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					          An Assessment of Marcellus
         Shale Environmental Issues in
                 West Virginia
                                         Presented at:
                            Marcellus Shale in WV: Emerging Issues
                                       Morgantown, WV
                                                  June 21, 2011




 Kathy G. Beckett, Esquire
 500 Lee Street East, Suite 1600, Charleston, WV 25301
 Phone: 304-340-1019 • Fax: 304-340-1272
w w w . j a c k s o n k e l l y . c o m • www.jacksonkelly.com
 kbeckett@jacksonkelly.com
                Overview of Presentation
  •   WV Oil and Gas Program
  •   Marcellus Shale activities in WV
  •   Well work permitting
  •   Water
       – Zero discharge effluent guideline
       – Disposal options
       – TDS
       – Pit Solids
       – Water withdrawal
       – EPA Study
  •   Air issues
  •   NORM
  •   Legislative initiatives



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               WV Oil and Gas Program

  • Interstate Oil and Gas Compact Commission –
    minimum state program guidelines
  • STRONGER – State Review of Oil and Gas
    Environmental Regulation
     – The 2003 West Virginia review consisted of
       two parts. A follow-up review of the progress
       made since the 1993 Review and a
       supplemental review.

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   Marcellus Shale activities in WV




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                                                  June 21, 2011




 Kathy G. Beckett, Esquire
 500 Lee Street East, Suite 1600, Charleston, WV 25301
 Phone: 304-340-1019 • Fax: 304-340-1272
w w w . j a c k s o n k e l l y . c o m • www.jacksonkelly.com
 kbeckett@jacksonkelly.com
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        Marcellus Shale Wells Drilled
              in West Virginia
                       Permitted   Drilled
          2009           426        125


          2010           433         58




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      Marcellus Shale Water Tracking
              in West Virginia
  •    In 2010, 28 of 58 wells reported:
      – 156.5 million gallons water withdrawn
      – 16 million gallons water recovered (10.2%)
        • 2 million gallons UIC disposal
        • 13 million gallons reuse
        • 1 million gallons centralized treatment
        plant and reuse


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              Well Work Permitting




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                 Well Work Permitting
  Permit required from Office of Oil and Gas for all
    wells*
    - bonding
    - soil and erosion and sediment central plan
    - notice to:
       •     surface owners
       •     coal operators

  * W. Va. Code '22-6-6


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                       Water Quality




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   Water Pollution Control Permits
  Additional permit required for any stream discharge*:
    -     applicable to individual or general permits
    -     must meet water quality standards
    -     must meet effluent guidelines
  Onshore Oil and Gas Effluent Guideline (40 C.F.R. '435.32)
    -     “no discharge of waste water pollutants”
    -     exception: “stripper oil wells”
    -     Appalachian Producers requested exemption “Marginal gas
    wells” – no action by USEPA
    -     Are Marcellus Shale wells covered by effluent guidelines? See
    September 1976 Development Document


  * W. Va. Code '22-6-7



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                        Water Disposal*
  - Prohibition against on-site stream
    discharge
  - UIC – “best option”
  - Recycling
  - POTW option heavily restricted; none
    authorized at this time

  * Office of Oil and Gas, Industry Guidance, January 8, 2010


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     Land Application General Permit
  General Water Pollution Control Permit (GP-1-WV-
    88) – “land application permit”
    - no discharge to streams
    - pit liquids treated / land applied
    - pit solids disposed on site
  July 30, 2010 Office of Oil and Gas memorandum
    “land application of any return fluids from
    completion activities in the Marcellus Shale
    formation is prohibited”

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            Drilling Pit Reclamation*
  Requirements:
   1. Pit liners remain intact
   2. Pit contents must be solidified with
   approved materials
   3. A liner must be placed over the top of
   pit

  * Office of Oil and Gas, Memorandum, March 23, 2010


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             Total Dissolved Solids
  - Existing water quality criteria
      • chloride
      • sulfate
  - On-going water quality concerns are causing some to
    call for TDS criteria of 500 mg/l
     • WV Legislature rejection of TDS criteria
     • ORSANCO?
  - Issues
     • 500 mg/l is a non-enforceable drinking water criteria
     • no stream discharge of Marcellus Shale water
     • need for additional scientific research

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                  Water Withdrawal




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                  Water Withdrawal*
  - W.Va. Code Chapter 22, Article 26
    requires after-the-fact reporting
  - Office of Oil and Gas now requires prior
    reporting and approval:
      • supplemental permit application form
      • no withdrawal allowed “at volumes beyond
        which the waters can sustain”
      • Water Withdrawal Guidance Tool
  * Office of Oil and Gas, Industry Guidance, January 8, 2010


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   USEPA Hydraulic Fracturing Study
  - February 28, 2011 request to EPA Science
    Advisory Board
  - Initial results: end of 2012
  - Additional results: 2014
  - Scope:
    • acquisition of water
    • chemical additives
    • fracturing
    • flow back management (including treatment
    and disposal)
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                       Air Issues




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                       Air Issues
  - Permitting:
    • Minor source permitting (45 CFR 13)
       -        individual compressors, etc.
    • Major source permitting (45 CFR 14)
       -        aggregation of activities?
       -        McCarthy Memo (September 22, 2009)
       -        aggregation criteria
                1.     adjacent property
                2.     common control
                3.     single industrial grouping
       -        Hughes v. DEP (10-3-AQB) – dismissed

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                   Air Quality Modeling*




 * Performed by Alpine Geophysics for the Midwest Ozone Group


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                                         O3 Trends by Regions
                                            RPO Regional Average O3 Design Values

                                   0.1
      Ozone Concentration [ppm]




                                  0.09

                                  0.08

                                  0.07
                                                                                           CENRAP
                                  0.06                                                     MANE-VU
                                                                                           MRPO
                                  0.05                                                     VISTAS
                                                                                           Standard
                                  0.04
                                     2000     2002        2004        2006          2008              2010




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                                                                                                                                                   Ozone DV (ppb)




                                                                                                                                   50
                                                                                                                                        55
                                                                                                                                             60
                                                                                                                                                  65
                                                                                                                                                         70
                                                                                                                                                                75
                                                                                                                                                                     80
                                                                                                                                                                          85
                                                                                                                                                                                        90

                                                                                                           Bucks, Pennsylvania



                                                                                                              Harford, Maryland



                                                                                                              Suffolk, New York




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                                                                                                        Westchester, New York



                                                                                                     Philadelphia, Pennsylvania



                                                                                                          Fairfield, Connecticut



                                                                                                        Gloucester, New Jersey



                                                                                                                Hamilton, Ohio



                                                                                                      Hampden, Massachusetts




                                                                                           County
                                                                                                                  Warren, Ohio




                            * Performed by Alpine Geophysics for the Midwest Ozone Group
                                                                                                    Mecklenburg, North Carolina



                                                                                                                Cecil, Maryland



                                                                                                        Monmouth, New Jersey



                                                                                                                   Butler, Ohio



                                                                                                              Allegan, Michigan



                                                                                                           Hudson, New Jersey



                                                                                                       New Haven, Connecticut
                                                                                                                                                                               2008 DVB (Obs)

                                                                                                                                                                               2018 DVF (BAU)
                                                                                                                                                                               2014 DVF (BAU)
                                                                                                                                                                                                8-hour Ozone Modeling Results*




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                                                            PM2.5 Trends: Regions
                                                                  RPO Regional Average PM2.5 Annual Design Values
                                                       18




                         PM 2.5 Concentration ug/m3]
                                                       16
                                                       14
                                                       12
                                                       10
                                                                                            c
                                                        8
                                                                                                                       CENRAP
                                                        6                                                              MANE-VU
                                                        4                                                              MRPO
                                                                                                                       VISTAS
                                                        2                                                              Standards
                                                        0
                                                        2000   2001   2002    2003   2004       2005   2006   2007   2008          2009

                                                                 RPO Regional Average PM2.5 24-Hour Design Values
                                                       40
             PM 2.5 Concentration ug/m3]




                                                       35
                                                       30
                                                       25
                                                       20
                                                                                                                      CENRAP
                                                       15                                                             MANE-VU
                                                                                                                      MRPO
                                                       10                                                             VISTAS
                                                        5                                                             Standards

                                                        0
                                                        2000   2001   2002   2003    2004       2005   2006   2007   2008          2009




                                                                                                                                          27
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                                                                                                                                           Annual PM2.5 dv (µg/m^3)




                                                                                                                                  8
                                                                                                                                      10
                                                                                                                                           12
                                                                                                                                                      14
                                                                                                                                                                16
                                                                                                                                                                      18
                                                                                                                                                                                       20



                                                                                                    Allegheny, Pennsylvania




                                                                                                            Madison, Illinois




                                                                                                          Wayne, Michigan




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                                                                                                            Cuyahoga, Ohio




                                                                                                             Hamilton, Ohio




                                                                                                      Beaver, Pennsylvania




                                                                                                      Brooke, West Virginia




                                                                                           County
                                                                                                      Milwaukee, Wisconsin




                            * Performed by Alpine Geophysics for the Midwest Ozone Group
                                                                                                      New Castle, Delaware




                                                                                                                Cook, Illinois




                                                                                                          Saint Clair, Illinois




                                                                                                              Clark, Indiana




                                                                                                            Marion, Indiana
                                                                                                                                                                      2008 DVB (Obs)

                                                                                                                                                                      2018 DVF (BAU)
                                                                                                                                                                      2014 DVF (BAU)




                                                                                                                 Scott, Iowa
                                                                                                                                                                                            PM 2.5 (Annual) Modeling Results*




                       28
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                                                                                                                                                                                                                                                             60



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                            * Performed by Alpine Geophysics for the Midwest Ozone Group
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                                                                                                                                                                                                                                                              PM 2.5 (24-hour) Modeling Results*




                       29
   Air Quality Modeling Conclusion
 • The ozone NAAQS can be achieved with no new
   controls no later than 2014

 • The annual PM NAAQS can be achieved with no new
   controls no later than 2014 with the possible exception of
   local controls at the Allegheny PA location

 • The 24-hr PM NAAQS can be achieved with no new
   controls no later than 2014 with the possible exception of
   local controls at the Allegheny PA and Brooke WV
   locations
                                                                30
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                       NORM




                              31
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                       NORM
  WVDEP presentation to legislative
   committee (May 7, 2011)
   - testing shows “safe levels of
   radioactivity from drilling the Marcellus
   Shale”
   - radiation in WV may be of less concern
   than PA
   - testing in PA has shown radiation
   levels “at or below normal”

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               Legislative Initiatives




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        WVDEP Proposed Legislation
             SB 424 (2011)
  1. $10,000 fee for horizontal drilling
  2. Revised permitting requirements
  3. Require a water management plan for
     horizontal drilling
  4. Increased penalty authority
  5. New regulation of large impoundments
     (independent of well work permit)
                                            34
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        WVDEP Proposed Legislation
           SB 424 (2011) (cont)
  6. New BMP requirement (including protection of
      groundwater and fugitive particulate matter)
  7. No water withdrawal beyond what the waters
      can sustain
  8. Enhanced notice requirements
  9. Enhanced inspection authority
  10. Seismic activity subject to notice to Miss Utility
      and to property owners
  11. Regulate pooling of gas from horizontal
      shallow wells
                                                           35
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     Joint Judiciary Proposed Legislation
               HB 2878 (2011)
  1. New well work permit required for horizontal
     wells
  2. New water pollution permit required
  3. Permit application must include certification of
     Division of Highways
  4. Enhanced notice to property owners
  5. 1000 feet buffer from building / water wells
  6. 2500 feet buffer from surface (1000 feet from
     groundwater) source for horizontal wells
  7. Enhanced enforcement authority
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     Joint Judiciary Proposed Legislation
            HB 2878 (2011) (cont)
  8.  Expanded pre-drilling survey requirement
  9.  Disclosure of chemicals used in fracturing
  10. Double liners for centralized impoundments
  11. Water withdrawal plan required
  12. Mandates surface use and compensation
      agreement
  13. Appeal to Environmental Quality Board
  14. Pre-empts local ordinances but not zoning
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                       Conclusion
  • WV DEP has developed a Marcellus Shale
    regulatory program based upon its well work
    permit.
  • New legislation will buttress the existing
    regulatory program and address important
    issues such as horizontal shallow well pooling.
  • Even with new legislation, it is likely that some
    parties will continue to raise objections to
    horizontal drilling.

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                Contact Information
                 Kathy G. Beckett
                Jackson Kelly PLLC
                    PO Box 553
               Charleston, WV 25322
           Telephone: (304) 340-1019
         Email: kbeckett@jacksonkelly.com

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