Posts Tagged ‘Wilkes-Barre’

By Elizabeth Skrapits (Staff Writer)
Published: July 26, 2010

HARVEYS LAKE – The natural gas company planning two exploratory natural gas wells in Noxen is steering clear of nearby Harveys Lake.

“Carrizo has no intention of drilling under Harveys Lake or anywhere near Harveys Lake,” Carrizo Marcellus LLC spokesman Phillip Corey said. “Our first well, the closest point to the lake as the crow flies, is almost 3 miles away.”

The company leased more than 3,000 acres of Sterling Farms, property belonging to the Sordoni family. While most of the property is in Noxen Township, some is in Harveys Lake Borough, he said. However, the company does not have rights to drill under Harveys Lake and doesn’t want to, anyway, Corey said.

“You can’t just go out there to drop a hole wherever you please,” he said.

Harveys Lake resident Guy Giordano, who is vocal about keeping contaminants out of the lake, said it’s good news that Carrizo is not drilling in the borough – but it’s still a little too close for him.

“That still doesn’t give me a lot of comfort. Thirty miles, yeah, but 3 miles, I’m not so sure,” he said.

Hydraulic fracturing, commonly called “fracking,” involves blasting millions of gallons of chemical-treated water thousands of feet underground to break up the shale and release the natural gas.

The fact that some of these chemicals are not disclosed bothers Giordano.

“Why can’t they use something non-toxic?” he asked. “I can’t believe the government would let anyone put anything in the ground that’s secret.”

State law allows natural gas companies to drill up to 100 feet away from a water source. State Rep. Karen Boback, R-Harveys Lake, wants to expand the buffer to 2,500 feet away from drinking water sources, as well as lakes and other bodies of water that are governed by boroughs or second-class townships. She also wants to prohibit drilling beneath them.

Boback has also signed on as a co-sponsor to state Rep. Phyllis Mundy’s bill calling for a one-year moratorium on natural gas drilling in Pennsylvania.

Corey said Carrizo will test the drinking water of residents around the drilling site, as required in the lease, which also calls for staying at least 500 feet away from any structure or water source.

He said Carrizo has not decided which direction, if at all, to drill horizontally. The company might just stick with a vertical well to see what’s there, he said.

“We’re going to play this very conservatively,” Corey said.

Giordano stressed that he does not oppose natural gas drilling.

“I’m glad these people got the money for these drilling leases, God bless ‘em. They deserve it,” he said. “But I wish they didn’t have to drill. If it’s rural, it’s OK, the risk is not that great. But when you’re talking about a densely populated area, it’s not worth it. I don’t see how they can take the risk.”

Ceasetown connection

Giordano pulled his minivan to the side of the road to get a better look at the Ceasetown Dam, slightly misty in the summer rain and surrounded by lush green foliage.

This is one of the main reasons he worries about Harveys Lake becoming contaminated.

“A few years ago I had a sample of lake water tested at the Kirby Health Center,” Giordano confessed. “It passed as drinking water.”

Harveys Lake is the source of Harveys Creek. Pennsylvania American Water Co. spokesman Terry Maenza said the company uses Harveys Creek as a backup water supply for the Ceasetown Reservoir. It isn’t used often but it’s there for emergencies, he said.

The Ceasetown Reservoir in Lehman Township serves about 70,000 people in all or parts of Ashley, Courtdale, Conyngham Township, Edwardsville, Hanover Township, Hunlock Township, Larksville, Nanticoke, Newport Township, Plymouth, Plymouth Township, Pringle, Salem Township, Shickshinny, Wilkes-Barre and Wilkes-Barre Township.

“We have done some sampling from Harveys Creek to get some baseline data, so we have that information on file if and when any drilling does take place in the future,” Maenza said.

The Susquehanna River Basin Commission, which regulates large water withdrawals from sources within the river basin, has not issued permits for any natural gas companies to take water from anywhere in Luzerne County, including the Ceasetown or Huntsville reservoirs.

Besides permits from the commission, “There are other permits they would have to get through us before they could start taking our water,” Maenza said.

Last week, there were water tankers at the Huntsville Reservoir, but they were removing sludge, Maenza said. When the filters at the water treatment centers are backwashed, the sludge goes into a lagoon, he explained. About 95 percent of it is recycled, including for agricultural use, he said.

When it comes to natural gas drilling, Maenza said Pennsylvania American Water officials are being vigilant, talking to the state Department of Environmental Protection about permits, keeping in constant touch with legislators including Boback, Mundy, and state Sen. Lisa Baker, R-Lehman Township.

Maenza said the company has also been in contact with Encana Oil & Gas USA Inc., which started site preparations for a second exploratory natural gas well on Zosh Road in Lake Township on Wednesday, the same day Encana began drilling its first well in Fairmount Township.

“Nobody’s more concerned than us,” Maenza said. “This is our business. Water quality is what we rely on. We don’t want anything to put our water supply in jeopardy.”

eskrapits@citizensvoice.com , 570-821-2072

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Copyright:  The Citizens Voice

By Bob Kalinowski (Staff Writer)
Published: June 25, 2010

WILKES-BARRE – State Rep. Phyllis Mundy on Wednesday moved ahead with a plan to halt all new natural gas drilling permits in Pennsylvania and two other proposals aimed at protecting drinking-water sources from contamination related to drilling.

Ms. Mundy, D-120, Kingston, formally introduced two bills and a resolution in the state House, which include:

n House Bill 2609, which would establish a one-year moratorium on the issuance of new natural gas drilling permits to give state officials more time to analyze the Marcellus Shale drilling industry and make sure proper protections are in place.

n House Bill 2608 would prohibit natural gas drilling companies that use fracking, or horizontal drilling, from drilling wells within 2,500 feet of a primary source of supply for a community water system, such as a lake or reservoir. The current restriction is only 100 feet.

n House Resolution 864 would urge Congress to pass the Fracturing Responsibility and Awareness of Chemicals Act. It asks Congress to repeal a provision in the federal Safe Drinking Water Act, known as the “Halliburton loophole,” that exempts oil and gas drilling industries from restrictions on hydraulic fracturing near drinking-water sources. The act also would require oil and gas industries to disclose all hydraulic fracturing chemicals and chemical constituents currently considered proprietary rights of the company.

There was no indication if or when the bills would come up for a vote by the House.

Contact the writer: bkalinowski@citizensvoice.com

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Copyright:  The Scranton Times

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

That situation could shift, says co-author of study of political donations.

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

While natural gas companies and their related political action committees have given millions of dollars to elected officials throughout Pennsylvania since 2001, the donations have not flowed as heavily into the coffers of politicians serving Luzerne County.

One of the authors of a report that looked at the correlation of campaign contributions and legislation related to the natural gas drilling industry predicted they soon will.

A study released this week by the non-profit organization Pennsylvania Common Cause, takes a look at the link between gas firms and political donations and finds that since 2001, the industry has contributed $2.8 million to political candidates in Pennsylvania.

The study, titled “Deep Drilling, Deep Pockets” also reports that since 2007 the industry has spent $4.2 million to lobby members of the state legislature and the Rendell administration.

“I think part of the industry’s success is cultivating people at the very top,” said James Browning, director of development for Pennsylvania Common Cause and one of two men who put the report together.

The report includes a list of the top 25 recipients of the funding from Jan. 1, 2001 through April of 2010. At the top of the list is state Attorney General Tom Corbett, a Republican candidate for governor. He received $361,207, according to the report. Two previous gubernatorial candidates also made the list – Mike Fisher, who lost his bid in 2002, accepted $98,386, and Lynn Swan, who lost his bid in 2006, took in $351,263. Both men are Republicans.

Gov. Ed Rendell is sixth on the list. The Democrat from Philadelphia has accepted $84,100 in campaign contributions over the past nine and a third years. Current Democratic candidates for governor Dan Onorato, $59,300 and Jack Wagner, $44,550, ranked seventh and 10th respectively.

Others on the list include current and former judges, a former lieutenant governor, a candidate this year for that same post, a former candidate for the state House and numerous current members of the General Assembly.

Not one of the seven state House members or four state senators who represent Luzerne County made the top 25 list. In fact, according to records on the Department of State website and those provided by Pennsylvania Common Cause, campaigns for four of the seven House members did not receive one dime from the gas companies. The four are: Jim Wansacz, D-Old Forge; Phyllis Mundy, D-Kingston; Eddie Day Pashinski, D-Wilkes-Barre; and Mike Carroll, D-Avoca.

Rep. Karen Boback, R-Harveys Lake, accepted $250 from Chesapeake Energy Corp. Fed PAC on Oct. 9, 2009. Boback said that money was accepted by mistake and returned two months later. She said it is her policy “not to solicit or accept contributions from oil or gas companies.”

Rep. John Yudichak, D-Plymouth Twp., accepted $250 on April 10, 2008, from the PAC affiliated with Dominion Energy. Rep. Todd A. Eachus, D-Butler Township, accepted $500 from EQT Corp. PAC on July 2, 2009; $500 from EXCO Resources PAC on Oct. 20, 2008; and $250 from Equitable Resources, Inc. PAC on Sept. 30, 2008.

Of the four senators who represent a portion of Luzerne County, Bob Mellow, D-Peckville, took in the most at $3,000. That encompasses eight total donations, four from the Equitable Resources, Inc. Political Involvement Committee totaling $1,750 and four from the NFG PA PAC, affiliated with Seneca Resources, totaling $1,250. He declined comment through a spokeswoman, saying that he had not yet seen the report.

Sen. John Gordner, R-Berwick, accepted three donations of $500 from Dominion PAC. One came in 2004, another in 2006 and the third in 2008. His term does not expire for another two years.

Sen. Ray Musto, D-Pittston Township, accepted $500 from the Marathon Oil Co. Employees PAC on Oct. 20, 2008. Earlier this year, the veteran lawmaker announced he was retiring and not seeking another term in Harrisburg.

Sen. Lisa Baker, R-Lehman Township, accepted three donations at $500 apiece. One came from Cabot Oil and Gas on April 22, 2009; another was from EXCO Resources PAC on Nov. 19, 2008; and on April, 22, 2009, she accepted one from NFG PA PAC.

Browning said that as pressure from the public is placed on officials to tax the industry and approve more regulations, the elected officials at all levels of government, even those in non-leadership positions, will begin to see the money.

“I will predict that as there are more votes and as drilling expands, the money will come,” Browning said.

It will not head to Baker anymore.

The senator, who is seeking her second term in office this year, said, “Because of the sensitivity of the issues revolving around gas drilling, I am not asking for contributions from the gas drilling interests, nor am I accepting them.”

Barry Kauffman, executive director for Pennsylvania Common Cause, said the report illustrates the “power of political money in the governing process.” He said that as discussions about securing access to state forest land for drilling and severance taxes on natural gas production have popped up the past two years, lobbyist and campaign contribution spending have increased. The results have been no taxes have been approved and the state leased state land for drillers.

Baker said that she votes in response to her constituents, not her contributors.

“My legislative decision-making takes into account a variety of factors, but campaign contributions are never one of them. If anyone who contributes believes they are gaining special access or assuring a result, they will be sorely disappointed. That no-connection principle applies irrespective of the size of the contribution,” Baker said.

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

Coyright: Times Leader

A panel offers an update on legislation, which turns out to center on money.

By Rory Sweeney rsweeney@timesleader.com
Staff Writer

BENTON – With interest increasing in drilling for natural gas in the Marcellus Shale, there’s a whole swirl of legislation related to it being considered in Harrisburg, but much of it comes down to money.

“A lot of what goes on in Harrisburg is who’s gonna pay to make the pie and who’s going to get a piece,” said state Rep. Garth Everett, R-Lycoming. “The fight is how we’re going to divide up the pie. … We want to see the Commonwealth get its fair share, but we also don’t want to … go New York on them and drive them away.”

Everett was among two other representatives – Karen Boback, R-Harveys Lake, and David Millard, R-Columbia – who spoke on Thursday evening at a meeting of the Columbia County Landowners Coalition.

A state Department of Environmental Protection official and a Penn State University educator were also on the panel.

Everett described the intention and status of nearly 20 bills throughout the legislature, noting that they fit into four categories: taxation and where the money goes, water protection, access to information and surface-owner rights.

While some likely won’t ever see a vote, Everett said a few will probably pass this session, including a bill that would require companies to release well production information within six months instead of the current five years.

He said a tax on the gas extraction also seems likely “at some point.”

For the most part, the industry received a pass at the meeting, with most comments favorable. One woman suggested companies might underreport the amount of gas they take out and questioned what’s being done to help landowners keep them honest.

Dave Messersmith of Penn State suggested that an addendum to each lease should be the opportunity for an annual audit of the company’s logs.

Robert Yowell, the director of the DEP’s north-central regional office, said the rush to drill in the shale happened so quickly that DEP is still trying to catch up with regulations. Likewise, he said, companies are still becoming acquainted with differences here from where they’re used to drilling.

“When they first came to town, I don’t think they realized how widely our streams fluctuated,” he said.

He added some public perceptions need to be changed – such as the belief that people aren’t naturally exposed to radiation all the time – and that he felt confident that “this can be done safely.”

In response to contamination issues in Dimock Township in Susquehanna County, DEP is upgrading and standardizing its requirements for well casings, Everett said. He added that it’s being suggested the contamination in might have been caused by “odd geology.”

“Every time humans do anything, there’s an impact on the land,” he said. “We just need to balance this right so that we end up with something we’re happy with when we’re done.”

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

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More than 650 acres are available. Drilling firms being contacted directly.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

Luzerne County began seeking bids Monday to lease more than 650 acres at Moon Lake Park for natural gas drilling.

In an effort to entice a bidder, county engineer Joe Gibbons said he is contacting drilling companies directly.

“I’m trying to swing it in our favor. I’m sending e-mails out to the gas industry to see if anyone’s interested in receiving a set of bid documents,” he said. “It’s up in the air because the commodities are in the tank right now. … I’m kind of optimistic. I hope we get somebody.”

Potential bidders can review and pick up the documents at the county property and supply office in Penn Place at 20 N. Pennsylvania Ave., Wilkes-Barre. The bids are due by 2 p.m. April 23, but must be pre-qualified by April 9.

The proposal is modeled, Gibbons said, on that used by the state Department of Conservation and Natural Resources.

The request for proposals was structured, he said, so that the county receives several revenue sources from the deal and retains authority over where drill pads would be located in the park. “The last thing I want to do is make the place look like an open construction site. I want to maintain its recreational integrity. It’s just a unique project,” he said.

The county would receive income from the rental of the drilled acreage; the sale of the timber felled when preparing the drilling sites; other marketable fluids, such as methane or oil, that are extracted from the drilling; and storage fees for gas that is stored when an exploratory well is drilled, but capped until it can be hooked up to a pipeline, he said. “They can have the storage, that’s fine, but we get the storage rental,” he said.

All bidders would have to offer at least 16 percent royalties on the price at the well head for any marketable fluids it produces, he said.

The winning bidder will offer the highest initial-year rental fee for the acreage, he said, which was set for at least $500 per acre. After that, the fee drops to between $10 and $20 per year, he said, but there is a stipulation that drilling begin within a year.

The winning bidder would post three bonds, including one to ensure the site is restored after drilling concludes, he said. “I put restrictions on where they could take water from and how much they could take, even above and beyond what DEP (the state Department of Environmental Protection) would issue in a mining permit,” he said.

The bids would also have to be pre-qualified to ensure they are from actual drilling companies planning development and not land-holding companies expecting to resell the land, he said. “If we do get a lease, I want to deal directly with the gas company. I don’t want to go through a middle man,” he said.

Copyright: Times Leader

Insiders say price declines and credit issues are limiting lease bids and bonus payment offers.

The natural-gas windfall seems to have dried up – at least for now.

Commodity price declines, disappearing credit worthiness and companies transitioning to produce gas from the lands they’ve leased have combined to limit lease bids and reduce bonus payment offers.

“Not only are we noticing it, there’s no argument that’s not happening,” said Jack Sordoni, who owns the Wilkes-Barre-based fossil-fuel drilling company Homeland Energy Ventures LLC and is negotiating leases for local landowners.

Though he’s recently inked leases in Fairmount Township with $2,850 per acre up-front bonuses, he said he’s also recently had similar offers in the same area fall to $2,000 per acre. Other sources are reporting offers dropping back to pre-summer levels of several hundred dollars.

Part of the cause for the change, he noted, is that some large companies have dropped out of the leasing competition because prices have fallen and the credit crisis has hampered their ability to take on short-term debt.

“I would suspect, not being an economist, that they would have pretty far reaching” effects, he said. “The ones who are signing aren’t competing with as many players, so the prices aren’t going to be as high.”

The companies say the clock is ticking on beginning work on existing leases, so they’re focusing on filling out the gaps in the territories they’ve already locked up.

“We have moved from the lease acquisition phase to the development phase,” Chesapeake Energy spokesman Matt Sheppard wrote in an e-mail. “We are leasing strategically to support our existing leasehold.”

Sheppard said that for Chief Oil & Gas and many companies “it is more of a shift to moving dollars into drilling and development” instead of continuing to build leasehold in unproven areas.

Chief Oil & Gas spokeswoman Kristi Gittins wrote in an e-mail: “A lot of acreage has been leased. As drilling begins and areas prove out, leasing should pick up.”

Sordoni said that in the business “a lot of times we call that ‘going operational,’ and think for many of them, that’s true.”

With drilling and production increasing, natural gas prices have dropped about 50 percent in the past half year, he noted.

“This was a gold rush at the beginning. It was a frantic pace. Companies were scrambling. The pullback of the commodity prices has certainly led to a slowdown,” he said.

But there are some positive indications for unsigned properties. For example, companies have already shown indications of ramping up production in the region.

Gittins said Chief will soon have four rigs in the region, including one made specially for maneuvering in the hilly Appalachian region, and two more by early 2009.

First, the gas isn’t going anywhere. Horizontal drilling only allows vertical fracturing of rock, and it’s illegal to drill beyond the leased boundaries. So the rule of capture – which allows gas or oil to be collected from a rock fracture that crosses a lease boundary – doesn’t apply.

Secondly, companies have already shown indications of ramping up production in the region.

Gittins said Chief will soon have four rigs in the region, including one made specially for maneuvering in the hilly Appalachian region, and two more by early 2009.

Chesapeake is predicting it will need much more water for its drilling operations before the 2012 expiration of its current permit with the Susquehanna River Basin Commission. While the company isn’t asking to change its permit to withdraw 5 million gallons daily from the river, it is asking to expand how much water it can use each day from 5 million gallons to roughly 20 million gallons.

Copyright: Times Leader

Companies now are focusing on drilling land that’s already been leased, industry experts say.

The natural-gas windfall seems to have dried up – at least for now.

Commodity price declines, disappearing credit worthiness and companies transitioning to produce gas from the lands they’ve leased have combined to limit lease bids and reduce bonus payment offers.

“Not only are we noticing it, there’s no argument that’s not happening,” said Jack Sordoni, who owns the Wilkes-Barre-based fossil-fuel drilling company Homeland Energy Ventures LLC and is negotiating leases for local landowners.

Though he’s recently inked leases in Fairmount Township with $2,850 per acre up-front bonuses, he said he’s also had this week similar offers in the same area fall to $2,000 per acre. Other sources are reporting offers dropping back to pre-summer levels of several hundred dollars.

Part of the cause for the change, he noted, is that some large companies have dropped out of the leasing competition because prices have fallen and the credit crisis has hampered their ability to take on short-term debt.

“I would suspect, not being an economist, that they would have pretty far reaching” effects, he said. “The ones who are signing aren’t competing with as many players, so the prices aren’t going to be as high.”

The companies say the clock is ticking on beginning work on existing leases, so they’re focusing on filling out the gaps in the territories they’ve already locked up.

“We have moved from the lease acquisition phase to the development phase,” Chesapeake Energy spokesman Matt Sheppard wrote in an e-mail. “We are leasing strategically to support our existing leasehold.”

Sheppard said that for Chief Oil & Gas and many companies “it is more of a shift to moving dollars into drilling and development” instead of continuing to build leasehold in unproven areas.

Chief Oil & Gas spokeswoman Kristi Gittins wrote in an e-mail: “A lot of acreage has been leased. As drilling begins and areas prove out, leasing should pick up.”

With drilling and production increasing, natural gas prices have dropped about 50 percent in the past half year, he noted.

“This was a gold rush at the beginning. It was a frantic pace. Companies were scrambling. The pullback of the commodity prices has certainly led to a slowdown,” he said.

But there are some positive indications for unsigned properties. For example, companies have already shown indications of ramping up production in the region.

Gittins said Chief will soon have four rigs in the region, including one made specially for maneuvering in the hilly Appalachian region, and two more by early 2009.

With drilling and production increasing, natural gas prices have dropped about 50 percent in the past half year.

Copyright: Times Leader

Revenue from tax on underground resources seen as windfall, but bill would need more support to pass.

Local municipalities could tap into the potential natural gas drilling windfall if state lawmakers are able to push through legislation that’s been stalled for more than a year.

House Bill 1373 would amend the state General County Assessment Law to explicitly make underground resources such as natural gas and oil subject to real estate assessment and taxation. The bill would require gas companies to pay taxes on the resources they extract, but wouldn’t add any tax burden to landowners.

“We’re concerned about these companies coming in and sucking up huge profits at the expense of citizens of Pennsylvania,” said state Rep. Eddie Pashinski, D-Wilkes-Barre, who is a co-sponsor of the bill.

Introduced in May 2007 by House Majority Leader Bill DeWeese, the bill was drafted in reaction to a state Supreme Court decision that ruled taxing those resources wasn’t specifically enumerated in the law. The amendment would preempt that ruling by making taxation of those resources part of the law.

Tom Andrews, DeWeese’s press secretary, said the push for the bill came from DeWeese’s constituent municipalities in western Pennsylvania, which had been relying on revenue from the resource taxes for years before it was shut off by the court decision.

However, the bill has been stalled in the House Finance Committee since May 2007, and sentiment among supporters is that state Senate Republicans, on principle, won’t support a tax bill.

“At this point, I don’t think it has the support to pass in the House, pass in the Senate and be signed by the governor, so that’s why we’ve held off on pushing it out of the House,” Andrews said.

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

Copyright: Times Leader

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Copyright: Times Leader