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Conventional Oil and Gas Industry Water Management in PA - Call to Action Pennsylvania’s conventional oil and natural gas producers must have access to cost effective water management and disposal options to survive the oil and gas industry’s downturn. Yet the water management companies serving the conventional industry in the Commonwealth are now threatened due to declining volumes as a result of the dramatic reduction of drilling and production by the industry, and a regulatory landscape made more stringent with development of shale. It is time to reset the policies governing central treatment facilities to provide conventional operators a muchneeded treatment option while other water treatment and disposal alternatives, such as disposal wells, continue to develop to address the conventional industry’s future needs. PA Legislature Recognized the Need to Address Conventional Industry Survival: The conventional oil and gas industry has been part of the region’s industrial fabric since the mid-1800s, providing jobs and associated economic activity in our local communities. Differences in the regulation of conventional and unconventional oil and gas operations were recognized and delineated legislatively in July 2016 with the enactment of Act 52, which prevented the Department of Environmental Protection (DEP) from imposing unreasonable and expensive new requirements on conventional wells. The same cannot be said for central, commercial produced water treatment facilities specifically catering to the conventional industry, which are facing the prospect of having to add new and costly treatment technology to reduce levels of total dissolved solids. If required to upgrade to meet new standards, these central facilities must raise new capital. However, the current low production volumes and regulatory uncertainty around disposal wells, the future of road spreading, and public wastewater treatment facilities prevent these central facilities from reaching a reasonable cost/benefit threshold for this investment, making capital expense financing unavailable. Even if financing became available, the resulting investment and price increase required to meet new standards will make water disposal service unviable for conventional producers. Recent Company Closure Prompts Urgency to Address Conventional Water Management Industry Survival: In late October 2016, the industry learned that Waste Treatment Corporation (WTC) would be closing its facility in Warren, Pennsylvania. WTC has been servicing the conventional industry in Pennsylvania and New York for decades and its shuttering is likely symptomatic of additional closures, creating ever fewer local options for water management. With lower volumes of water being produced by operators, facilities like WTC with fixed costs can face revenue shortfalls that exceed those fixed operating costs. Challenges for such central facilities being asked to comply with stringent regulatory requirements and make capital investment in technology are also exacerbated by an increased use of very low cost options for water disposal, including road spreading, diversion to publicly owned treatment works and recycle or reuse of produced water by unconventional producers in the area. While all these cost-effective options are required for the conventional industry, these services are seasonal and unreliable on daily basis. Only centralized facilities offer a year-round water disposal service, and due to reduction in production, they cannot spend excessive capital investment in unviable technology. Conventional Industry-Wide Economic Impacts of New Permitting Requirements: Centralized treatment facilities for produced water from conventional wells play an essential role in the interdependent structure of Pennsylvania’s oil and natural gas industry. They need reasonable and justified discharge limits to be able to provide that treatment at a cost that conventional producers can afford, especially when prices are depressed and water disposal options are limited. These facilities have the real potential of following the example of WTC and closing their doors, impacting the viability of the entire industry as well as natural gas service to the customers of western Pennsylvania public utilities that depend on conventional production to serve them. A rational and cost-effective solution is available to the state Department of Environmental Protection to allow these treatment facilities to continue serving the conventional industry: maintain their existing permits and recognize the need for treatment requirements separate from those imposed on the unconventional industry, similar to the establishment of separate Chapter 78 and 78a regulations. These treatment facilities and conventional energy producers deserve the chance to continue as a critical segment of Pennsylvania’s economy and the thousands of jobs they provide.