Posts Tagged ‘Washington’

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

Victoria Switzer watches the trucks, at least 100 of them she estimates, ramble past her Dimock Township home every day. They go back and forth from the Cabot Oil and Gas drill sites, hauling equipment, waste water and materials.

She worries what would happen if there was a spill, if the operator wasn’t properly licensed, if the truck wasn’t mechanically sound.

For years she’s been calling state officials and complaining about their speed, their actions and what she saw as violations. Last week some agencies heeded the call of Switzer and others like her and made a concerted effort to send a message to the truck operators that though they are permitted to operate, they need to do so legally.

During a three-day enforcement effort last week that focused on trucks hauling waste water from Marcellus Shale natural gas drilling operations across the state, the state police placed 250 commercial vehicles out of service.

State Police Commissioner Frank E. Pawlowski said state troopers worked in partnership with personnel from the Department of Environmental Protection, the Pennsylvania Public Utility Commission and the federal Motor Carrier Safety Administration as part of Operation FracNET.

In total, 1,137 trucks were inspected from June 14-16.

“Pennsylvania has experienced significant increases in heavy truck traffic in areas where Marcellus Shale natural gas drilling operations are taking place, particularly in Bradford, Clearfield, Susquehanna, Tioga and Washington counties,” Pawlowski said. “The process of hydraulic fracturing, or fracking, requires significant amounts of water to be delivered to the sites and later trucked away.”

He said the enforcement effort centered on identifying commercial vehicle safety deficiencies that could lead to crashes. Pawlowski said 131 of the 250 vehicles placed out of service were trucks hauling waste water. He said 669 traffic citations and 818 written warnings were issued as the result of waste water truck inspections. In addition, 23 of the 45 drivers placed out of service during the operation were waste water vehicle operators.

“As activities at natural gas sites continue to increase, it is important that everyone involved, including the waste transportation industry, understands Pennsylvania’s environmental and traffic safety laws and complies with them,” said DEP Secretary John Hanger.

“Cracking down, I’m thrilled to see it,” said Switzer, who is one of a dozen property owners in the Susquehanna County township that have had their well water polluted by oil drilling. “Better late than never.”

Mark Carmon, spokesman for DEP’s Northeast Regional office, said that three trucks were cited in Susquehanna County out of the 30 that were stopped. Two of the trucks were not carrying Prevention Preparedness Contingency plans, which list what chemicals are being hauled, emergency contact numbers in case of a spill and plans for cleanup. One of the trucks did not have proof of waste hauling certification, and one truck did not have its waste log book listing what it was hauling and from and to where.

Carmon said the operation provided “a good opportunity to check these trucks” and said it will be an ongoing measure.

Lt. Myra A. Taylor, a state police spokeswoman, said a decision was made to “make a concerted effort to blitz these particular areas,” in part, because of concerns raised by residents.

“I applaud the citizenry,” Taylor said. And she echoed Carmon’s comments that these inspections will not be a one-time event.

“We will be ever vigilant,” she said.

State Rep. Karen Boback, R-Harveys Lake, praised the offices involved in the operation.

“I applaud our state agencies and the state police for working together to monitor frack water hauling operations. It is vital that we continue to scrutinize every phase, aspect and offshoot of the drilling process, and I encourage law enforcement to persist in efforts to root out those operators who are not acting in accordance with Pennsylvania laws and potentially endangering the lives and health of Commonwealth residents, along with our environment,” she said.

Taylor said the truck violations found ran the gamut mechanical issues to overweight trucks. Driver citations included drivers operating without a proper license and drivers who were operating without enough rest or working too many hours in a day.

A list of what trucking companies were cited was not available by the state police or DEP.

A statement from the executive director of the Marcellus Shale Coalition, a pro-drilling organization, said steps have been taken and will continue to be taken to reduce gas-related truck traffic.

Copyright: Times Leader

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

WILKES-BARRE – A representative of a trade association for the oil and natural gas industry defended her members’ record on environmental issues Tuesday during a meeting with The Times Leader editorial board.

Sara Banaszak, senior economist with the American Petroleum Institute in Washington, D.C., also shared her perspectives on federal regulation and state taxation of the industry.

Banaszak indicated she understands concerns that residents of the region might have, given the legacy of coal barons profiting from the region’s anthracite, disappearing with their profits, and leaving future generations to deal with stripping pits, mine subsidence, acidic streams and lung disease.

“From the industry perspective, no accident and no amount of pollution is acceptable. It’s not sustainable for the industry. If I’m polluting your water, I know I’m going to be tossed out of town in two minutes, so it’s not in my interest,” Banaszak said.

Banaszak said any industrial process can be dangerous, “and anything we do has impacts on the earth. So what we’re trying to do is continuously and on an ongoing basis employ best knowledge, best practices and the technological development and the regulation needed to make sure that we’re getting the best that we can. And the best that we can has to be clean water. We have to have clean water,” she said.

Banaszak said many people don’t realize there is already regulation in place to protect Pennsylvania from water pollution.

“Even if I get a lease, I’m not going to drill a well or even move equipment onto that site until I’ve presented to the state of Pennsylvania a well drilling plan, and a well drilling plan has a water management plan attached to it,” she said.

Much concern has been raised about “fracking” – the hydraulic fracturing of rock to release natural gas.

Banaszak said fracking has been used in the industry since the 1940s. And when the Safe Drinking Water Act was passed in 1974, the U.S. Environmental Protection Agency found it unnecessary to regulate because it wasn’t threatening drinking water. The manner in which it was being managed at the state level was sufficient to protect drinking water, she said.

Banaszak said problems with the completion of drilling and cementing of wells or poor management of fracking fluid on the surface led to pollution of groundwater, not the fracking process itself. She said more oversight is needed for those practices.

Banaszak said gas companies don’t want to reveal formulas for fracking fluids because they are proprietary. But the industry doesn’t oppose disclosing the proprietary information to state regulators, local authorities and hospitals if the information is kept confidential, she said.

Banaszak said making the EPA responsible for oversight of fracking would require the agency to develop a new oversight program or dramatically overhaul its program regulating underground use of fluids.

A complete overhaul would be a slow process, taking six months to two years to develop a proposal, plus more time for advertising, public comment and developing draft and final plans.

“That’s why there’s so much concern. It’s not a simple matter just to say, oh, we’re just asking under federal law for the disclosure of chemicals,” she said.

Regarding concerns about fracking depleting water supplies, Banaszak said that even at double the peak drilling level in the Barnett Shale in Texas, which is 10 times greater than Marcellus drilling was in 2009, water use would represent only half of what is used for recreational purposes in Pennsylvania, such as golf course and ski slope maintenance.

As for economics, Banaszak said imposing a severance tax on natural gas production could actually hamper economic development.

Although the Marcellus Shale is the second-largest natural gas field in the world, she said other sources are available to investors. She said it seems natural to assume that the state could gain more revenue through taxing natural gas production, but the issue can be counter-intuitive.

“If you impose a tax, you get less investment and the government could see less net revenues. … If you let the situation go, the amount of government revenue you collect could actually be more,” she said.

The pipeline infrastructure in the Northeast is old and difficult to tap, requiring much investment. In West Virginia, where taxes there are 10 percent higher, “you see dramatically low investment,” Banaszak said.

Copyright: Times Leader

Cleaner than coal and cheaper than oil, a 90-year supply is under our feet, experts say.

By MARK WILLIAMSAP Energy Writer

An unlikely source of energy has emerged to meet international demands that the United States do more to fight global warming: It’s cleaner than coal, cheaper than oil and a 90-year supply is under our feet.

It’s natural gas, the same fossil fuel that was in such short supply a decade ago that it was deemed unreliable. It’s now being uncovered at such a rapid pace that its price is near a seven-year low.

Long used to heat half the nation’s homes, it’s becoming the fuel of choice when building new power plants. Someday, it may win wider acceptance as a replacement for gasoline in our cars and trucks.

Natural gas’ abundance and low price come as governments around the world debate how to curtail carbon dioxide and other pollution that contribute to global warming. The likely outcome is a tax on companies that spew excessive greenhouse gases. Utilities and other companies see natural gas as a way to lower emissions — and their costs. Yet politicians aren’t stumping for it.

In June, President Barack Obama lumped natural gas with oil and coal as energy sources the nation must move away from. He touts alternative sources — solar, wind and biofuels derived from corn and other plants. In Congress, the energy debate has focused on finding cleaner coal and saving thousands of mining jobs from West Virginia to Wyoming.

Utilities in the U.S. aren’t waiting for Washington to jump on the gas bandwagon. Looming climate legislation has altered the calculus that they use to determine the cheapest way to deliver power. Coal may still be cheaper, but natural gas emits half as much carbon when burned to generate the same amount electricity.

Today, about 27 percent of the nation’s carbon dioxide emissions come from coal-fired power plants, which generate 44 percent of the electricity used in the U.S. Just under 25 percent of power comes from burning natural gas, more than double its share a decade ago but still with room to grow.

But the fuel has to be plentiful and its price stable — and that has not always been the case with natural gas. In the 1990s, factories that wanted to burn gas instead of coal had to install equipment that did both because the gas supply was uncertain and wild price swings were common. In some states, because of feared shortages, homebuilders were told new gas hookups were banned.

It’s a different story today. Energy experts believe that the huge volume of supply now will ease price swings and supply worries.

Gas now trades on futures markets for about $5.50 per 1,000 cubic feet. While that’s up from a recent low of $2.41 in September as the recession reduced demand and storage caverns filled to overflowing, it’s less than half what it was in the summer of 2008 when oil prices surged close to $150 a barrel.

Oil and gas prices trends have since diverged, due to the recession and the growing realization of just how much gas has been discovered in the last three years. That’s thanks to the introduction of horizontal drilling technology that has unlocked stunning amounts of gas in what were before off-limits shale formations. Estimates of total gas reserves have jumped 58 percent from 2004 to 2008, giving the U.S. a 90-year supply at the current usage rate of about 23 trillion cubic feet of year.

The only question is whether enough gas can be delivered at affordable enough prices for these trends to accelerate.

The world’s largest oil company, Exxon Mobil Corp., gave its answer last Monday when it announced a $30 billion deal to acquire XTO Energy Inc. The move will make it the country’s No. 1 producer of natural gas.

Exxon expects to be able to dramatically boost natural gas sales to electric utilities. In fact, CEO Rex Tillerson says that’s why the deal is such a smart investment.

Tillerson says he sees demand for natural gas growing 50 percent by 2030, much of it for electricity generation and running factories. Decisions being made by executives at power companies lend credence to that forecast.

Consider Progress Energy Inc., which scrapped a $2 billion plan this month to add scrubbers needed to reduce sulfur emissions at 4 older coal-fired power plants in North Carolina. Instead, it will phase out those plants and redirect a portion of those funds toward cleaner burning gas-fired plants.

Lloyd Yates, CEO of Progess Energy Carolina, says planners were 99 percent certain that retrofitting plants made sense when they began a review late last year. But then gas prices began falling and the recession prompted gas-turbine makers to slash prices just as global warming pressures intensified.

“Everyone saw it pretty quickly,” he says. Out went coal, in comes gas. “The environmental component of coal is where we see instability.”

Nevada power company NV Energy Inc. canceled plans for a $5 billion coal-fired plant early this year. That came after its homestate senator, Majority Leader Harry Reid, made it clear he would fight to block its approval, and executives’ fears mounted about the costs of meeting future environmental rules.

“It was obvious to us that Congress or the EPA or both were going to act to reduce carbon emissions,” said CEO Michael Yackira, whose utility already gets two-thirds of its electricity from gas-fired units. “Without understanding the economic ramifications, it would have been foolish for us to go forward.”

Even with an expected jump in demand from utilities, gas prices won’t rise much beyond $6.50 per 1,000 cubic feet for years to come, says Ken Medlock, an energy fellow at the James A. Baker III Institute for Public Policy at Rice University in Houston. That tracks an Energy Department estimate made last week.

Such forecasts are based in part on a belief that the recent spurt in gas discoveries may only be the start of a golden age for gas drillers — one that creates wealth that rivals the so-called Gusher Age of the early 20th century, when strikes in Texas created a new class of oil barons.

XTO, the company that Exxon is buying, was one of the pioneers in developing new drilling technologies that allow a single well to descend 9,000 feet and then bore horizontally through shale formations up to 1 1/2 miles away. Water, sand and chemical additives are pumped through these pipes to unlock trillions of cubic feet of natural gas that until recently had been judged unobtainable.

Even with the big increases in reserves they were logging, expansion plans by XTO and its rivals were limited by the debt they took on to finance these projects that can cost as much as $3 million apiece.

Under Exxon, which earned $45.2 billion last year, that barrier has been obliterated.

Copyright: Times Leader

By MARC LEVY Associated Press Writer

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

___

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

Copyright 2008 The Associated Press.

By JOSEPH B. WHITE The Wall Street Journal

First it was ethanol made from corn. Then ethanol made from twigs and stems and trash. Then, the future was going to belong to hydrogen. Now, the alternative fuel flavor of the month in Washington is natural gas.

You may know this already, thanks to vigorous public-relations campaigns mounted to promote natural gas as a vehicle fuel by energy billionaire T. Boone Pickens and allies such as Chesapeake Energy Chairman and Chief Executive Officer Aubrey McClendon. Mr. Pickens touts natural gas as a fuel for cars as part of his broad “Pickens Plan” to reduce America’s dependence on foreign oil.

Mr. Pickens, in a television ad, summarizes his case for using natural gas as a vehicle fuel in nine words: “It’s cleaner. It’s cheaper. It’s abundant. And it’s ours.”

Nothing is ever that simple in the energy business. A lot of natural gas isn’t “ours.” It belongs to the same companies that currently supply us with oil, or to big gas utilities such as Ch esapeake. But Mr. Pickens is correct when he says that natural gas is abundant in the U.S. Recent advances in drilling technology have made it possible to exploit gas reserves that weren’t economical to tap before, such as the Marcellus Shale in the Appalachian region of the Northeastern U.S.

The macro problem that Mr. Pickens and gas industry executives need to solve is what to do with all that new gas – assuming it becomes available as forecast. Already, natural-gas prices have slumped about 40 percent since May. Grabbing some of petroleum’s more than 90 percent share of the U.S. vehicle fuels market is a smart strategy for the gas industry.

The question for consumers who don’t own shares in natural-gas companies is whether a compressed-gas fueled vehicle is a better deal than some other green technology, or the status quo.

The only natural gas car on the U.S. market right now is a Honda Civic GX. Honda Motor Co. let me borrow one for a few days to road t est the NGV (natural-gas vehicle) lifestyle.

Driving the Civic GX isn’t different than driving a standard, petrol-fueled car. My white test car had an automatic transmission and the usual bells and whistles. The adventure of driving a natural-gas fueled Civic only starts when the fuel gauge gets close to empty – and that happens fairly quickly because the car’s range is only 200 to 220 miles between fill-ups.

At this point, you’ll need an Internet connection to help you find a public natural-gas vehicle refueling station in your metro area. If you are fortunate will you find one in your ZIP code, because there are only about 1,100 natural-gas refueling stations in the U.S. The closest one to my house was about 18 miles away at a depot owned by the City of Ann Arbor.

The unmanned refueling station had an imposing looking pump with two hoses that dispensed compressed gas at different pressures. The Civic’s manual explained that I should use the one marked 360 0 pounds per square inch. Behind the Civic GX’s fuel door is a nozzle fitting. After a couple of tries, I got the fitting from the high-pressure hose properly locked on, and threw a lever on the pump to “On” to start the flow.

I realize it was irrational and techno-phobic to worry that I would somehow overfill the compressed gas tank on board the car and turn my Civic into an explosive device. Let’s say that I was nervous enough that I had done something wrong that when the pump shut off automatically, I was relieved, even though the system had only refilled the tank to the half-full mark. Mr. Pickens could add another element to his plan: It will create jobs for filling station attendants who can help nervous natural-gas newbies.

On the positive side, my natural gas was about half the price of the equivalent quantity of gasoline – $1.94 a gallon.

The Honda Civic GX illustrates almost perfectly the chicken-and-egg problems besetting efforts to wean personal transportation in the U.S. away from petroleum fuels.

Because there aren’t many natural-gas refueling stations, Honda only builds a couple of thousand natural-gas Civics a year, and other car makers are reluctant to push the technology to consumers. Because there are so few natural-gas vehicles, outside of commercial or government fleets, fuel retailers don’t have much incentive to sink $500,000 to $750,000 into a natural-gas refilling station capable of handling cars as rapidly as a conventional gas station can, says Richard Kolodziej, president of NGV America, a Washington advocacy group that represents about 100 natural-gas companies and other enterprises with a stake in promoting natural gas as a motor fuel.

Because there is little demand for natural-gas vehicles, the ones that are available come with a hefty price premium, in part because their fuel tanks aren’t molded plastic, but are instead heavily engineered, high-pressure tanks. A Civic GX lists for ab out $24,590, compared to about $17,760 for the mid-range Civic LX on which it is based. Tax credits can offset as much as $4,000 of that price. And in some states, natural-gas cars can use high-occupancy vehicle express lanes – a major perk for time-pressed commuters.

The Civic GX achieves about 24 miles to the gallon in the city and 36 on the highway, when its consumption is converted to gasoline equivalent miles per gallon, Honda says. The Environmental Protection Agency estimates the GX’s annual fuel costs at $884 a year, compared to $1,987 a year for a petroleum-fueled Civic. That indicates a payback, after the tax credit, of about 2½ years on the premium over the standard car.

One problem with the natural-gas Civic, Mr. Kolodziej concedes, is that it doesn’t look any different than a normal car. It doesn’t advertise the owner’s green cred the way a Prius does. “Where’s the sex in that?” He asks. “The sex comes in when you fill up for $10.”

Mr. Kolodzie j says he refuels his Civic GX using a Phill home-fueling system. This costs about $5,000 and allows a natural-gas vehicle owner to refuel overnight with gas from the lines running into the house. (A $1,000 tax credit is available for the Phill system.) But the hardware in Mr. Kolodziej’s garage isn’t all that’s different. He also says he doesn’t care that the vehicle has a limited range and takes hours to refill using the home refueling device.

“I go to work. I go to the store,” he says. “That’s what 99 percent of people do. Americans want to be able to drive to California tomorrow. They won’t.”

Mr. Kolodziej would say that. But he’s right. A switch to natural-gas cars would require a change of attitudes and expectations both by consumers and car makers. More of us would need to accept owning a car that can do one job – commuting and running errands in fewer than 200 miles a day. It’s the same fundamental proposition behind plug-in hybrids such as the Chevrolet Volt or plug-in Prius.

The big hurdle for natural-gas vehicles is that somebody will need to invest substantial sums in a consumer refueling infrastructure. The gas industry was hoping that somebody would be Uncle Sam. Unfortunately, Congress just found out last week it may have to spend $700 billion salvaging the global financial system. That could put big federal subsidies for natural-gas cars – and a lot of other worthy ideas – on the back burner.

___

Send comments about Eyes on the Road to joseph.white@wsj.com.

Copyright 2008 The Associated Press.

Posted At: Times Leader