An environmental group Tuesday released a study contending that regulatory officials in Texas and five other states affected by the shale drilling boom have been overwhelmed by the rush of activity, leaving residents at risk of air and water problems caused by drilling.
The report, “Breaking All the Rules: The Crisis in Oil & Gas Regulatory Enforcement,” contends that hundreds of thousands of oil and gas wells – including more than half of active wells in Texas – never are inspected to see whether they comply with state rules.
Even when violations are found, an attorney for the group said, the penalties are too low to make a difference.
“A rule is difficult to enforce if a company knows it can be ignored with little or no consequence,” said Bruce Baizel, an attorney with Earthworks, which produced the report.
But Barry Smitherman, chairman of the Texas Railroad Commission, said enforcement is a high priority for him, dating back to his tenure at the Public Utility Commission and the Harris County District Attorney’s Office, and issued a statement highlighting some of the agency’s accomplishments. The commission adopted new guidelines last month establishing higher penalties, he said.
Most of the Earthworks report’s data was compiled in 2010, when the Railroad Commission had 88 field inspectors; that increased to 97 inspectors in 2011.
Smitherman said the number grew to 153 oil and gas field inspectors by this year. He said they conducted 118,484 inspections in fiscal year 2012 ending Aug. 31, and identified 55,960 violations. He noted that the commission inspects by lease, rather than by well.
Earthworks calculated that in 2011, Railroad Commission inspectors averaged 1,184 inspections each. The state had 270,233 active oil and gas wells that year.
Calvin Tillman, former mayor of the Denton County town of Dish, who became involved with Earthworks after his town was surrounded by drilling on the Barnett Shale, said some companies make it nearly impossible for the Railroad Commission to perform inspections.
2 in the morning
“When they’re doing some of the key things, such as casing, that stuff typically is done off-hours, when the Railroad Commission simply isn’t there,” he said during a conference call to release the report. “You have an agency that has a short budget anyway, they’re not going to pay overtime for someone to come out at 2 o’clock in the morning, and the company is well aware of that.”
Tillman said he moved his family out of town because of health problems he blamed on a processing plant near his home, including nosebleeds his children suffered.
He described depending on “underfunded, understaffed state agencies” to regulate oil and gas companies as “the biggest loophole” for the industry.
Besides Texas, the Earthworks report looked at oversight in Colorado, New Mexico, New York, Ohio and Pennsylvania.
Texas had far more active wells than the other five states, as well as more inspectors. It also had a lower percentage of active wells that weren’t inspected.
In both Ohio and Pennsylvania, for example, the group estimated that 91 percent of active wells were not inspected. It estimated that 53 percent of active wells in Texas weren’t inspected in 2010.
The Earthworks report includes a number of recommendations, ranging from surprise inspections to increasing the budgets of regulatory agencies and increased transparency in reporting violations.
Baizel acknowledged that states may be unlikely to boost the agencies’ budgets but suggested agencies shouldn’t issue permits for more wells than they can inspect.
If industry wants more permits, he said, “they could go to the legislatures and say, ‘You need to fund this, and we’ll pay higher permit fees.’ ”