ENFORCEMENT:

EPA officials ignored engineer's theory in Range contamination case

A former Texas state oil and gas regulator outlined in 2011 how two Range Resources Corp. wells outside Fort Worth could have leaked natural gas into the water supply of nearby homes.

Thomas "Buddy" Richter, hired by attorneys for one of the homeowners, said that state inspectors had found a leak and that Range failed to seal its well bore with cement deeply enough to protect the neighbors' underground water supplies. Richter, a petroleum engineer, said other companies drilling shale in the area sealed their wells significantly deeper.

The Texas Railroad Commission, where Richter once worked, ruled that Range was not at fault. But Richter said the elected commissioners appeared to have fast-tracked the Range case to take a swipe at U.S. EPA.

"I can recognize when there's political. And yes, there was political," Richter said in a deposition. "I think they were trying to make a statement: 'EPA go home.'"

EPA had accused Range in December 2010 of contaminating the water wells in a case widely seen as symbolic of the agency's advance and subsequent retreat on regulating the nation's shale boom.

Not widely reported, Richter's affidavit and deposition, both done in November 2011, make the most coherent case for EPA's accusations.

Range spokesman Matt Pitzarella dismissed Richter's assertions as speculation. The gas in the water wells, Pitzarella said, came from a different formation -- the Strawn -- than the one Range was drilling.

"This theory is ridiculous on its face, but essentially all they could come up with to explain why the gas in the water is Strawn gas, yet still try to point a finger at Range," he said.

EPA and Justice Department officials dropped their case against Range in March 2012, without a full explanation.

They did so disregarding Richter's report. Documents obtained by EnergyWire under a Freedom of Information Act request show EPA and Justice Department officials distributing it among themselves in the weeks before the case was dismissed, along with a deposition from Richter's boss reaching the same conclusions.

"I don't think you can reach any other conclusion, logically, than that [Range's] Teal and the Butler wells are a cause or a contributing factor to the ongoing natural gas problems in the Lipsky water well," said Wayman Gore, president of Austin-based PGH Engineers.

Range drilled its Butler and Teal wells in 2009, about 2,300 feet from the water well of Steve Lipsky and his family in the Silverado subdivision near Weatherford, Texas, in Parker County. A little more than a year later, Lipsky called state officials to complain about gas bubbling into his water supply.

Two oil and gas inspectors from the Railroad Commission paid a visit, and Lipsky said the inspectors found something they didn't expect.

It was a small leak, signified by what is known in the drilling business as "bradenhead pressure."

"I don't know what it is, but they told me it would be bad if it was there. But it couldn't be there," Lipsky said later in a deposition. "And then they found it, and said it wasn't that bad."

Pressure on the bradenhead of a well is an indication that gas is seeping into the space behind the production casing from the uncemented portion below.

State officials moved too slowly for Lipsky and a consultant he was working with. The consultant, Alisa Rich, contacted EPA's regional office in Dallas.

In December 2010, EPA issued an emergency order accusing Range of contaminating the water well of Lipsky and another homeowner with natural gas. The order, signed by then-Regional Administrator Al Armendariz, also accused the Railroad Commission of failing to protect the homeowners.

Commissioners angrily rejected the charges and quickly called a January hearing for Range to present its case.

Range denied the accusations and mounted a vehement defense. The company says the gas could have gotten into the aquifer when increased water in Lipsky's subdivision drew down water levels.

Commissioners ruled in March 2011 that Range was blameless.

EPA withdrew the case in late March 2012 with little explanation. Range officials stress that they did not settle the case -- EPA withdrew it.

Internal EPA emails obtained by EnergyWire show that EPA officials were keen to gain Range's cooperation in a national study of hydraulic fracturing. EPA and the company are now negotiating the terms of that cooperation (EnergyWire, Feb. 14). EPA officials were also concerned about agency employees getting dragged into Lipsky's court fight with Range.

A Texas judge dismissed Lipsky's case against Range, saying the Railroad Commission's ruling is final. Lipsky is weighing an appeal. Range's $4.2 million counter-claim alleging Lipsky conspired to defame the company is ongoing.

A punctured aquifer and political pressure

Richter examined the evidence gathered by his former employer and came to a different conclusion. He said Range had proved to the commission that the gas in Lipsky's well didn't come from the Barnett Shale it was producing. But Range drilled through other gas-producing formations on its way to the mile-deep Barnett, and he said the commission didn't account for that.

Essentially, Richter said, Range's well poked a hole through the bottom of the aquifer. Without cement to block it, gas could then rise into the local drinking water supply.

Records show Range encased its two wells down 394 feet and 409 feet, while Devon cemented its nearby wells to 1,005 feet or more.

"I'm thinking maybe Range should have looked to see how were other operators completing their wells," Richter said. But he acknowledged under questioning that the records didn't indicate why they were cemented deeper.

The Railroad Commission examiners who heard testimony in the case dismissed the bradenhead pressure by saying Range's wells passed a mechanical integrity test supervised by a state inspector in October.

The test results "demonstrate that the casing in the well has integrity," they said in the recommendation adopted by the elected commissioners.

Richter said Range hadn't ruled out the bradenhead pressure as being the sign of a problem.

"Range presented no evidence to the commission that would rule out the likelihood that this bradenhead pressure comes from migration of natural gas through the uncemented portion of the well," Richter said in his affidavit.

Richter also noted the Railroad Commission made its decision based on information presented by Range, which went unchallenged at the hearing. That essentially made it a default judgment. Since it was an "unprotested" case, Richter said, the agency assigns the decision less value than it would to a "protested" case.

He also said the commissioners moved with unusual speed to issue their ruling, indicating that politics were at play. The commission did in less than two months what he said usually takes six months.

Under questioning from Range attorneys, Richter said he wasn't accusing any of the commissioners or hearing examiners of acting "inappropriately."

But others have complained of a "pay-to-play" culture at the commission, and critics say the agency is unsympathetic to landowners who complain about oil and gas companies (EnergyWire, Feb. 19). The three elected statewide commissioners get most of their campaign contributions from the oil and gas industry.

The Railroad Commission accepted the explanation of an engineer hired by Range who cited seven other water wells in the area that have produced gas as evidence that methane is common in the local water supply.

Range took the deposition (part one, part two) of water well driller Larry Peck, who drilled Lipsky's water well. But the company didn't call him at the hearing. Peck said he found it unusual for gas to appear in Lipsky's water years after the well was drilled.

"That was the first one I've hit in that part of the country," Peck said. "It's funny we never hit them before, as many wells as I've drilled in this county."