Chesapeake Settles With Pennsylvania Landowners

Chesapeake Energy has settled a lawsuit filed by three families in Pennsylvania over concerns that drilling contaminated their water. The total payment to the plaintiffs is $1.6 million.

Attorneys representing the plaintiffs say the settlement attests to the strength of their case. Chesapeake, on the other hand, states that the water supply is "consistent with area water-quality standards" and that the company agreed to settle in order to "bring closure to the matter."

The three families live on the same road in rural Bradford County, not far from the Susquehanna River in northern Pennsylvania. In a news release, their attorneys say gas extraction and drilling activities by Chesapeake "contaminated the property and groundwater of these Bradford County residents with excess methane levels that required one family to evacuate their home for two weeks."

The attorneys also state that, prior to the commencement of drilling in 2009, the families' water showed "no signs of pollution. By the summer of 2010, however, the plaintiffs experienced sudden changes in their groundwater quality."

The families believe that wells drilled near their property by Chesapeake were leaking because they had been poorly constructed.

Following an investigation by the Pennsylvania Department of Environmental Protection in 2010, Chesapeake was fined $900,000 for contaminating private water supplies in Bradford County. The department concluded the contamination was the result of "improper well casing and cementing in shallow zones."

Chesapeake, however, suggests that such conclusions are clouded by the lack of pre-drill water testing.

Pennsylvania recommends pre-drill testing on water sources that lie within 2,500 feet of the drill site. In a statement, Chesapeake said it "meets or exceeds that recommendation with its testing. All of these water sources are beyond that testing radius, and thus Chesapeake had not collected pre-drill data for the water sources."

The statement goes on to say, "The pre-drill testing that we do have in the area shows that a significant percentage of residential wells had measurable methane levels prior to any Chesapeake drilling activity in the area."

Chesapeake says, despite efforts to "restore the residents' confidence in their water wells" over the past two years, it became clear that "reasonable solutions" would not satisfy them. The $1.6 million settlement, according to Chesapeake, includes the fair market value for the affected property plus "other compensation."

In an unrelated story, Reuters reports that Chesapeake and competitor Encana may have conspired to keep land prices low in Michigan. Read it here.