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April 18, 2016

The Honorable George Bedwick, ChairmanIndependent Regulatory Review Commission333 Market Street, 14th FloorHarrisburg, PA 17101

Re: Final Rulemaking: Environmental Protection Performance Standards at Oil and Gas Well Sites (25 Pa.Code Chapters 78 and 78a) - IRRC #3042

Dear Chairman Bedw-ick:

SWN Production Company, LLC (“SWNPC”), an oil and gas exploration and production subsidiary of

Southwestern Energy Company (“SWN”) active in Pennsylvania, appreciates the opportunity to comment on theProposed Amendments to 25 Pa. Code Chapters 78 and 78a, “Environmental Protection Performance Standards

at Oil and Gas Well Sites’1 (collectively, the “New Regutions”) put forth by the Pennsylvania Department ofEnvironmental Protection (“PADEP”),

As the third largest producer of natural gas in the US. Lower 48 and a widely-acknowledged leader inresponsible energy development, SWN and all its subsidiaries haie a deep commitment to providing the energythat powers our nation and our world in an environmentally sensitive and responsible manner. We at SWNPCunderstand that our continued success depends upon our dedication not only to the company and its bottomline, but to the environment and the communities in which we operate. To this end, SWNPC supportsresponsible environmental oil and gas regulation that affords adequate protection to Pennsylvania’s vast natural

resources, and commends the PADEP for seeking to improve the state’s oil and gas regulatory regime, includingwithout (imitation with respect to the protection of water resources, public health, consideration of landownerconcerns and process transparency.

However, while we fully endorse the PADEP’s goals in promulgating the New Regulations, there are certainprovisions therein which could have a dramatic negative impact on our ability to operate without anycorresponding public benefit, could potentially result in unintended adverse consequences, or which are

counterproductive or otherwise problematic from an operational perspective. Thus, starting on the following

page is a short discussion of some of these problematic provisions. Please note that our comments pertain to

potential impacts on SWNPC’s operations arid are offered solely in the spirit of improving the Rule from anoperational perspective, and that they are not meant to be an exhaustive critique or indicate that comments

submitted by other operators or industry groups are without merit. Specifically, SWN is a member of the

Marcellus Shale Coalition and is in full support of the MSC’s comments as to the New Regulations. Thank you in

advance for your review and consideration of the comments provided herein.

A’

i1: P)k iXfl5 ti)

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Page 2

SWNPCComryents on Proposed Amendments to 25 Pa. Code Chapters 78 and 78aApr 18, 2016

Provision:

78a,59c, Centralized Impoundments a) An operator using a centralized impoundment at the time of the

effective date of these regulations shall close the centralized impoundment in accordance with this sectionprobtain a permit in accordance with subpartj Article IX (Relating to Residual Waste Mangment). Theclosure plan shaU be submitted electronically to the Department through its web site review and approval nolater than (six months from the effective date of this regulation.) The operator shall properly close thecentralized impoundment in accordance with the approved plan or obtain a permit in accordance with$ipart D,rticle IX (Relating to Residual Waste Management) no later than ((3) years from the effective dateof this regulation.

SWNPC Comment/Recommendation:

In order to continue to operate efficIently and effectively, SWNPC recommends that the proposed mandate toclose existing impoundments, forcing the construction of centralized tank farms (CTFs) be reconsidered as thiswill have significant cost implications and unintended consequences such as increased truck traffic and increasein surface impaci. Total costs associated with closing our existing four flowback impoundments, two separatefacilities, will range between $3-$5 million dollars. Additionally, the constructiOn of new CTF’s will rangebetween $4.5-$6.5 million dollars, totaling between $8-$13 million dollars for the two (2) facilities in order to

replace the existing impoundments volumes. Furthermore, operating casts would be between .5600-$900

thousand dollars a year, per site. These costs include electronic monitoring, 24 hour on-site support personnel

for truck unloading and tank mixing operations. In total, each CTF location will increase 5WN’s operating cost by$i.2$1.8 million dollars a year.

Increased truck traffic will also have adverse impacts on local road infrastructure and adverse safety implicationsas well. Other unintentional impacts surrounding CTF are the surface footprint and visual impacts to surroundinglandowners, SWN’s replacement CTF’s will be greater than 20 acres in size, exceeding the current 15 acre size forour impoundments. Tank farms will also be highly visible and have greater exposure to strong weather, lighting

strikes, vandalism and otherfactors out of SWNPC’s control.

Timing is also a concern for SWN regarding any mandated CTFfor reuse water. Permit time frames are expected

to take at least a year comparing to traditional timefines, and construction will add an additional six months.

Should pre-coristruction groundwater monitoring be required at each location for a full year this would extendthe total permit time to 18 to 36 months. Lastly, there will be an impact on our ability to utilize our reuse waterand a potentiulfor a loss of 3 million barrels of reuse fluid due to the closing of these impoundments. This will

create an increased operating cost 10 haul and dispose of that water to a tune of approximately $45 million

dollars, and this does not accountfor any production delays.

SWN recommends new construction be based on Centralized Waste Treatment facility design criteria, as outlined

in 40 CER 437.2 (cj. and grandfarhering existing impoundments far 7 years to maximize water reuse and

minimize additional surface construction impacts. Additionally, SWNPC feels PADEP Oil and Gas staff should

manage all reuse water and permitting facilities, with a benefit of streamlined permitting for projects that are

environmentallyfavorable.

Thn Rght Peopie *lrrg the Right Things,

wsa.i nvw5r. the oesh ifow from ourwdni1jrq Aonet oreetn

Page 2SWNPCComments on Proposed Amendments to 25 Pa. Code Chapters 78 and 78aApril 18, 2016

Provision:

78a.65 Relating to Site Restoration and Reclamation: Restoration. The owner or operator shall restore landsurface areas disturbed to construct the well site as follows: 1) Post Drilling — within 9 months aftercompletion of drilling a well, the owner or operator shall undertake post-drilling restoration of the well site inaccordance with a restoration plan developed in accordance with subsection (I,) and remove all drillingsupplies, equipment, primary containment and secondary containment not necessary for production orneeded to safely operate the well... (I) ...on a multi-well pad, restoration is required within 9 months afteicompletion of drilling all permitted wells on the well site or 9 months after the expiration of all existing wellpermits on the well site, whichever is later.

SWNPC Comment/Recommendation:

These requirements relating to site restoration and reclamation should be stricken for unconventional wells, asthey pertain more closely to conventional wells. SWNPC believes our locations are constructed to a reasonablesize to ensure safe operations for our producing wells for their life span. SWNPC believes as long as pastconstruction storm water management controls are designed, approved, and constructed to manage rates andvolumes, and the site is permanently stabilized, then minimizing the site is not warranted for theseunconventional well locations and a potential safety concern.

Additionally, typical development timelines for unconventional reservoirs require multiple trips to a pad site,which may span up to a decade of development. Therefore, SWNPC would be required, if held to proposedregulations, to engage in contracting of locations and subsequent expanding of the same locations to supportdevelopment activities, This increased earth disturbance on previously stabilized land surfaces and the increasedroad and construction related traffic will leading to deterioration of local infrastructure, increased road relatedtraffic will also increase the potent,al for other environmental impacts, such as fugitive dust, as well asdecreasing community relations for landowners in our operating areas. If 78o. 65 is approved as proposed.SWNPC would be required to invest upwards of $70 million dollars in contraction and expansion activities forearth disturbance alone.

We thank IRRC for their consideration of our comments to the proposed New Regulations. If you would like todiscuss further, please contact me at 832796••282O and I will make the appropriate staif available.

Sincerely.

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The sInt &r rhe jr’t he5D.

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