FAILURE TO FOLLOW FREEZING WEATHER PROCEDURES, CAUSED A BIG LOSS OF NATURAL GAS AND A HUGE FINE FOR CABOT OIL & GAS CORPORATION

FAILURE TO FOLLOW FREEZING WEATHER PROCEDURES, CAUSED A BIG LOSS OF NATURAL GAS AND A HUGE FINE FOR CABOT OIL & GAS CORPORATION

The Department of Environmental Protection (DEP) today announced it has fined Cabot Oil & Gas Corp. of Pittsburgh $76,546 for a January well control incident at the company’s Huston well pad in Brooklyn Township, Susquehanna County.

“Cabot lost control of the Huston J1 gas well for 27 hours, to which the department responded to promptly to ensure there were no significant environmental impacts,” DEP Director of District Oil and Gas Operations John Ryder said. “In this incident, mostly gas was released, which dissipated quickly to background levels within 100 feet from the well.”

The incident began the morning of Jan. 5 when a Cabot subcontractor was replacing equipment on the wellhead. The subcontractor did not follow standard operating procedures for the process by failing to first warm the wellhead prior to conducting any work in the freezing temperature. This resulted in damage to a wing valve.

A subsequent analysis of the damaged wing valve indicated that it was in the open position, allowing gas to escape. The analysis also indicated that frozen sand in the valve bore may have obstructed movement of the gate, causing a function test to indicate the valve was closed when it was open.

Cabot contacted Wild Well Control of Houston, Texas, for assistance, which installed two hydraulic valves to diminish the gas flow in the damaged valve to allow full replacement. The well was brought under control shortly before 1 p.m. on Jan. 6.

During the incident, Cabot contacted five property owners within a quarter mile of the well pad to notify them of the situation. However, it was determined that no evacuation was needed based on the results of DEP air monitoring. DEP staff used meters to detect combustible gas on and in the vicinity of the well pad, and to determine if there was an explosive atmosphere.

DEP Oil and Gas and Emergency Response program staff were on scene providing oversight throughout the incident.

The department issued a notice of violation (NOV) to Cabot on Jan. 16 for violations of the Solid Waste Management Act, Clean Streams Law and the Chapter 78 oil and gas regulations. The NOV requested a written response within 10 days, which Cabot provided.

In its response, the company said it could not determine the exact amount of natural gas or fluid released because it was not possible to safely measure the flows, but said the majority of the release consisted of natural gas.

Pennsylvania hits another production record

Gas production in Pennsylvania continued to hit records, with 1.9 trillion cubic feet of gas coming out of the ground during the first half of the year, according to new data released from the Pennsylvania Department of Environmental Protection on Monday. That's a 14 percent increase over the previous six-month period when operators pulled 1.7 trillion cubic feet of gas out of the ground. A year ago it was closer to 1.4 trillion.

About 510 new wells came online during the reporting period.

Infrastructure constraints in Appalachia have made it difficult for producers to get their gas out of this underpriced market to hungry demand centers outside of Pennsylvania, but some of that may be easing.

“There's a lot of new capacity over the first half of the year," said Sam Gorgen, a U.S. crude oil production analyst at the Energy Information Administration, who monitors Pennsylvania oil and gas production.

"Certainly, there is the possibility of companies wanting to bring on more wells, and there could be some restrictions on [how much] they could flow from those wells," he said.

Susquehanna County had the most gas production during the past six months, with 455 billion cubic feet, or 23 percent of the state sum. Bradford and Lycoming counties followed.

In southwestern Pennsylvania, Washington County continued to lead the area in gas production with 198 billion cubic feet, followed closely by Greene County with 172 billion cubic feet. Production from the Greater Pittsburgh region accounted for about a quarter of all statewide gas reported during the first six months of 2014.

Washington County was once again the leader in liquids production in the state by a large margin, with 1.8 million barrels of condensate, most of that coming from Range Resources, and 204,316 barrels of oil, all from Chesapeake Energy.

While a distant second, Mercer County is starting to emerge as another liquids-rich destination, with Shell and Halcon having some successes there with condensate and oil. Last week, Shell sold off its acreage in Mercer and neighboring Western Pennsylvania counties to Rex Energy Corp.

Five Cabot Oil & Gas wells in Susquehanna County were the most productive during the past six months, pumping out the most gas per day even though some had already been producing for more than six months. Typically, a shale gas well starts slowing production after only a few months.

The top five producers in the state — Chesapeake Energy, Cabot Oil & Gas, Range Resources, Southwestern Energy, and EQT Corp, in that order — accounted for nearly half of the state's gas supply for the first half of the year.

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