Chesapeake Energy Misinformed Shareholders About Impact of Well Blowout

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Chesapeake’s Environmental Assessment of Well Blowout is Attained Through a Conflict of Interest

Natural gas drilling at night. photo: Joshua B. Pribanic

In an October 15, 2011 news release, Chesapeake Energy stated “the public was never in danger ” when a well blowout, also called a well control incident, resulted in the uncontrolled release of toxic hydraulic fracturing fluids in Leroy Township, Pennsylvania in April 2011.

Podcast: Chesapeake Energy Bradford County Blowout
[audio: http://v3.cache3.c.bigcache.googleapis.com/public_herald_podcasts/Part%201_%20Chesapeake%20Energy%20Atgas%20Blowout.mp3?ir=1&redirect_counter=2]

However, the spill, which occurred during fracking, prompted authorities to ask seven families to evacuate the area, as reported by Patriot-News and other sources.

Chesapeake’s news release called the assessment of soil, sediment, and shallow groundwater — where in the spill occurred — an “independent report.” But the company that conducted the environmental assessment, SAIC, shares a clear conflict of interest with Chesapeake.

Louis A. Simpson is on the board of directors for both SAIC and Chesapeake. The Public Herald contacted both the Pennsylvania Department of Environmental Protection (DEP) and the Environmental Protection Agency (EPA) to learn more about why this report had been validated as independent. But the DEP has not returned phone calls or emails about the topic, and the EPA has asked for the questions to be submitted through the Freedom of Information Act (FOIA).

SAIC also owns a subsidiary named Varec, which sells FuelsManager® Oil and Gas products to the industry and has been a member of the industry group Marcellus Shale Coalition since March 2011.

Chesapeake’s news release, titled “Independent Report on Atgas Incident Finds No Impact on Local Water Wells” misleads the public and company shareholders by failing to acknowledge that residential water supplies were, in fact, impacted. It stated, “None of the nearby private water wells was impacted by the event.” However, in a weekly status report submitted to DEP September 7, 2011, the company stated that a “reverse osmosis system” was installed by SAIC at one residential well and that “the bottom fracture zone of the …water well was sealed.” More reports about the impact of the blowout were addressed in Public Herald’s previous article.

In contrast to SAIC’s findings for Chesapeake, the fed­eral Agency for Toxic Sub­stances and Dis­ease Reg­istry, or ATSDR, tested seven res­i­den­tial drink­ing water wells in the area near the Brad­ford County blow-out and concluded that one well was con­t­a­m­i­nated by gas drilling activity, showing a “10-fold increase in methane and various salts, compared with samples taken in July 2010, before natural gas drilling began at the site.”

The report states that more infor­ma­tion is needed to deter­mine if contamination was caused by the blowout or other gas drilling activ­ity.

SAIC reports indicated that their water well tests matched baseline data in the final report to the DEP.

SAIC also works closely with “U.S. Department of Defense, the intelligence community, the U.S. Department of Homeland Security, other U.S. Government civil agencies and selected commercial markets” to develop “weapons and support systems” and “collect and disseminate information” with projects like CHIRP, that “utilizes a  telescope  that can view a quarter of the Earth” from commercial spacecraft with a “wide-field-of-view infrared staring system”, according to SAIC’s 2011 Annual Report.

Read more about this report  and Chesapeake’s response » 

Chesapeake Water Well Impact Report to DEP


  • John Trallo

    It will be very interesting to see what the DEP has to say about this, and why they did not test themselves. This is exactly why this industry, the politicians who support them, the state regulatory agencies that have co-opted/corrupted by them can not be trusted.

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  • The search for “truth” generally involves consulting the parties involved. If Melissa had done so, it would have damaged her premise, but not the truth. In fact, the report released by ATSDR , while largely consistent with the SAIC reports previously submitted by Chesapeake to the PA DEP, appears to be extremely limited in its scope. ATSDR’s study concludes that natural gas activity has had no impact in six of the seven water wells investigated and they are unable to draw a definite conclusion about the source of concern with one water well. This finding is to be expected since ATSDR’s conclusions and recommendations are based on a single sampling event in April 2011. Further, it appears that ATSDR did not take into account multiple reports and over 730 sample results submitted to PA DEP concerning these water wells and the immediate surrounding area.

    An in-depth report based on this broad field of data, completed by SAIC and submitted to the PA DEP on July 13, 2011, has determined that the water well in question was drilled into a natural salt bearing formation and thus had significant water quality issues pre-dating any Marcellus Shale natural gas activity. This conclusion is corroborated by the owner of the water well, detailed field investigation of the well’s structure, local geology and the extensive data collection on water quality conducted by SAIC. This information, coupled with the remaining publicly available information submitted by Chesapeake to the PA DEP, show no impact to any of the seven water wells in the area.

    Chesapeake welcomes ATSDR’s continued review of this matter and will share any and all data or expertise that we can to assist their investigation. Likewise, we would recommend the extensive data that has been publicly available at the PA DEP for months be considered as ATSDR continues their review.

    While the above addresses the science related to this report, I’d also like to address the fiction in Melissa’s story regarding alleged “conflict of interest.” The SAIC report is considered to be independent because its protocols and findings have been fully disclosed to and accepted by the PA DEP. Moreover, Mr. Simpson was elected to our board in June, two months after and completely unrelated to the incident.

    SAIC is a $10.92 billion/year global company with 41,000 employees. SAIC’s integrity and reputation are superb, which is why we chose it to do this important study. Any suggestion of a conflict of interest is antithetical to SAIC’s interests and ours. It would also be false. To report otherwise is an inappropriate blending of “creativity” and “truth” and contrary to the interests of The Publid Herald and its readers.

    Kind regards,

    Michael

    PS: Anyone interested is welcome to read the full reports and inspect the extensive data on all seven wells and an indepth report on the salty one at this link:

    http://www.chk.com/News/Articles/Pages/release_2011101501.aspx

    • Joshua B. Pribanic

      Hi Michael,

      All parties were contacted several times to issue a response to our findings from the DEP file review. Melissa was instructed to publish about the 6 out of 7 wells and indicate that the contaminated well could be from another operation, as she did. Her work is diligent in recovering Chesapeake’s response to the blowout, and is questioning the moral truth of Chesapeake’s press release, which failed to highlight important facts about water wells surrounding the blowout. I would like to discuss this in more detail with Chesapeake and give them another opportunity to make their voice heard regarding this story, and those scheduled for the coming month. My contact information can be found in the right sidebar of our about section.

      Respectfully,
      Joshua B. Pribanic
      Editor-in-Chief

      • Joshua:

        Thanks for your invitation to share more information with you.

        But first, an admission of fault. I lost my original post last night while trying to add the link to the studies. In my haste to retype it quite late at night, I managed to make two errors: 1) I didn’t identify myself as Michael Kehs at Chesapeake Energy; and 2) I misspelled your publication. Apologies for both.

        We would indeed be happy to share our analysis of the ATSDR report with you and Melissa. I will get it to you later today. I think you will find, if you look at the studies as posted on chk.com that SAIC has done and extraordinary amount of work to make sure that our neighbors and our regulators (both PA DEP and USEPA) have data of the highest scientific caliber. Chesapeake’s reporting of that data to journalists and stakeholders who had previously asked for it via our press release was in keeping with both the scientific and the “moral truth.”

        Kind regards,

        Michael

        • Joshua B. Pribanic

          Hi Michael,

          CHK’s response to the ATSDR I”ll include as an update to Melissa’s report.

          We were the first set of journalists to look at SAIC’s report to the DEP in October, and do plan to comment on how much more organized and thorough the report is in comparison to DEP reports we’ve looked into over the last year (this is an issue we planned to address in our second installment to natural gas clean-ups). If you can leave a contact number in an email to melissa@publicherald.org for someone who’ll be able to answer questions regarding SAIC’s submission to the DEP, and conversations between SAIC/Chesapeake/DEP, we have Friday open to talk.

  • Elisa Young

    More than just Chesapeake and SAIC are conflicted – I’m downright confused.

    The well explodes – spraying perfectly safe water everywhere – and people have to be evacuated. The company that does the testing showing that there was never any danger happens to have a swivel chair between the company that’s not releasing anything dangerous and the company testing for contamination.

    We aren’t allowed to see a list or know what’s in the fracking fluid so we can know what contamination to test for independently for follow up, or know what safety precautions to take. (Do the workers even know?)

    It’s just Dawn dish soap, really?

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  • It would be interesting if you wrote some more about what it means for a report to be verified as independent. Does that mean that when an accident like this happens, DEP & EPA can say “get an independent evaluation” and those evaluations get certified?

    As long as the polluter is doing the hiring, how would any such study be found to be “independent?”

    Anyway, great job unearthing this. I work for an enviro org and I didn’t know about testing by ATSDR.

    • Joshua B. Pribanic

      We’ve asked these questions to Chesapeake and will have a follow-up article to clarify.

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