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The Associated Press September 20, 2011, 10:18AM ET

DEP reorganizes regulation of Pa.'s drilling boom

Gov. Thomas W. Corbett's administration is making changes to the state agency that primarily regulates Pennsylvania's booming natural gas industry, including elevating the status of the Bureau of Oil and Gas Management, officials said Monday.

The Department of Environmental Protection did not comment on questions about the changes, and a spokeswoman said it would answer questions on Tuesday.

However, Sen. John Yudichak, the ranking Democrat on the Environmental Resources and Energy Committee, said a department official told his office that it would elevate the bureau in status and put it under its own deputy secretary.

Under the new structure, an Office of Oil and Gas Management would report directly to department administrators in Harrisburg and not to regional offices, as the bureau has in the past.

Yudichak, D-Luzerne, said he would reserve judgment on the changes until he gets more details, but added that, from the little he knew, the plan is a good one if it helps ensure that the department can protect public health and the environment.

"There's a tremendous amount of demand ... on the resources in terms of physical personnel and the work that needs to be done," Yudichak said.

Currently the Bureau of Oil and Gas Management is one of five bureaus under the Office of Mineral Resources Management.

The natural gas industry began flocking to Pennsylvania in earnest in 2008 to tap the Marcellus Shale formation, regarded as the largest-known natural gas reservoir in the nation.

That year, the bureau flagged 1,519 oil and gas drilling violations, according to department records. Last year, it flagged 2,759, a number it is poised to exceed by almost 30 percent this year after reporting 2,541 violations through the first eight months of 2011, according to the department's records.

Department Secretary Michael Krancer told employees in an email last week that the agency would be making an official announcement about the changes.

"The reorganization will, among other things, help us refocus our efforts toward the department's core mission of protecting human health and the environment," Krancer wrote. "It will also enhance coordination among programs and communication between program development and implementation staff. In addition it will ensure statewide consistency and improve our delivery of services to the citizens of the Commonwealth."

Tight state budgets have forced cuts in the department's and employee complement and budget -- from about $219 million in the 2008-09 fiscal year to $135 million in the current 2011-12 year -- leaving it unable to adequately carry out its duties, environmental advocates say.

But the Bureau of Oil and Gas Management has grown, adding permitting and inspection staff thanks to an increase in well permitting fees designed to keep up with the rapid pace of new drilling.

The new fee revenue has helped the agency to more than double the staff of the Bureau of Oil and Gas Management, to about 200 compared with its 2008 staffing level, DEP officials said earlier this year.

The Marcellus Shale formation lies primarily beneath Pennsylvania, New York, West Virginia and Ohio, but Pennsylvania is the center of activity, with more than 3,000 wells drilled since 2008 began. Thousands more wells are planned, but production from the wells are already dwarfing the flow of gas from the tens of thousands of shallow-gas wells that had existed before the Marcellus Shale industry began transforming large areas of Pennsylvania.

In the first half of 2011, the department reported that the state's more than 1,600 producing Marcellus Shale wells generated about 435 billion cubic feet of gas during the first six months of 2011, a 60 percent increase over the second half of 2010 and more than twice as much as all other wells produced in all of 2010.

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