Shale criminal charges stun drilling industry

XTO Energy Inc., of Fort Worth, Texas,is a major player in Pa.'s Marcellus Shale.
XTO Energy Inc., of Fort Worth, Texas,is a major player in Pa.'s Marcellus Shale. (RON JENKINS / Fort Worth Star-Telegram)
Posted: September 13, 2013

Pennsylvania Attorney General Kathleen Kane's decision to prosecute a major Marcellus Shale natural-gas driller for a 2010 wastewater spill has sent shock waves through the industry.

But environmentalists Wednesday hailed the prosecution of the Exxon Mobil Corp. subsidiary as a departure from the soft treatment they say the industry has received from Pennsylvania regulators.

"We have been very concerned about enforcement in the Marcellus, and we welcome the attorney general's taking an active role," said Myron Arnowitt, Pennsylvania director of Clean Water Action.

Kane's office announced charges Tuesday against XTO Energy Inc. for discharging more than 50,000 gallons of toxic wastewater from storage tanks at a gas-well site in Lycoming County.

XTO in July settled federal civil charges over the incident by agreeing to pay a $100,000 fine and deploy a plan to improve wastewater-management practices. The consent decree included no admissions of liability.

The Fort Worth, Texas, drilling company, which Exxon acquired in 2010, said it had worked cooperatively with federal and state authorities to clean up the spilled waste, known as "produced water." XTO excavated and removed 3,000 tons of contaminated soil from the site.

"Criminal charges are unwarranted and legally baseless because neither XTO nor any of its employees intentionally, recklessly, or negligently discharged produced water on the site," XTO said in a statement.

Kane's office said it did not need to prove intent to prosecute the company for crimes. XTO is charged with five counts of unlawful conduct under the Clean Streams Law and three counts of unlawful conduct under the Solid Waste Management Act.

Industry leaders said the prosecution of a company for what they called an inadvertent spill creates a hostile business environment.

"The incident has been fully addressed at the state and federal levels, and this action creates an untenable business climate that will discourage investment in the commonwealth," Kathryn Z. Klaber, president of the Marcellus Shale Coalition, said in a statement.

The Pennsylvania Chamber of Business and Industry also protested.

"This decision sends a chilling message to all businesses looking to locate in Pennsylvania that they could be held criminally liable in the event of an unintentional spill by a contractor that resulted in no injury to humans or wildlife and that had no lasting impacts on the environment," said Gene Barr, its president.

First to be charged

XTO is the first Marcellus Shale production company to face criminal charges.

A Western Pennsylvania waste-hauler, Robert Allan Shipman, was convicted of illegally dumping waste in 2012, and sentenced to serve seven years of probation and 1,750 hours of community service, and to pay $382,000 in restitution and fines. The attorney general has appealed the sentence, arguing that Shipman deserved jail time.

In the XTO case, a grand jury did not charge any individuals. XTO faces a fine of $25,000 a day per violation, said Kane spokeswoman Carolyn E. Myers. The leak took place during the two months the company stored wastewater on the site.

Activists believe that Kane, a Democrat, has been looking to make a statement on shale drilling since she assumed office in January.

"She has indicated that she is on the watch for a criminal prosecution opportunity in the Marcellus Shale," said Arnowitt, of Clean Water Action.

The XTO case was referred to the attorney general by the Department of Environmental Protection before Kane took office.

"The prosecutorial powers of this office are used carefully and with great consideration," First Deputy Attorney General Adrian R. King Jr. said through a spokeswoman. "We closely examine the facts and the applicable law in each case and proceed accordingly."

The XTO spill received very little public attention when it occurred.

A DEP inspector discovered wastewater leaking from an open valve on a storage tank during an unannounced visit to the Marquardt well site on Nov. 16, 2010. The wastewater spilled into a tributary of the Susquehanna River and also contaminated a spring. Pollutants were present in the stream for 65 days after the spill.

The grand jury's presentment does not say who opened the valves on the tank or why. XTO officials at the time suggested vandals might be responsible. But it noted that the drilling site had no secondary containment, little security, and no alarm system for leaks.

Shale-gas wells produce huge quantities of wastewater after they are hydraulically fractured, which involves the injection of water, chemicals, and sand deep underground. The wastewater contains fracking chemicals and pollutants from the shale formation itself, including barium, calcium, iron, magnesium, manganese, potassium, sodium, strontium, bromide, and chloride.

As part of its federal settlement, XTO agreed to implement an estimated $20 million plan to recycle more wastewater and to install a remote monitoring system at all well sites in the region to trigger alarms in case of a spill.


BY THE NUMBERS

50,000

Gallons of toxic wastewater were discharged from storage tanks at a gas-well site in Lycoming County in 2010.

$100,000

Fine XTO Energy agreed to pay. The drilling company also agreed to improve wastewater management practices.


 


Contact Andrew Maykuth at 215-854-2947 or amaykuth@phillynews.com, or follow on Twitter @Maykuth.

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