Posts Tagged ‘liability insurance’

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

Property owners hear about some of the financial complications involved with gas drilling agreements.

Although planning for what to do with gas-lease profits is a problem most people wouldn’t mind having, landowners likely aren’t eager to add paperwork to the already document-laden gas-leasing process.

Experts, however, say protecting the wealth is the same as accumulating it in the first place.

“I’ve seen some horror stories, and if it means going to an attorney and paying a few dollars, it’s worth it,” said Ronald Honeywell, a trust officer with Luzerne Bank who spoke at a seminar on the financial implications of gas leases on Monday evening at Lake-Lehman Junior-Senior High School.

Past seminars on leasing have packed the school’s auditorium, but Monday’s seminar on taxes and investing attracted perhaps 50 people. Presenters admitted that financial topics aren’t often looked forward to but are important nonetheless.

Of particular interest were leasing’s tax implications, such as drilling’s effect on county Clean and Green tax abatement programs. Michelle O’Brien, an attorney with Rosenn, Jenkins & Greenwald in Wilkes-Barre, said drilling would roll back seven years of abatements.

“It’s only fair that the oil company pays that price because they’re the ones kicking you out of Clean and Green,” she said.

However, she pointed out that the company’s payment would likely be a reimbursement, meaning the landowner should be prepared to pay the penalty.

“It sounds like a simple concept, but the money could be a lot of money,” she said, perhaps up to $100,000.

O’Brien also pointed out leases allow landowners to retain control over the location of pipelines and other infrastructure because the property’s marketability could drop depending on where such things are placed.

Even with legal exemption clauses, landowners should retain liability insurance, she said, to cover situations not directly caused by the drilling processes, such as all-terrain vehicles crashes or youths getting hurt on the equipment.

Robert Lawrence, a certified public accountant, explained that the royalties and sign-on bonuses are passive income, similar to rental income, which means they can push landowners into higher tax brackets and impact Social Security or Medicare payments. He suggested that people receiving royalties discuss paying installments on the estimated taxes.

Passing the wealth along creates its own pitfalls, noted Lee Piatt, also with Rosenn, Jenkins & Greenwald. Financial planning and distribution of the proceeds through family corporations or other outlets can avoid some of that, he said.

While it can cause headaches, the increased tax burden can also make some investments more enticing, said Arthur Daube, an investment adviser with Park Avenue Securities. Though their return is low, municipal bonds are tax-free by law, he said, so they can act as havens for profits.

O’Brien also pointed out leases allow landowners to retain control over the location of pipelines and other infrastructure.

Copyright: Times Leader