Posts Tagged ‘executive director’

Natural gas captured from organic shale formations is not new to the oil and gas industry; shale gas has been produced since the early 1800s (DOE, 2009).  Most shale gas formations have historically been deemed economically impractical to drill due to the available technology and relative abundance of domestic conventional natural gas sources.  However, recent technological advances in horizontal drilling and hydraulic fracturing along with increasing demand for natural gas and recent price trends for natural gas, have allowed previously inaccessible reserves to become technologically feasible and economically efficient to recover (DOE, 2009).

The Annual Energy Outlook for 2009, recently released by the United States’ Energy Information Administration, projects an increase of 0.5% total primary energy consumption annually through 2030 (EIA, 2009).  The majority of this demand increase will come from the residential sector’s demand for additional electricity (EIA, 2009).  Currently, coal-fired electricity generation dominates the electricity generation sector at approximately 49% of total U.S. domestic generation capacity (EIA, 2009).  However, due to emerging concerns and public policy developments regarding greenhouse gases and renewable portfolio standards for a sustainable energy supply, lower carbon energy sources needed for electricity generation are expected to gain marketplace demand (EIA, 2009).  Unfortunately, conversion from a fossil fuel-dependent energy economy to a low-carbon energy economy will take time and significant capital investment for infrastructure development (DOE, 2009).  A recent Wall Street Journal article cites Carl Pope, executive director of the Sierra Club as viewing natural gas as a “bridge fuel” from carbon-intensive fossil fuels, such as coal and petroleum, to cleaner future fuel sources (Casselman, 2009).

In order to meet the expected increased demand for natural gas without increasing dependence on foreign imports, development of domestic unconventional natural gas sources will need to grow rapidly.  Production from unconventional natural gas sources, namely organic shales, tight sand formations, and coal-bed methane, currently account for approximately 50% of the total domestic natural gas production (DOE, 2009), this total production from unconventional resources was estimated at 8.9 trillion cubic feet (Tcf) per year in 2007 (ALL, 2008c).  Of the 8.9 Tcf of unconventional natural gas produced in the United States in 2007, 1.2 Tcf was from shale formations; however, shale gas production is expected to grow to 4.2 Tcf by 2030, accounting for an estimated 18% of the total U.S. gas production in 2030.  Unconventional sources combined are predicted to grow to nearly 56% of total U.S. domestic natural gas production (EIA, 2009).  To date, four evolving shale gas plays (Haynesville, Marcellus, Fayetteville and Woodford) are estimated to have over 550 Tcf of total recoverable gas resources, these formatiosn are expected to be capable of providing sustainable production of 2-4 Tcf of natural gas annually for decades (DOE, 2009).  Of these four, the Haynesville Shale and Marcellus Shale may have the most significant additions to domestic reserves of natural gas in recent decades.

Copyright: GoMarcellusshale.com

Authority soliciting proposals now to raise money for upgraded pollution controls.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

The Wyoming Valley Sanitary Authority is investigating the feasibility of treating wastewater created from natural-gas drilling.

It hopes to offset some cost increases the authority will soon incur to make pollution-reducing renovations.

The authority published a request for proposals earlier this week, seeking bidders who could supply at least 500,000 gallons of wastewater daily for at least three years and pay at least 5.5 cents per gallon. Using both minimums, that would create daily revenue of $27,500.

Drilling for gas in the Marcellus Shale creates millions of gallons of wastewater that must be treated.

“The good part of that is that, instead of paying for fresh water from the Susquehanna (River), we would pre-treat this and they would reuse that to fracture new wells,” said Fred DeSanto, the authority’s executive director. “We know drilling’s going on; we are a wastewater treatment facility. That’s our business to treat it. We just don’t want time to go by as there’s water to treat.”

That means that, for now, the plant is seeking a permit from the state Department of Environmental Protection to treat up to 150,000 gallons per day in its sewage stream. The company, however, is reserving the right to inspect for pollutants in incoming drilling wastewater.

It requires pre-testing for “total dissolved solids” and “suspended solids” – generally a measure of the amount of minerals and chemicals in the water – and reserves the right to deny it.

DeSanto said that protects the authority’s equipment, which would “probably” be damaged by heavy loads of solids.

All testing and transportation costs would be paid by the drilling company, which also must carry $2 million in liability insurance, indemnify the authority from all risks associated with hauling the waste and provide a “blanket statement” that it isn’t “hazardous waste.”

The long-term goal is to build a million-gallon-per-day, closed-loop facility to “pre-treat” the water enough that it could be reused in industrial capacities and resell it to the companies that brought it in.In its bid request, the authority is looking to get at least half a cent per gallon for that water. That water would never touch the sewer operation or be discharged into the river.

“It’s the preferred method of disposal by DEP,” said John Minora, the president PA NE Aqua Resources, which is consulting on the project. “We’re left with a sludge cake that gets either landfilled or incinerated. … The water that’s left, it looks a little milky because it’s high in salt.”

That waste could then be mixed with effluent from the plant’s sewer operation to reduce solids levels, thus preventing more discharges to the river, he said. As pollution discharge credits, which would set a limit for how much facilities can discharge, become a reality, the reduced discharges could provide more revenue.

“I think the people who are environmental should be very happy about that,” Minora said. “Recycle and reuse, I don’t think it has to be an us-against-them” situation.

The revenue would go toward the millions the authority will have to spend to upgrade its system for upcoming requirements to reduce pollution in the Chesapeake Bay and to fix stormwater overflows that currently spill untreated sewage into the river whenever it rains heavily.

Potential revenues are “unknown right now because we don’t exactly what the treatment cost is going to be,” DeSanto said. “We feel that there’s enough there that we could make a profit to help our operating budget in the future, help our ratepayers.”

Bids are due by Nov. 16.

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

Tuesday’s program will include presentation on Marcellus Shale and questions from audience.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

The Pennsylvania Council of Professional Geologists will hold a seminar Tuesday on gas drilling in the Marcellus Shale, and it’s prepared to take on even the most technical of questions, from the science of the drilling itself to the legal issues surrounding it.

“We’re going to try to answer those questions,” said Rhonda Hakundy-Jones, the council’s executive director. “We’ve certainly heard those questions before. Some of them don’t have definitive answers; they have, shall we say, a range of answers.”

The deadline to register for the Tuesday event, set at the Quality Inn on Kidder Street across from the Wyoming Valley Mall, has been extended to today and applicants can contact the council to make arrangements if they won’t be able to get the entry fee in on time, Hakundy-Jones said.

The council has a subcommittee that’s been tracking shale-gas issues, she said, and “this was just the next logical step … to provide some of that educational material that we have collected, and our geologic knowledge, and present it to the public. … We are trying to make it a rather broad overview, and it’s geared more to professionals … people with some understanding of regulations in general and science in general.”

The panelists, who include two geologists, an attorney, a laboratory technician and representative of an environmental management company, plan to tackle the issues from an in-depth, technical perspective, Hakundy-Jones said, to explain “what those things are, how they work,” particularly hydraulic fracturing.

Additionally, after a 45-minute presentation and more than an hour for questioning, the event will host an hour-long session for informal discussion during which food will be available.

Hakundy-Jones expects, however, there will be interaction with the audience during the formal sessions as well. “We find that’s a great way to get additional information,” she said.

So far, about 20 people have registered, and she expects that may double.

“There should be plenty of opportunity for people to ask their questions,” she said. “Of course, how often, for example, can you get an attorney’s advice for $50?”

If you go

What: “A Rock ’n Rules Review” of issues concerning gas-drilling in the Marcellus Shale

When: 2:30 to 6 p.m. Tuesday

Where: The Quality Inn on Kidder Street, Wilkes-Barre

Cost: $50

Who: Experts in the various fields involved in drilling will speak on technical topics, then take questions.

For information: Go to: www.pcpg.org/Marcellus_intro.asp for a registration form or call 717-730-9745.

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

Copyright: Times Leader

By MARC LEVY Associated Press Writer

HARRISBURG, Pa. (AP) _ The land agents, geologists and drilling crews rushing after the Marcellus Shale are raising something besides the natural gas they’re seeking: Talk of a natural gas tax.

Thanks to a state Supreme Court decision six years ago, Pennsylvania is now one of the biggest natural-gas producing states — if not the biggest — that does not tax the methane sucked from beneath its ground.

But momentum is gathering to impose such a tax. The Marcellus Shale — a layer of black rock that holds a vast reservoir of gas — is luring some of the country’s largest gas producers to Pennsylvania, and state government revenues are being waylaid by a worldwide economic malaise.

A spokesman for Gov. Ed Rendell says the administration is looking at the idea of a tax on natural gas, but a decision has not been made. Typically, Rendell does not reveal any tax or revenue proposals until his official budget plan is introduced each February.

Senate Republicans are planning a November hearing at Misericordia University in northeastern Pennsylvania to look at what effect can be expected on local governments if Marcellus Shale production lives up to its potential.

Local officials worry about damage to local roads ill-suited for heavy truck traffic and equipment. School districts could be strained by families of gas company employees moving into town. And some residents are concerned about gas wells disrupting or polluting the water tables from which they draw drinking water.

Legislators must find the fairest way for companies to share those costs, whether by levying a tax or through some other means, said Sen. Jake Corman, R-Centre, the GOP’s policy chairman.

“I do think there is an understanding that some sort of compensation for municipalities is warranted,” Corman said. “We just have to figure out the best way to do that.”

So far, drilling activity is under way on the Marcellus Shale in at least 18 counties, primarily in the northern tier and southwest where the shale is thickest, according to the state Department of Environmental Protection.

Land agents are trooping in and out of county courthouses to research the below-ground mineral rights. At least several million acres above the Marcellus Shale have been leased by companies in West Virginia, New York and Pennsylvania.

Just this week, Range Resources Corp. and a Denver-based gas processor said they have started up Pennsylvania’s first large-scale gas processing plant, about 20 miles south of Pittsburgh.

And CNX Gas Corp. announced that a $6 million horizontal well it drilled in southwest Pennsylvania is producing a respectable 1.2 million cubic feet a day — a rate it expects to improve in coming weeks.

In the opposite corner of Pennsylvania, drilling pads are now visible on Susquehanna County’s farmland, and hotel rooms are booked with land agents and drilling crews.

“It is the talk at the coffee shops, at the local grocery store, the gas station — everybody,” said state Sen. Lisa Baker, R-Luzerne.

Activity is still in the early stages, as exploration companies work to confirm their basic assumptions about the potential of the Marcellus Shale reservoir, and probe for the spots with the greatest promise, analysts say.

Industry representatives say they oppose a tax, and Stephen W. Rhoads, the president of the Pennsylvania Oil and Gas Association, questioned the wisdom of imposing a tax on gas production that is still speculative.

In some natural-gas states, a tax is collected based on a company’s gas production by volume.

But in Pennsylvania, the Supreme Court ruled in 2002 that state law did not allow counties, schools and municipalities to impose a real estate tax based on the value of the subsurface oil and gas rights held by exploration companies.

An appraiser’s study presented last year during a House Finance Committee hearing estimated that the court’s decision had cost Greene, Fayette and Washington counties up to $30 million in county, school and municipal tax revenue.

The state’s county commissioners and school boards support the resumption of some type of taxing authority — although that could mean landowners would get smaller royalty checks.

Regardless, Doug Hill, the executive director of the County Commissioners Association of Pennsylvania, said the matter is one of basic fairness since coal, gravel and limestone are assessed.

“The bottom line is it isn’t a windfall issue,” Hill said. “It’s a tax equity issue.”

___

Marc Levy covers state government for The Associated Press in Harrisburg. He can be reached at mlevy(at)ap.org.

Copyright 2008 The Associated Press.

In addition to anticipated jobs and profits from natural-gas drilling, water usage should increase as regional operations get under way.

That could mean more income for water haulers and sanitary authorities.

Drilling companies have been ramping up activities because an underground rock layer known as Marcellus Shale is expected to contain billions of dollars in natural gas deposits.

Each well-drilling operation could require up to 1 million gallons of water. While the water can be reused, it eventually must be disposed of at a treatment facility.

The Wyoming Valley Sanitary Authority hasn’t accepted any well-drilling wastewater, but it is interested.

“If it’s not hazardous to our plant, and if DEP approves us as a disposal site, we would consider it,” executive director Fred DeSanto said.

The state Department of Environmental Protection recently sent a letter to sanitary authorities advising them that wastewater from the drilling can be harmful to certain treatment systems and cause them to violate their discharge permits. The water must be tested and approved by DEP.

Such contracts could be lucrative, but have potential problems. WVSA, the major wastewater treatment facility in Luzerne County, charges 3.5 cents per gallon for treatment of up to 2 million gallons and 3 cents for quantities beyond that.

That could help offset the estimated $6 million in upgrades the authority said it needs to meet Chesapeake Bay watershed agreement discharge standards.

That quick influx, however, creates a problem.

Sandy Bartosiewicz, WVSA’s financial and budget officer, said the authority has never been in a situation where it accepted “that amount of volume at one time.”

It will also have an impact on wastewater haulers.

“The volume of the material is significant,” said Chris Ravenscroft, president of Honesdale-based Koberlein Environmental Services. “I don’t think there’s any one company out there that has the capacity for the volume. … So I think there’s a large volume of work that will be generated.”

He said his company is actively seeking energy companies that are looking for haulers and treatment facilities. Gas companies are investigating drilling possibilities through the Marcellus region, which stretches from upstate New York through northern and western Pennsylvania, including the upper fringe of Luzerne County, and down into Virginia. Several wells have been drilled in this region, according to DEP spokesman Mark Carmon.

Cabot Oil & Gas Co. announced recently a well in Susquehanna County became its first to generate income.

Copyright: Times Leader

DEP ordered partial shutdown of 2 drilling sites for not having permits.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

HARRISBURG – Reacting to regulation violations and some activities by companies exploring for natural gas in the Marcellus Shale, state environmental regulators on Friday held an unprecedented summit with gas drillers to define expectations for water and land protection.

The meeting came about a week after regulators took steps to rein in the burgeoning exploration industry and its increasing demand for water. The Susquehanna River Basin Commission warned drillers they needed water-withdrawal permits, and the state Department of Environmental Protection ordered the partial shutdown of two drilling sites for not having such permits.

Citing Pennsylvania’s coal and oil past and current commitment to renewable energies, DEP Secretary Kathleen McGinty assured the state “likes energy” and is “not allergic” to the effort required to extract it, but cautioned that her department will expend as much energy to protect the environment and natural resources.

“This is not about sending a signal that we don’t want to be a partner,” she said. “It’s just about some good rules for the road.”

Experts have known about the Marcellus Shale layer, which runs from upstate New York into Virginia and touches northern Luzerne County, for decades. They believe it contains enough recoverable gas to supply America’s natural gas demand for two years. However, technology has only recently advanced enough to tap the shale, which lies as much as 8,000 feet below the surface.

J. Scott Roberts, DEP deputy secretary in the Office of Mineral Resources Management, announced additions to the agency’s usual drilling permit specifically for Marcellus Shale that include detailed estimates of water use.

Paul Swartz, the river basin commission’s executive director, said companies need to make timely applications and factor the permitting process into their drilling timelines. Two permits were approved at the commission’s meeting on Thursday, he said, but another 84 – about a year’s worth of work – still await approval. Though there is a water-use threshold for requiring a permit, he said any work in the Marcellus would exceed that threshold and require a permit.

Exploration in the Marcellus is unlike gas exploration elsewhere in the state because deposits are vastly deeper, mostly unproven and necessary infrastructure, such as pipelines and water-treatment facilities, does not exist.

As energy prices continue to rise, drilling in the deep shale has become more enticing. DEP issued a record number of permits in 2004, 2005 and 2006. The rise leveled off in 2007 with 7,241 permits. So far in 2008, 2,510 have been issued.

Copyright: Times Leader

Gas leasing! When I first wrote about this in May last year, lease prices were “up to several hundred dollars an acre.” When I did an update in December, prices “as high as $800” were said to be offered. Now $2,500 an acre is thought to be a reasonable price. Who knows how high it may go? Statewide, speculation about the most promising part of the Marcellus Shale is being directed solidly toward northeastern Pennsylvania.

The issues I mentioned in my first article are still valid concerns: clearing of trees and vegetation at the drilling site and for access roads; noise, lights, and vehicle and human traffic during the drilling process; and the risk of water supply interruption or contamination. Several water-related issues have come into higher prominence since then: the source and disposal of the water used in drilling and hydraulic fracturing (“fracking”) a gas well, and the removal and disposal of solid and liquid wastes from the well site.

Representatives of land trusts from around the state, including Countryside Conservancy, met in Harrisburg in mid-June to learn more about the Marcellus Shale gas resource, how it will be developed, and how gas extraction can coexist with conservation. The conference organizer, the Pennsylvania Land Trust Association ( www.conserveland.org), has indicated that they will soon post information from this meeting on their website.

As a land trust, the Countryside Conservancy is dedicated to land and water conservation. We are not opposed to exploration and extraction of natural gas, but we want to ensure that the process does not damage natural resources of conservation value. To that end, we are working hard to educate ourselves about the pros and cons of gas development, and we urge landowners to do the same.

At the moment, one of the more accessible information resources for landowners is the Penn State Cooperative Extension website (naturalgaslease.pbwiki.com). It contains information, publications, links to lawyers, CPAs, energy companies and more. The Extension does not recommend the services of anyone referred to on their website, but it is a place to start.

If you are a landowner considering leasing your gas rights, you will NOT want to sign any lease you are given by a gas or leasing company. There are many provisions that may need to be added to a lease to protect you, your land and your finances. A small sampling of things that you may want your lease to dictate, beyond leasing rates and royalties: removal of waste materials from the site; bearing the costs of Clean and Green or other tax penalties; lease extension clauses; permitting gas storage and transmission in addition to extraction; “shut-in” or “holding by production” clauses; defining the primary vs. secondary term of the lease; controlling the number of wells permitted on a property; timber payment for any trees removed; use of ponds as a water source; testing and protection of drinking water supply; the “Pugh Clause”; the landowner’s right to audit the operator’s production data; and landowner indemnification. This is not a comprehensive list, just an illustration that leases are complex legal documents.

Our #1 advice remains: talk to a lawyer who has experience in this field. You do not want to sign any important legal document that may change your land forever without having a lawyer on your side.

Also, get your well water tested. In fact, even if you are not leasing but your neighbors are, it is an excellent idea to test your water supply so that you will have pre-drilling baseline data. The testing needs to be done by a DEP-certified lab in order to be admissible for legal purposes. You can visit the Department of Environmental Protection website ( www.dep.state.pa.us) for a list of approved labs and other information (search under “Energy,” then “oil and gas wells”).

We at the Conservancy are not geologists or gas-rights lawyers, but we are dedicated to helping landowners make the best decisions for their land. We will do our best to put landowners in touch with people who can provide sound advice.

I can’t do better than quote the disclaimer on the Penn State Cooperative Extension web site: This information is for educational purposes only. The information posted here is NOT to be considered as legal advice. Consult a qualified attorney before signing anything!

Last call for the Countryside Conservancy’s 9th Annual Auction! The Auction takes place Saturday, July 12 on the green at Keystone College and tickets are still available. The party starts at 6 pm. Call 945-6995 now to reserve your place!

Mary Felley is the Executive Director of the Countryside Conservancy. Contact her at 945-6995 or cconserv@epix.net

Copyright: Times Leader