Amendments to Coal and Gas Resource Coordination Act Effective Immediately
On May 13, 2011, Governor Tom Corbett signed into law Act 2 of 2011 amending the Coal and Gas Resource Coordination Act (“Coordination Act”) to establish adequate and safe spacing between natural gas well clusters and workable coal seams. No permits for gas wells covered by the new law will be issued unless the well cluster is located at least 2,000 feet from the nearest well cluster. For “active coal mines,” the owner of the workable coal seam must consent in writing to the location of the well. The law is effective immediately.
Under another statute, the Oil and Gas Act, coal operators are required to protect wells penetrating coal seams by leaving a large pillar of coal around the well, but the law does not require the well operator to specifically locate the well bore as it penetrates the coal seam. In a recent Commonwealth Court Opinion affirming the Environmental Hearing Board ruling, it was found that the Department did not have the duty or authority to require deviation surveys and logging of the well by the well driller.1
Background
The prior law did not meet the well spacing needs of either the coal operators or Marcellus gas well drillers. For gas well operators, the 1,000-foot space requirement did not allow for the preferred procedure by Marcellus gas well operators, which is to place a number of wells in close proximity to each other on a single pad. For coal mine operators, the 1,000-foot spacing requirement and the gas well plugging requirements were not adequate to allow for safe and efficient coal recovery using the most efficient mining method — long wall mining. In addition, coal mine operators often had difficulty determining the precise location of the well or penetrating the coal seam, which composes safety hazards for mine workers that could come in contact with an abandoned well.Under another statute, the Oil and Gas Act, coal operators are required to protect wells penetrating coal seams by leaving a large pillar of coal around the well, but the law does not require the well operator to specifically locate the well bore as it penetrates the coal seam. In a recent Commonwealth Court Opinion affirming the Environmental Hearing Board ruling, it was found that the Department did not have the duty or authority to require deviation surveys and logging of the well by the well driller.1
New Law Requirements
Act 2 of 2011 addresses many of these issues through the following revisions to the Coordination Act:- Act 2 of 2011 allows for “clusters” of wells that can be drilled in close proximity to each other. Well clusters, each containing multiple wells, cannot be closer than 2,000 feet to any other well cluster, unless the owner of a workable coal seam and the well applicant agree in writing to a lesser distance. Absent any agreement, the parties can invoke the dispute resolution panel to resolve the spacing issue. The panel (part of the original Coordination Act) is comprised of 3 individuals: one selected by the driller, one selected by the operator, and a third selected by the other 2 individuals. The panel must choose a location that meets the two criteria.2 Also, a cluster may not be larger than 5,000 square feet in area. The coal operator would still have a duty to protect the wells by leaving pillars of coal surrounding each well cluster.
- The Act amends the definition of “active coal mine” to comprise an area included on a five-year timing map prepared by the permittee. This five-year timing map is to include the areas “reasonably expected to be mined and permitted for mining by the operator during a five year period beyond the projected completion of the mining of the current permitted area.” This change will expand the area where objections by mine operators may be filed. Within 30 days of the effective date of the Act (June 12, 2011), underground mine operators must provide the DEP their current five-year timing maps for already permitted active mines. Any coal companies with pending applications for a new mine, renewal applications pending or pending application seeking to add additional acres should begin to prepare such a map for submission to the Department once the approval being sought is issued.
- Act 2 of 2011 also prohibits drilling through an operating coal mine without written consent of the operator of the coal mine to the proposed location of the well. The definition of “operating coal mine” is also proposed to be expanded to include any workable coal seam for which an underground mining permit has been issued. It should be noted that under long-standing case law coal operators may not deprive the owners of gas rights the right to reasonably recover their gas resources.3 This means the coal operator of an “operating coal mine” under the new law cannot block the gas reserves from drilling through the coal to recover its property. Thus, the agreed to location of the well has to be one that provides reasonable access to the gas resources.
- If the well cluster is proposed to be drilled through a “workable coal seam” that is neither “active” nor “operating” the gas owner must provide the plat showing the proposed location to the coal owner and the coal owner can provide recommendations on the location of the proposed well location.
- The new law also requires any deviation surveys obtained in the well to be provided to the coal company by the well operation within 60 days of completion of drilling.
- Within 60 days of the effective date of the Act (July 12, 2011), the DEP must commission an independent study to assess various aspects of the well pillar size/configuration necessary to protect well bores in areas where mining will occur. The intent is to amend the 1957 gas well pillar study that forms the basis for the amount of coal pillar support that is to be left in place around gas wells by the coal operator. The DEP has 240 days from the effective date of the Act to complete this report and publish it in the Pennsylvania Bulletin.
Conclusion
This new law provides Marcellus gas well operators the needed spacing changes to accommodate multiple horizontal wells on single well pads and also provides coal mine operators with the ability to use 5 year mining maps to achieve maximum coal recovery in a safe and efficient manner. Both the coal industry and gas industry trade associations supported this compromise.
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1 Foundation Coal v. DEP, et al., 993 A.2d 1277 (Pa. Cmwlth. 2010)
2 The two criteria are as follows: (1) proposed well can be drilled without endangering the safety of the mine workers, and (2) allows for the maximum recovery of both gas and coal resources.
3 Chartiers Block Coal Co. v. Mellon, 152 Pa. 286 (1893)