Essentially all abandoned wells are conventional vertical not horizontal ones

From an Article by Mike Tony, Charleston Gazette, Charleston, WV, October 8, 2022

Landowners in Harrison, Nicholas, Preston and Wetzel counties has filed the lawsuit in the U.S. District Court for the Northern District of West Virginia in July against Diversified Energy and Pittsburgh-based EQT Corp. A 2018 agreement between the company and the WV DEP requires Diversified to summarize the actions taken to plug oil and gas wells or place them into production during the past year.

Diversified Energy, the largest owner of gas wells in the country, says it doesn’t have to plug wells that West Virginia landowners allege in federal court pose health and environmental hazards, arguing that state regulators relieved them of that responsibility. Diversified Energy Company says an agreement it made with the state Department of Environmental Protection to plug or place into production a set number of gas and oil wells annually shields it from the duty to plug and abandon the wells.

The company says the federal lawsuit from eight landowners in four West Virginia counties would “usurp” the authority of the Office of Oil and Gas, the DEP’s well-plugging and reclamation regulatory unit that state officials have acknowledged is understaffed. Diversified argues it has no duty to plug wells unless it identifies them as candidates for plugging in annual reports it is required to file with the Office of Oil and Gas through 2034.

The lawsuit alleges the two companies struck transfer deals in recent years for many more wells than Diversified can afford to plug and decommission. Industry experts have made similar observations, saying the company’s business model is based on acquiring a high number of low-producing wells that yield short-term dividends but present long-term liabilities mounting as the company puts off well decommissioning obligations.

The DEP estimates older wells that have been poorly maintained will likely total more than $100,000 in plugging costs. New wells that have been properly maintained cost a few tens of thousands of dollars, per the agency. Plugging typically entails using cement to seal wells that are no longer productive to keep toxic chemicals from polluting the air and aquifers.

The landowners’ lawsuit asks the court to make EQT liable for plugging and decommissioning the wells that Diversified took responsibility for in 2018 and 2020, contending that those transfers were fraudulent. The lawsuit petitions the court to award plaintiffs and class members damages from Diversified to compensate them for the cost of plugging, remediation of the abandoned wells.

Most of Diversified’s roughly 70,000 wells are in Appalachia, acquired since 2018 from EQT and Canonsburg, Pennsylvania-based CNX Resources. Diversified acquired more than 12,000 gas wells from EQT in deals in 2018 and 2020 for roughly $700 million. In a response it filed last week to the landowners’ lawsuit, Diversified highlighted a passage of its 2018 agreement with the Office of Oil and Gas stating that the company “requires sufficient time to identify” which wells have a “bona fide future use” that merits them being placed back into production. “For the duration of that process, Diversified has no duty to plug its wells unless it identifies them as a plugging candidate in its reports, and then only on a set schedule,” Diversified’s response contends.

The DEP did not respond to a request for comment on Diversified’s filing. Per the agreement, Diversified must either place into production or plug at least 50 oil and gas wells for which no production was reported in 2017 every year from 2020 through 2034, of which at least 20 must be plugged each year. Diversified has similar consent agreements in Kentucky, Ohio and Pennsylvania. Combined, the company’s agreements in those states plus West Virginia commit the company to plugging at least 80 wells annually out of its tens of thousands of wells there.

The landowners’ lawsuit called those consent agreements a “smoke-screen” that doesn’t impact “private civil liberties that Diversified [and EQT] have to private citizens over private property rights.” The DEP has contracted with a Diversified subsidiary to plug wells. The agency has paid Diversified subsidiary Next LVL Energy LLC over $150,000 since October 2021 for well-plugging, according to West Virginia State Auditor’s Office data.

The DEP awarded Next LVL Energy two contracts to plug and reclaim orphaned gas and oil wells under the federally funded Infrastructure Investment and Jobs Act passed by Congress last year. Next LVL Energy was the low bidder on the two DEP contracts, bidding a combined $10.2 million. The DEP is requiring contractors to identify, inspect and prioritize what documented or undocumented wells to plug, in addition to plugging them and reclaiming the well sites. Under the terms of state-posted contracts, contractors will have the exclusive right to plugging orphaned, abandoned wells within the contract region.

Diversified acquired Next LVL Energy, a Pittsburgh area-based well-plugging company, in February.

Diversified also argued in its response to the lawsuit that their claims are time-barred under a two-year state statute of limitations for trespass, nuisance and negligence claims, citing past statute of limitations-focused judicial decisions. The company contends the two years the landowners had to file claims began when the wells on their properties stopped producing gas in a two-year window from 2017 through 2019.

The landowners allege that Diversified’s acquisition of thousands of wells from EQT was completed with intent to defraud creditors, including the plaintiffs, in a business model designed to push off decommissioning liabilities for decades. They say Diversified has left them with unplugged, abandoned wells that pose health risks, degrade the environment and hurt their property values.

Much of the lawsuit is based on a report published in April by the Ohio River Valley Institute, a Johnstown, Pennsylvania-based pro-renewable energy nonprofit think tank. That report predicted it was highly unlikely that Diversified will have enough money to plug and abandon all its wells. The lawsuit cites the report to allege that if Diversified had used industry norms to calculate its plugging and decommissioning obligations, then its liabilities would exceed $2 billion instead of the company’s self-reported figure of roughly $520 million, making Diversified insolvent. The report cited Diversified company data and federal projections for natural gas prices. The Ohio River Valley Institute report found that Diversified has used unusual assumptions like implausibly long economic lives of wells though 2095 and an excessively long ramp-up timeline to start plugging and abandoning most of its wells to calculate the value of its asset retirement obligations, liabilities for well plugging and abandoning costs.

In 2020, Greg Rogers, a senior advisor to Carbon Tracker, a London-based think tank researching climate change impacts on financial markets, called Diversified’s business model “a legal Ponzi scheme” in a conference call with the Capitol Forum, a corporate news analysis service. “[I]t only works as long as there’s growth and the perception of profitability,” Rogers said. States mandate that wells no longer producing gas or oil are plugged and abandoned, and that well owners secure a bond or other financial assurance that helps cover the expense of closing wells that aren’t productive anymore.

But Diversified’s critics say its business model could leave West Virginia taxpayers footing the bill for remediating many of the company’s wells. “[I]t is clear Diversified Energy’s economic model is built to fail and could leave residents of West Virginia with billions of dollars in clean up costs,” Ohio River Valley Institute senior researcher Ted Boettner said in an email.

The Office of Oil and Gas, whose authority Diversified emphasized in its lawsuit, has been beset by low inspector staff numbers. The state’s well inspection staff dwindling from 17 to nine in the past two years on the Legislature’s watch has concerned not just environmentalists but royalty owner advocates. The office has faced a $1.3 million shortfall, with officials attributing the budget crunch to permit fees having dried up amid oil and gas industry struggles. Bills that would have restored office staffing levels to what they were before they were slashed in 2020 through annual $100 oversight fees on unplugged wells failed in the Legislature amid opposition from the Gas and Oil Association of West Virginia. The industry group said the fees would be too onerous for operators.

A recent study found that low-production well sites like those dominating Diversified’s portfolio are a disproportionately large source of methane emissions. The April report published in the peer-reviewed scientific journal Nature Communications found roughly half of all well site methane emissions nationwide come from low-production well sites like Diversified’s, which emit six to 12 times as much methane as the average rate for all U.S. well sites. Methane has a 100-year global warming potential 28 to 36 times that of carbon dioxide, according to the U.S. Environmental Protection Agency, making Diversified’s deepening well footprint across Appalachia a climate concern.

Methane emissions cause ozone pollution (near term) & climate change (long term)

From an Article by Michael Booth, Colorado Sun, July 25, 2022

DCP Operating Company LP settles with federal and state officials over allegations of failing to detect gases contributing to Front Range ozone. This Colorado natural gas processor will pay a $3.25 million fine in a settlement with federal and state air pollution officials, after allegations the company failed to detect and repair leaks that contributed to worsening ozone problems on the northern Front Range.

DCP Operating Company LP and five related subsidiaries will pay the fines and make repairs, in a consent decree announced by the regional Environmental Protection Agency office in Denver after allegations of leaks and failure to repair at gas processing locations in Greeley, Platteville and other Weld County locations. Weld County is part of the EPA’s northern Front Range nonattainment area for ongoing ozone violations, and state and local governments must come up with plans to cut emissions that contribute to the health-harming gas.

The decree says DCP does not admit to liability for the allegations, but will have to pay the fine and also invest millions of dollars in equipment and systems to prevent new leaks. The decree was negotiated with EPA, the U.S. Department of Justice, and the Colorado Air Pollution Control Division, part of the state health department.

“Enforcement actions like this are critical to improving air quality, particularly in places facing air quality challenges like Weld County,” Assistant Attorney General Todd Kim for the Justice Department’s Environment and Natural Resources Division said in a statement. Soon after the fine announcement, the state health department issued another Ozone Action Day Alert for the Front Range, one of many so far this summer, warning vulnerable residents to avoid too much outdoor activity for 24 hours.

“EPA continues to deliver cleaner air through the rigorous enforcement of the Clean Air Act,” EPA Regional Administrator KC Becker said in a statement. “This settlement will reduce emissions of over 288 tons of volatile organic compounds and 1,300 tons of methane from production areas near northern Colorado communities, a majority of which are disproportionately impacted by pollution.”

Colorado Department of Public Health and Environment Executive Director Jill Hunsaker Ryan credited state inspectors and enforcement personnel from the air division’s leak detection and repair program. She said the settlement will go to the state’s Community Impact Fund, which helps pay for local environmental justice projects.

DCP will now have to bolster leak detection and repair at facilities in the Greeley, Kersey/Mewbourne, Platteville, Roggen, Spindle, O’Connor and Lucerne processing plants, and the future Bighorn plant. The requirements include new equipment that leaks less, tightening compliance with rules, repairing leaks faster, and staff training. The decree says the company will also use optical imaging technology to find and repair leaks faster.

One repair on two turbines at the Kersey/Mewbourne plant will cost $1.15 million, and is expected to reduce VOCs there by 26 tons a year, and methane by 375 tons a year, according to the agreement. Natural gas processing facilities separate impurities and liquids from the gas. Methane also contributes to global warming, multiplying greenhouse gases by dozens of times the rate of carbon dioxide emissions.

Ground-level ozone causes respiratory illness, aggravates asthma, and can worsen existing heart disease.

A related company, DCP Midstream, was fined $5.3 million by New Mexico regulators in 2020 for alleged repeated violations of state air pollution emissions rules.

EPA and state officials say they are focusing tightly on northern Front Range oil and gas operations. The EPA last year reached a $1 million settlement with Noble Energy over alleged violations from oil tank batteries in Weld County floodplains.

DCP said in an email statement that the company started working on some of the fixes in the decree as early as 2019. “The settlement agreement resolves an administrative enforcement matter with the EPA and the State of Colorado and is also in line with our commitment to responsible environmental management and sustainability,” said DCP manager of public affairs Jeanette Alberg. The agreement “is consistent with our ongoing efforts to reduce emissions within our company footprint and is a positive outcome for all of our stakeholders,” she said. DCP is also upgrading Colorado facilities not mentioned in the settlement, the company said.

Environmental groups responded with skepticism, noting a recent hearing in front of the Air Quality Control Commission where northern Front Range cities said their own studies showed emissions are not down.

“This just continues to underscore the oil and gas industry’s rampant noncompliance with clean air laws and the terrible toll that continues to be taken on air quality along the Front Range,” said Jeremy Nichols of WildEarth Guardians. “Studies have basically confirmed that oil and gas industry emissions have not decreased over the years. It’s good that regulators are pressing DCP, Nichols said, “but it doesn’t seem like industry is truly changing its ways and doing everything it can and should to comply.”

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CLEAN AIR COUNCIL Recommendation ~

Tell the EPA to finalize the strongest air pollution regulations possible. This includes a ban on gas flaring or venting unless in absolute emergencies, consistent methane monitoring at all oil and gas facilities (including smaller, leak-prone wells), and requiring “no-bleed” pneumatic controllers and pumps at all gas wells and compressor stations.

We Need the Strongest Methane Rule Possible

>>> From the Clean Air Council, Philadelphia, Wilmington, Pittsburgh, June 10, 2022

Later this year, the U.S. Environmental Protection Agency (EPA) will be proposing the full version of its much anticipated rule limiting climate-changing methane and asthma-causing volatile organic compound (VOC) pollution from new and existing oil and gas facilities. In a draft rule published by the EPA in November 2021, the EPA specifically requested input about a variety of topics within the rule, such as lowering emissions from orphaned and abandoned wells as well as the logistics of community air monitoring networks.

We need the EPA to propose the strongest rule possible in order to avoid the worst effects of climate change, reduce carcinogens like benzene, and reduce VOC pollution that reacts in heat to form dangerous ground-level-ozone (smog). Methane pollution has 87 times the global warming potential of carbon dioxide over a 20-year time period and, according to the EPA, is responsible for 30% of the increased temperatures and precipitation we are currently experiencing. The National Oceanic and Atmospheric Administration (NOAA) has predicted an “above average” hurricane season for the 7th consecutive year.

In addition to the oil and gas industry’s impact on the climate chaos we are currently experiencing, researchers continue to identify new public health issues related to ground-level ozone pollution, the main component of smog. Beyond the well-known effects of smog on your respiratory system leading to conditions like asthma, a recent study has also linked smog pollution to “cognitive decline.”

Please click here to tell the EPA to propose the strongest methane standard for oil and gas facilities possible.

>>> Sincerely, Joseph Otis Minott, Esq., Executive Director and Chief Counsel, Clean Air Council

API number is a unique identification code

The Ohio River Valley Institute (ORVI) recently released a report entitled Diversified Energy: A Business Model Built to Fail Appalachia. Over the last several years, Diversified Energy has become the largest owner of oil and gas wells in the country! However, Diversified is not, for the most part, in the business of drilling new wells. It is buying up existing, declining wells and milking them now for all they are worth. But in the future thousands of their wells will not be producing enough gas to even pay to operate themselves, let alone to save the money to plug them.

Diversified already has a little more than 2000 wells in West Virginia right now that should already have been plugged! They only plugged 75 of these wells since January last year. Their disclosures to their stockholders (in Great Britain) raise a question whether thousands more that will need plugging will be coming, and whether Diversified will have the money in the future to plug somewhere around 10,000 wells in West Virginia that reach the end of their economic lives. We think they will become orphaned wells.

If you have a Diversified well on your land, and if it is not producing, please get hold of us. We would like to help to try to get it plugged while some money is still available, or by some other means, rather than have it left unplugged on you. Contact us through lawyer and co-founder Dave McMahon whose contact information is at the bottom of this blog.

Generally you will know if the well on your land is operated by Diversified because it will have Diversified’s name on it. If it does not and you still suspect it might be a Diversified well then:

There are two ways we can find out if the Diversified well on your land is producing (and if it is in fact operated by Diversified). One, you can send us your surface tax ticket or the information on it (we would need the county, district name, map and parcel number from that). Two, another more certain way to make sure we have the right well is for you to go to the well and get the API number off of the well. That number will look like 047 – 0_ _ – 0 _ _ _ _. (Other numbers that don’t look like that can be an old company well number of an equipment part number) Get us that API number. Here is a web page about API numbers. Or that page tells you how you can look up the information yourself on the West Virginia Geologic and Economic Survey website and others.

While you are there at the well listen to hear if it is making a hissing sound in the pipes. That will mean that it is producing and we may not be able to get it plugged soon, but if you have other questions about it let us know. (If it is making a hissing sound as gas is escaping out of the pipes into the air, be sure to contact us!) If there is a no sound it may not be producing and, again, let us know about it – we might be able to do something to get it plugged to stop devaluing your land or before it pollutes your surface land, groundwater, air etc,

To avoid any lawyer ethical problems, or even the appearance of impropriety, this communication is branded as “advertising material”. We also have to note that the lawyer responsible for this email is David McMahon, a co-founder of WVSORO. His number is 304-415-4288. His address is 1624 Kenwood Rd, Charleston, WV 25314. His email is wvdavid@wvdavid.net. He is the person to contact about the well on your property.

>>> Advertising Material from David McMahon, Lawyer, Charleston, WV

Reference ~ West Virginia Surface Owners’ Rights Organization, 1500 Dixie Street, Charleston, WV 25311
info@wvsoro.org 304 346 5891

Diversified Energy apparently counts with match sticks, WV & PA & OH beware

From an Article by Mike Tony, Charleston Gazette Mail, April 30, 2022

The WV well inspection staff dwindling from 18 to nine in the past two years on the Legislature’s watch has concerned not just environmentalists but royalty owners who see a corrosive connection between the state’s well inspector shortage and a growing orphaned well problem.

“[Inspectors] may spot problems that can be fixed to keep the well from becoming essentially uneconomic or they could spot a well that needs to be plugged,” West Virginia Royalty Owners Association President Tom Huber said. “As these wells grow older and older and older, that’s when they become orphaned, and then there’s no one to go after to get to plug the well.”

The Ohio River Valley Institute cited an analysis of more than 20,000 Diversified wells in Pennsylvania in observing a sharp decline in company-reported methane emissions post-acquisition.

Diversified reported a well was inaccessible for testing for leakage more than 3,200 times after wells associated with those reports were reported accessible by previous well owners more than 2,000 times the previous year. “Interestingly, [previous ownership] could get to the wellhead,” report author and Cornell University engineering professor emeritus Anthony Ingraffea said. “So I guess the trees grew up very, very quickly after Diversified acquired the wells.” Last year, Bloomberg Green reported it found methane leaks at most of 44 Diversified well sites it visited, including eight in West Virginia.

Diversified reported retiring 136 wells in 2021, exceeding its requirements of plugging 80 wells in West Virginia, Pennsylvania, Kentucky and Ohio and moving the company closer to a stated goal of plugging 200 wells across Appalachia by 2023, according to its 2021 annual report.

In a statement, Paul Espenan, vice president of environmental health and safety at Diversified, defended the company’s environmental record. Espenan said the company has invested in pursuing opportunities to use excess plugging capacity to support other operator retirements. Espenan said recent company efforts to equip well tenders with handheld methane detection devices, deploy aerial leak surveys and upgrade equipment resulted in year-over-year reductions in methane intensity as the company works toward a target of net-zero greenhouse gas emissions by 2040. “Sustainability is core to our unique approach as a responsible operator that unlocks value, delivers free cash flow and is committed to asset stewardship through the full life of acquired, low-decline producing assets,” Espenan said.

The 136 wells retired last year represent less than half of 1% of all the wells in Diversified’s portfolio. The company said in its 2021 annual report that it established an in-house plugging team in West Virginia last year.

Diversified and its subsidiaries have 22,876 non-plugged wells in West Virginia, DEP spokesman Terry Fletcher said. Diversified-owned companies have plugged roughly 130 wells in the state since 2018, Fletcher said. The DEP estimates that older wells that have been poorly maintained will likely total over $100,000 in plugging costs. New wells that have been properly maintained cost a few tens of thousands of dollars, per the agency.

The state’s Oil and Gas Abandoned Well Plugging Fund, created in 2020 by House Bill 4090 to pay for reclaiming abandoned wells without a responsible operator, has a balance of $1.86 million, Fletcher said – a fraction of Carbon Tracker’s $7.6 billion estimate of the cost to plug wells that ceased production in West Virginia.

The Office of Oil and Gas reports about 6,300 documented orphaned wells and estimates an additional 9,000 undocumented orphan wells statewide. The plugging workload for even a small portion of Diversified wells would be unlike anything the state has ever tackled before. A study last year by the Interstate Oil & Gas Compact Commission noted that West Virginia funded plugging of three orphan wells in the state from 2018 to 2020.

A total of 472 wells have been plugged under the state’s program, according to the report by the Interstate Oil & Gas Compact Commission, a multistate governmental entity that promotes what it calls efficient recovery of oil and gas resources and environmental health. Fletcher said DEP records indicate that state-funded well plugging has been occurring since at least 1993.

The DEP expects to plug 160 orphaned wells — roughly 1% of its statewide orphaned well estimate — in the initial grant phase of the Infrastructure Investment and Jobs Act enacted in November, under which states are eligible to receive up to $25 million for cleaning up orphaned oil and gas wells. Fletcher has said the DEP is identifying all areas where staff can be increased given the Office of Oil and Gas’ personnel shortage.

The state Legislature has failed to adopt bills that would restore the Office of Oil and Gas to its previous personnel level despite pressure from environmental, surface and royalty owner advocates to shore up the office’s funding.

The Governor’s Office did not respond to a request for comment on why the office did not add any measures addressing the inspector shortage to the agenda of last week’s special legislative session despite the office’s previously stated support for bills that would have increased funding for state oil and gas inspectors. The governor announces the convening of a special session through a written proclamation referred to as a “call” because it calls the Legislature into session. The Legislature cannot take up items outside the call during a special session.

“We want to make sure that these wells, the gas, the oil that is produced, is sold so the royalty owners can be paid royalties on those products and [that the gas and oil] are not wasted through leakage or broken tanks that seep the oil out into the ground,” Huber said. “So we support any effort to add inspectors.”

Burd argued a proposed $100 annual oversight fee for unplugged wells would have been onerous for operators. It would have applied to wells producing 10,000 cubic feet or more of gas daily. The bill stalled in the House after passing the Senate.

“It speaks to a kind of lax regulatory culture in West Virginia, I guess,” May said. The Ohio River Valley Institute has proposed a production fee ranging 3 to 7 cents per thousand cubic feet in West Virginia, Pennsylvania and Ohio over the next 25 years to provide enough funds to decommission most of the states’ unplugged well inventories.

But West Virginia regulators are left to make the most of sweeping federal investments in well reclamation and contend with a projected rise in gas production without strength in numbers. The big numbers are on Diversified’s side — at least for now. “I think more inspectors would mean less orphaned wells, which is a good thing in the long run,” Huber said.

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Diversified Set to Track Appalachia Oil, Gas Methane Leaks with Aerial Scans

From an Article by Matthew Veazey, Natural Gas Intelligence, December 8, 2021

Methane leak detection provider Bridger Photonics has been selected to perform multi-year aerial scans of Diversified Energy Co. plc’s natural gas production and distribution assets, initially in Appalachia.

Bridger plans to deploy its laser imaging, detection and ranging (LiDAR) equipment to track the emissions. “Our Gas Mapping LiDAR technology will efficiently detect, pinpoint and quantify typically more than 90% of basin emissions to inform and streamline Diversified’s repair and maintenance activities,” said Bridger CEO Pete Roos.

Diversified, whose Central Region holdings include the Haynesville and Barnett shales and assets in the Midcontinent, said the LiDAR program would be extended to those assets as well. The company noted that early 2021 field trials of Bridger’s LiDAR technology on a “large segment” of Appalachia pipeline detected fugitive natural gas emissions “well below” 500 parts per million, which is the U.S. Environmental Protection Agency (EPA) leak definition threshold.

Diversified said it would spend $3 million annually over the next three years on LiDAR aerial emissions scanning activities. The total $9 million commitment “supports our near-term goal to reduce our 2020 level methane emissions by 30% by 2026 on the way to net-zero by 2040,” said Diversified CEO Rusty Hutson Jr. “Adding aerial emissions detection to the handheld devices we’ve placed in the hands of our skilled well tenders further enhances our ability to detect and repair fugitive emissions across our asset base.”

By way of proposed changes to the U.S. Clean Air Act, the EPA is seeking to broadly limit methane emissions across oil and gas operations. The new mandate would add covered methane sources at well sites, natural gas gathering and boosting compressor stations, gas processing equipment, as well as transmission and storage equipment.

The Biden administration wants to curb methane emissions from oil and gas operations beyond U.S. territory as well. In November, President Biden hosted his counterparts from Canada and Mexico for a trilateral summit, which featured a pledge to develop a “‘North American strategy on methane and black carbon.’” Also, the Biden administration and the European Union have endorsed a target to cut methane emissions 30% worldwide by 2030.

You will not believe what Diversified is getting away with ....

From an Article by Mike Tony, Charleston Gazette Mail, April 30, 2022

All is often not well when gas wells end.

In 2020, Carbon Tracker, a London-based think tank researching climate change impacts on financial markets, estimated the costs of plugging gas and oil wells that ceased production in West Virginia exceeded $7.6 billion — with bonds totaling just $28.7 million to cover that expense. That same year, a senior advisor to Carbon Tracker reflected on the business model behind thousands of those wells in West Virginia and across Appalachia in a conference call with the Capitol Forum, a corporate news analysis service. The advisor called that business model a “legal Ponzi scheme.” ~~~ “[I]t only works as long as there’s growth and the perception of profitability,” Greg Rogers said.

Headquartered in Alabama and led by Lumberport native and cofounder and CEO Rusty Hutson Jr., Diversified Energy has become the largest owner of oil and gas wells in the country. Most of the company’s nearly 70,000 wells are in Appalachia, acquired since 2018 from regional producers such as Pittsburgh-based EQT and Canonsburg, Pennsylvania-based CNX Resources.

“But … if your production is falling on those wells, especially if it’s falling faster than you think, then you’re going to need to continually acquire more and more wells,” Rogers said of Diversified’s business model. “The problem is you’re acquiring more and more liabilities as you do that, these liabilities for the closure.”

“[Diversified’s] business model is built around low decline assets paying out cash flow in the form of dividends to retail investors,” Tom Loughrey wrote in a June 2020 company analysis for Friezo Loughrey Oil Well Partners, an analytics firm serving investors in the oil and gas sector. “The problem with these structures, and why they always fail, is the valuations eventually exceed the future cash flows; the company must replace assets at an increasing rate until hitting the wall.”

States mandate that wells no longer producing gas or oil are plugged and abandoned and that well owners secure a bond or other financial assurance that helps cover the expense of closing wells that aren’t productive anymore. Two recently released reports suggest Diversified’s expanding well portfolio poses long-term risks both to West Virginia’s bottom line and its environmental safety.

The Ohio River Valley Institute, a Johnstown, Pennsylvania-based pro-clean energy nonprofit think tank, published a report April 12 predicting it is highly unlikely Diversified will have enough money to plug and abandon all its wells, citing Diversified company data and federal projections for natural gas prices. Plugging and abandoning costs will be higher than the revenue generated by Diversified’s current well inventory by 2056, the report projects.

The report finds 96% of the company’s producing wells in West Virginia, Pennsylvania, Kentucky and Ohio produce less than five barrels of oil equivalent per day. Wells producing less than that amount are considered financially distressed by the Colorado Oil and Gas Conservation Commission, the report notes. “The numbers just don’t add up,” report co-author and Ohio River Valley Institute research fellow Kathy Hipple said.

A week after that report was released, a Environmental Defense Fund study found low-production well sites like those dominating Diversified’s portfolio are a disproportionately large source of methane emissions. This study published in the peer-reviewed scientific journal Nature Communications found roughly half of all well site methane emissions nationwide come from low-production well sites, which emit six to 12 times as much methane as the average rate for all U.S. well sites.

Methane has a 100-year global warming potential 28 to 36 times that of carbon dioxide, according to the U.S. Environmental Protection Agency, making Diversified’s deepening well footprint across Appalachia a climate concern in addition to a threat to states’ bottom lines. “The percentage of methane emissions is disproportionately high,” said Karan May, senior campaign representative for the Sierra Club in West Virginia. “When I put that together with Diversified, it just scares me for what’s happening in Appalachia particularly.”

Diversified is only the 15th largest producer in Appalachia despite being its largest well owner, Ohio River Valley Institute researchers found, citing Capitol Forum data. “Diversified’s business model is based on harvesting cash flows from its wells and delaying P&A [plugging and abandoning] costs for as long as possible,” the Ohio River Valley Institute report concluded.

Diversified could have 60,000 wells to plug and abandon throughout Appalachia at the end of consent agreements reached with regulators in West Virginia, Pennsylvania, Kentucky and Ohio committing the company to decommissioning some 80 wells annually for the next 15 years.

“[T]hey’ve become too big to fail,” report co-author and Ohio River Valley Institute research fellow Ted Boettner said. The Ohio River Valley Institute report finds that Diversified has used unusual assumptions like implausibly long economic lives of wells though 2095 and an excessively long ramp-up timeline to start plugging and abandoning most of its wells to calculate the value of its asset retirement obligations, liabilities for well plugging and abandoning costs.

The report also says the company appears to be avoiding its obligations to report methane leakage from its wells, citing an analysis of emissions reporting submitted by Diversified for more than 20,000 active wells in Pennsylvania. Ohio River Valley Institute’s researchers and other industry experts anticipate a rapid decline in gas production. That would leave Appalachian states particularly vulnerable to being on the hook for cleaning up thousands of additional orphaned wells.

“[W]hen one company owns so many of these wells, that risk is just huge,” Boettner said. “Who’s going to be left holding that bag? It’s important that our state oil and gas regulators take a huge look at this company and figure out a way to ensure that they can cover these costs.”

West Virginia’s leaders have let the state’s inspection unit responsible for looking after wells statewide atrophy in recent years, declining to shore up funding for well regulators even amid a surge in production. The West Virginia Department of Environmental Protection has reported major manpower shortages in its Office of Oil and Gas, which manages the state’s abandoned well-plugging and reclamation program.

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UNITED NATIONS has assembled the best scientists for long range studies

Essay by Randi Pokladnik, Environmental Scientist, Tappan Lake, OH, April 4, 2022

Dr. Svitlana Krakovska, a Ukrainian climate scientist and member of the International Panel on Climate Change recently said, “Human induced climate change and the war on Ukraine have the same roots, fossil fuels, and our dependence on them.” Europe’s dependence on fossil fuels from Russia is “funding the war” in Ukraine. Russia, the second largest producer of natural gas, has been accused of using the resource in a geopolitical way against European countries dependent on its gas.

Europe views the worsening situation in Ukraine as justification to double up its investments in renewable energy. The IEA and EU leaders announced a proposed series of steps to accelerate clean energy: fast-tracking permitting for wind and solar projects, revisiting decisions to phase out nuclear energy, and doubling the rate of conversions from natural gas boilers to electric heat pumps in buildings.” All of these would cut European natural gas demand.

However, oil and gas companies in the US, along with many politicians including Joe Manchin of West Virginia, are using the war to rationalize more drilling and fracking in the US. Manchin recently said, “Russia has weaponized energy and the thing I know about an adversary or a bullyis if they have a weapon, you better have one that will match it or be better than theirs”. However, Natural Resource Chair Raul Grijalva (D-Arizona) said in a recent op-ed, “Doubling down on fossil fuels is a false solution that only perpetuates the problems that got us here in the first place,” saying it is time to “cut the lifeline to fossil-fuel despots like Putin.”

The newly released UN Climate Report clearly shows we are losing the battle against climate change. UN Secretary General Antonio Gutteras said “the evidence detailed by the Intergovernmental Panel on Climate Change (IPCC) is unlike anything he has ever seen, it is an “atlas of human suffering and a damning indictment of failed climate leadership.”

Damaging effects from human-induced (anthropogenic) climate change are happening at a much faster rate than previous modeling had predicted. At least 40% of the world’s population is highly vulnerable to climate change impacts, and these impacts will be felt most in areas that have contributed the least to greenhouse gas emissions. The report stresses that the window to act in a meaningful way and avoid major destruction will close by the end of this decade.

The “David and Goliath” battle environmental activists (especially activists in the Appalachian region) have waged against the fossil fuel industry often feels like a war. The Appalachian region has become a resource colony, the residents have become collateral damage, and the landscape often looks like a war zone after the extraction of coal, oil, and gas.

At one time, it was said that McDowell County, WV exported more coal than any other county in the USA. However, it now sits in poverty with the less than 20,000 residents who still call it home. Harry Caudill’s “Night Comes to the Cumberlands” details the story of broken miners living in a broken land as coal mining destroyed the landscape as well as the bodies of the miners.

Mountaintop coal removal (MTR) replaced long-wall mining in the 1970s. Often referred to as “strip mining on steroids,” this technique uses monstrous machinery rather than miners. Millions of pounds of explosives are used to blast off up to 1000 feet or more of the mountains’ elevation. Peaks that took millions of years to form are gone in a matter of days. Thousands of miles of streams are buried under the mine spoils, and what remains of the once diverse mesophytic forest ecosystem is a flattened sterile moonscape. MTR has destroyed over 500 mountains and flattened an area equivalent to Delaware.

John McQuaid, a writer for the Smithsonian Magazine, once said of MTR, “I’ve reported on devastation around the world, from natural disasters such as Hurricane Katrina, to wars in Central America and the Middle East, to coastlines in Asia degraded by fish farming. But in the sheer audacity of its destruction, mountaintop coal removal is the most shocking thing I’ve ever seen.”

As the coal industry slowly dies in the area, local, state, and federal politicians are touting new ways to extract wealth from the region: petrochemicals and plastics. Both require hydrocarbon gases obtained by using high pressure hydraulic fracking. This technique forces hydrocarbons from shale deposits under the region, and is as destructive and polluting as coal mining. It requires millions of gallons of freshwater, produces millions of gallons of toxic radioactive brine, releases volatile organic compounds and methane gas, and contaminates surface and ground water.

A study by Yale Public Health found that of the hundreds of chemicals used in fracking, over 80 percent have never been reviewed by the International Agency for Research on Cancer (IARC). Of the 119 that have been reviewed by IARC, 55 were found to be carcinogenic. Among the chemicals most frequently used in fracking, 24 are known to block hormone receptors in humans (according to a 2017 study published in Science Direct).

Make no mistake, we all are witnessing a war; a war waged on our planet by the fossil fuel industry and those who benefit financially from these industries.

Like most wars, money is needed to fund this endeavor. Federal taxpayer-funded grants, subsidies, and tax incentives help fuel the climate crisis by providing financial incentives for continued extraction. Pennsylvania lawmakers offered Royal Dutch Shell nearly $1.7 billion over 25 years to construct the plastics-making Shell Cracker Plant in Monaca, Pa.

“Conservative estimates put U.S. direct subsidies to the fossil fuel industry at roughly $20 billion per year, with 20 percent currently allocated to coal and 80 percent to natural gas and crude oil. European Union subsidies are estimated to total 55 billion euros annually.”

Just like a conventional war, propaganda and lies are used to mold public opinion. “The fossil fuel industry has perpetrated a multi-decade, multibillion dollar disinformation propaganda and lobbying campaign to delay climate action by confusing the public and policymakers about the climate crisis and its solutions.”

The residents of Appalachia have learned that when it comes to extractive industries, rules and regulations for human health and the environment are more often than not watered down, ignored, unenforced, or non-existent. The oil and gas industries are exempt or excluded from certain sections of these federal environmental laws: Clean Air Act, Clean Water Act, Safe Drinking Water Act, National Environmental Policy Act, and Emergency Planning and Community Right-to Know Act.

It is difficult to win a war when the cards are stacked against you, but the war for a livable planet is one we cannot afford to lose. We will have to make sacrifices but the people of Appalachia have sacrificed their health, lives, and land for decades to fuel the nation. It is time to demand renewable energy. It is time to stop subsidizing the companies responsible for the destruction of our planet. No more wars for fossil fuels.

As Dr. Svitlana Krakovska of Ukraine said, “We will not surrender in Ukraine, and we hope the world will not surrender in building a climate-resilient future.” Bill McKibben recently said that if the USA cannot choose renewable energy while watching the incredible courage of the people in Ukraine, then “I don’t know if we’re ever going to do it.”

>>> Dr. Randi Pokladnik was born and raised in Ohio. She earned an associate degree in Environmental Engineering, a BA in Chemistry, MA and PhD in Environmental Studies. She is certified in hazardous materials regulations and holds a teaching license in science and math. She worked as a research chemist for 12 years and now resides near Tappan Lake in Ohio’s Harrison County, near the Marcellus & Utica shale developments.

Extra credit for “responsibly sourced gas” ...???

From an Article by Justin Jacobs, Financial Times, February 23, 2022

Like organic grain or cruelty-free cosmetics, US natural gas producers have embraced a new label to market their fuel to concerned consumers: “responsibly sourced”. Volumes have double for certified fuel but critics raise doubts about environmental standards.

ExxonMobil, EQT and Chesapeake Energy are among the companies supplying gas certified as such by third parties, which say that they monitor for methane leaks and other forms of ecological damage such as spills and water contamination.

Backers hope the outside vetting will ease investor pressure over carbon dioxide and methane emissions from producers and pipelines — and keep sales flowing to increasingly green-minded utilities and international liquefied natural gas buyers.

Critics see “responsibly sourced” gas as the latest example of corporate greenwashing and a poor alternative to strong government regulation of methane, a potent greenhouse gas that is the primary constituent of natural gas.

Demand for certification is booming. A recent report from Enverus, a consultancy, said that the amount of gas supply certified as “responsibly sourced” was expected to more than double from around 8.7bn cubic feet a day in 2021 to around 20bn cu ft/d in 2022 — roughly a fifth of total US output.

The “responsibly sourced” claim is part of a broader gas industry effort to clean up operations in the face of questions over whether it can survive in a future with lower emissions from fossil fuels.

“If you want to make the world a better place, the answer is not to end fossil fuels next year. That’s just not practical,” said Rich Weber, chief executive of PennEnergy Resources, a large privately held producer in the prolific Marcellus shale region in the US north-east. “The better way is to make sure that natural gas is produced responsibly.” Weber, who has embraced the “responsibly sourced” label, likened the certification schemes to bond ratings from Standard & Poor’s and Moody’s. He said that buyers and investors were starting to “demand” third-party certifications.

Last week the French utility and international gas trader Engie said it had signed a deal to market gas certified as “responsibly sourced” from Range Resources, a major producer in the Marcellus. It was the first such deal that Engie had publicly announced since its widely reported exit from a potential multibillion-dollar contract to export liquefied gas from Texas, in part over emissions concerns.

Ken Robinson, president of Engie Energy Marketing, said in a statement that he expected “continued expansion of these new markets as part of the response to the energy transition.”

The gas sold to Engie was certified by Project Canary, one of a handful of companies offering such programmes. Chris Romer, Project Canary chief executive, said that interest was being driven by producers “choosing to compete based on climate change, not deny climate change.”

“Look, what’s happening is Wall Street investors are walking away from dirty oil and gas companies, so you’ve got to get on the right side of history,” said Romer, who refers to himself as “one of the last Democrats for fracking.”

Along with Project Canary, a for-profit company with private equity backing, the emerging responsibly sourced gas certification industry also includes the non-profit groups MiQ, based in Colorado, and Equitable Origin in New York. Each has its own scoring system and uses different methods to track emissions.

Critics say the differing methods and a lack of transparency around data, which is generally owned by the companies seeking certification, undermines the certificates’ credibility.

“The methane emissions data is, as I see it right now, on really shaky foundations,” said Andrew Baxter, a director at the Environmental Defense Fund. “These voluntary certification schemes can’t be viewed as a substitute for stringent regulatory standards.” Baxter also said the voluntary nature of the programmes created the risk that producers would only put forward their best assets for certification. “Operators can cherry-pick facilities that they know are already low-emitting for certification, whilst they leave the troublemakers uncertified and hidden from view,” he said.

The Biden administration proposed new rules last November that would tighten methane regulations in a bid to combat soaring emissions. Methane has as much as 80 times the warming potential as carbon dioxide over a 20-year period.

Natural gas emits about half the carbon dioxide as coal when it is burnt and the US’ shale gas boom has been credited for bringing down the country’s energy-related emissions as it has eaten into coal’s market share. But many environmentalists argue that persistent gas flaring and methane releases undermine claims from the industry that it can be a green fuel.

Buyers such as utilities and power plants, are paying a small premium of several cents per million cubic feet for certified responsibly sourced gas, around 1 to 2 per cent over current natural gas prices, said PennEnergy’s Weber. But analysts say that for gas producers convincing investors that they’re cleaning up their operations is the bigger prize.

“Given where commodity prices are, we see capital cycling back into the industry and investors will be looking at the environmental footprint to differentiate companies,” said Nick Volkmer, an analyst at Enverus. “This is a way to attract capital.”

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NOTE: “Responsibly Sourcing” Gas versus “Fracking Responsibly”

Fracturing Responsibility and Awareness of Chemicals Act, From Wikipedia

The Fracturing Responsibility and Awareness of Chemicals Act (H.R. 1084, S. 587, dubbed as the FRAC Act) was a 2009 legislative proposal in the United States Congress to define hydraulic fracturing as a federally regulated activity under the Safe Drinking Water Act. The proposed act would have required the energy industry to disclose the chemical additives used in the hydraulic fracturing fluid. The gas industry opposed the legislation.

The bill was introduced to both houses of the 111th United States Congress on June 9, 2009. The House bill was introduced by representatives Diana DeGette, D-Colo., Maurice Hinchey D-N.Y., and Jared Polis, D-Colo. The Senate version was introduced by senators Bob Casey, D-Pa., and Chuck Schumer, D-N.Y. The bill was re-introduced to both houses of the 112th United States Congress on March 15, 2011, by Rep. Diana DeGette and Senator Bob Casey.

The FRAC Act was reintroduced by Senator Casey to the 113th United States Congress as S. 1135 on Jun 11, 2013 and again as S. 785 on March 18, 2015 to the 114th United States Congress. Another FRAC Act bill was introduced in the 115th United States Congress by Senator Casey on April 6, 2017 as S. 865.

Clean Air Moms want you to understand Frontline Impacts

I am thrilled to commend everyone in the Halt the Harm Network for joining over 500,000 comments submitted nationwide on the EPA Methane Rule as of Monday. Over 8500 of these comments came from our grassroots leaders and concerned members of HHN.

We were also successful in promoting community voices at the Frontline Impacts from the EPA Methane Rule webinar on January 26.

Thank you to everyone who submitted comments, shared this to their network, and joined us for the January 26 webinar. We have all had a significant impact on strengthening the EPA methane rules to truly protect communities across the country.

The methane rule campaign is being created by leaders in Halt the Harm Network – a project focused on building a stronger and more connected movement to fight oil & gas. Join the network discussion here.

Please join us in the ongoing Methane Rule discussion space in particular to know when EPA’s supplemental comment period opens in March.

>>> Thank you! Raina Rippel, Senior Fellow, Halt the Harm Network

Halt the Harm Network, 5335 Wisconsin Ave NW,
Suite 440, Washington, District of Columbia 20015

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See also: Federal pipeline agency shifts focus to cut methane – Mike Soraghan, E&E News, January 18, 2022

The Pipeline and Hazardous Materials Safety Administration (PHMSA) was given a broad new responsibility by Congress to limit greenhouse gas emissions, and the “thousands” of inquiries it’s planning to make to companies about their methane emissions this year will be some of the earliest tangible signs of that mandate. “Congress was very clear that we must not just reduce these emissions, but we must do all we can to minimize these emissions,” Tristan Brown, PHMSA’s deputy administrator, said in a speech late last year.

In late 2020, Congress ordered pipeline companies to update their inspections and maintenance plans to find ways to reduce methane emissions. It ordered PHMSA to check those plans with inspections. Meanwhile, the agency is also writing rules on methane, requiring companies to find and fix leaks. It says it’s aiming to have a proposed rule published in the Federal Register by May.

Permitting, inspecting and enforcement all need updating a.s.a.p.

>>> From an Article by Zack Budryk, The Hill (Online News), 01/05/22

WASHINGTON, DC — The U.S. has more than double the amount of abandoned oil and gas wells than previously thought, according to a preliminary analysis by the Interior Department.

In a memo Wednesday, the department said there are currently more than 130,000 documented abandoned, or orphaned, wells. Comparatively, a 2019 report from the Interior documented a total of 56,600 orphaned wells across 30 states. Across the entire country they found that the number of abandoned wells in that report ranged from zero to 13,226.

The bipartisan infrastructure bill President Biden signed into law in November of last year includes $4.7 billion to restore and plug orphaned wells. In December, the department released guidance on state applications for grants under the program.

Since then, the majority of states, 26, have submitted notices of intent to apply for the grants, according to the memo. Nearly every state documented contained orphaned wells.

States applying for funding included Alabama, Alaska, Arizona, Arkansas, California, Colorado, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, West Virginia and Wyoming, according to the memo.

The Interior Department is set to publish the full amount of grant funding each state is eligible to receive in the months ahead, according to the memo. On Thursday, the Bureau of Land Management will host a presentation on its orphaned-well reclamation program.

Plugging orphaned wells has been top priority for Interior Secretary Deb Haaland since her nomination. The White House’s budget request for fiscal 2022 also included a proposal to more than double the enacted 2021 budget for orphaned well cleanup and reclamation, which the administration said would create 250,000 union jobs.

The White House’s more ambitious climate and social spending bill — which has not passed either chamber of Congress — would also put $41 billion toward environmental remediation, including reclamation of orphaned wells.

Its path forward remains unclear after Sen. Joe Manchin (D-W.Va.) said in December that he would not back the package.

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SEE ALSO:WV-DEP seeks support to hire gas, oil well inspectors, Lacie Pierson, Charleston Gazette, January 18, 2022

Also during the meeting, the Department of Environmental Protection Secretary Harold Ward told the committee that department officials hope to be able to hire eight new natural gas and oil well inspectors before the state receives $165 million in federal grants to manage nearly 6,300 abandoned natural gas and oil wells.

The department currently employs nine people who are responsible for inspecting about 75,000 wells, or about 8,000 wells per inspector, Deputy Secretary of Environmental Protection Scott Mandirola told Senate Finance members during a budget presentation at the Capitol.

“Right now, we’re at a very difficult crossroads,” Ward said. “To be candid with you, we have a solution, and its proposed legislation this year.” DEP officials are asking the Legislature to approve a bill that would allow them to charge a $100 permit fee to raise $1.3 million to support the return of inspectors and other staff to the department’s Oil and Gas Division.

Senators on the committee were alarmed by the ratio of wells to inspectors, raising concerns about public safety as well as the workload on inspectors, even with the potential addition of eight more inspectors. “This is a tragedy that we’ve got wells and things that we know that are leaking,” Sen. Charles Clements, R-Wetzel, said. “Something’s got to be done.”