Posts Tagged ‘Alaska’

By Patrick Sweet (Staff Writer)
Published: July 18, 2010

Harry Traver and Doug Brody glanced at each other, stood up and followed their neighbor’s lead.

“We didn’t drive all the way out here to make changes,” neighbor Joel Field responded when Carrizo Oil & Gas proposed amendments to the multimillion-dollar deal the three came to finalize.

Before the men made it very far, the company reeled them back to the bargaining table at its Pittsburgh office and hammered out a natural gas deal that includes the mineral rights to roughly 8,500 acres.

Willing to walk away from a deal worth more than $4 million – with the potential to become much more than $40 million – the three men exemplify the roughly 135 families they represent.

“Ninety-five percent of the people that signed live here,” Mr. Brody said. “I mean, this is our home … It’s been our group’s home for years and generations in some cases. We took our time and I think we did it right.”

Noxen is a community that came together and protested the closing of its post office on a bitter December morning. They embrace the camaraderie of a community that answered the call when its historic train station was threatened with demolition and raised money to protect it.

So, when gas company land agents approached residents in rural Noxen Twp., they demonstrated perhaps their greatest skill: their ability to unite.

Strength in numbers

Residents gathered under the pavilion behind Noxen United Methodist Church to formulate their plan of action. Across the street from his Whistle Pig Pumpkin Patch, Mr. Field found himself responsible for preserving the hopes of his family, friends and neighbors for a lucrative gas lease. The Noxen Area Gas Group was born.

“I kind of stood up and said, ‘Well, we ought to try this and we ought to try that,’ and everybody said, ‘OK. Great. Go do that,’” the 47-year-old farmer said.

“The responsibility was awesome.”

Over a 2½-year span, those responsibilities included innumerable hours of courthouse research, days studying the natural gas industry and negotiating deals that never succeeded. He even traveled to Houston to market the land that their farms, orchards and businesses have rested on for generations.

“We didn’t sign in the end, but for quite a long time we were dancing with Chief,” Mr. Field said. “The only reason we danced with Chief Oil and Gas was because we did courthouse research that revealed they had a couple thousand acres right contiguous to our block.”

Mr. Field didn’t realize exactly what he was getting himself into that day. He never thought he would have to hunt down the estranged brother of a neighboring family to gain his signature on their lease.

“It actually took a couple months to find the brother in California,” Mr. Field said. “They actually tracked him down through his union.”

Just as much, Mr. Traver and Mr. Brody – whom Mr. Field called upon to help organize the group – didn’t think they would be studying geology or helping to cover a several thousand dollar attorney bill.

Two days after the group signed the lease on July 10, Mr. Field, Mr. Traver and Mr. Brody sat down with Times Shamrock Newspapers for an exclusive interview about the experience. It was a complete about-face for the tight-lipped trio who refused to jeopardize any part of the deal before it was done.

Sitting at the wooden picnic table behind Mr. Field’s house, not far from the barn where the group held some of its meetings, the three men smiled as they shared stories.

“Getting up to speed on (natural gas) and keeping the people together was always, I guess, our biggest concern,” said Mr. Field.

“But the people stayed together and that’s what made it happen,” Mr. Traver added.

“Some of our principles in the very beginning, when we first started out, was to stick together as a family, as a community,” Mr. Field continued.

A boomtown again?

It’s not difficult to imagine why the community would unite so well. The tiny farming community has struggled to strengthen its economy ever since Mosser Tanning Co. left town in 1961.

The tannery employed enough people to force the construction of a second hotel and a row of houses nearby. It brought unprecedented life to Noxen’s economy that was once based on just more than a dozen farms and a handful of small businesses.

“When the tannery left, everything left with it,” Noxen resident Pearl Race said. “This was a booming town at one time.”

So, when a gas company comes and injects millions of dollars into a community that has seen half a century pass by since its industrial backbone collapsed, residents are more than excited.

“I think it’s a wonderful thing,” Ms. Race said. “It’s got to help financially; much more taxes, much more money.

“We’re going to finish paying our mortgage off.”

Carrizo paid each lessor $500 per acre up front with an additional $4,500 and 20 percent royalty if the company finds a decent supply of gas.

On the day of the signing, Mr. Traver said, an elderly woman who was having trouble getting by stepped up to the table, leased her roughly 1-acre property and took her check. Mr. Traver’s wife, Dawn, offered to take her to the bank.

The woman, Mr. Traver said, declined the offer.

“I want to keep it for a couple days just to look at it,” she said.

The possibility of a check more than 10 times the amount they just received, it seems, has most folks embracing the words of former Alaska Gov. Sarah Palin: “Drill, baby, drill.”

“We want production,” Mr. Field said. “We’re not just out there to get the bonus money. The value in this arrangement is in the royalty.”

Is the gas there?

The problem is companies aren’t quite sure the gas is there. Carrizo bought 2-D seismic data, senior landman Phillip Corey said, to get an idea of what they’d find.

“Based on what we see, it looks OK,” Mr. Corey said. “You’re trying to extrapolate a picture with three data points, though, when what you really need is a hundred.”

The uncertainty is why Carrizo didn’t pay the full $5,000 per acre up front. The company will drill two exploratory wells to test the area’s potential before cutting any more checks.

The Noxen group is split into southern and northern areas. Carrizo will drill one well in each area. If gas production is strong in the north but not the south, Carrizo will only have to pay northern landowners and vice versa.

Wooden stakes with neon flags tied to the tops mark the location of the northern well in Mr. Field’s pumpkin patch. The Sordoni family’s huge Sterling Farms property will host to the southern well.

The Sordoni property is one of a few properties directly abutting Harveys Lake. A provision in the lease prevents Carrizo from drilling within 500 feet of any structure or water source.

Still, some folks are concerned with what might unfold.

Noxen resident Viola Robbins, 72, has family in Dimock Twp., the poster-child community for environmental disasters caused by natural gas drilling. Thousands of gallons of potentially carcinogenic drilling fluid spilled just outside the town.

“They can’t do nothing,” Ms. Robbins said. “(The gas company) brought them water for drinking and cooking.”

Toxic water forced Ms. Robbins’ great-niece Andrea Ely and her family to move back in with her parents.

“I’m against it,” Ms. Robbins said. “Maybe it’s me. It might be a different story if I had lots of land for them to drill on.”

Still, many others have faith that Carrizo won’t make the same mistakes as Cabot Oil and Gas did in Dimock Twp.

“We all own farms down through here,” Mr. Traver said. “When these people say that they are worried about the water, they aren’t as worried as these guys, because that’s how they make their living.”

Contact the writer:

psweet@citizensvoice.com

View article here.

Copyright: The Scranton Times

Jurisdiction over drilling for natural gas in the Marcellus Shale is subject of hearing.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

HARRISBURG – The chairman of the state Public Utility Commission is confident that Marcellus Shale development will stabilize prices not only of natural gas, but electricity prices as well, and is thrilled the natural gas industry supports the PUC’s oversight of pipeline safety in Pennsylvania.

Commission members on Thursday heard testimony from representatives of the natural gas industry, a federal pipeline safety official, the state consumer advocate and the director of the Pennsylvania Association of Township Supervisors on the commission’s jurisdiction as related to Marcellus Shale development.

“I think everybody is in agreement that this increased gas supply, whether the gas is sold in Pennsylvania or not, is going to have a depressing effect on the wholesale price of gas,” PUC Chairman James H. Cawley said after the hearing.

Irwin “Sonny” Popowsky, of the state Office of Consumer Advocate, testified that the retail and wholesale price level of natural gas “has been on a roller coaster ride for years.”

He said an abundance of natural gas should stabilize and ultimately lower the price of gas and electricity so that it is affected by supply and demand rather than politics in the Middle East.

Commissioner Wayne Gardner said he’s heard that many roads were severely damaged under Chesapeake Energy traffic.
David J. Spigelmyer, vice president of government relations for Chesapeake, said a harsh freeze-thaw season and the fact that many roads were never constructed with proper foundations resulted in the need significant road repairs. But the company is bonded to repair those roads and has hired 23 road contractors in Bradford County to repair them.

David M. Sanko, executive director of the Pennsylvania Association of Township Supervisors, said his concern is that state law requires bonds for roadwork in the amount of $12,500, but it could cost up to $100,000.

Commissioner Robert Powelson asked how the commission can be confident that the “self-policing system (of the gas industry) will work and that safety will be maintained?”

Spigelmyer said the industry has worked closely with the state Department of Environmental Protection to ensure the industry meets state requirements and noted that permit fees that fund inspections climbed from $100 to about $4,000.

Alex Dankanich, general engineer with the U.S. Department of Transportation’s Office of Pipeline Safety, testified that of the 31 states that produce natural gas, only Pennsylvania and Alaska lack the statutory authority to regulate gas gathering pipelines.

Cawley noted that the administration had been pushing for the PUC to obtain inspection authority because the administration doesn’t have the manpower.

Dankanich said the PUC would be reimbursed 80 percent of the cost for inspecting non-Class I pipelines – those surrounded by 10 or fewer homes within 220 yards of a pipeline in a 1-mile stretch. Those lines are exempt from federal inspection.

PUC Vice Chairman Tyrone Christy asked if Pennsylvania should also exempt Class I pipelines from inspection.

Lindsay Sander, a consultant for the Marcellus Shale Coalition, said she was comfortable with the exemption given the low number of Class I problems.

Cawley said the natural gas industry “seems to be bending over backwards to be responsible. But you’ve got to have the rules in place for everybody, including the potential bad apples who are going to try and take shortcuts.”

He said the commission is not trying to economically regulate the gas production industry.

“We’re not going to try and set the rates. We just want safety jurisdiction, whether they’re a public utility or not. And … the industry coalition, which has 170 members, support us adopting the federal standards. … They’ve said that’s fine and they’ve said they’re willing to help pay for it on a per-mile basis,” he said.

Cawley said the commission has submitted proposed statutory language to House and Senate oversight committees related to PUC safety regulation.

“One part of it has already been passed by the House almost unanimously. It would increase fines for violations to the federal level. It would go from $10,000 per day to $100,000 per day and up to $1 million overall. House Bill 1128, that could be the vehicle for getting it done. The Senate could amend it and send it back over or the House could give us this additional legislation, but this is our top legislative priority – pipeline safety,” Cawley said.

He said he also asked the industry for a commitment to use PUC’s certificated trucks for hauling equipment and supplies, “and they’ve committed to that, which is good. We’ve increased carrier enforcement in that area because we discovered that in their haste to get supplies in, they weren’t using PUC certificated carriers.”

“We’ve increased our enforcement, … and now that they know we’re watching, they’ll be more careful about the carriers they use,” Cawley said.

Steve Mocarsky, a Times Leader staff writer, may be reached at 970-7311.

Copyright: Times Leader