Dimock PA

Texas independent Cabot Oil & Gas will pay $4.1 million and install 19 whole-house gas mitigation systems in a settlement after a town's water wells were contaminated with methane.

Upstream staff 16 December 2010 02:41 GMT

Once completed, the company can work to complete its wells in the Dimock/Carter Road area of the Marcellus Shale, a massive gas formation that underlies about two-thirds of Pennsylvania and parts of surrounding states.

In an announcement, Cabot said it would commence these operations in the first quarter of 2011 with new drilling starting in the second quarter.

The new deal with the Pennsylvania Department of Environmental Protection supersedes all earlier arrangements, including a department push to recover $11.8 million in costs of building a 5.5-mile water main from a nearby water treatment plant.

Cabot chief executive Dan Dinges said the agreement provided a reasonable way forward for all parties.

"We have been committed to responsible operations within Susquehanna County, and we have redoubled our efforts with the Pennsylvania Department of Environmental Resources to resolve past issues,” he said in an announcement.

“Today's announcement signifies a tremendous effort on all sides to move forward with resolution and closure."

Residents of the Dimock township sued the company in 2009 after alleging the hydraulic fracturing process contaminated water, causing two wellhead explosions and creating illness.

Each of the 19 families impacted will receive a minimum payment of $50,000, which DEP Secretary John Hanger said was twice the value of the family homes.

"In addition to the significant monetary component of this settlement, there is a requirement that Cabot continue to work with us to ensure that none of their wells allow gas to migrate," he said.

Cabot also will pay $500,000 to offset the state's expense of investigating the stray gas migration cases.

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