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Tioga County, PA – Gas Exploration

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TGP Pipeline 300 & Expansion

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Potential for economic plus to area. Williamsport benefits despite no well within 12 miles.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

With most of the nearby Marcellus Shale natural gas production occurring north and west of Luzerne County, the question of whether Greater Wilkes-Barre will benefit with an economic boom or be bypassed remains unanswered.

It depends on a number of factors, including the volume and quality of natural gas that can be harvested in the county.

If prospects are not good here, the proximity of natural gas development in nearby counties could have some impact locally if the infrastructure close to Wilkes-Barre has the most to offer nearby energy companies, drillers and their employees, according to an economic development official in a county that has been reaping the benefits of Marcellus Shale production.

Jason Fink, executive vice president of the Williamsport/Lycoming Chamber of Commerce, said chamber officials began seeing signs of interest in gas production in Lycoming County about two years ago when the appearance of landmen first became noticeable.

Work had begun on five to seven natural gas wells in northern Lycoming County by the end of 2007, according to records from the state Department of Environmental Protection.

By the end of 2008, 13 more wells had been drilled; another 24 followed last year, and four more have been drilled this year.

And although the closest well is about 12 to 15 miles from Williamsport, the city of about 30,000 is seeing “a number of significant areas of development,” Fink said.

A boom hits Williamsport

The first evidence of business development related to the shale came about a year and a half ago with growth in oil field services. Chief Oil & Gas has been operating for well over a year in the county and Anadarko Petroleum Corp. also has had a presence, Fink said.

Precision Drilling set up shop and Weatherford – a mechanical/technological support company for the oil and gas industry – is in the process of developing a 20-acre site in the county, he said.

Industrial Properties Corp., which is operated by the chamber, sold a 24-acre parcel to Halliburton, which is in the process of developing the property and projects the hiring of 250 employees at the site.

Sooner Pipe, which provides casing pipe for Chesapeake Energy and is one of the largest customers of U.S. Steel, just signed a 10-year lease with the Williamsport Regional Airport for a pipe lay-down yard. That project is expected to employ 50 people when operational, Fink said.

The work force at Allison Crane & Rigging – a third-generation family-owned company in Williamsport – grew by more than 50 employees early on in the well construction phase. And Sooner Pipe intends to use local trucking company Woolever Brothers Transportation to haul all of its pipe when the facility is operational, Fink said.

It’s all about infrastructure

Fink said that Williamsport is benefiting from the gas extraction activity, the heart of which is at least 15 to 20 miles northwest and northeast of the city, because it has more to offer than more rural counties to the north.

“They need to have access to certain infrastructure to conduct their business. We have a highway system, housing, hotels, restaurants – everything they need for their employees. Bradford and Tioga are more rural and have very limited hotel space,” Fink said, adding that rail service through Norfolk Southern and a short line and a nearby interstate highway also helps matters.

Bradford County saw 113 wells drilled last year, while Tioga County had 114.

Because of the influx of workers, the city saw demands for home and apartment rentals grow. Developers responded by renovating space above downtown businesses, creating new rental units.

Fink said local unemployment had been hovering around 10 percent, but he’s seen it drop to 9.1 percent lately.

“We’ve been working with the Pennsylvania College of Technology and the local CareerLink office. Really, once more local people are able to gain the skills this industry requires, I think you’ll be able to see a greater economic impact,” he said.

Would it work in Wilkes-Barre area?

“I would think Wilkes-Barre would have the same opportunities if they find gas in volumes in areas proximate to Wilkes-Barre. And the Wilkes-Barre area understands the positive side as well as the pitfalls of the acquisition of natural resources for energy purposes,” Fink said.

Todd Vonderheid, president of the Greater Wilkes-Barre Chamber of Business and Industry, agrees.

“There’s certainly an opportunity to be captured for the region. Several things have already happened,” Vonderheid said.

Vonderheid noted that several suppliers and vendors to the gas-and-oil industry already are locating in the region and hiring locally.

“We’re trying to facilitate that and make the process as easy as possible. We’re working with energy company officials to better learn what those supply opportunities might be,” Vonderheid said, adding that representatives of Chesapeake and EnCana energy companies sit on the chamber board of directors.

Vonderheid said a presentation for chamber members on Marcellus Shale opportunities, the gas extraction process, environmental issues and the possible economic impact is in the works.

Copyright: Times Leader

75 percent of gas production workforce composed of unskilled, semi-skilled jobs.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

If natural gas production from the Marcellus Shale is as successful as energy companies and landowners hope, the companies likely will need to hire more employees to man wells, perform testing for and oversee the drilling of new ones and monitor their operations.

“The jobs associated with natural gas drilling are well-paying jobs,” said Doug Hock, spokesman for Calgary-based Encana Energy, which has its U.S. headquarters in Denver, Colo.

Salaries even for less-skilled positions generally range between $60,000 and $70,000, Hock said.

The types of company jobs that usually become available when drilling operations are successful include drilling engineers, geologists and geophysicists and permitting experts. Pumpers, employees who check wells on a regular basis for proper operation, will be needed after more wells are drilled, Hock said.

Other positions with energy companies include experts in land negotiations and in community relations, he said.

Rory Sweeney, spokesman for Chesapeake Energy, said the Oklahoma City, Okla.-based company currently has 1,032 employees working in Pennsylvania, up from 215 in January 2009.

Local employment

As far as local employment, Sweeney said 168 employees report to local offices, “but we have more than 1,000 statewide and most of them are working rigs in NEPA.”

Types of workers expected to be hired include welders, rig hands, production workers, engineers, drilling and land technicians, pipeline field staff, construction field staff, administrative support and dozens of other occupations.

Last summer, the Marcellus Shale Education and Training Center at the Pennsylvania College of Technology conducted a Marcellus Shale Workforce Needs Assessment study that looked at potential workforce needs in two tiers of Pennsylvania counties – the northern tier, which borders Luzerne County to the north, and the central tier, which borders Luzerne County to the west.

The northern tier includes Wyoming, Sullivan, Susquehanna, Bradford and Tioga counties; the central tier includes Clinton, Centre, Columbia, Montour, Northumberland, Union, Snyder, Lycoming and Mifflin counties.

The study found that the direct workforce needed to drill a single well in the Marcellus Shale region is comprised of more than 410 individuals working in nearly 150 different occupations. The total hours worked by these individuals are the equivalent of 11.53 full-time, direct jobs over the course of a year.

The study notes that nearly all of these jobs are required only while wells are being drilled.

By comparison, 0.17 long-term, full-time jobs associated with the production phase of development are created for each well drilled in a given field. While comprising a very small percentage of the overall workforce, these long-term jobs compound every year as more wells are drilled. For example, if 100 wells were drilled each year for 10 years, 17 production jobs would be created each year, according to the study.

The study found the majority of occupations in the direct workforce were unskilled or semi-skilled jobs including heavy equipment operation, CDL truck operation, general labor, pipefitters and a variety of office-related occupations. These occupations account for about 75 percent of the workforce.

Learn on the job

Industry representatives, survey respondents and additional research indicated that most of these occupations require no formal post-secondary education, and only a few, such as CDL, welding and X-ray, require a specialized license or trade certification.

However, nearly all of them require the skills and knowledge unique to the natural gas industry, which are best learned through experience. Workers within all occupations of the natural gas industry are additionally prized for their hard work ethic and willingness to work very long hours in unfavorable conditions, the study found.

The majority of the remaining 25 percent of workers are in occupations that are white collar in nature, including foremen, supervisors, paralegals, Realtors, engineers and geological scientists.

Larry Milliken, director of Energy Programs at Lackawanna College, said that industry wide, jobs in the gas and oil drilling industry pay about 20 percent better than the same types of jobs in other industries.

“Around here, there are an awful lot of jobs in the $9- to $14-per-hour range. Jobs in the oil and gas industry tend to start in the $18-per-hour range and go up from there,” Milliken said.

A petroleum engineer might earn $40,000 to $45,000 teaching at a college or university, but working in the field for a gas or oil company, the engineer could make close to $90,000, he said.

The average technician in the natural gas industry can expect to earn about $30 per hour, which equates to an annual salary of about $60,000. A starting technician with a two-year degree can expect to earn $18 to $20 to start, amounting to a salary near $40,000, Milliken said.

In gas production growth areas, employees with at least associate’s degrees would tend to progress up the employment ladder “faster than someone off the street,” Milliken said.

Sweeney said Chesapeake has a variety of recruiting events, such as a drill-rig worker recruiting event this week through PA CareerLink, and a job fair in Towanda in October that attracted more than 1,000 applicants.

Chesapeake also employs a Scranton-based professional recruiting firm to recruit local employees for NOMAC, Chesapeake’s wholly owned drilling subsidiary.

Company officials plan to build a residential and training facility in Bradford County this year to serve as quarters for out-of-town employees and as NOMAC’s Eastern U.S. Training Facility, which will help the company train workers, Sweeney said.

Coming tomorrow: Schools gear up to train Marcellus Shale workers.

Copyright: Times Leader

A panel offers an update on legislation, which turns out to center on money.

By Rory Sweeney rsweeney@timesleader.com
Staff Writer

BENTON – With interest increasing in drilling for natural gas in the Marcellus Shale, there’s a whole swirl of legislation related to it being considered in Harrisburg, but much of it comes down to money.

“A lot of what goes on in Harrisburg is who’s gonna pay to make the pie and who’s going to get a piece,” said state Rep. Garth Everett, R-Lycoming. “The fight is how we’re going to divide up the pie. … We want to see the Commonwealth get its fair share, but we also don’t want to … go New York on them and drive them away.”

Everett was among two other representatives – Karen Boback, R-Harveys Lake, and David Millard, R-Columbia – who spoke on Thursday evening at a meeting of the Columbia County Landowners Coalition.

A state Department of Environmental Protection official and a Penn State University educator were also on the panel.

Everett described the intention and status of nearly 20 bills throughout the legislature, noting that they fit into four categories: taxation and where the money goes, water protection, access to information and surface-owner rights.

While some likely won’t ever see a vote, Everett said a few will probably pass this session, including a bill that would require companies to release well production information within six months instead of the current five years.

He said a tax on the gas extraction also seems likely “at some point.”

For the most part, the industry received a pass at the meeting, with most comments favorable. One woman suggested companies might underreport the amount of gas they take out and questioned what’s being done to help landowners keep them honest.

Dave Messersmith of Penn State suggested that an addendum to each lease should be the opportunity for an annual audit of the company’s logs.

Robert Yowell, the director of the DEP’s north-central regional office, said the rush to drill in the shale happened so quickly that DEP is still trying to catch up with regulations. Likewise, he said, companies are still becoming acquainted with differences here from where they’re used to drilling.

“When they first came to town, I don’t think they realized how widely our streams fluctuated,” he said.

He added some public perceptions need to be changed – such as the belief that people aren’t naturally exposed to radiation all the time – and that he felt confident that “this can be done safely.”

In response to contamination issues in Dimock Township in Susquehanna County, DEP is upgrading and standardizing its requirements for well casings, Everett said. He added that it’s being suggested the contamination in might have been caused by “odd geology.”

“Every time humans do anything, there’s an impact on the land,” he said. “We just need to balance this right so that we end up with something we’re happy with when we’re done.”

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

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By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

Drilling for natural gas in the Marcellus Shale that underlies much of Northeastern Pennsylvania is expected to create hundreds to thousands of jobs, depending on who’s doing the projections, and have other widespread economic effects.

Some of those new work opportunities will be with the drilling and gas companies, but others are expected to be with subcontracted services, from land surveying and engineering to hauling and construction. Legal and banking services also will be needed.

Chesapeake Energy has invested significantly in not only leasing land in Pennsylvania, but in doing business with private companies.

With 94 wells drilled in the state in 2009 and more than 200 additional wells planned for this year, the company has paid subcontractors and vendors in Pennsylvania $269 million since January 2009, company spokesman Rory Sweeney said in an e-mail.

Among the first employers to see the effects of natural gas exploration are law, surveying and engineering firms.

“We are seeing an increase in our business volume,” said Mark Van Loon, a partner with Rosenn Jenkins & Greenwald, a law firm with offices in Scranton, Wilkes-Barre and Hazleton.

“We’ve represented quite a few people in relation to the Marcellus Shale and land leases in Luzerne County, north to the New York border, and east and west from there in Susquehanna, Bradford, Luzerne and Lackawanna counties. There have been some in Wayne County, but not as much,” Van Loon said.

Lease holders also will also need to protect their financial assets, and that’s where banks come into the picture.

David Raven, president and chief executive officer of Pennstar Bank, said the financial institution is seeing a significant increase in business related to Marcellus Shale at branches in Susquehanna County.

“It’s specific to folks who receive lease (bonus) payments and eventually will receive royalties on the gas that’s produced,” Raven said.

In addition to landowners who want to protect their rights while negotiating the most lucrative deals, firms and individuals that enter into large contracts with the gas and drilling companies – engineers, construction firms, suppliers and haulers, for example – will want to have those contracts vetted before signing, according to Van Loon.

“If somebody has a contract that’s large enough, they’re likely to have it reviewed by their legal counsel because it involves too much risk for them not to. And there could be contractual disputes in relation to the delivery or performance of services,” he said.

Van Loon said his firm has five attorneys actively working on oil and gas lease issues, but at this point the partners have not seen the need to hire additional staff.

That’s not the case with Borton Lawson, an engineering firm based in Plains Township that also has offices in Bethlehem, State College and, as of two months ago because of the business generated by the Marcellus shale, in Wexford – a town in Pittsburgh’s northern suburbs.

Chris Borton, company president, has referred to the Pittsburgh area as “the heart of the gas and oil industry” in the region.

Last year, Borton Lawson laid off some of its survey crew workers as companies hurt by the recession cut back on land development. But over the last six months, the firm has hired six to eight people – including several surveyors – for jobs directly related to the Marcellus Shale.

And the company is looking for 13 more employees right now to fill positions such as environmental engineers and scientists, an electrical engineer, an automation engineer and a mechanical engineer.

Salaries for those jobs range from $40,000 to $80,000 depending on the type of job and experience of the employee, Borton said.

Borton said his firm is working with five natural gas companies in Northeastern Pennsylvania. The company will open a satellite office in the borough of Towanda, the county seat of Bradford County, on April 15 because of the extensive natural gas exploration and drilling in that area.

County drilling near

One of the gas companies – Encana Oil and Gas Inc. – has leased 25,000 acres of property in Luzerne County. The land is mainly on the north side of Route 118 in Fairmount, Ross, Lake and Lehman townships.

Encana so far has obtained permits for drilling one well in Lake Township and another in Fairmount Township and is seeking a permit for one in Lehman Township, said company spokesman Doug Hock. Hydrogeological studies are now under way, and officials hope to begin constructing wells by May.

“For every well drilled, that creates about 120 jobs, either directly or indirectly. … The bulk of these jobs as we begin operations are done by subcontractors,” Hock said.

Subcontracted work includes water haulers, truck drivers, construction crews for well pad grading and construction and rig hands after the wells are built. Local average wages could see a boost, given that salaries even for less skilled positions range from $60,000 and $70,000, he said.

Hock said Encana prefers to hire local contractors, “but it’s not always possible because of the skills available in the labor market.”

He couldn’t predict how many new jobs will be generated by Encana operations because officials won’t know how many additional wells – if any – might be drilled until they see the results of natural gas production from the first two or three.

“By the end of 2010, we’ll have an idea if we have a good program, something that’s economically viable that we can continue to develop,” Hock said.

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

Copyright: Times Leader

After ’08 deal dies, Wyoming County Landowners expect Chesapeake Energy deal.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

A year after the financial meltdown sank a lucrative gas-lease offer, the Wyoming County Landowners group has come to terms with another company, Chesapeake Energy, for what is expected to be a record deal.

Neither side has released details yet, but Chip Lines-Burgess, secretary of the landowners’ group, expected an announcement late Tuesday evening.

“No one in the region has seen this amount of money,” she said. “We’re excited about the offer we have received, and it’s going to be a huge impact for our entire region financially. … Hopefully, it comes to fruition. … This is what we’ve been striving for the last year and a half.”

She added that lease signings could come as soon as a facility is secured that is large enough to hold the expected 600 to 800 landowners involved.

The group is composed of roughly 37,000 acres in Wyoming, Bradford, Susquehanna, Sullivan and Lackawanna counties. A minimal amount of Luzerne County acreage is also involved, Lines-Burgess said.

Only those who have recently re-signed are currently members, she said, though other members can re-join by filling out paperwork on the group’s Web site. New members also might be considered, though Lines-Burgess was unsure what the demarcations will be. She also noted that while current Lackawanna County members will remain in, it’s unclear if new landowners from that county will be accepted.

In August 2008, the group made headlines by signing a lease with Colorado-based Citrus Energy, but the worldwide financial crisis caused the deal to fall through quickly. Ironically, Citrus was chosen after it beat an original offer from Chesapeake.

The landowners regrouped quickly and began aggressively courting companies, creating a solicitous Web site and attending two industry expos. Most members chipped in $30 to cover various expenses, including creating their own roughly 40-page lease with items worked in that are usually left for individual landowners to add or subtract as addendums.

“We knew that we wanted a company that could afford to buy 37,000 acres … that could not only buy us, but drill us,” Lines-Burgess said. “In order to do that, we knew we had to go for the cream of the crop. … Within the last month, it has just heated up tremendously.”

Chesapeake is one of the largest natural-gas producers in the country and the largest leaseholder in the Marcellus Shale, a layer of gas-laden rock about a mile underground that’s centered on northern Pennsylvania.

Lines-Burgess said Marty L. Byrd, the vice president for land in Chesapeake’s Eastern Division, flew into the region Monday evening to meet with members of the landowners’ group Tuesday morning. He is expected to meet with the group’s core membership today, and leases could be signed by the end of the month, she said.

“There was a little give and take all the way around,” she said, citing the company’s requirement of an increased drilling-unit size. The group estimates about 100 well pads will be created throughout the entire acreage.

TO LEARN MORE

To join the landowners’ group, read its lease and find other information about the group, go to its Web site at: www.pamarcellusshale.com

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader

By Tom Veneskytvenesky@timesleader.com
Sports Reporter

Private landowners aren’t the only group being eyed by natural gas companies as potential lease partners.

Companies are also targeting two of the largest landowners in the region – the Pennsylvania Game Commission and state Department of Conservation and Natural Resources, hoping to develop the vast gas deposits they suspect sit below the surface.

Officials with both agencies say interest in their property – which totals thousands of acres in the region — is extremely high. Royalties and payments that companies are willing to offer to lease the land are also high, but that doesn’t mean the agencies are ready to sign on the dotted line.

Both agencies control their own destinies on those properties where they own the surface and subsurface mineral rights. When some of the properties were purchased years ago, the seller held onto the mineral rights. But on those state game lands where the Pennsylvania Game Commission owns the gas rights, numerous drilling companies have contacted the agency about its property in the northeast. The attempts have been aggressive, according to Mike DiMatteo, a geologist with the Game Commission’s oil, gas and mineral recovery program.

“Some of them came in and drew a circle from Tioga County down to Centre and over to Wayne and Pike,” DiMatteo said. “They are interested in leasing large areas.”

And the Game Commission is interested in what they have to offer … with conditions.

DiMatteo said the presence of the Marcellus shale layer under the surface of Northeastern Pennsylvania is believed to hold significant deposits of natural gas. The companies want the gas, which is at a record high price, but they need the land to access the layer of shale thousands of feet below the surface.

State Department of Environmental Protection spokesman Mark Carmon said his office has issued less than a half dozen permits for gas drilling in the Northeast and most of the interest is in Susquehanna, Wayne and Wyoming counties.

Despite the high interest, the Game Commission has so far entered into one lease agreement in the Northeast (State Game Lands 123 in Bradford County). DiMatteo said two more agreements are in the works and they are looking at more.

He added it’s too early to tell how much revenue natural gas wells would generate for the agency because the process is in the exploratory stage.

Game Commission spokesman Jerry Feaser said the agency receives an average of $2 million to $3 million a year, up significantly from an annual average of $300,000 a couple years ago. Most of that revenue is generated from active wells in the southwest and north central parts of the state.

“There hasn’t been enough development in the Marcellus formation yet to know what a typical well will produce. The companies are pretty tight-lipped about what’s there, so it’s hard to put a dollar value on the potential reserve,” DiMatteo said.

Based on the agency’s experience with wells drilled on game lands in other areas, they know what to include in a lease to protect wildlife and habitat. The agency prefers companies utilize existing timber and maintenance roads to access their wells, and areas such as wetlands, unique habitats and places holding threatened or endangered species are avoided.

Before a lease is signed, the agency conducts a resource recovery questionnaire of the game lands to assess the pros and cons. Leases typically last for five years or as long as the well is producing.

“In some areas we find we can’t take a risk with the habitat, so we won’t have any activity there,” DiMatteo said.

When the well is taken out of production, it must be capped and the area and access road must be seeded as a wildlife food plot or used as forest cover.

Like the Game Commission, the DCNR is open to the prospect of natural gas drilling on its property – just not right now. According to Teddy Borawski, minerals section chief with the Bureau of Forestry, the agency isn’t entering into any lease agreements until it completes an internal study on the matter.

The agency has wells operating from past lease agreements, and when it determines which properties it wants to make available for additional leases they will be put out for bids.

“There’s a very large amount of interest in state forest and state park land in the northeast,” Borawski said.

State park lands are off limits to gas drilling because the practice would conflict with the recreational use of the property, he added.

Borawski said leases entered into with his agency carry the strongest environmental stipulations in the state. They include a stringent environmental review, an exceedance of DEP regulations, safeguards against surface and groundwater contamination and significant setbacks from streams.

State forest and state game lands are attractive to gas companies because it is more efficient to lease large, contiguous blocks of land. Stephen Rhoads, president of the Pennsylvania Oil and Gas Association, said drilling goes as deep as 8,000 feet and extends horizontally several thousand feet, which can cover a few acres. Companies also conduct seismic exploration before they drill, and a large area is needed for the research.

Rhoads criticized DCNR’s move to wait to enter into lease agreements, because it benefited financially from the practice in the past.

“The impact of oil and gas development on the surface is trivial. There is no chronic environmental impact,” he said. “There is a more significant impact to DCNR putting wind turbines on their ridge tops.”

While DCNCR continues to study the matter, DiMatteo said the Game Commission may be ready to seek more bids in the next few months. To wait for the price of gas to increase, he said, is too much of a risk because the Marcellus formation may prove not to be profitable once drilling commences.

“These wells could be a boom or a bust. We’re willing to listen and explore, but we’ll approach it with caution,” Feaser said.

Properties breakdown

Mike DiMatteo said most of the interest in gas drilling has been for Game Lands located in Bradford, Pike, Sullivan, Susquehanna, Wayne and Wyoming counties. Here is a breakdown of how much property the Game Commission owns in those counties:

Bradford County: 53,429 acres

Columbia County: 21,532 acres

Pike County: 24,467 acres

Sullivan County: 57,752 acres

Susquehanna County: 14,358 acres

Wayne County: 20,637 acres

Tom Venesky, a Times Leader outdoors writer, can be reached at 829-7230

Copyright: Times Leader