Texas-based natural gas producer Cabot Oil and Gas is in the hot seat after the studies found traces of methane gas, double the Pennsylvania state safety level, in local drinking-water wells in the town of Dimock, Pennsylvania. This finding comes on the heels of Cabot’s recent press release announcing record production from their operations in the Marcellus, which is within the vicinity of Dimock, whose water issues were documented in the high profile film “Gasland.” In 2010, the Pennsylvania Department of Environmental Protection (PADEP) found contamination in 18 wells resulting from Cabot’s drilling in the area, yet continues to allow the company to drill. The EPA also declared the water in Dimock as safe to drink, despite conducting their own analysis and finding trace amounts of gas.
A survey of emails, posted on the EPA’s website as a response to Freedom of Information requests from environmentalists, highlight various federal and state regulators overwhelmed by a lack of manpower and stumbling over themselves as they struggle to analyze data from Cabot. In a chain of emails, from as early as February 2012, the EPA, PADEP, Fish and Wildlife Service (FWS), and numerous departments within these agencies show regulators questioning the accuracy of their own databases – in one example finding 20 wells in Cabot’s data that were not permitted and 12 others listed as vertical wells when Cabot drilled horizontally. In another chain of emails from 2009, EPA employees appear baffled by the PADEP’s decision to allow Cabot to resume fracking three weeks after an unrelated incident in which Cabot spilled 8,400 gallons of chemicals into local wetlands.
Cabot is now on the defensive with studies at Duke University finding that the methane gas in the contaminated water is consistent with the isotopic characteristics of Marcellus gas. The company argues that methane is naturally present in shallow ground water and is unrelated to drilling in the Marcellus. As government officials continue to question each other’s jurisdiction, residents in the town of Dimock struggle with layers of bureaucracy that allow companies like Cabot to fall through the cracks. The EPA stands by their position that the drinking water is safe while state regulators appear to be at odds with themselves. The controversy will only intensify pressure on governments to ban hydrofracking, increasing uncertainty in the already crowded frack water treatment field. Clients should avoid investing in frack water treatment companies that don’t have likely plays in other applications.