Gulfport Fined $250,000 For Well Pad Violations

September 17, 2013

BARNESVILLE - Utica Shale fracker Gulfport Energy paid a $250,000 fine after the Ohio Department of Natural Resources discovered "ground contamination" at seven local natural gas well pads.

The Oklahoma City-based driller that continues working at sites throughout eastern Ohio - including the Stutzman well near Barnesville that was yielding as much as $100,000 worth of revenue per day earlier this year - also must remove the contamination from each of the seven sites and plant new vegetation.

ODNR spokesman Mark Bruce said one of the agency's inspectors found contamination at a Harrison County well, which prompted a more thorough investigation.

"The division found that brine and other oil and gas drilling related fluids were escaping from underneath the containment liner of the Gulfport pads," ODNR documents state.

"There are really two problems here," said Bruce. "There should not have been a fluids spill in the first place. But then, they had a ripped liner, which allowed the fluids to escape into the environment."

The "compliance agreement" to which Gulfport agreed states the company failed to "properly construct and maintain the dikes and pits ... in a manner that would prevent the escape of brine and crude oil."

Bruce said Gulfport tested several local water wells but found no contamination. There also was no pollution in streams or ponds.

Many eastern Ohio residents who originally signed leases with Wishgard LLC or Tri-Star Energy have seen those contracts turned over to Gulfport, while Gulfport has also signed many county landowners to their own leases. Terms of the leases can range widely depending upon when they were signed and a multitude of other factors. However, some property owners have received at least as much as $5,900 per acre, with as much as 20 percent of the production royalties.

The seven drilling pads with contaminated soil were the Eagle Creek pad in the Egypt Valley area of Belmont County; the Inherst pad, south of Barnesville in Belmont County; the McCort pad, south of Barnesville in Belmont County; the BK Stephens pad, between U.S. 22 and Piedmont Lake in Harrison County; the Gustina-Bear pad, south of U.S. 22 near Piedmont Lake in Harrison County; the Clay pad, south of U.S. 22 near Piedmont Lake in Harrison County; and the Ryser pad, north of U.S. 22 near Clendening Lake in Harrison County.

"All seven pads will have to be rebuilt before drilling can start again - and only with ODNR approval," said Bruce, noting that Gulfport will also need to document the types of fluids transported to and from the drilling sites.

Paul K. Heerwagen, director of Investor Relations & Corporate Affairs for Gulfport, said he appreciates the ODNR "working with us on this issue."

"We did have an issue and have taken steps to rectify the situation and prevent future occurrences. There are no long-term detrimental impacts to the environment, and all issues have been remediated," he said.

Companies such as Gulfport, Chesapeake Energy, Chevron and XTO Energy are known in the industry as "producers" because these companies sell the gas they pump out of the ground. Because the wet Marcellus and Utica shale gas requires processing before it can go to market, producers send their gas to companies such as Blue Racer Midstream, Williams Partners, M3 Midstream or MarkWest Energy for processing and fractionation.

"We will continue to augment our procedures and take additional precautions to ensure prevention of future incidents," Heerwagen pledged. "Environmental stewardship is of the utmost importance."



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