Who Pays the Costs of Fracking?

Report Shows Weak Bonding Rules Leave Communities Exposed to Drilling Damage

PennEnvironment Research & Policy Center

Raising new concerns on a little-examined dimension of the fracking debate, PennEnvironment Research & Policy Center today released a report analyzing Pennsylvania’s financial assurance requirements for oil and gas drilling operations. Who Pays the Costs of Fracking? demonstrates how Pennsylvania’s bonding requirements are inadequate to cover the cost and range of damage from drilling and fracking activities.

“From contaminated drinking water to long-term illness, who is going to be there to pay the piper after the new gas rush is over?” asked Erika Staaf, Clean Water Advocate from PennEnvironment.  “With Pennsylvania’s weak bonding requirements, all too often individual residents and communities are going to be left with a heavy tab for fracking damage.”

Just reclaiming a fracking site can cost hundreds of thousands of dollars.  And the damage done by fracking – from contaminated groundwater to ruined roads – can cost millions of dollars. As shown in PennEnvironment Research and Policy Center’s report, Pennsylvania’s bonding requirements do not even come close to covering these costs:

  • Drilling operators are only required to secure $4,000 to $10,000 in bonds up front, for single wells.   
  • The bonds only cover site restoration and well plugging, not compensation for victims for damage to property or health, provision for alternative source of drinking water in case of contamination, and full restoration of damage to public infrastructure.
  • The state releases the drillers from this assurance one year after the well is plugged and the site reclaimed, leaving impacted residents, communities, and taxpayers on the hook for longer-term damage.

Today’s report is the second in a series.  In the first report – The Costs of Fracking (2012) – PennEnvironment Research & Policy Center provided documented examples of the dollar and cents costs related to the myriad environmental impacts of fracking – from replacing contaminated drinking water to fixing ruined roads to treating illness from air pollution.
Of particular concern for financial accountability are the long-term costs of fracking.  According to the report, as of 2006, there were already 59,000 abandoned oil and gas wells and at least another 90,000 whose status is unknown nationwide.  The potential cost for just plugging these wells exceeds $780 billion.  The fracking boom is now adding thousands of new wells to this mix.

“From coal to oil to mining, we’ve seen every boom of extraction leave a legacy of pollution that future generations are left to grapple with,” observed Staaf.  “Pennsylvania’s bonding requirements are yet another reason why fracking is taking us down the same disastrous path.”