A pragmatic approach to O&G policymaking

April 23, 2013

As deputy secretary of the state Department of Environmental Protection’s office of oil and gas management, Scott Perry acknowledges that he finds himself with a variety of leanings that could appear to be in conflict.

Perry, who was the final speaker for Washington & Jefferson College’s Center for Energy Policy and Management’s 2012-13 Energy Lecture Series, told an audience that he considers himself to be an environmentalist, an energy consumer and a regulator who takes a pragmatic view when it comes to writing policy for a fuel that is playing a formidable role in making the U.S. energy independent.

A DEP veteran with more than 10 years at the agency, Perry, an attorney, had earlier served as assistant counsel across a range of bureaus and offices within DEP, including the bureaus of oil and gas, laboratories, water standards and facility regulations, watershed management, waste management and radiation protection.

Today, he oversees the development of the agency’s policy, as well as regulatory and technical guidance, on oil and gas activities in Pennsylvania.

While recognizing Pennsylvania’s massive fairway for the Marcellus Shale, he noted the sheer abundance of natural gas and its related liquids coming out of the shale play in Southwestern Pennsylvania.

“You’re really in the center of the shale gas universe,” he said.

Two of the major themes of shale development in Pennsylvania noted by Perry are how quickly it unfolded in a roughly five-year span, and how rapidly changes in drilling technology have quickened the pace of production in the Keystone State.

“We really became aware of shale gas development in 2007 and 2008,” he said, “but (production) really didn’t begin in earnest until 2010.”

That was the year DEP did 5,000 inspections at 1,600 Marcellus gas wells and issued 1,300 violation notices, Perry said.

“It was a complete and total failure,” he said of the effort to enforce regulations.

Following the passage of Act 13 in 2011, which he termed “the greatest revision of oil and gas laws” in Pennsylvania’s nearly 150 years of drilling activity, Perry noted a different dynamic, with much improved enforcement and compliance.

“Last year, we had more than twice as many inspections and half the violations,” Perry said.

The reduction in violations also came at a time when Marcellus gas wells in the state produced 2.1 trillion cubic feet of natural gas and, with its cleaner-burning properties, contributed to the rapid displacement of coal at power plants.

While Perry is pleased with the difference, he’s emphatic the agency won’t ease its regulatory oversight.

“Have we reached our goal? Absolutely not,” he said.

He noted that the agency, working with industry, was able to end the disposal of drilling wastewater – which he said is 10 times saltier than ocean water – into waterways.

“They were relying on dilution” from the waterways to handle wastewater disposal, a process he said contributed to higher bromide levels in waterways such as the Monongahela River.

In 2012, he noted 71 percent of all wastewater was recycled to the next well site for hydraulic fracturing, while the remaining 29 percent went to offsite treatment or to disposal wells in Ohio. As a result, bromide levels fell dramatically in the Monongahela.

And while Act 13 also addressed other concerns such as spill prevention at well sites and identifying abandoned wells, Perry said he is suggesting more policy changes for oil and gas.

Some of those he’ll be recommending to the agency’s environmental quality board will be to raise well permit fees and the addition of more staff, although he doesn’t see any new rules taking effect until next year.

While Perry views himself as an environmentalist, he told the group he also takes a pragmatic approach to policy for the state’s oil and gas industry, especially because of the benefit of abundant, domestically produced natural gas as a cleaner substitute for coal in electricity generation; for its potential in replacing dirtier diesel fuel in over-the-road truck fleets; and for attracting additional manufacturing to the state.

When a member of the audience asked how the agency manages to enforce regulations across an industry that has grown so much in such a short time, Perry mentioned the concise recordkeeping of wastewater transfers that involve the operator, hauler and recipient; dragnets that catch unscrupulous haulers; and the ability to pull permits.

“The most effective tool we use when an operator is out of compliance, is we (can) shut them down,” he said. “We don’t hesitate to hold the permit.”

Michael Bradwell has been business editor for the Observer-Reporter since 1995, and was named editor of The Energy Report in 2012. He joined the newspaper in 1990 as a general assignment reporter in the Greene County bureau and has also worked as a copy editor. A 1974 graduate of Pennsylvania State University with a degree in English, he began his career at the Bedford (Pa.) Gazette. Prior to joining the O-R, he served as public relations director for Old Bedford Village, account executive at two Pittsburgh public relations agencies and copywriter for the country’s largest wholesaler of mutual funds.

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