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Cabot Oil & Gas Responds To Pennsylvania DEP Annoucement
Oct 1, 2010

Pittsburgh (October 1, 2010) Cabot Oil & Gas Corporation (Cabot) today issued a statement reaffirming its position that its operations are safe, environmentally responsible and did not cause methane gas to migrate into Northeastern Pennsylvania water supplies. In addition, the company stated that though it does not agree with Pennsylvania Department of Environmental Protection (PaDEP) Secretary John Hanger’s assertion that the company is at fault, Cabot is committed to ensuring residents in an area of Pennsylvania deemed by the Secretary to have been "affected" continue to be offered and provided with clean drinking water.

Cabot’s statement is in response to a PaDEP press conference held yesterday in Dimock Township, Pa., during which the PaDEP announced its plans to proceed with a new water line from a neighboring community for the benefit of 18 or fewer homes. The PaDEP estimates the water line would cost about $11.8 million – or about $656,000 per home for which it would be built.

"Though methane was pre-existing in the area’s water prior to Cabot’s drilling, we, just like the PaDEP, want to help solve this problem," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "Our difference with the PaDEP is that the solution to methane in water has been venting water wells and putting them on water treatment devices, which cleans up the water quickly. We do not know why Secretary Hanger has changed his mind from endorsing separators to wanting this new pipeline that could take years and cost millions. As well, we have just drilled a new water well at one of the households that is making clean water, so we know that this is also a viable solution," Dinges added.

In the Modified Consent Order dated April 15, 2010, Cabot attempted to satisfy the PaDEP demands by agreeing to plug certain wells and to offer methane separation systems to the litigants as the solution to the water problems, which Cabot strongly believes it did not cause. This was the preferred solution that PaDEP insisted upon and to which Cabot agreed. The order was clear in that the methane separation systems were the final solution; once Cabot made the offer to “affected” residents (which Cabot did), the company was deemed to have met the PaDEP requirement. The systems are now sitting in a Cabot equipment yard.

“Additionally, it was clear at the time that if we did not agree to this solution, an enforcement action was to follow completely shutting down the Company’s Pennsylvania operations; therefore, we were forced to accept this demand,” explained Dinges.

In the following months, the PaDEP told Cabot that it wanted more time in order to convince the litigants that the separation systems were the solution and requested Cabot agree to amend the order to remove the separator language. Cabot complied with this request, trusting the PaDEP’s assurance that separators were still the solution. After the plaintiffs’ lawyer publically stated in July that the plaintiffs’ preferred solution was a public water line from Montrose, this culminated in the PaDEP announcement in August that a new pipeline from Montrose is the solution, with no mention of the separators. Additionally, PaDEP disclosed that Cabot was expected to pay for the pipeline.

“The abrupt change in the PaDEP’s proposals – going from separators to building a multi-million dollar, multi-year pipeline project is an obvious attempt at placating the litigants and that is why we have taken our position,” stated Dinges.

Methane migration is a long standing issue in the area and throughout Pennsylvania and one that has been solved by the separation systems and by simply venting water well spaces. The allegation this morning that the water is unsafe has not been asserted by anyone. The only danger presented by methane is if it escapes into a confined space and that is solved as stated by a PaDEP publication, which instructs one to vent the water well to the atmosphere.