Posts Tagged ‘driller’

It is up to the state whether to approve or deny the request to seek natural gas.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

PLAINS TWP. – A second energy company has plans to drill a natural gas well in Luzerne County – this one behind the East Mountain Business Park in Plains Township on property owned by Theta Land Corp.

Rice Drilling, a subsidiary of Washington County-based Rice Energy, filed an application for a permit to drill and operate a well in the northeast corner of the township with the state Department of Environmental Protection on June 24, according to the department’s online database.

The department has 45 days from receipt to either approve or deny the application.

Encana Oil & Gas is set to begin drilling two wells in Fairmount and Lake townships this summer and has drilling permits for two other sites in Lake and Lehman townships.

According to a DEP well locator map, the proposed well site in Plains Township would be just west of Deep Hollow Pond, a little more than 1,000 feet from Baltimore Drive and less than a mile south of Jumper Road.

Freda Tarbell, DEP’s community relations coordinator for the Northwest Region, said the staffer handling the application was unavailable on Thursday, so specifics on the site, such as acreage and distance from water sources, were unavailable.

A secretary with Rice said no company representative was available to provide information on Thursday.

The permit application is somewhat unusual, given that energy companies normally lease gas rights from land owners before applying for drilling permits. However, no lease for the land had been filed with the Luzerne County Recorder of Deeds.

Theta Land Corp. is a subsidiary of Southern Union Co. – one of the nation’s largest suppliers of natural gas – and has been linked to billionaire Louis DeNaples of Dunmore.

Environmentalists criticized DeNaples in 2000 in connection with the purchase of 44,000 acres of land – some of it environmentally sensitive – owned by Theta. He had long been thought to be the buyer, but a confidentiality clause in the sales agreement kept the buyer’s identity secret.

However, DeNaples’ role was confirmed by a Dauphin County grand jury, which determined that a company controlled by DeNaples had purchased Theta. DeNaples in 2008 had been charged with perjury for allegedly lying to state Gaming Control Board investigators about alleged ties to organized crime members. Prosecutors withdrew the charge after he transferred ownership of Mount Airy Casino Resort in Monroe County to a trust.

Plains Township Secretary Kathy O’Boyle said no application for drilling has been submitted to the municipality. She said most of the land behind the business park is zoned as a conservation district and extraction of natural resources would be considered a conditional use. The driller would have to appear before the planning commission and the township board of commissioners for approval, and that process could take about a month, she said.

Reacting to news of the drilling permit application, state Rep. Eddie Day Pashinski, D-Wilkes-Barre, said he’s “in favor of economic development and job growth,” but he supports a temporary moratorium on gas drilling in Pennsylvania “until safeguards are in place.”

“There needs to be regulations in place, enough inspectors on the ground, enough state police to monitor and check vehicles and proper water treatment facilities to protect drinking water sources,” Pashinski said.

“We were all very excited when we learned this new industry was coming to Northeastern Pennsylvania. &hellip Their initial presentations were very encouraging. But in light of what happened in Dimock and Clearfield County, I am supporting a temporary moratorium,” he said.

Natural gas migrated from well bores in Dimock, Susquehanna County, contaminating some drinking water wells last year.

A blowout at a well in Clearfield County in June shot explosive gas and polluted water 75 feet into the air before crews tamed it 16 hours later.

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

Copyright: Times Leader

It is up to the state whether to approve or deny the request to seek natural gas.

By Steve Mocarsky smocarsky@timesleader.com
Staff Writer

PLAINS TWP. – A second energy company has plans to drill a natural gas well in Luzerne County – this one behind the East Mountain Business Park in Plains Township on property owned by Theta Land Corp.

Rice Drilling, a subsidiary of Washington County-based Rice Energy, filed an application for a permit to drill and operate a well in the northeast corner of the township with the state Department of Environmental Protection on June 24, according to the department’s online database.

The department has 45 days from receipt to either approve or deny the application.

Encana Oil & Gas is set to begin drilling two wells in Fairmount and Lake townships this summer and has drilling permits for two other sites in Lake and Lehman townships.

According to a DEP well locator map, the proposed well site in Plains Township would be just west of Deep Hollow Pond, a little more than 1,000 feet from Baltimore Drive and less than a mile south of Jumper Road.

Freda Tarbell, DEP’s community relations coordinator for the Northwest Region, said the staffer handling the application was unavailable on Thursday, so specifics on the site, such as acreage and distance from water sources, were unavailable.

A secretary with Rice said no company representative was available to provide information on Thursday.

The permit application is somewhat unusual, given that energy companies normally lease gas rights from land owners before applying for drilling permits. However, no lease for the land had been filed with the Luzerne County Recorder of Deeds.

Theta Land Corp. is a subsidiary of Southern Union Co. – one of the nation’s largest suppliers of natural gas – and has been linked to billionaire Louis DeNaples of Dunmore.

Environmentalists criticized DeNaples in 2000 in connection with the purchase of 44,000 acres of land – some of it environmentally sensitive – owned by Theta. He had long been thought to be the buyer, but a confidentiality clause in the sales agreement kept the buyer’s identity secret.

However, DeNaples’ role was confirmed by a Dauphin County grand jury, which determined that a company controlled by DeNaples had purchased Theta. DeNaples in 2008 had been charged with perjury for allegedly lying to state Gaming Control Board investigators about alleged ties to organized crime members. Prosecutors withdrew the charge after he transferred ownership of Mount Airy Casino Resort in Monroe County to a trust.

Plains Township Secretary Kathy O’Boyle said no application for drilling has been submitted to the municipality. She said most of the land behind the business park is zoned as a conservation district and extraction of natural resources would be considered a conditional use. The driller would have to appear before the planning commission and the township board of commissioners for approval, and that process could take about a month, she said.

Reacting to news of the drilling permit application, state Rep. Eddie Day Pashinski, D-Wilkes-Barre, said he’s “in favor of economic development and job growth,” but he supports a temporary moratorium on gas drilling in Pennsylvania “until safeguards are in place.”

“There needs to be regulations in place, enough inspectors on the ground, enough state police to monitor and check vehicles and proper water treatment facilities to protect drinking water sources,” Pashinski said.

“We were all very excited when we learned this new industry was coming to Northeastern Pennsylvania. … Their initial presentations were very encouraging. But in light of what happened in Dimock and Clearfield County, I am supporting a temporary moratorium,” he said.

Natural gas migrated from well bores in Dimock, Susquehanna County, contaminating some drinking water wells last year.

A blowout at a well in Clearfield County in June shot explosive gas and polluted water 75 feet into the air before crews tamed it 16 hours later.

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

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Copyright:  Times Leader

Pa. American Water Co. wants state government to offer water supply protection.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

Officials with the water company that owns two Back Mountain reservoirs want to see state action to better protect those drinking water sources from contamination related to natural gas drilling.

They also want the opportunity to have input into the permitting process for natural gas wells located near those reservoirs.

Terry Maenza, spokesman for Pennsylvania American Water Co., said there is no requirement that natural gas companies or any state agency notify water suppliers when well-drilling permit applications for land near water supplies are submitted to the state Department of Environmental Protection.

“We would like to see those laws and regulations revised so we can be notified and have a chance to express any comments or concerns while a permit is under review,” Maenza said.

Maenza’s comments follow the revelation on Monday that at least one property on the shore of the Huntsville Reservoir in Lehman Township, and an adjacent property, have been leased to EnCana Oil & Gas (USA) Inc., which will begin exploratory drilling operations at a well in Fairmount Township in July and at a second in Lake Township in late summer or early fall.

Paul Siegel, who owns the three acres on the Huntsville shore, said on Monday there is language in his lease that allows him and his wife, Janet, to restrict any surface drilling on his land but would allow EnCana to drill horizontally underneath his property.

The couple’s son and daughter-in-law, Christopher and Maureen, own 10.88 acres bordered by Christopher’s parents’ land on the east and by Huntsville-Idetown Road on the west that is also leased to EnCana.

Maenza said there is a 500-foot buffer between other properties and the high-water point of the Huntsville and Ceasetown reservoirs in most areas, but some parcels of land were “grandfathered in” without buffers when Pennsylvania American bought the water system from PGW in 1996.

As far as allowing a gas company to drill underneath the reservoirs, Maenza said it “would depend on what the driller was proposing and who owns the land. I’m not sure how far (down) our rights extend under the reservoirs,” he said.

Maenza said Pennsylvania American started water sampling and visual creek inspections about two weeks ago “so we can get some baseline data before the drilling begins.”

Huntsville Reservoir provides water for about 30,000 people living in Dallas, Kingston Township., Swoyersville, Wyoming and West Wyoming. Ceasetown Reservoir provides water to about 70,000 people in Ashley, Courtdale, Edwardsville, Larksville, Nanticoke, Plymouth, Pringle, Shickshinny, the townships of Conyngham, Hanover, Hunlock, Newport and Plymouth, and portions of the city of Wilkes-Barre.

Wyoming Mayor Robert Boyer said he’d like to learn more about the drilling process, given that his town receives water from the Huntsville Reservoir.

“There is a potential for environmental concerns. If we drill for oil a mile under the ocean floor and we don’t have a plan in place to deal with a catastrophic event like we had off the Gulf Coast, it makes sense that we want to have environmental protections in place before we start drilling here. Don’t put the cart before the horse,” Boyd said.

Maenza noted that state Sen. Lisa Baker, R-Lehman Township, is working on legislation to protect water sources.

In order to protect aquifers and determine any adverse consequences attributable to drilling, one bill would require testing at three times – before drilling, at the completion of drilling and six months afterward – at three different depths.

A second bill would rule out drilling at sites too close to drinking water sources such as reservoirs.

A third bill would require DEP to ensure that the operators of wastewater treatment facilities are properly trained and sufficiently monitored to lessen the chances of human error creating a major problem.

Jennifer Wilson, Baker’s chief of staff, said specifics on the proposed bills, such as minimum distances from aquifers, are still being worked out.

Although EnCana has obtained a drilling permit for a site in Lehman Township about midway between Harveys Lake and Huntsville Reservoir, Wendy Wiedenbeck, public and community relations adviser for EnCana, said the company has not yet put together a full development program for drilling in Luzerne County should production at wells in Fairmount and Lake townships prove successful.

She did say the company is starting to look at additional potential drilling locations in the county.

As for company policies on proximity of drilling to water resources, she said the company naturally abides by the minimum setbacks set by states. But in considering additional setback distances, she said each potential drill location is unique and is assessed individually.

“We would take the same thoughtful, measured approach to any future operations as we have with our first two wells,” Wiedenbeck said.

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

Copyright: Times Leader

By MURRAY EVANS Associated Press Writer

OKLAHOMA CITY — Chesapeake Energy Corp. said Monday it plans to raise about $5 billion over the next two years in an effort to expand its investment in oil and natural gas liquids and to reduce its debt.

Oklahoma City-based Chesapeake announced a “strategic and financial plan” that includes the sale of up to a 20 percent equity interest in its Chesapeake Appalachia LLC subsidiary to investors within the next three to 12 months. Chesapeake is a key driller in the Appalachian Basin, with 24 operating rigs in the Marcellus Shale natural gas play.

Chesapeake also announced a private placement of $600 million of a new series of convertible preferred stock to investors in Asia. The investors, Maju Investments (Mauritius) Pte Ltd. and Hampton Asset Holding Ltd., will have an option for up to $500 million more shares within the next 30 days.

Of the $5 billion to be raised, Chesapeake said it plans to use $3.5 billion to pay off its debt and $1.5 billion to focus on drilling for oil and natural gas liquids.

Chesapeake also is looking at negotiating various joint ventures as part of its plan, which the company said is ultimately designed to achieve an investment grade rating for its debt securities.

Chesapeake is one of the top independent natural gas producers in the U.S. but has gradually expanded its oil and natural gas liquids portfolio in recent months. Company spokesman Jim Gipson said natural gas accounted for about 90 percent of Chesapeake’s production in the first quarter of 2010, down from 93 percent a year ago.

Chesapeake’s CEO Aubrey McClendon has spoken in recent weeks about the company’s interest in expanding its oil and natural gas liquids production, noting that oil prices are rising while the cost of natural gas is stagnant. Crude oil rose $1.69 to $76.80 per barrel Monday on the New York Mercantile Exchange while natural gas rose 15.5 cents to $4.170 per 1,000 cubic feet.

In a production update issued last week, Chesapeake said it is trying to identify more supplies of oil and natural gas liquids.

Copyright: Times Leader

On WVIA show, members of industry admit not telling public about methods.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

PITTSTON TWP. – Members of the gas-drilling industry acknowledged on Thursday evening a failure to inform the public about their procedures, and the audience at the WVIA call-in show reminded them of that often.

Viewers of the “State of Pennsylvania” program repeatedly questioned – through the Internet, phone calls and in person – potentials for polluting, environmental justice issues and the industry’s willingness to abide by regulations.

There were even sporadic bursts of applause when in-house questions touched on contentious issues. “I don’t want it (Marcellus Shale drilling) in Luzerne County,” said Audrey Simpson of Shavertown “Take a trip up to Dimock (Township in Susquehanna County) and see what the hell is happening to those people up there.”

There, methane contamination in 13 wells is being attributed to gas-drilling activities. Those affected have brought a lawsuit against the local driller, Cabot Oil and Gas.

A Cabot representative was not among the panel.

In fact, the only driller there was Chesapeake Energy, represented by David Spigelmyer, the vice president of government relations for Chesapeake’s Eastern Division. The company has defended the industry by itself at several similar public-input meetings.

Early on during the hour-long program, the vehemence was foreshadowed by Gary Byron, a former state Department of Environmental Protection official and the president of Dux Head Environmental Services, a consulting firm for the drilling industry.

“The industry and the DEP don’t agree on a lot, but the one thing they do agree on,” he said, is that information has lagged behind drilling activity so much that “there are a lot of misconceptions about the industry.”

He added that many of the companies need to be educated about regulatory methods in Pennsylvania. “They want to comply,” he said.

Bruce Bonnice, who has worked for several resource-conservation groups but also leased his land to Carrizo Oil and Gas and now consults for them, likened the risks to everyday transportation. “I’m not sure I’m going to have a car accident every time I get in my car, but I still travel,” he said.

Spigelmyer noted plans for taxing the industry are premature because the Marcellus hasn’t yet shown it’s worth refocusing capital from other gas shales in southern states. He added that regulatory overhead would further stunt that process.

Copyright: Times Leader

At issue is tapping into Marcellus Shale in Fairmount and Lake townships.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

WILKES-BARRE – After more than two hours of testimony on Tuesday night that mostly didn’t address the issues before the board, the Luzerne County Zoning Hearing Board unanimously approved temporary permits and special exception uses to develop natural-gas drilling sites in Fairmount and Lake townships, among the first in the county.

The board, however, placed several caveats on the approvals, including bonding for all roads used, sound and light control measures, and a prohibition on controlling dust on roads with water contaminated from the drilling process.

The two sites are located in municipalities that don’t have zoning boards, which is why the county board was involved.

In Lake, the site is on two properties on Zosh Road owned by Edward Farrell and Daniel Chorba. In Fairmount, the property just off state Route 118 east of Mossville Road and behind the Ricketts Glen Hotel is owned by Edward Buda.

The 12-month temporary permits will allow the well drilling and the storage of water used therein. The special exceptions allow the permanent existence of the well pad at the sites.

At least 50 people attended the hearing, speaking fervently both for and against the expansion of Marcellus Shale gas drilling into Luzerne County. However, board solicitor Stephen Menn warned throughout that most of those issues weren’t before the board.

“This board has very limited rights about what it can do with regards to gas and oil drilling,” he prefaced. “Your concerns are misdirected to us. They should be directed to your legislators.”

Board member Tony Palischak, who is involved with conservation groups, voiced concerns about drilling. “We’re a little skeptical because of all the hair-raising things,” he said, that have been reported in other drilling areas, including Dimock Township in Susquehanna County. A driller there has been fined and cited repeatedly for environmental abuses.

However, he approved the uses. “We have no alternative,” he said afterward. “It’s up to (the state Department of Environmental Protection) and (the state Department of Conservation and Natural Resources) to take it from here.”

Still, objectors from as far as Bethlehem noted water and air pollution concerns, along with damage to roads and congestion.

Others welcomed the economic opportunities, and at least one, Charles Kohl, was swayed when the Denver-based companies, WhitMar Exploration Co. and EnCana Oil and Gas (USA) Inc., announced their interest in leasing all properties in those townships.

The companies are also proposing a site in Lehman Township, which has its own zoning board.

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

Copyright: Times Leader

Chesapeake Energy explains protections it practices during drilling for natural gas.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

PLAINS TWP. – As negative issues arise related to natural-gas drilling in the Marcellus Shale, at least one company is being careful to keep residents informed about the industry’s benefits and distance itself from concerns.

Speaking on Thursday at the “Executive Management Breakfast Series” put on by Penn State Wilkes-Barre, a spokesman for Chesapeake Energy detailed the environmental protections his company uses when drilling and outlined the positive economic effect the industry has had in Pennsylvania.

Chesapeake has paid out $700 million to landowners since 2008, along with $100 million to contractors in the state and $500,000 to community projects in 2009, according to Brian Grove, the director of corporate development for the company’s eastern division.

But the growth – a plan for 200 more wells in 2010 – isn’t at the expense of precautions, he said. Wells receive five layers of protection from ground water, he said, and “all of the chemicals (used in the hydraulic fracturing process) are stuff you will find in your home.”

The statement comes weeks after driller Cabot Oil and Gas was fined by the state Department of Environmental Protection for spilling fluids that contaminated a nearby wetland and a day after the department announced another fine against Cabot and ordered that alternative water supplies be provided to Susquehanna County residents whose water wells have been contaminated with methane.

“Certainly, when an operation isn’t meeting the regulations laid out by the state, it doesn’t reflect well on the industry,” Grove acknowledged, adding that Chesapeake is striving to remain free of such image-tarnishing incidents.

At least one of Chesapeake’s operating practices impressed Mary Felley, the executive director at Countryside Conservancy in La Plume, for its environmental protection beyond state regulations. Drillers must collect water contaminated by drilling activities, but they’re only required to store it in open-air pits. When Grove noted that Chesapeake stores all of it in closed containers, Felley complimented the company on its additional protections.

Grove also assured members of the Wyoming County Landowners Group whose land rights are confirmed will be receiving the full up-front payments the group negotiated, which was a particular concern for Marisa Litwinsky, a financial advisor with Merrill Lynch. Group members and others who have recently signed with Chesapeake have worried that the driller might back out on paying the balance of those deals.

“We’re committed to” the land group, Grove assured. “Anyone who’s got a good title, they’re going to have a lease.”

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

Copyright: Times Leader

Bill, 2 Supreme Court decisions could alter how operations are taxed, located.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

Three recent state-level actions – a legislative bill and two state Supreme Court decisions – could affect how natural gas wells are sited and taxed. Earlier this week, state Rep. Bill DeWeese, D-Greene County, proposed a bill to tax underground gas deposits by adding their assessed values to property taxes. The driller would pay, and the tax revenue would, for the first year, be used to reduce the municipality’s millage to equal the previous year’s tax revenue. The millage – a dollar tax on every $1,000 of assessed property value – could be increased in subsequent years.

“If a municipality needs the same amount of money as last year, then yes, the millage would go down. But, the reality is they’re probably going to keep ours the same and get more money from them (the drillers),” said Marianne Rexer, a business professor at Wilkes University.

The bill is in response to a 2002 state Supreme Court decision that no law exists to tax natural gas, as there does to tax coal and other minerals.

Stephen Rhoads, president of the Pennsylvania Oil and Gas Association, said the tax wasn’t utilized by many counties before, and “it is a false hope that this is going to bring a revenue stream to counties and school districts any time soon.”

The state Supreme Court ruled in February on two western Pennsylvania cases regarding municipalities’ rights to restrict drilling.

In one case, the court found municipalities can’t control where drilling infrastructure is permitted, as that would interfere with regulations already promulgated in the state Oil and Gas Act.

But they can indicate in which zoning districts drilling may be allowed “in recognition of the unique expertise of municipal governing bodies to designate where different uses should be permitted in a manner that accounts for the community’s development objectives,” the court’s opinion states in the other case.

The ruling might not have much effect in the Northeastern Pennsylvania municipalities of interest to drillers. Many don’t have zoning ordinances, and others, such as Fairmount Township in northwest Luzerne County, want less restrictive ones.

Several landowners have sought drilling leases, township Supervisor David Keller said, and he has no interest in restricting their options. The township now yields to the county’s Planning and Zoning office, but Keller said the township is looking into writing its own zoning ordinance because “it would give us more leeway to let people do more with their property as they see fit.”

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Expert advises landowners to have groundwater tested before gas drilling begins.

In the rush to sign leases to drill for natural gas, some fear that dollar signs might blur landowners’ considerations of other important issues, like protecting groundwater.

But landowners are unlikely to notice most major threats to water quality, and the problems they do notice, according to Bryan Swistock, a water specialist with Penn State University, have more to do with landowner oversights than driller mistakes.

“Most of the real health concerns in water you wouldn’t even notice,” he said. “The vast majority of the complaints turn out to be something else (other than contamination from drilling), so it’s really important that people take a look at their water supply and make sure they’re not causing their own problems.”

He noted that problems often occur from faulty residential wells or other outside factors, but landowners attribute it to the drilling. Natural gas drilling sites are cropping up in the region as companies rush to tap the Marcellus shale, a layer of rock about a mile below the surface that industry experts believe is trapping billions of dollars in natural gas.

Swistock, who has done most of his research with shallow wells in western Pennsylvania instead of the deep shale wells, stressed the importance of getting water tested for a baseline before giving drillers the green light. “It’s very difficult to show that anything’s been done to your water unless you can show it was good before,” he said.

He suggested watching for sedimentation, particularly due to construction and ground disturbance, as well as metals like barium and iron showing up in groundwater.

“It’s not common, but it can happen from time to time,” he said. “If it’s going to happen, most likely it’s going to happen right around the gas well.”

Just as important are concerns over the quantity of water used, where it comes from and where it goes. The innovative horizontal drilling method used to tap the shale requires millions of gallons of water, and industry watchers like Swistock are concerned that the region lacks the treatment facilities necessary to process the tainted water that results.

In an attempt to educate landowners about these water issues, Swistock has been holding seminars through the Penn State Cooperative Extension. One is scheduled for 7 p.m. to 9 p.m. Oct. 14 at Lake-Lehman High School.

“It’s funny. You can pretty much divide the people who attend these things into two groups,” Swistock said. Those who stand to profit off the drilling generally attend but don’t get too agitated, he said. Those who won’t profit but stand to be affected by any problems do get agitated. “It’s a natural reaction. If you’re going to make money from something you’re more willing to put up with it.”

Still, Swistock noted, with all the problems, the problems with natural gas drilling are a far cry from those associated with past energy extraction activities in this region. “It certainly pales in comparison to coal mining,” he said.

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

Copyright: Times Leader