PHILADELPHIA - Pennsylvania regulators said on Friday they ordered Cabot Oil & Gas Corp (COG.N) to stop all hydraulic fracturing operations at company natural gas wells in Susquehanna County following three recent chemical spills.

An order from the state's Department of Environmental Protection requires Cabot to develop a new pollution prevention and contingency plan within 14 days for all permitted well pad sites in the county.

Cabot must also conduct an engineering study of all equipment and work practices associated with hydraulic fracturing at well sites in the county within 21 days, said the regulators. The study must evaluate the cause of the spills and establish corrective measures.

The company voluntarily shut down hydraulic fracturing at its Heitsman well in Dimock Township on Tuesday following the spills that occurred in less than one week, the DEP said in a statement.

The department took this action because of our concern about Cabot's current fracking process and to ensure that the environment in Susquehanna County is properly protected, said Robert Yowell, director of the DEP's north central region.

Hydraulic fracturing, or fracking injects a mixture of water, sand and chemicals deep underground at high pressure to fracture the rock and release natural gas.

Last week, the DEP issued a notice of violation to the company for spilling thousands of gallons of LGC-35 CBM, a lubricant used in fracking, near the northeast Pennsylvania town of Dimock, where Cabot is drilling for gas in the Marcellus Shale formation.

Teresa Candori, a DEP spokeswoman, said Friday's action was the first time the department has ordered the shutdown of a fracking operation in the Marcellus Shale.

Some residents of Pennsylvania and other states claim natural gas drilling has contaminated groundwater with toxic chemicals used in fracking. Cabot and other energy companies say chemicals used in gas drilling are heavily diluted, and are pumped far underground where they cannot escape into aquifers.

Cabot spokesman Kenneth Komoroski said the company acknowledged that the spills occurred but took issue with some aspects of the DEP's order.

The company already submitted a pollution prevention and contingency plan, and previously believed its efforts to clean up the spills met DEP requirements, he said.

The spill was 99.5 percent fresh water so there was not a great deal of environmental consequence in the first place, he said.
Cabot's cleanup efforts included impounding an area where the chemicals entered a creek, and removing soil nearby, he said.

The company was planning to begin fracking one well in Susquehanna County in the coming week, and that operation will now be suspended in addition to the operation that was voluntarily shut down, Komoroski said. He declined to say how long the ban would last or what the financial impact to the company would be.

The company is drilling seven wells in the county that will require fracking.

Shares of Cabot were trading down 5 percent at $34.23 in afternoon trade on the New York Stock Exchange.

(Additional reporting by Arundhati Ramanathan in Bangalore; Editing by David Gregorio)

Pennsylvania