Posts Tagged ‘United States’

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

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

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

People are wondering just what EnCana will bring to Marcellus Shale drilling.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

Edward Buda had been dealing with representatives of Whitmar Exploration Co. for about two years since he, his late brother and sister-in-law negotiated a lease with the company for natural gas drilling on their Fairmount Township property.

Now, there’s a new player in the mix, since Whitmar announced a partnership with EnCana Oil & Gas (USA) Inc. in November for a joint venture in drilling and development of the Marcellus Shale in Luzerne and Columbia counties.

Like others in the Back Mountain, Sweet Valley and Red Rock areas, Buda is a bit wary of the Denver-based energy company.

“We did business with Whitmar. How (Encana is) going to be, I don’t know. How they honor the contract, that’s to be seen. I still don’t know much about them,” said Buda, 75, who lives in Ross Township.

Buda’s brother Walter and Walter’s wife Eleanor signed a fairly simple three-page lease with Whitmar in February 2009, a month before Walter died. Eleanor passed away in November, Edward said, and he became the new lease holder just as EnCana came into the picture.

Now, EnCana wants to lease Edward’s property in Ross Township, but he isn’t too impressed with the $1,000-per-acre offer. And the 16-page lease proposal that has undergone many revisions is written in legalese, he said.

“They wanted to put a drill pad on my property (in Ross Township). I said I want to wait and see what happens in Red Rock (section of Fairmount Township). Everybody’s waiting to see whether it’s going to be a gusher or a fiasco in Red Rock,” Edward said.

Wendy Wiedenbeck, a public and community relations adviser for EnCana, said the well on Buda’s property and a second well planned for a Lake Township property owned by township Supervisor Amy Salansky and her husband, Paul, are exploratory ventures.

If those wells produce an acceptable amount of natural gas, EnCana will develop a plan for expanded drilling operations in the area, Wiedenbeck said. Drilling is expected to begin in July on Buda’s property and gas production should start by October. Clearing of an access road to the site began last week.

Company has won honors

For the past few months, Wiedenbeck has been the face of EnCana locally, arranging and attending meetings with people who live or own property within a mile of the planned drilling sites as well as attending meetings with local groups concerned about drilling activity in their communities.

A self-described “Army wife” with two sons – one in first grade, the other a senior in college, Wiedenbeck has lived in Colorado since 1989 and has been working in community/public relations since the early 1990s. She’s been with EnCana for five years.

“They’re a cultural fit for me. I believe they truly believe in responsible development,” Wiedenbeck said of her employer.

To prove her point, Wiedenbeck provided a long list of awards EnCana has received over the past few years. Just a few include:

• The 2008 U.S. Environmental Protection Agency Natural Gas STAR award, recognizing outstanding efforts to measure, report and reduce methane emissions;

• Interstate Oil & Gas Conservation Commission Chairman’s Stewardship Awards, recognizing exemplary efforts in environmental stewardship by the oil and natural gas industry;

• The 2009 Colorado Oil & Gas Conservation Commission Award for Courtesy Matters program in the Denver-Julesburg Basin surrounding Erie, Colo.

“Courtesy Matters” is EnCana’s community engagement program that brings EnCana staff and third-party contractors together with the community to discuss the nuisance issues associated with company operations,” Wiedenbeck said.

“Courtesy Matters creates a working environment where open and ongoing dialog are paramount. Discussions generally include concerns with traffic, noise and dust associated with our operations,” she said.

Community investment vital

Marty Ostholthoff, community development director for Erie, Colo., said in a teleconference that EnCana is one of four major energy companies drilling in the Denver-Julesburg Basin, the others being Noble Energy Inc., Kerr-McGee Corp. and Anadarko Petroleum Corp.

Fred Diehl, assistant town administrator in Erie, said he would be remiss if he didn’t point out “how far ahead of the other operators EnCana is” when it comes to community investment.

Diehl said he mentioned to Wiedenbeck that officials wanted to install solar panels on a new community center being built, and EnCana donated $250,000 to make that happen. A month ago, the company donated $175,000 for eco-friendly lighting at community ball fields.

“It’s not a requirement that they make notifications to our residents (about drilling activities or problems), but they do. It’s not a requirement that they make financial investments into our community, but they do,” Ostholthoff said.

Of course, there’s a downside to the presence of the drilling companies in the suburban area, which lies in one of the largest natural gas fields in the country, Diehl said.

“These things are still loud,” he said of the drilling rigs. “People come into our offices complaining, ‘We can’t sleep.’ But we worked with the operators to put up hay bales and cargo trailers to minimize the noise. The only good thing is, (the drilling is) temporary.”

As far as addressing concerns of residents, Diehl said all of the companies seem willing and responsive. “If they’re not, one of them can give the whole industry a black eye,” Diehl said.

Wiedenbeck said EnCana will have a toll-free number posted at its drilling sites that people can call to report concerns. Callers who choose the Pennsylvania prompt will be automatically directed to her office or cell phone. An operations phone number also will be established, she said.

And while EnCana will hire someone locally to help with community relations efforts, Wiedenbeck said she will continue to be “that face” for the community. She has spent about half her time in Pennsylvania since EnCana partnered with Whitmar, sometimes bringing her youngest son, Sammy, on trips here.

“He loves Pennsylvania,” she said.

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

Copyright: Times Leader

EnCana’s hydraulic fracturing has never impacted a water well, spokeswoman says.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

Wendy Wiedenbeck acknowledges that Luzerne County residents might be troubled by the fact that EnCana Oil & Gas (USA) Inc. paid $1.5 million in fines over the past four years.

But Wiedenbeck, the community and public relations adviser for the natural gas company that will begin drilling in the Back Mountain and Red Rock areas this summer, said the company is “committed to responsible development” and today is “a leader in environmental stewardship.”

According to data Wiedenbeck provided at the request of The Times Leader, EnCana was assessed $542,000 on nine fines in 2006; $663,000 on 19 fines in 2007; $306,000 on 19 fines in 2008; and $3,000 on 10 fines in 2009. The data for 2009 is subject to change, she said.

Some Back Mountain residents and elected officials have expressed concern that drilling activities could contaminate water private water wells or the Huntsville and Ceasetown reservoirs.

Wiedenbeck said EnCana has never had an instance in which the company’s hydraulic fracturing process affected a water well.

“In fact, there has never been an instance where the fracking process impacted water wells. We have, however, experienced operational failures, which resulted in regulatory violations and fines. These range from issues with lost circulation during cementing, which resulted in permanent changes to cementing protocols in 2004, to deficiencies with location signage,” she said.

Encana’s violations have ranged a wide gamut, from a $1,000 fine after a contractor’s truck broke down on a mountain road during a restricted time period, preventing parents from picking up their children from a bus stop in 2002, to the largest fine issued by the Colorado Oil & Gas Conservation Commission for allowing gas to migrate into a creek.

The commission fined EnCana a record $371,000 after one of the company’s wells leaked into West Divide Creek in Western Colorado in 2004. The seep was found to contain the carcinogenic chemical benzene.

Wiedenbeck said that fine is included in the total assessed in 2006, and the seep resulted from a failure in cementing procedures at the well.

“We made a mistake. We moved too fast. But we worked with the commission to modify and improve the cementing procedure in Colorado. Since then, we’ve drilled hundreds of wells in Colorado without incident. But (the Divide Creek incident) is part of the reason why we’re taking a very thoughtful and measured approach to our operations in Luzerne County,” she said.

Wiedenbeck also pointed to a vast improvement in EnCana’s record related to spills.

In 2009, EnCana had 75 reportable spills totaling 4,036 barrels of material, a volume reduction of 38 percent from 2008 and 87 less than in 2007, she said.

Dave Neslin, executive director of the Colorado Oil & Gas Conservation Commission, said commission staff views EnCana as “a responsible operator.”

Neslin said EnCana’s compliance has improved since the Divide Creek seep, and the company implemented an extensive remediation plan. “Much of the impact has been remediated,” he said.

Neslin said EnCana is one of the largest operators in the state, responsible for nearly 10 percent of the approximately 40,000 active oil and gas wells in the state.

He noted that the company was the first to voluntarily establish a wildlife mitigation program encompassing 44,000 acres to ensure wildlife populations will be protected, and that EnCana won a commission award last year for the company’s Courtesy Matters community outreach program.

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

Copyright: Times Leader

National Science Foundation gives funds to Pennsylvania College of Technology.

By Andrew M. Sederaseder@timesleader.com
Times Leader Staff Writer

The National Science Foundation has awarded a $294,689 grant to Pennsylvania College of Technology to be used for educating and training high school students for careers in the Marcellus Shale natural gas industry.

According to a release from U.S. Rep. Chris Carney, the award is the first in a continuing $882,134 grant that the foundation anticipates awarding to the Williamsport-based college over the next three years. It will provide funding to develop state-of-the-art, college-level curriculum for many of the nearly 150 occupations related to natural gas extraction.

“The Marcellus Shale formation represents a tremendous opportunity for job growth in clean-energy technology,” said Carney, D-Dimock Township. “This grant from the NSF will help the residents of our region cultivate the skills necessary to work at the forefront of the industry, and on one of the most significant natural resource reservoirs in the nation.”

The courses primarily target secondary students from 23 school districts in central and northern Pennsylvania seeking a head start on college credit through dual-enrollment programs.

“These students will be able to take courses in high school and start college with some credits under their belts,” said Larry Michael, the executive director for work force and economic development at Pennsylvania College of Technology. “The program provides educational pathways for high school students to make a smoother transition and have a leg up for careers in development of the Marcellus Shale.”

Lackawanna College also offers Marcellus Shale-related course offerings, many at its New Milford campus in Susquehanna County. The college was not in the running for funding from the NSF, said Larry Milliken, Natural Gas Technology Program director at Lackawanna College. He said those kinds of grants often go to research facilities, like Penn College.

Lackawanna College has received some funding recently for its gas education program.

Chesapeake Energy, which is one of the major gas drillers operating in Northeastern Pennsylvania, made a $50,000 donation to Lackawanna College to be used for equipment in training students enrolled in the Gas Tech Program.

Andrew M. Seder, a Times Leader staff writer, may be reached at 570-829-7269.

Copyright: Times Leader

WATER SUPPLIES IN BERNALILLO COUNTY ARE THREATENED WITH OIL DRILLING

•    Oil and gas drilling may contaminate pristine drinking water aquifers in Bernalillo County.

Oil and gas companies frequently use a technique, hydraulic fracturing or “fracking,” to increase a well’s production of oil and gas. Fracturing fluids, which often contain toxic chemicals, are injected underground into wells at high pressures to crack open an underground formation and allow oil and/or gas to flow more freely. More than 90 percent of oil and gas wells in the United States undergo fracturing.  While a portion of the injected fluids are transferred to aboveground disposal pits, some of the chemicals may remain underground.

•    Drilling has polluted drinking water in New Mexico, Alabama, Colorado, Virginia, West Virginia and Wyoming.

Residents have reported changes in water quality or quantity following fracturing operations of gas wells.  Here is one homeowner’s account:
Laura Amos, her husband Larry and daughter Lauren live south of Silt in western Colorado.  “We were among the first in our area to have natural gas drilling on our property.  In May 2001 while fracturing four wells on our neighbors’ property (less than 1000 feet from our house) the gas well operator “blew up” our water well.  Fracturing opened a connection between our water well and the gas well, sending the cap of our water well flying and blowing our water into the air like a geyser at Yellowstone. Immediately our water turned gray, had a horrible smell, and bubbled like 7-Up…”

•    Oil and gas drilling wastes water

Oil and gas drilling in the arid west wastes billions of gallons of water and may have potentially devastating economic and environmental impacts for affected communities in the long-term.  Discharging ground water can deplete freshwater aquifers, lower the water table, and dry up the drinking water wells of homeowners and agriculture users.  The water discharged from oil and gas wells is highly saline. This water can permanently change chemical composition of soils, reducing soil, air and water permeability and thereby decreasing native plant and irrigated crop productivity.

•    The oil and gas industry has exemptions from two major laws established to protect the nation’s water—the Clean Water Act and the Safe Drinking Water Act.

The Clean Water Act is our bedrock law that protects American rivers, streams, lakes, wetlands, and other waterways from pollution. These surface waters are often sources of drinking water for people and livestock.  The Safe Drinking Water Act (SDWA) was enacted to protect public drinking water supplies as well as their sources. This Act authorizes health-based standards for drinking water to protect against both naturally occurring and man-made contaminants.

The Safe Drinking Water Act’s Underground Injection Control program protects current and future underground sources of drinking water by regulating the injection of industrial, municipal, and other fluids into groundwater, including the siting, construction, operation, maintenance, monitoring, testing, and closing of underground injection sites.  Unfortunately, the oil and gas industry is exempt from crucial provisions of the Safe Drinking Water Act intended to protect our drinking water.

•    The New Mexico Oil Conservation Division has detected and documented more than 700 incidents of groundwater contamination from oil and gas facilities across the state.

Prior to 1990, only 39 orders were issued against oil and gas companies for contaminating groundwater; since 1990, 705 documented groundwater incidents related to the oil and gas industry have been recorded in New Mexico.

For a PDF version of this fact sheet, click here

For More Information:
www.OGAP.org

Copyright:

New Energy Economy

Encana Gas and Oil spokeswoman says company would be required by the state to correct problems.

By Jen Marckinijmarckini@timesleader.com
Staff Writer

LEHMAN TWP. – Stefanie Spezzia and her husband, Howard, live just outside of a one-mile radius of an exploratory drilling well site in the Back Mountain.

The Spezzias built their Shady Lane home nearly four years ago, but now they worry about the possibility of water contamination due to drilling into the Marcellus Shale for natural gas. It was one of many concerns talked about at a Tuesday evening meeting for neighbors within the proposed “Salansky” gas well site area, as it is called by the company.

“We don’t have the money to put a new well up,” said Stefanie Spezzia. “If the water is contaminated and they can’t fix it, we have nowhere to go.”

EnCana Oil and Gas Inc., which operates from its headquarters in Denver, Colo., has about 8,700 gas wells across the United States. This is the first time the gas company is drilling into the Marcellus, according to Wendy Wiedenbeck, spokeswoman for the eight-year-old natural gas company.

“How safe are we from you polluting our water on your first endeavor?” asked one of the estimated 130 in attendance.

EnCana is attempting to establish a baseline for water quality and quantity conditions by requesting property owners participate in a water sampling assessment, which will be collected by Rettew Associates, a third-party environmental-testing firm based in Lancaster.

Letters were mailed April 8 to landowners located within a mile radius of the well covering Lake and Lehman townships, and Harveys Lake borough.

Wiedenbeck said the gas company would be required by the state to correct water contamination problems.

“We will take every safeguard to not impact your water,” she said to concerned residents.

Wiedenbeck said the company is committed to responsible development and protecting the water by baseline water testing.

But, residents such as the Spezzias and homeowner Libby Davis, who resides with family at their Meeker Outlet Road property just within the well drilling radius, remain skeptical.

Davis, of Lake Township, said she has not signed an access agreement that would allow the collection of water samples.

Township officials voted unanimously on April 13 to allow the company to drill near Peaceful Valley Road.

Jen Marckini, a Times Leader staff writer, may be reached at 829-7210.

Copyright: Times Leader

Sporting groups, conservationists and anti-drilling neighbors protest the large-scale gas exploration.

MICHAEL RUBINKAM Associated Press Writer

PLEASANT MOUNT, Pa. — A few hundred yards from Louis Matoushek’s farmhouse is a well that could soon produce not only natural gas, but a drilling boom in the wild and scenic Delaware River watershed.

Energy companies have leased thousands of acres of land in Pennsylvania’s unspoiled northeastern tip, hoping to tap vast stores of gas in a sprawling rock formation — the Marcellus Shale — that some experts believe could become the nation’s most productive gas field.

Plenty of folks like Matoushek are eager for the gas, and the royalty checks, to start flowing — including farmers who see Marcellus money as a way to keep their struggling operations afloat.

“It’s a depressed area,” Matoushek said. “This is going to mean new jobs, real jobs, not government jobs.”

Standing in the way is a loose coalition of sporting groups, conservationists and anti-drilling neighbors. They contend that large-scale gas exploration so close to crucial waterways will threaten drinking water, ruin a renowned wild trout fishery, wreck property values, and transform a rural area popular with tourists into an industrial zone with constant noise and truck traffic.

Both sides are furiously lobbying the Delaware River Basin Commission, the powerful federal-interstate compact agency that monitors water supplies for 15 million people, including half the population of New York City. The commission has jurisdiction because the drilling process will require withdrawing huge amounts of water from the watershed’s streams and rivers and because of the potential for groundwater pollution.

The well on Matoushek’s 200-acre spread in the northern Pocono Mountains in Wayne County is up first. The commission is reviewing an application by Stone Energy Corp. of Lafayette, La., to extract gas from the well — the first of what could be thousands of applications by energy companies to sink wells in an area roughly the size of Connecticut.

Stone Energy’s application has already generated more than 1,700 written comments to the DRBC. The company, which paid a $70,000 penalty for drilling the Matoushek well without DRBC approval in 2008, has already received a permit from the Pennsylvania Department of Environmental Protection.

Eager gas companies have leased more than 300 square miles of watershed land, conservation officials estimate.

“This is certainly just the start. There’s a lot of acreage out there, and a lot of people interested in leasing their land,” said Tracy Carluccio, deputy director of the anti-drilling Delaware Riverkeeper Network.

The Marcellus Shale is a rock formation 6,000 to 8,000 feet beneath Pennsylvania, New York, West Virginia and Ohio, including about 36 percent of the Delaware River basin. New drilling techniques now allow affordable access to supplies in the Marcellus and other shales in the U.S. that once were too expensive to tap.

Energy companies combine horizontal drilling with hydraulic fracturing, or “fracking,” a technique that injects vast amounts of water, along with sand and chemicals, underground to break up the shale and release the gas.

While gas companies refuse to identify the chemicals they use — claiming that is proprietary information — critics cite contamination problems in other natural gas drilling fields. They worry that unregulated fracking can taint drinking water, deplete aquifers and produce briny wastewater that can kill fish. In Dimock, Pa., about 40 miles west of the Matoushek well but outside the Delaware basin, state environmental regulators say that cracked casings on fracked wells have tainted residential water supplies with methane gas.

The Environmental Protection Agency announced last month that it will study the impact of fracking on the environment and human health. The EPA said in 2004 there was no evidence that fracking threatens drinking water quality, but critics, including a veteran engineer in the Denver regional EPA office, argued that report’s methodology was flawed.

The industry contends environmental concerns are overblown. It says the drilling techniques are safe and that there has never been a proven case of groundwater contamination caused by fracking — in part because fracking occurs far below the water table. Congress exempted hydraulic fracturing from federal oversight in 2005.

Dozens of people told the DRBC at a recent public hearing why they oppose the watershed drilling. A few supporters called it an economic boon and a property-rights issue.

Richard Kreznar, who owns property in the Pennsylvania riverfront community of Damascus, said gas drilling primarily benefits large landowners and exploration companies.

“After the Delaware River and the stream next to my house are messed up, what compensation will I get? Who will put it back together again?” he asked DRBC staff.

Lee Hartman, the Delaware River chairman for Trout Unlimited, worries that large water withdrawals required for fracking will create low stream flows in the Delaware’s tributaries, damaging fish habitat. For the Matoushek well, Stone Energy wants to take 700,000 gallons a day from the Lackawaxen River’s narrow west branch.

Hartman and others say the DRBC should first study the cumulative environmental impacts of drilling in the Delaware watershed, and pass drilling regulations, before it allows any gas extraction to take place. The agency has asked for $250,000 in federal funds for a study, but commissioners have not said whether they will wait before voting on Matoushek’s well.

Opponents say they will sue if Stone Energy’s application is approved.

Downstream communities that rely on the Delaware for drinking water are worried about the coming gas boom. New York City Mayor Michael Bloomberg opposes any drilling in the watershed, while the Philadelphia City Council has asked the basin commission for an environmental study.

New York state regulators have put a moratorium on drilling in the Marcellus region, saying they won’t approve permits until they are finished drafting new regulations.

Back in northeastern Pennsylvania, Matoushek, 68, a semiretired farmer who signed a lease with Stone Energy three years ago, said he is counting on royalty checks from gas production to help fund his golden years and secure the land for future generations of his family. As far he’s concerned, the benefits far outweigh any theoretical harm.

Copyright: Times Leader

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

As energy companies and lease holders extol the benefits and safety of natural gas drilling in the state, and environmentalists and people who live near drilling operations point to chemical spills, water pollution and noise, a congressman last week called for an effort from opposing sides in the energy debate to work together for compromise.

U.S. Rep. Joe Sestak, D-Delaware County, who is running for the U.S. Senate, came to The Peace and Justice Center in Wilkes-Barre on Wednesday to host a forum on Marcellus Shale development.

Panelists included James Shallenberger, a Pennsylvania-licensed geologist and senior project manager at consulting firm Princeton Hydro who spoke on behalf of the gas drilling industry; David T. Messersmith, an extension educator with Penn State Cooperative Extension in Wayne County who is an expert on Marcellus Shale; and Dr. Thomas Jiunta, a Lehman Township resident with a podiatry practice in Kingston who founded Luzerne County Citizens for Clean Water.

“There was a lot of passion in that room. … One side is saying one thing, one side is saying another. I want to be a person who brings people together for a principal compromise, not a compromise of principles,” Sestak said last week in a phone interview.

“I personally believe this is a great economic opportunity for our state, particularly if we are able to benefit by a proper excise tax and if we put the proper protections in place,” Sestak said.

Sestak also said a priority should be enabling community and area colleges to train people for gas industry jobs to ensure Pennsylvanians are getting jobs associated with the drilling industry, rather than leaving energy companies with no choice but to hire experienced people from out-of-state.

Sestak said he learned much about the economic benefits as well as the environmental problems associated with natural gas exploration when he visited several counties in which Marcellus Shale drilling has been ongoing while he was on the campaign trail.

He noted that former Sen. Rick Santorum and Sen. Arlen Specter voted for “the Halliburton Loophole,” which exempts the gas and oil industry from complying with the Safe Water Drinking Act. And he said he supports the “FRAC Act” – Fracturing Responsibility and Awareness of Chemicals Act, which would amend the Safe Drinking Water Act to include the gas and oil industry.

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

Copyright: Times Leader