Posts Tagged ‘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

The order against EOG Resources Inc. will remain in place until DEP can finish its investigation.

MARC LEVY Associated Press Writer

HARRISBURG — Pennsylvania regulators halted work Monday at dozens of unfinished natural gas wells being drilled by the company whose out-of-control well spewed out explosive gas and polluted water for 16 hours last week.

The order against Houston-based EOG Resources Inc. will remain in place until the Department of Environmental Protection can finish its investigation and until after the company makes whatever changes may be needed, Gov. Ed Rendell said.

The order stops EOG from drilling and hydraulically fracturing wells. It affects about 70 unfinished EOG wells into the gas-rich Marcellus Shale formation.

Another concern was the apparently bungled attempts to notify the right emergency-response officials about the accident. Fines are likely, said Environmental Protection Secretary John Hanger.

Nobody was hurt in Thursday’s blowout in a heavily forested section of north-central Pennsylvania.

The accident shot highly pressurized gas and wastewater as high as 75 feet. The gas never caught fire, but state officials had worried about an explosion and ordered electrical service to the area cut before specialists secured the well at about noon Friday.

About 35,000 gallons of wastewater have been pumped into holding tanks so far, the company said.

Monitors in a nearby spring show signs of pollution, although Hanger said the spring is in such a rural area that it is not viewed as a public health hazard. Officials say they have detected no pollution in larger waterways that feed public water supplies.

The state says the company is cooperating and is supportive of the stop-work order.

Gary L. Smith, vice president and general manager of EOG’s Pittsburgh office, said the company regrets the accident and would continue to work with Pennsylvania officials.

“After the investigations are complete, we will carefully review the findings with the goal of enhancing our practices,” Smith said.

“When all outstanding issues are resolved, we look forward to resuming full operations in Pennsylvania,” Smith added.

DEP officials said the well’s blowout preventer failed, and they were investigating whether the failed equipment was the primary cause.

A blowout preventer is a series of valves that sit atop a well and allow workers to control the pressure inside.

Hanger and EOG said the blowout preventer had been tested successfully by the company on Wednesday morning.

Copyright: Times Leader

STEVE MOCARSKY smocarsky@timesleader.com

An attorney and a gas company land man warn that attractive lease offers from energy companies might not always be as generous as they seem.

Kit Akers, lead land man for new ventures at EnCana Oil & Gas, said other natural gas companies could come in throwing around relatively large bonus money offers to Luzerne County landowners if EnCana’s exploratory drilling is successful in Fairmount and Lake townships.

“Sometimes people get blinded by bonus money and aren’t always thinking about protecting themselves in the long run,” Akers said.

Luzerne County landowners might be experiencing bonus envy, considering that gas companies in Susquehanna and Bradford counties are offering $5,000 to $6,000 per-acre bonuses for drilling rights leases while EnCana is offering $2,500.

But Akers said the value of drilling rights in Luzerne County will increase if EnCana’s exploratory drilling is successful.

“Just the very fact that (EnCana’s acquiring state) permitting for the wells made the area more attractive to competition; that alone increases the potential value,” Akers said.

But Akers said landowners should consider more than just the bonuses and royalties offered in exchange for drilling rights.

“The WhitMar (a company EnCana has purchased leases from) lease form is very friendly to landowners. The lease is 14 pages long and loaded with surface protections, generous well location fees and other benefits to landowners. Other leases can be as short as two pages and include none of these protections. People sometimes get blinded by the money offered on the front end for a lease that is not worth as much to them,” Akers said.

Garry Taroli, an attorney with the Wilkes-Barre law firm Rosenn Jenkins & Greenwald, has been representing landowners in lease negotiations for about three years.

“The leases have become more friendly to property owners. With competition comes more benefits from the property owners’ point of view,” he said.

Many newer leases require minimum setbacks from structures and water sources, extra payments for damaged timber, reimbursements for harm to water or land and testing of water before, during and after drilling activities – paid for by the gas company, Taroli said.

Taroli advised that landowners at least have a lease reviewed by an attorney before signing it.

Some leases he’s seen contain language that could be a headache for landowners. While most leases set specific time limits for drilling, one lease he saw allowed a gas company to drill “for so long as gas could have been produced on the property.”

That term, Taroli said, “could be until doomsday.”

Jeffrey Nepa, an attorney with Nepa & McGraw in Carbondale and Clifford, said he’s happy to see property owners communicating on Internet forums to try to stay informed about lease issues.

“It’s nice to see people pooling their resources together to battle against the gas companies,” Nepa said.

“We live in the age of information. … We see that the gas companies are controlling the information. And a lot of times we see them put out misinformation. But at the end of the day, it comes down to caveat emptor – buyer beware.”

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

Copyright: Times Leader

EnCana is currently signing standard leases giving Luzerne County landowners $2,500-per-acre bonuses.

STEVE MOCARSKY smocarsky@timesleader.com

The value of land leases with natural gas drilling companies has been climbing in counties to the north, but whether that happens in Luzerne County will depend on the results of exploratory drilling scheduled to begin this summer.

Natural gas exploration companies are now offering leases in Susquehanna and Bradford counties with up-front per-acre bonuses in the $5,000 to $6,000 range and royalties as high as 20 percent, said Garry Taroli, an attorney with Rosenn Jenkins & Greenwald representing area landowners.

Late last month, natural gas producer Williams Companies bought drilling rights to 42,000 net acres in Susquehanna County from Alta Resources for $501 million, placing the lease value on that land at nearly $12,000 per acre.

So people like Edward Buda, who owns land in Fairmount Township on which the first natural gas well in Luzerne County will be drilled in July, might be feeling some lessor’s remorse, given that they agreed to comparatively paltry up-front bonuses for the first two years of the lease term.

When Buda, 75, of Ross Township and his late brother and sister-in-law were in negotiations with WhitMar Exploration Co. early last year, they, like many others, agreed to bonus payments of $12.50 per acre each year for the first two years of the lease. The bonus increases to $2,500 for the third year.

However, if drilling begins on or under a landowner’s property before an anniversary date of the lease, any bonus payments for subsequent years become null and void and the royalty provision of the lease kicks in. So, if the drilling that is to begin next month on Buda’s property is successful, he likely won’t ever see that $2,500-per-acre bonus but will receive much larger royalty payments.

Since Buda’s lease was negotiated, WhitMar sold most of the company’s interest in the leases to EnCana Oil & Gas (USA) Inc.

EnCana is currently signing standard leases giving Luzerne County landowners $2,500-per-acre bonuses – $1,000 the first year of the lease and $1,500 the second year, according to EnCana’s Group Lead for Land (New Ventures) Kit Akers.

Some landowners who signed the same type of deal with WhitMar as Buda believe they’ve been treated fairly.

Michael Giamber, 57, of Fairmount Township, lives about 2 miles from the Buda drill pad. While the Budas negotiated their lease on their own, Giamber joined a consortium of landowners who negotiated a deal with WhitMar in 2008 for bonuses of $12.50 per acre each year for the first two years of the lease, $2,500 per acre for the third year, and a 20-percent royalty on all gas produced.

“It was in the middle of a recession and leasing had pretty much stopped except in Dimock. We essentially partnered with WhitMar,” Giamber said.

In exchange for landowners accepting the initially small incremental bonus payment arrangement, WhitMar promised to do seismic testing of the leased land and partner with a company that would handle the drilling and secure permits for one to three exploratory wells in the county within two years.

“I signed on not because of the bonus, but because of the 20-percent royalty and because if they did not drill one to three wells after two years, we’d be free agents again,” able to renegotiate for better terms, Giamber said. “Because we were in a recession, what did we have to lose?”

“A lot of older people would rather more up-front money, and I can appreciate their position,” Giamber said.

Jeffrey Nepa, an attorney with Nepa & McGraw in Carbondale and Clifford, believes people who signed leases early for smaller bonuses were either “more desperate and needed money or were misinformed about what the extent of (drilling in the Marcellus Shale) was. Some people have had buyer’s remorse, so to speak, regretful that they signed and wanting to get out,” Nepa said.

Nepa said he’s seen bonus money increase, dip back down, “and now it’s creeping back up again. And it appears that landowners “who held out, so to speak, are the ones that are rewarded with the largest contracts. In the Barnett Shale (in Texas), I’ve heard of property owners getting in excess of $20,000 per acre, and they were the ones who held out.”

Gas companies normally drill in 640-acre blocks of land. So people with a larger tract of land are better off holding out for better lease terms, Nepa said.

On the other hand, those who signed leases earlier are now the ones who will see royalty payments kick in much sooner than anyone else, because they will be the first to have wells drilled, said Robert Schneider, 39, of Fleetville, Lackawanna County.

Schneider joined a landowner consortium that negotiated leases with a $2,100 bonus and an 18-percent royalty in 2008 with Exco Resources, and he’s glad he didn’t hold out for more.

“Two years have gone by and I have three years left. … There’s a risk if you wait,” Schneider said, speculating that implementation of more rigorous and costly government permitting requirements, the establishment of a severance tax or finding insufficient or no gas in his area are all reasons that companies might pull out and stop leasing.

EnCana’s Akers backed up what Giamber and Schneider had to say. “People who leased earlier put themselves in a position to most likely have their land drilled earlier,” she said.

And Akers said, if WhitMar had not been able to secure leases at relatively low cost to the company, exploration in Luzerne County might not have begun as soon as it has.

“Because these people leased early to WhitMar, WhitMar was able to build a large position of leases that allowed for horizontal drilling. That’s what got a company like EnCana interested in coming to Luzerne County. If we had not seen a consolidated lease position, it’s unlikely WhitMar would have gotten a company like EnCana to come in … It was possible that the $12.50 offer was the only offer those people would ever get,” she said.

Akers also believes that the reason landowners in Susquehanna and Bradford counties are being offered much higher bonuses is because hundreds of wells have been drilled there and natural gas extraction has proven successful.

“Luzerne County, on the other hand, is really on the frontier. There’s no way to know if shale within a geographic region will produce any gas or enough gas to make drilling profitable without actually drilling wells. There have been no wells drilled in Luzerne County, so that’s the reason why there’s a difference in lease prices between Luzerne County and other counties,” Akers said.

If wells on Buda’s land and a site in Lake Township don’t produce any gas or at least enough of it to make drilling there worthwhile, land lease values in Luzerne County could drop to zero, Akers said.

If the wells do produce significant amounts of gas, however, competition for drilling rights will definitely heat up, Akers said, and with it the price.

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

Copyright: Times Leader

MARC LEVY Associated Press Writer

HARRISBURG — State environmental regulators worked Sunday to get to the bottom of what caused a natural-gas well to spew explosive gas and polluted water for 16 hours last week before it could be brought under control.

Neil Weaver, spokesman for the Department of Environmental Protection, blamed a failure on the well’s blowout preventer, a series of valves that sit atop a well and allow workers to control the pressure inside. Investigators are trying to figure out what caused the malfunction.

The blowout is the latest in a string of accidents connected by regulators to the rapidly growing pursuit of the rich Marcellus Shale gas reserve that lies beneath much of Pennsylvania.

It seems likely the Pennsylvania blowout will enter the debate in the Capitol, where legislators are battling over the merits of an extraction tax and tighter regulations on an industry that has spent several billion dollars and drilled more than 1,000 wells in Pennsylvania in just a couple years.

State Rep. David Levdansky, D-Allegheny, said such oil problems could bring increased interest in a moratorium on leasing public land for gas drilling and a severance tax that could largely fund existing environmental protection and cleanup programs. Levdansky is a leading environmental advocate.

Weaver declined to discuss whether investigators have found anything so far or whether well driller EOG Resources Inc. of Houston committed any violations that could lead to fines or any other penalties.

An EOG spokeswoman said Sunday the investigation into the cause is ongoing, and the company had no light to shed on the blowout.

Crews evacuated the site Thursday night and didn’t regain control over it until just past noon Friday. No one was injured, the gas didn’t explode and polluted water didn’t reach a nearby waterway, officials said.

The blowout sent highly pressurized gas and polluted water 75 feet into the air. Huge tanks were required to cart off chemical- and mineral-laced water collected on the grounds of the private hunting club where the well had just been drilled.

Copyright: Times Leader

A company drilling for natural gas says it is already working with local officials.

STEVE MOCARSKY smocarsky@timesleader.com

Although the community at large hasn’t been privy to it, some local emergency management officials have been working closely with an energy company to draft emergency response plans to address any local natural gas drilling-related catastrophe that might occur.

EnCana Oil & Gas USA is slated to begin drilling a well at a site in Fairmount Township in about a month, and many local residents, officials and emergency responders have become anxious, feeling left-in-the-dark about whether local emergency responders have the equipment, knowledge and protocols in place to handle a drilling-related catastrophe.

But Wendy Wiedenbeck, public and community relations advisor for EnCana, said local firefighters would not be responsible for containing or fighting a gas well fire or gas release at a well site.

“In the event of an incident, local emergency responders will be asked to provide support to our operations personnel who are specially trained to deal with incidents at oil and gas locations,” Wiedenbeck said.

“Should a serious well-control incident occur, such as release of gas or fire, EnCana will look to local emergency responders to provide support while EnCana calls upon well-control experts to assist in addressing such an incident,” she said.

The well-control company EnCana has identified in an Emergency Response Plan submitted to the state Department of Environmental Protection is Wild Well Control in Houston, Texas. A second call would be placed to Cudd Well Control, also in Houston.

“Depending on the severity of the well-control issue, they would respond as soon as possible. In the meantime, the area around the well – the exact area again depends on the well-control issue – would be secured and/or evacuated. This is another example of how Encana and local emergency responders will work together,” Wiedenbeck said.

Wiedenbeck said Encana has experienced well-control incidents in the past, and the risks are inherent in the oil and natural gas industry.

“Our training, systems, and protocols are designed to fit the level risk associated with the activity. Our goal is to minimize the risk and to operate in a safe manner. Safety is our number one priority,” she said.

County office works on plan

Steve Bekanich, coordinator of the Luzerne County Emergency Management Agency, said last week that he has had several conversations with EnCana officials, but a volunteer with the county EMA “has taken the lead for my office. … We are close to completing an emergency response plan.”

Bekanich said Barney Dobinick, who is also the EMA coordinator for Lake Township, is “handling all direct talks with EnCana for ease of operations. He’s briefing me almost on a daily basis. … I’m very comfortable with what Barney has been doing. He’s been a trusted staff member for 20 years.”

Dobinick said a 230-page set of response guidelines is near completion. After meeting with EnCana representatives in mid-June, the plan will be shared with area municipal officials for their approval and made available to the public. Sometime in the next few, a public meeting also will be scheduled to gather input and answer questions.

Until the plan is complete, Dobinick said it would be counter-productive to release any aspects of it until EnCana has reviewed it and possible changes are made.

“If we determine there’s a better way, we’ll amend it. We’re not hiding anything. We just want to have a complete plan in place (before it’s released),” he said.

Bekanich said adjustments can be made even after the plan is disseminated to municipal officials and input is gathered from the public.

Dobinick did say, however, that local emergency responders would handle some emergencies at well sites, for example, a brush fire, an office trailer or vehicle fire or a hazardous materials spill.

Jack Dodson, emergency management coordinator for Dallas Township and Kunkle fire chief, has said his major concern was having emergency personnel who might have to extract disaster victims from a well-related catastrophe prepared to do so.

Dobinick said there are response guidelines for mass-casualty incidents, getting basic and advanced life support on-scene and implementing a disaster plan for hospitals and medical air transport.

“And depending on the seriousness of an event, it would determine how much, if any, of an area would be evacuated,” Dobinick said.

Off-site also part of concern

Dobinick said he’s more concerned about local responses to off-site incidents, such as the crash of a truck carrying “residual backflow” material, or “frack water” used in the hydraulic fracturing of the Marcellus Shale formation.

He said fire departments would handle the initial stabilization of such an incident and work to prevent contamination of any nearby waterway. A state-certified hazardous material clean-up team would come in if needed to remove the material and any contaminated soil.

Dobinick said he feels “very comfortable” with the guidelines and hopes to have the majority of the document complete by the end of the week. He’s still waiting on some information from the county 911 office and the American Red Cross.

Plus, Bekanich noted that Luzerne County is a member of and has access to the resources of the East Central Pennsylvania Regional Task Force – a seven-county all-hazards task force formed in 1998 along with eight other such task forces in the state in response to terrorist threats.

Bekanich said 48 professionals from Luzerne, Wyoming, Schuylkill, Colombia, Northumberland, Montour and Berks counties attended a training event/exercise last week at the county EMA headquarters and worked on a scenario to determine “how we would bring logistics and resources together for an event such as a catastrophic well failure.”

If a catastrophe did occur, Bekanich said, “it’s not like we would be in this on our own. We have resources and technical expertise from seven other counties to rely on for support.”

Dobinick also said EnCana has commissioned a transportation study and will be sitting down with officials from the Lake-Lehman School District to address any concerns about incidents that could affect school bus routes.

Several area residents have voiced concerns about emergency response and traffic at public meetings over the last few months and have been dissatisfied with information supplied by EnCana.

Company schedules meetings

Wiedenbeck said meetings with stakeholders are scheduled for this week.

“Our goal is to understand how these agencies work together, how our operations impact them and how we can work together to make sure we collectively work together so local emergency responders continue to do the great job they’re already doing,” Widenebeck said.

The purpose of sitting down with Dobinick and others is to determine the capabilities of local responders and “if there are gaps, how do we fill them.”

In some instances, Wiedenbeck said, there might be grants available to purchase emergency response equipment that might be needed – for example, a new radio system.

“Our job is to work together with emergency responders, the recreation district, township supervisors and the school district to understand existing protocols and how those protocols might be impacted if there is an incident. We also need to understand existing resources, identify potential gaps and solutions for addressing the gaps, if any,” Wiedenbeck said.

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

Copyright: Times Leader

The Susquehanna River Basin Commission has a set of rules for gas companies.

STEVE MOCARSKY smocarsky@timesleader.com

The Department of Environmental Protection isn’t the only state agency intent on protecting water sources from natural gas drilling activities that could affect area residents.

Tom Beauduy, deputy director of the Susquehanna River Basin Commission, said the commission requires drilling companies to account for “every gallon of water” withdrawn from any water source within the basin – where it comes from, where it’s used and what happens to it after it’s used.

And, a $1 million water quality monitoring system is being put in place near drilling sites within the basin, Beauduy said.

Beauduy said Marcellus Shale development in Pennsylvania hit the commission “like a tsunami,” just like it did every other impacted agency in the state.

The natural gas industry uses 4 million to 6 million gallons of water per natural gas well to release gas from the shale in a process called hydraulic fracturing, or fracking. Currently, the industry is using about 1 million gallons per day in the state, and Beauduy expects that amount to increase to 28 million a day.

The commission, which is responsible for water resources planning, management, conservation, development, use and allocation, responded quickly to the industry’s needs. Protocols were adjusted so the commission could deal with the surge of water allocation requests, but no corners are cut when granting water withdrawal approvals, Beauduy said.

All companies known to be drilling in the Marcellus Shale region, which underlies more than 72 percent of the Susquehanna River Basin, were notified of the commission’s regulatory requirements. And the commission activated a previously unused rule that authorized an administrative “approval by rule” process for water withdrawals solely from public water supplies.

To date, Beauduy said the commission has approved 111 surface water withdrawals, with 55 applications pending; and 22 approvals of public water supply withdrawals, with 14 pending. It has also issued 662 approvals by rule for individual well pad sites and has 181 pending.

While the amount of water the gas industry needs might seem massive, Beauduy pointed out that the golf and ski resort industry in Pennsylvania consumes an average of 56 million gallons per day. He said industry needs can be accommodated if regulated properly. The industry must abide by restrictions that prevent negative impacts on streams and rivers that could harm aquatic life and water quality.

And while DEP regulates how the industry must dispose of flowback water from fracking operations, the commission will track area rivers and streams to catch a contamination problem.

The commission will have 30 water quality monitoring stations set up by the end of June in the regions where drilling in the Marcellus Shale is most active, as well as other locations where no drilling activities are planned so the commission can collect control data. The monitoring network will provide constant data collection with instruments sensitive enough to detect subtle changes in water quality on a frequency that will allow background conditions and any changes to them to be documented throughout the year.

Each monitoring station will be equipped with water quality sensors and a transmitter to continuously monitor and report water temperature, pH, dissolved oxygen, ability to conduct electricity (conductance) and water clarity. The water depth also will be recorded to establish a relationship with stream flows.

The monitoring of conductance is key to detecting impacts associated with natural gas activities if they occur because water produced by the natural gas industry is generally 200 times more conductive of electricity than water normally measured in streams in the basin.

The monitoring network, the data from which will be accessible online by the public, will provide early warnings to help DEP officials respond more rapidly and better pinpoint causes if water quality conditions change. It will also help local public water suppliers, local watershed groups and communities stay informed.

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

Copyright: Times Leader

PSU report touts job growth, increased taxes; planned severance tax a concern. Others say study inflates benefits.

STEVE MOCARSKY smocarsky@timesleader.com

Development of the Marcellus Shale has the potential to create more than 200,000 jobs in Pennsylvania during the next 10 years, according to an update to a Penn State University study released on Monday.

The report warned, however, that imposing a state severance tax on the natural gas industry, as Gov. Ed Rendell has proposed, could induce energy companies to redirect their investments to other shale “plays” in the United States. Plays refers to natural gas development in other shale developments.

If that happened, any revenues gained from a severance tax could be offset by losses in sales taxes and income taxes resulting from lower drilling activity and natural gas production as producers shift their capital spending to other shale plays.

Some, however, have expressed doubt about the impact of a severance tax and claims and assumptions about economic benefits and job growth in the report.

The update, commissioned by the Marcellus Shale Coalition, was conducted by professors with the university’s Department of Energy and Mineral Engineering. It supplements a study the department released last July.

The updated study also states that during just the next 18 months, gas drilling activities are expected to create more than $1.8 billion in state and local tax revenues.

“At a time when more than half-a-million people in Pennsylvania are currently out of work, the release of this updated report from Penn State … confirms the critical role that responsible energy development in the commonwealth can play in substantially, perhaps even permanently, reversing that trend,” Kathryn Klaber, president and executive director of the Marcellus Shale Coalition, said in a press release.

“Last year alone, Marcellus producers paid more than $1.7 billion to landowners across the state, and spent more than $4.5 billion total to make these resources available. By the end of this year, that number is expected to double, and millions of Pennsylvanians will find themselves the direct beneficiaries of that growth,” Klaber said.

The updated study finds that Marcellus development will create more than 111,000 new jobs by 2011, a result of an increase in the number of wells developed from the roughly 1,400 in operation today to 2,200 expected during the next 18 months.

All told, by 2011, this work is expected to deliver nearly $1 billion in annual tax revenue to state and local governments.

In addition to generating tax revenue, natural gas development stimulates the economy in two major ways: business-to-business spending and payments to land owners, the study states.

Exploring, drilling, processing and transporting natural gas requires goods and services from many sectors of the economy, such as construction, trucking, steelmaking and engineering services. Gas companies also pay lease and royalty payments to land owners, who also spend and pay taxes on this income.

In 2009, Marcellus gas producers spent a total of $4.5 billion to develop Marcellus Shale gas resources, drilling 710 wells that year. The writers estimate that this spending added $3.9 billion in value to the economy and generated $389 million in state and local tax revenues, and more than 44,000 jobs.

Based on energy company plans to drill 1,743 wells this year, value-added dollars, tax revenue and jobs creation are expected to approximately double for 2010, according to the report. And by 2015, the numbers are expected to nearly double from this year.

Some question PSU report

While the report paints a rosy economic picture for the state, assuming that no severance tax is imposed, some are leery of assumptions and claims made in the report.

Dick Martin, coordinator of the Pennsylvania Forest Coalition, an alliance of outdoor enthusiasts, landowners, churches and conservation groups, first notes a disclaimer in the study, that Penn State does not guarantee the accuracy or usefulness of the information.

Martin said the study contains some flaws.

While the study states that development costs are higher in the Marcellus Shale than in other shale plays, “the industry itself tells its shareholders that the Marcellus is a low-cost gas deposit,” he said.

“Chesapeake Energy has told its shareholders that it can make a 10 percent return when gas prices are at only $2.59 per thousand cubic feet. Gas price today is $4.08,” Martin said.

Martin also said the study relies on data and assumptions supplied by the gas industry and that it looks only at benefits and not at costs to communities, infrastructure, environment and regulators.

He said the study does not look at data from other states that either imposed or raised severance taxes. He said there is no evidence that severance taxes affect either production or investment in states that impose or raise severance taxes.

Martin pointed to a review by the state Budget and Policy Center of the study Penn State released in July, saying the review is still valid because the update is based on the 2009 report and used the same methodology.

The review claims that the 2009 Penn State report “overplays the positive impacts of increased natural gas production, while minimizing the negative.”

Among other flaws, the report “exaggerates the impact a severance tax would have on development of the Marcellus Shale and overstates what taxes the industry now pays, going so far as to count fishing and hunting license fees paid by those who benefit from the industry as a tax due to industry activity,” the review states.

Also according to the review, the report acknowledges that many drillers will avoid corporate taxes, paying the much lower personal income tax or avoiding taxes altogether through deductions.

The report also “inflates the economic impact of expanded gas production in Pennsylvania to puff up the industry’s economic promise,” the review states.

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

Copyright: Times Leader

Pa. senator says protection needed to ensure drilling doesn’t contaminate water.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

The state senator representing the Back Mountain is proposing a series of bills to protect drinking water sources from contamination associated with natural gas drilling.

Sen. Lisa Baker, R-Lehman Township, said on Monday that the chances of water contamination grow as drilling into the Marcellus Shale increases in Pennsylvania, and the proposed bills are in response to citizen and community concerns about the safety of water resources.

“Prevention and protection are preferable to crisis management and emergency response,” Baker said.

EnCana Oil & Gas plans to drill two natural gas wells in the Back Mountain – one each in Lehman and Lake townships – and a third in the Red Rock area in Fairmount Township, not far from Ricketts Glen State Park.

The well site in Lehman Township is less than two miles from the Huntsville Reservoir.

Although there are proposed water protection regulations moving through the approval process, Baker said state law has “more force.”

And as drilling proceeds on a larger scale, “area residents want answers that show responsibility being assured, rather than risks being assumed,” Baker said.

“Reasonable environmental protections will not discourage the development of this industry; they will help to make sure that unreasonable costs are not imposed on local communities and homeowners,” she said.

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 afterwards – 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 the state Department of Environmental Protection to ensure that operators of wastewater treatment facilities are properly trained and sufficiently monitored to lessen the chances of human error creating a major problem.

Baker said some of the costs would be borne by the gas companies.

Oversight costs could be paid for through a severance tax, which is expected to be debated in the coming weeks.

She reiterated her opposition to any severance tax plan that would devote the revenue generated to filling a hole in the state budget rather than providing for community protection in drilling areas.

“The environmental and economic catastrophe in the Gulf of Mexico underscores the crucial nature of taking all reasonable precautions and for being prepared for dealing with extreme situations when things go horribly wrong,” Baker said.

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

Copyright: Times Leader

By Tom Veneskytvenesky@timesleader.com
Sports Reporter

The talk inside Giles Evans’ sporting goods shop has changed recently.

For years hunters and anglers have come into Brady and Cavany Sporting Goods, in the heart of Tunkhannock, to swap stories about where the fish are biting and the big bucks are roaming. And every day, Evans leans on the counter and takes it all in.

But recently, in addition to hunting and fishing, a new topic has sprung to the forefront: gas drilling.

Evans said he hears more and more hunters and anglers expressing concerns about how the drilling boom will affect the streams they fish and the woods they hunt. It’s a concern that continues to grow as quickly as the well pads dotting the ground in Northeastern Pennsylvania.

“This is a big event up here,” Evans said. “A lot of people are making money, but a lot of people are concerned about the land and the water.”

Anglers, Evans said, are worried about the pristine trout streams in the area – Tunkhannock, Meshoppen, Mehoopany and Bowman’s creeks to name a few. They wonder if the streams can withstand the water withdrawals needed for the drilling process or, worse yet, what happens if they become contaminated.

“Anglers consider these places as pristine and they’re really concerned for the creeks,” Evans said. “The gas drillers are putting a lot of pads in around Meshoppen, near Whites Creek. That is a fantastic little trout stream. God forbid something happens there.”

Or anywhere else for that matter, according to Joe Ackourey, an avid fly fisherman and member of the Stanley Cooper Sr. Chapter of Trout Unlimited.

Ackourey said the area of Wyoming County and northern Luzerne County that is targeted for drilling is home to numerous high-quality wild trout streams. The majority of those streams, he said, flow through remote mountainous areas and could be easily damaged.

The disturbance created by gas drilling – clear-cutting for pads, erosion, increased water temperatures and water withdrawals – can be fatal to the wild trout and other aquatic life that inhabits the streams.

“I just don’t like the major changes that are going to take place to these ecosystems all for the sake of the mighty dollar,” Ackourey said. “I fear for those streams and the wild trout that inhabit them.”

Lease helps hunting club

Dallas resident Russ Bigus has hunted the mountains and farmlands of Sullivan and Wyoming counties for decades. He enjoys the abundant wildlife in the area and the pristine landscape.

Bigus also supports the gas drilling boom and the economic benefit that comes with it.

If done properly, Bigus feels, gas drilling can actually enhance the region’s natural areas.

The money paid to farmers and landowners who enter into leases with gas companies will make it easier for them to keep their land as open space, Bigus said.

While he admits there is reason to be concerned about environmental degradation, the revenue generated from drilling could prevent open space from becoming something else.

It has happened in other parts of the state, Bigus said.

“In Juniata County it used to be all farms with great habitat for wild pheasants,” he said. “That’s all gone now. Those farms have been sold for development.

“That doesn’t have to happen any more with the income generated from natural gas drilling. Hunting opportunities will remain the same or get better with our open space here remaining open.”

Bigus said his hunting club, the White Ash Landowners Association located in Cherry Township, Sullivan County, currently has a gas lease agreement for its 5,000 acres.

Much of the club’s land has been degraded by strip mining in the past, he said, and the impact from gas drilling is minimal in comparison.

“It’s a very short-lived impact from what I’ve seen,” he said. “And our land is even more financially stable now.”

Still, Bigus cautioned that drilling can be an environmental disaster if not regulated properly.

According to Luzerne County property records, private hunting and fishing clubs that have leased land for drilling include North Mountain Club in Fairmount Township, Mayflower Rod & Gun Club in Ross Township and Rattlesnake Gulch Hunting Club in Ross Township.

“Scary what could happen”

Dr. Tom Jiunta, who resides in Lehman Township, hikes and fishes around the Ricketts Glen area and near his cabin in Laporte, Sullivan County.

Both areas are potential hotspots for gas drilling activity, and Jiunta fears what could happen to the streams and trails, such as the Loyalsock Trail, that he and countless others enjoy.

Aside from the major disruption of clearing land and the potential for pollution, Jiunta said other effects could be devastating, such as noise from drilling, air pollution and the introduction of invasive species as equipment from other states is moved into the remote locations of Northeastern Pennsylvania.

“There’s a lot of subtle impacts that may not be noticed until a few years from now,” Jiunta said.

Despite his concerns, Jiunta said he isn’t totally opposed to drilling if it’s done properly “in the right places with the right regulations in place.” Pennsylvania is lacking as far with the latter, he said. “You can’t depend on the industry to police itself and we don’t have enough DEP (state Department of Environmental Protection) staff to keep on top of this.

“It’s really scary what could happen.”

As far as hunters go, some already have been affected by gas drilling. Evans, the sporting goods store owner, said hunters have told him that they lost their traditional hunting spots in Susquehanna County last deer season when the areas were deemed off limits due to gas drilling activity.

Even in areas where gas companies halted operations for the first week of deer season, Evans said, hunters were affected.

“Customers told me that in the Hop Bottom and Springville areas, the gas companies were out before the season with helicopters laying cables for seismic testing,” Evans said. “It was a noisy process and that scared a lot of deer out of the area and changed their patterns.”

Compromise needed

Bigus agreed that some hunting area will be lost while drilling commences, but believes conflicts can be reduced by an open line of communication between landowners and gas companies.

“For example, make sure they agree that there will be no activity for the first week of deer season, and have them do most of the work in the summer,” he said. “It’s important to establish a good relationship.”

And for all the concerns expressed daily by his customers, Evans said there is at least one example of how drilling can be done with little impact.

A well drilled near Nicholson, he said, was located next to a road and didn’t venture into the woods, lessening the impact on hunters and the environment, according to Evans.

But for that one positive, a looming negative experience continues to leave a sour taste with hunters and anglers.

In 2009, the Cabot Oil & Gas Corp. was fined $120,000 by DEP after methane gas infiltrated into private water wells in Dimock Township. In addition, between 6,000 and 8,000 gallons of fracking fluid leaked from a pipe at a drill site in the area and contaminated a nearby wetland.

This year Cabot was fined an additional $240,000 and ordered to shut down three wells because of methane contamination of water wells.

While DEP has prohibited Cabot from drilling in the area for one year, the damage was already done when it came to the views of hunters and anglers.

“That business in Dimock really has hunters and anglers concerned,” Evans said. “Everybody’s worried about it because there’s so much unknown, and the Cabot incident didn’t help.

“A lot of people that talk about it in the store just hope that they get done, get out and nothing gets harmed. In the meantime, they’re scared to death about what could happen.”

Copyright: Times Leader