July 2015 Gas & Oil Magazine-Pennsylvania edition

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Table of Contents

PUBLISHER Andrew S. Dix ASDix@dixcom.com

EXECUTIVE EDITOR Ray Booth RBooth@dixcom.com

4

U.S. OIL PRODUCTION REDUCES GULF COAST IMPORTS

5

WIDGET ALLOWS INTERACTIVE VISUALS FROM EIA

6

INDUSTRY ASSN. FILES ACTION TO STOP ENFORCEMENT OF PROVISIONS FOUND UNCONSTITUTIONAL

6

LAND PURCHASE COULD LEAD TO MULTIBILLION SHELL FACILITY

7

SHELL CLEARS HURDLE FOR ARCTIC DRILLING

8

AN EYE IN THE SKY: SKYWATCH MONITORS EXISTING GAS, ENERGY PIPELINES

10

U.S. NOW LARGEST OIL & NATURAL GAS PRODUCER

ADVERTISING

11

DEVELOPMENTS FOR AREA LANDOWNERS AFFECTED BY THE ROVER PIPELINE

Kelly Gearhart KGearhart@the-daily-record.com 330-287-1653

12

THE BOOM BEYOND: PLASTICS, FERTILIZER MANUFACTURING THRIVING

13

HYDRAULIC FRACTURING WATER CYCLE

15

EPA STUDY: FRACKING HAS NOT LED TO WIDESPREAD WATER CONTAMINATION

16

WHAT THEY ARE SAYING: POLL FINDS OVERWHELMING SUPPORT FOR FRACKING IN PA

17

ACT 13: PIOGA REQUESTS STATE SUPREME COURT TO FORCE DEP’S COMPLIANCE

18

FEDERAL JUDGE WANTS DELAY EXPLAINED

Ed Archibald Account Executive EArchibald@dixcom.com 740-439-3531

DIGITAL CONTENT MNGR Brad Tansey BTansey@dixcom.com

LAYOUT DESIGNER Elizabeth Horne Ehorne@the-daily-record.com

“Gas & Oil” is a monthly publication jointly produced by Dix Communication newspapers across Ohio & PA. Copyright 2015.

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July 2015

U.S. oil production reduce Gulf Coast imports I

n recent years, higher domestic production of light, tight crude oil has led to a reduction in crude oil imports. Certain types of crude oil have been affected more than others; for example, the increased economic availability of domestic light, tight crude oil has virtually eliminated Gulf Coast imports of light crude oil. In the past year, Gulf Coast imports of medium crude oil have also fallen because of increased production from the Eagle Ford, Bakken, and Permian regions.

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measured by API gravity as established by the American Petroleum Institute. Less-dense liquids have higher API gravities. Crude oils with API gravities of 35 or above are considered light; 27 to 34 are medium; less than 27 are heavy.

From the first quarter of 2014 to the first quarter of 2015, medium-grade crude oil imports to Gulf Coast refineries decreased 45%, from 1.5 million barrels per day (b/d) to 0.8 million b/d. On the other hand, over that same period there was a 0.4 million b/d (22%) increase in imports to Gulf Coast refineries of heavy crude oil. Improved refining margins from processing additional volumes of heavy crude have resulted in a 3% increase in gross atmospheric distillation unit (ADU) throughput in the Gulf Coast region over this period, from 8.0 million b/d to 8.2 million b/d.

Almost all medium-grade crude oil imports are from Middle Eastern countries. Gulf Coast imports of medium crude oil from Saudi Arabia decreased by 52% from the first quarter of 2014 to the first quarter of 2015, from 0.9 million b/d to 0.4 million b/d. Similarly, Gulf Coast imports of medium crude oil from Kuwait decreased by 46% over this period, from 0.4 million b/d to 0.2 million b/d.

Source: U.S. Energy Information Administration, Petroleum Supply Monthly

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Widget allows interactive visuals from EIA

T

he U.S. Energy Information Administration (EIA) today released a new widget that allows internet users to display interactive visualizations of current energy data from EIA on their own websites. The widget pulls user-selected data from EIA's application programming interface (API) to create maps, line charts, pie charts, and bar graphs. The interactive visualizations are configured to always show the latest EIA data so that the embedded charts and maps never go out of date.

For example, EIA's new widget tool allows users to embed visualizations showing monthly and quarterly net electricity generation for the United States, including the map shown above, on their own websites. When a visitor clicks on the map, the visualization also retrieves and graphs how this data breaks down the generation fuel for each U.S. state, how that state's electricity supplies are generated over time by different fuel sources, and how that state compares with other states.

Thus, the effects of California's current drought can be seen with a decline in hydroelectric generation.

In another example, EIA's new widget allows users to embed U.S. petroleum production data in an interactive world map (one of several base maps offered by the tool). U.S. petroleum output can be easily compared to other countries' pro-

duction by selecting specific nations on the map, which results in a line graph showing the output of each country chosen.

A wide range of EIA customers, including policymakers and their staff, journalists working on energy articles, researchers keeping up with the latest energy trends, students gathering information, and members of the public interested in energy issues can benefit from the new EIA widget.

The energy visualization tool joins the EIA Excel add-in and EIA's data API as a part of the agency's continuing efforts to share more of its energy data in easily updated, customizable ways. This version incorporates comments received during a beta testing phase earlier this year. These tools can be found on the Open Data section of EIA's website.

The product described in this press release was prepared by the U.S. Energy Information Administration (EIA), the statistical and analytical agency within the U.S. Department of Energy. By law, EIA's data, analysis, and forecasts are independent of approval by any other officer or employee of the United States Government. The views in the product and press release therefore should not be construed as representing those of the Department of Energy or other federal agencies.

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July 2015

Pennsylvania Edition

Industry Assn. files action to stop enforcement of provisions found unconstitutional W

EXFORD, Pa. -- The Pennsylvania Independent Oil & Gas Association (PIOGA) has filed legal action with the Pennsylvania Supreme Court to enforce portions of the court’s ruling on Act 13, asking the court to stop the state Department of Environmental Protection (DEP) from requiring well permit applicants to comply

Land purchase could

lead to multibillion

Shell facility R

oyal Dutch Shell reportedly closed on its purchase of a former zinc smelter site in Beaver County, Pennsylvania, on Monday, June 15.

Previous reports said Royal Dutch Shell was considering building a plant at the site that would convert ethane into plastics.

A plant for the Horsehead Holdings Corp. was previously at that site near Potter, Pennsylvania. Shell did not release the purchase price for the land. The closing comes about six months after Shell exercised its option to buy the land under an agreement that was extended for more than two years.

And while Shell has bought surrounding land and begun site preparation and demolition at the site, the company has not committed to building what would become a multibillion-dollar plant.

A published statement from spokesman Ray Fisher called the move a "necessary step for us to advance the permitting process and allows us to proceed with preliminary site development work.”

with certain provisions of Act 13 the court found unconstitutional and unenforceable in its December 2013 decision.

“The Supreme Court made clear in its Act 13 ruling that specific well permitting requirements in Section 3215 of the Act were unconstitutional, and denied the department’s request for reconsideration of that decision in February 2014,” said PIOGA General Counsel Kevin J. Moody. “It is unfortunate that PIOGA has had to take this action, but court decisions apply to government agencies in the same way they apply to others, and DEP has ignored the fact that the Supreme Court invalidated and enjoined nearly all provisions of Section 3215 in its decision on Act 13. Requiring a government agency to obey the law, just as the agency requires others to obey laws it administers, is a win for all citizens and the rule of law.

“DEP cannot continue to require our industry to comply with these invalidated and enjoined provisions without obtaining authorization from the General Assembly,” added Moody. “In the meantime, however, DEP has simply ignored the court’s determination and is using the Section 3215 decisional process as if the court’s ruling does not exist. This has forced PIOGA to take action on behalf of its members and the industry to ask the court to enforce its injunction.”

The Pennsylvania Supreme Court invalidated and enjoined several provisions of Section 3215 in its decision on Act 13, including those related to the department’s consideration of impacts on certain identified public resources. DEP has continued to apply those requirements in the well permit application process, despite both the judgment of the court and the court’s denial of the department’s request that the court reconsider its invalidation of these specific provisions.

Moody emphasized that existing laws and permitting requirements are more than adequate to fully protect the statutorily designated public resources outside the well permitting decisional process, and the industry will continue to comply with those laws. “Natural gas developers protect public resources through voluntary measures as well as by complying with provisions of federal laws that protect threatened and endangered species, and state laws administered by the Department of Conservation & Natural Resources, Fish and Boat Commission and Game Commission,” Moody said.

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July 2015

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Shell clears hurdle for Arctic drilling Mark Thiessen Associated Press

A

NCHORAGE, Alaska (AP) — Royal Dutch Shell's Arctic drilling program cleared a major bureaucratic hurdle to begin drilling for oil and gas off Alaska's northwestern coast this summer.

The Bureau of Ocean Energy Managementhas approved the multi-year exploration plan in the Chukchi Sea for Shell after reviewing thousands of comments from the public, Alaska Native organizations and state and federal agencies.

The approval came just days before a planned protest of the drilling program in Seattle.

Shell must still obtain other permits from state and federal agencies, including one to drill from the Bureau of Safety and Environmental Enforcement. Both BOEM and BSEE are agencies of the U.S. Department of Interior. The company must also obtain government opinions that find Shell can comply with terms and conditions of the Endangered Species Act. Shell spokesman Curtis Smith said the approval “is an important milestone and signals the confidence regulators have in our plan. However, before operations can begin this summer, it's imperative that the remainder of our permits be practical, and delivered in a timely manner.

“In the meantime, we will continue to test and prepare our contractors, assets and contingency plans against the high bar stakeholders and regulators expect of an Arctic operator,” Smith said in an email to The Associated Press.

The Bureau of Ocean Energy Management's director, Abigail Ross Hopper, said in a statement that officials recognize “the significant environmental, social and ecological resources in the region” and have established “high standards for the protection of this critical ecosystem, our Arctic communities, and the subsistence needs and cultural traditions of Alaska Natives.”

“As we move forward, any offshore exploratory activities will continue to be subject to rigorous safety standards,” she said.

The Port of Seattle would need to get another permit to base the Arctic drilling fleet in Seattle for about six months of the year.

Meanwhile, Smith said that a giant floating oil rig currently

anchored off Port Angeles, Washington, will be towed to Seattle this week despite the Seattle mayor's assertion that the Port of Seattle can't host the rig until it gets a new land-use permit.

Smith said in another email that the 400-foot-long Polar Pioneer was scheduled to arrive at the Port of Seattle's Terminal 5 “later in the week” to prepare for planned exploration in the Arctic Ocean.

Smith said his company believes its arrangements to use the terminal are valid and disagrees with Seattle's interpretation.

Seattle Mayor Ed Murray has urged the port to reconsider its two-year, $13 million lease with Foss Maritime, a company whose client is Shell.

Activists plan to protest. A so-called “festival of resistance” starts Saturday and will include protesters on land and in kayaks, trying to block the ship's movements.

Environmental groups on Monday blasted the Bureau of Ocean Energy Management for providing the permit to Shell.

“This decision places big oil before people, putting the Arctic's iconic wildlife and the health of our planet on the line,” Erik Grafe, an attorney for Earthjustice, said in a statement.

“The agency should not be approving such threatening plans based on a rushed and incomplete environmental and safety review. Ultimately, Arctic Ocean drilling is far too risky and undermines the administration's efforts to address climate change and transition to a clean energy future.”

Shell's drilling plan proposes to drill up to six wells within the Burger Prospect, located about 70 miles northwest of the village of Wainwright, Alaska. The wells would be drilled in about 140 feet of water by the Polar Pioneer and the Noble Discoverer. Both vessels would provide relief-well capability for the other.

Shell has said the two ships will leave the Chukchi Sea at the end of each drilling season.

Arctic offshore reserves are estimated at 26 billion barrels of recoverable oil and 130 trillion cubic feet of natural gas, according to U.S. Geological Survey estimates.

Associated Press reporter Phuong Le in Seattle contributed to this report.

8

Gas & Oil

July 2015

Pennsylvania Edition

An eye in the sky: Skywatch monitors existing gas, energy pipelines

Dan Kubacki Dix Communications

A

SHLAND, OH -- For a pipeline inspection pilot, flying an aircraft low to the ground and doing several things at once comes with the job.

It’s a position that isn’t for everyone who has earned their wings, but according to Steve Bechtol, president of Skywatch, it’s a job for a pilot who can safely manually fly a small plane no higher than 500 feet from the ground all while accurately observing pipeline right of ways. Bechtol has owned the company since 2007, but Skywatch has been around locally since the 1980s, when it was owned and operated by Roger Blodgett.

“It’s a very busy cockpit,” Bechtol said. “When you’re flying low to the ground and taking down observations, you’re basically multitasking, and task management is key to learning to do pipeline patrolling well. Roger always used to say there’s pilots and then there’s pipeline patrol pilots, and there’s not very many of the latter. It’s very different flying than just taking off and going up to altitude and cruising to the next location.”

Blodgett founded Air Surveillance in 1986 and later acquired Skywatch, which was at the time based in Wadsworth. Bechtol bought the company in 2007 two years after Blodgett passed away. Since then, Skywatch’s fleet has grown to four Cessna 182 aircrafts with eight employees,

including three full-time pilots and two part-time pilots. A hangar at Ashland County Airport is home to one half of Skywatch’s operations.

“When we bought it, there was one airplane and it was flying in Ohio only,” Bechtol said. “We’ve been able to grow it in the last seven years to four aircrafts and we fly in 23 states now. We have a base here in Ashland and one in Iowa.”

On a typical day, Skywatch pilots take four- to six-hour flights on each pipeline observation assignment. Bechtol said Skywatch has contracts to monitor existing pipelines for most major energy companies.

“We fall under the damage prevention for these companies, and so we’re basically protecting their resources, giving updates on vegetations, encroachments, new building going on in what they call high-consequence areas and to just document what’s close,” he said.

If the pilots spot a problem, they contact “line spotters” at ground level who can further investigate an issue on a pipeline. Most of the issues can be avoided by a property owner calling state utility protection services before starting any digging or new construction.

Bechtol said Skywatch’s planes are equipped with the most up-to-date safety features and prospective pilots receive months of training before their first solo flight.

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July 2015

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Steve Bechtol, president of Skywatch, stands in front of two of his company’s planes housed at Ashland County Airport. Skywatch has four planes in its fleet and patrols energy pipelines in 23 states in the Midwest. Times-Gazette photo/Tom E. Puskar

“We’re very focused on safety, because the industry has a history of being a little more accident-prone, and we’re out to change that,” Bechtol said. “We do an extensive amount of training when somebody’s hired on; they usually fly with us several months before we turn them loose.”

Skywatch has pipeline patrol contracts year round, and Bechtol still gets the chance to perform relief flying these days. He has been a pilot with the Air Force Reserves in Youngstown for 12 years and recently joined the Ohio Air National Guard in Mansfield.

“The business and the military flying both complement each other quite well because the C130 is a low-level aircraft that you usually fly 300 to 500 feet, and it’s the same thing we do in pipeline patrol, we fly at 300 to 500 feet,” Bechtol said. “The training was valuable to carry over to the business. They really go hand in hand pretty well.”

With the Air Force Reserves, Bechtol flew planes for personnel and equipment airdrop missions as well as transporting medics, wounded and soldiers’ remains from combat zones. He was last deployed in Afghanistan in 2011 for several months.

“Hauling remains home was a pretty big honor,” Bechtol said. “That’s something I’ll never forget.”

With the National Guard, Bechtol will continue to do the same type of flying, except the commute to base will be much shorter. Bechtol is a native of Wayne County, gradu-

ated from Ashland University in 1995 and said he is committed to keeping Skywatch in Ashland. He recently gave a presentation at the Ashland Rotary Club about Skywatch and his small-business focus.

“It was a good location for us and we like Ashland and plan to stay here,” Bechtol said. “Something I feel pretty strongly about is supporting the local businesses that support us. I think I said in the Rotary presentation that I looked in our Quickbooks and we have 70 vendors that we use with an Ashland County address, and we’re proud of that. It’s kind of neat to see the relationship between small businesses in Ashland, how we’re not large enough to have an IT department or a marketing department, but there’s a business in town to help fill that need for us.”

Skywatch’s contracts are located primarily in the Midwest, but the company does have room to grow, according to Bechtol.

“We’re quite possibly the only one based out of this region,” he said. “Most of our competitors are based out of Texas. There’s definitely room for expansion, because for one thing, we have probably some of the best and safest airplanes in the industry.”

Dan Kubacki can be reached at 419-281-0581, ext. 237, or at dkubacki@times-gazette.com.

10

Gas & Oil

Pennsylvania Edition

July 2015

U.S. Now Largest Oil & Natural Gas Producer Joe Massaro Energy In Depth - PA

T

hanks to American ingenuity, the United States is now the largest producer of natural gas and oil in the world – let that sink in for a second. Just a decade ago the U.S. was in a state on energy scarcity and imports were the highest they had been in years. Now, for the first time in years the U.S. is closer to energy independence than ever before.

Thanks to hydraulic fracturing U.S. oil & gas operators have been able to tap into shale formation miles beneath the surface and unlock huge reservoirs of oil and natural gas.

By deploying this technology in business friendly states across the country like Ohio, Pennsylvania and West Virginia the U.S. has been able to cut their imports of natural gas to levels not seen in 28 years, the level since 1987. According to the Energy Information Administration, “U.S. net imports decreased 9 percent in 2014, continuing an eight-year decline.”

The decrease in natural gas imports into the U.S. has translated into energy savings for American households across the country. Take a look at New York, as recently as 2008 the state was importing more of its natural gas from Canada at a premium. Now after the development of Pennsylvania’s Marcellus Shale, there is more natural gas flowing from New York into Canada than the amount flowing into the state from Canada. A similar story is being told for domestic oil production as well.

When the U.S. became the world’s largest producer of oil it leap-frogged over other oil producing countries like Saudi Arabia and Russia. British Petroleum’s (BP) Chief Economist, Spencer Date, recently stated, “The implications of the shale revolution for the U.S. are profound.” He went on to say, “We are truly witnessing a changing of the guard of global energy suppliers.”

According to data from BP the U.S. saw oil production go up by 1.6 million barrels per day in 2014, for a total of 11.6 million per day on average. And, for the first time in 40 years, this spike in production propelled the U.S. to become the number one producer of oil in the world.

Much like increased natural gas production, oil production also led to American consumer savings. During 2014 the price per barrel of oil went from over $100 to under $60 solely because of U.S. production. Because of the decrease in oil prices American drivers are paying less at the pumps.

For instance Columbus, Ohio had under $2 per gallon of gasoline for the first time in five years. In a recent study The American Automobile Association (AAA) found that

Americans would be paying 40 cents more per gallon of gas than they’re paying now were it not for shale development.

Continued shale development across the country is continuing to provide Americans with family sustaining jobs and lower energy costs. But most importantly we now have global bragging rights for pioneering shale development and making the United States and energy superpower again.

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July 2015

11

DEVELOPMENTS FOR AREA LANDOWNERS AFFECTED BY THE ROVER PIPELINE Atty. David J. Wigham

W

OOSTER -- The Rover Pipeline Project, sponsored by Rover Pipeline LLC (“Rover”), is a proposed pipeline project involving the construction of a series of large pipelines to transport several billion cubic feet of natural gas each day from processing and production facilities in the Utica and Marcellus Shale regions of Ohio, West Virginia, and Pennsylvania through Ohio and into Michigan and Canada.

The "Rover Pipeline" will really be a series of pipelines, with the size varying by location. In Wayne, Ashland, Tuscarawas, and Stark counties, the Rover Pipeline will consist of two 42-inch diameter high pressure pipelines.

As part of the pipeline planning and construction process, Rover is required to obtain permanent easements over property in the pipeline route. As I detailed in a previous article published on December 30, 2014, due to the complexity of the issues involved in negotiating easements and the frequent lack of information or abundance of disinformation regarding easement terms and payments, landowners almost always benefit from retaining experienced legal counsel. As a result, one of the single most important decisions of any landowner negotiating a pipeline easement will be who they retain to represent them in negotiations with Rover.

Since my December 30, 2014 article, a number of facts have come to light showcasing the importance of retaining adequate counsel. Initially, many landowners believed that the Rover Pipeline Project would either be abandoned or the pipeline route would be moved off of their property.

Since the project was first announced Rover has actively moved the project from the pre-planning stage to the actual permit approval process. Based on the filings to date federal approval is likely given within the next year, and the pipeline route in eastern Ohio will apparently remain largely unchanged. In short, if you own property in the route for the Rover Pipeline and still have doubts about whether you would even need to negotiate an easement, you can lay those doubts to rest.

Another key development since my December 30, 2014 article is Rover's issuance of initial offers to the landowners in the pipeline route. At this time, all affected landowners should have received at least one offer from Rover to acquire an easement. These initial offers are still significantly

below the industry average per foot to acquire pipeline easements. In fact, Rover has already increased many of their initial offer for easements by anywhere from 60% to over 300%.

This development means two things for landowners. First, for those landowners who engaged an attorney on a contingency basis whereby the attorney receives 20%-33% of the amount Rover pays over the initial offer, those landowners can start to evaluate exactly how much their attorney(s) will receive in fees. These landowners will likely be surprised to discover that the legal fee will be much higher than perhaps originally anticipated because of Rover's negotiating strategy to issue extremely low initial offers. This means that law firms charging 20%-33% of the amount Rover pays over the initial offer will be set to collect staggering fees.

A preferable fee structure is one based on a percentage in the range of 10% of the total amount paid by Rover. This fee structure could save landowners tens of thousands of dollars.

Second, these increases signal that Rover recognizes that their initial offers were simply too low and they are willing to negotiate. Nevertheless, landowners should be very cautious going forward as Rover has repeatedly displayed a high level of skill in negotiating easements.

Finally, while Rover has shown that they are willing to increase their offer, it is apparent at this point that Rover will not simply provide landowners with adequate compensation because the landowners refuse to accept low offers.

To obtain adequate compensation, landowners will not only need to be patient but also will need to substantiate why the offer provided by Rover is too low. In the absence of this evidence, it is hard to believe that any landowners will be able to obtain adequate compensation for the financial impact of the Rover Pipeline, particularly without legal counsel.

Experienced legal counsel should also be able to provide evidence of going rate for a pipeline easement based upon their past experience.

David J. Wigham is a second generation oil and gas attorney at the law firm of Critchfield, Critchfield & Johnston, in Wooster, Ohio, with nearly 25 years of industry experience.

He is also the current chair of the Natural Resources Committee of the Ohio State Bar Association.

12

Gas & Oil

July 2015

Pennsylvania Edition

The Boom Beyond: Plastics, Fertilizer

Manufacturing Thriving Joe Massaro Energy in Depth-Marcellus

F

rom fertilizer to plastic, shale gas development continues to fuel American manufacturing and create family sustaining jobs. As EID has noted many times, the price of natural gas remains low because of prolific shale plays being developed across the country.

That, in turn, is fueling large growth for energy-intensive industries like the fertilizer industry.

Prior to the shale revolution here in the United States, nitrogen fertilizer, the most common fertilizer used by farmers across the country, was imported from other countries that had access to affordable natural gas. According to a report

by CRA International: “An unstable U.S. fertilizer supply would introduce significant risk not just to U.S. agriculture but, by extension, to the entire world food supply. There is economic value in the continued presence of a U.S.-based nitrogenous fertilizer manufacturing industry to the extent that it minimizes reliance on global sources that may one day prove unreliable.” (Pg.20) Today, because of the shale revolution here in the United States, the fertilizer industry is seeing huge savings in its manufacturing process. Because of this, the domestic fertilizer industry is currently experiencing its largest growth in 25 years. According to the Fertilizer institute: “Low-cost gas selling for $2.76 per million British thermal units — down 40 percent from last year’s prices and well below the $9 it cost in 2003 — has invigorated the fertilizer manufacturing industry across the Midwest and Southeast, with more than 35 fertilizer plants proposed or recently

brought online.”

These savings in the manufacturing process are being passed on to farmers, which is helping to lower their annual costs.

This is a trend we’ve been seeing for years now with other energy intensive industries like plastic. Thanks to abundant affordable natural gas the plastic industry has not only recovered from the recession, but it’s expected to grow by more than 20 percent over the next decade. According to Steve Russell, vice president of the American Chemistry Council’s plastic division: “The ready availability of large amounts of natural gas is giving the U.S. plastics industry really a renaissance, turning it from among the highest-cost producers to one of the lowest in the world, increasing manufacturing in the United States, increasing exports to markets that we were not exporting to before, and along with all that comes jobs.”

Hydraulic fracturing has been creating family sustaining jobs in states that support the development of their shale resources. Now, as the natural gas developed here in the Commonwealth makes its way to manufacturing plants across the U.S. we’re witnessing a renaissance in American manufacturing. Dave Taylor, President of the Pennsylvania Manufacturers Association President recently stated that Pennsylvania’s natural gas revolution is a “one-two punch for manufacturing competiveness.”

That’s something we can all celebrate.

Joe Massaro is a spokesman for Energy in Depth – Marcellus

Gas & Oil

www.GasandOilMag.com

July 2015

13

Hydraulic fracturing

water cycle

STAGE

1

STAGE

3

WATER ACQUISITION Volumes of water are withdrawn from ground water and surface water. Three resources to be used in the hydraulic fracturing process.

WELL INJECTION Pressurized hydraulic fracturing fluid is injected into the well, creating cracks in the geological formation that allow oil or gas to escape through the well to be collected at the surface.

STAGE

2

STAGE

4

CHEMICAL MIXING Once delivered to the well site, the acquired water is combined with chemical additives and proppant to make the hydraulic fracturing fluid.

FLOWBACK AND PRODUCED WATER When pressure in the well is released, hydraulic fracturing fluid, formation water, and natural gas begin to flow back up the well. This combination of fluids, containing hydraulic fracturing chemical additives and naturally occurring substances, must be stored on-sit — typically in tanks or pits — before treatment, recycling, or disposal.

STAGE

5

WASTEWATER TREATMENT AND WASTE DISPOSAL Wastewater is dealt with in one of several ways, including but not limited to: disposal by underground injection, treatment followed by disposal to surface water bodies, or recycling (with or without treatment) for use in future hydraulic fracturing operations.

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July 2015

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Gas & Oil

July 2015

15

EPA Study: Fracking Has Not Led to Widespread Water Contamination

Katie Brown, PHD Director, Strategic Communications FTI Consulting

O

n June 4th, the Environmental Protection Agency (EPA) released its long awaited, five-year study, which finds “hydraulic fracturing activities have not led to widespread, systematic impacts to drinking water resources.”

As many have noted, this is the most important study on hydraulic fracturing to come out over the past five years – a fact that EPA’s Science Advisor and Deputy Assistant Administrator of EPA’s Office of Research and Development pointed to in a press release, “It is the most complete compilation of scientific data to date, including over 950 sources of information, published papers, numerous technical reports, information from stakeholders and peer-reviewed EPA scientific reports.”

EPA today also released nine peer-reviewed scientific reports, which played a big role in contributing to EPA’s overall groundwater study.

EPA’s study actually builds upon a long list of studies that show the fracking process poses an exceedingly low risk of impacting underground sources of drinking water. It corroborates a “landmark study” by the U.S. Department of Energy in which the researchers injected tracers into hydraulic

fracturing fluid and found no groundwater contamination after twelve months of monitoring. It is also in line with reports by the U.S. Geological Survey, the Government Accountability Office, the Massachusetts Institute of Technology, and the Groundwater Protection Council, to name just a few.

The report contradicts the most prevalent claim from anti-fracking activists, which have made “water contamination” the very foundation of their campaign against hydraulic fracturing. As Energy in Depth reported in March, after heralding the report at its inception, anti-fracking organizations like the NRDC and InsideClimate News (ICN) later went into damage control, downplaying the forthcoming report, likely due to what it would conclude.

Hydraulic fracturing has brought cleaner air, significantly reduced greenhouse gas emissions, created millions of jobs, reduced energy prices, strengthened national security, and turned the American economy around.

With this new report, it couldn’t be clearer that shale development is occurring in conjunction with environmental protection — and the claims by anti-fracking activists have been thoroughly debunked.

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July 2015

Pennsylvania Edition

What They Are Saying: Poll Finds Overwhelming Support for Fracking in PA

The Marcellus Shale Coalition

P

ennsylvanians and Americans “overwhelmingly • “Majority Favor Fracking”: A new poll reveals more support” the safe and proven use of hydraulic than half of Pennsylvanians favor fracking. The survey fracturing to produce clean-burning natural gas, ac… shows 1% of Pennsylvanians support the natural gas cording to a national survey by Robert Morris University’s drilling technique. … The figure is almost two percentage Polling Institute. points higher than the national opinion of 55.9%. Nearly HERE ARE KEY POLL TAKEAWAYS: half of those polled — 48% — said they would welcome • Support for fracing has also increased significantly – movthe industry in their own hometowns. … The poll was coning from 42.3% in 2013 to 55.9% majority today. ducted weeks before a study from the EPA revealed no • Additionally, support for fracing in Americans’ own connection between contaminated drinking water and hometowns has also seen increased support. Today, fracking. … According to the results, 74.3% believe frack49.2% would support (strongly or somewhat) fracing in ing has the potential to jolt the state’s economy. (Times their own hometowns – up from 40.0% in late 2013.

Leader, 6/15/15) • Other important findings include: • Nat’l Poll “Demonstrates Strong Bipartisan Support”: • Fracing can help the U.S. economy – 73.3% agree MSC president Dave Spigelmyer touted the more indus• Fracing will help the U.S. move to energy indepentry-positive aspects of the study and took a jab at Gov. dence – 68.9% agree Wolf’s proposal to implement a severance tax on drillers.

• The U.S. should begin exporting some of the resulting “Poll after poll, including this most recent one, continues natural gas – 51.6% agree to demonstrate strong bipartisan support for job-creating THIS FROM RMU’S RELEASE: natural gas development, which is putting tens of thouA poll by The Robert Morris University Polling Instisands of Pennsylvanians to work, enhancing air quality tute shows 57.1% of Pennsylvanians in support of hydrauand revitalizing our manufacturing sector. … Pennsylvalic fracturing. … Nationally, the figures showed 55.9% of nians recognize the clear economic and energy security Americans hold the same view. … Among those surveyed in benefits of shale, and this research should serve as a rePa., 74.3% said fracking has the potential to help the U.S. minder to elected officials that we need common-sense economy. … Among Pennsylvanians polled, 69.9% said new policies aimed at keeping the commonwealth competitive drilling technologies that allow fracking “will help move the rather than even higher energy taxes.” (Beaver County U.S. to energy independence. … The poll was conducted beTimes, 6/16/15) fore the release of a recent report by the EPA that found • Majority of Voters Support Fracking: More than half of fracking has not had much impact on drinking water. Once Pennsylvanians support hydraulic fracturing or “frackagain mirroring national results, more Pennsylvanians said ing,” according to a recent poll. … “I’m not surprised at they would favor fracking in their own hometowns than the all,” said Vince Matteo, president and CEO of Williampercentage opposed — 48.2% to 43.3%. sport/Lycoming Chamber of Commerce. “It’s a proven HERE IS WHAT THE MEDIA IS REPORTING: industry in the state and the country. I think they see the • “Support for Fracking Growing”: About 56% of 1,003 benefits for the economy and job growth,” Matteo said. people polled nationwide said they support hydraulic frac(Williamsport Sun Gazette, 6/15/15) turing from shale, up from 42% in November 2013. The • Voters “Overwhelming Support” Fracking: A majority of increase tracked overall knowledge of the process, which Pennsylvanians — 57. 1% — are in support hydraulic fracgrew to nearly 71% from 45% nationwide, and was up to turing, slightly more here than across the U.S., according nearly 74% among 529 Pennsylvania residents polled last to a new poll. Based on the nationwide poll, 9% of Amermonth. … More than 73% of national respondents (74% icans hold the same view. … More Pennsylvanians said in Pa.) said pulling gas from shale has thepotential to help they would favor hydraulic fracturing in and around their the economy, and 69% nationally said fracking will help own hometowns than the percentage opposed — 48.2% the country move to energy independence. (Pittsburgh to 43.3%. (Pittsburgh Business Times, 6/15/15) Tribune-Review, 6/15/15)

www.GasandOilMag.com

Gas & Oil

July 2015

ACT 13

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PIOGA requests state Supreme Court to force DEP’s compliance T

he Pennsylvania Independent Oil & Gas Association on June 12 filed legal action with the Pennsylvania Supreme Court to enforce portions of the court’s ruling on Act 13, asking the court to stop the state Department of Environmental Protection (DEP) from requiring well permit applicants to comply with certain provisions of Act 13 the court found unconstitutional and unenforceable in its December 2013 decision.

“The Supreme Court made clear in its Act 13 ruling that specific well permitting requirements in Section 3215 of the Act were unconstitutional, and denied the department’s request for reconsideration of that decision in February 2014,” said PIOGA General Counsel Kevin J. Moody. “It is unfortunate that PIOGA has had to take this action, but court decisions apply to government agencies in the same way they apply to others, and DEP has ignored the fact that the Supreme Court invalidated and enjoined nearly all provisions of Section 3215 in its decision on Act 13.

Requiring a government agency to obey the law, just as the agency requires others to obey laws it administers, is a win for all citizens and the rule of law.

“DEP cannot continue to require our industry to comply with these invalidated and enjoined provisions without obtaining authorization from the General Assembly,” added Moody. “In the meantime, however, DEP has simply ignored the court’s deter-

mination and is using the Section 3215 decisional process as if the court’s ruling does not exist. This has forced PIOGA to take action on behalf of its members and the industry to ask the court to enforce its injunction.”

The Pennsylvania Supreme Court invalidated and enjoined several provisions of Section 3215 in its decision on Act 13, including those related to the department’s consideration of impacts on certain identified public resources. DEP has continued to apply those requirements in the well permit application process, despite both the judgment of the court and the court’s denial of the department’s request that the court reconsider its invalidation of these specific provisions.

Moody emphasized that existing laws and permitting requirements are more than adequate to fully protect the statutorily designated public resources outside the well permitting decisional process, and the industry will continue to comply with those laws.

“Natural gas developers protect public resources through voluntary measures as well as by complying with provisions of federal laws that protect threatened and endangered species, and state laws administered by the Department of Conservation & Natural Resources, Fish and Boat Commission and Game Commission,” Moody said.

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Gas & Oil

July 2015

Pennsylvania Edition

Federal judge

Matthew Brown Associated Press

B

ILLINGS, Mont. (AP) — A federal judge is pressing U.S. officials to explain why it’s taken three decades to decide on a proposal to drill for natural gas just outside Glacier National Park in an area considered sacred by some Indian tribes in Montana and Canada.

A frustrated U.S. District Judge Richard Leon called the delay “troubling” and a “nightmare” during a court hearing earlier this year. He ordered the Interior and Agriculture departments to report back to him with any other example of where they have “dragged their feet” for so long.

“This is no way to run a government. No way to run a government,” Leon told government attorney Ruth Ann Storey, according to a transcript of the June 10 hearing in Washington, D.C. At issue in the case is a 6,200-acre energy lease in northwest Montana’s Badger-Two Medicine area immediately south of Glacier. Owned by Solenex LLC of Baton Rouge, Louisiana, the lease has been suspended since the 1990s.

Solenex sued in 2013 to overturn the suspension and wants to begin drilling for gas this summer. It’s represented by the Mountain States Legal Foundation, a conservative Colorado law firm that handles property rights cases and has numerous representatives of the oil and gas industry on its board of directors.

U.S. Justice Department spokesman Wyn Hornbuckle said Wednesday the government will submit a response to the judge’s concerns next week. He declined to elaborate.

The Badger-Two Medicine area is the home of the creation story of the four Blackfoot tribes in Canada and Montana and the Sun Dance that is central to their religion. The land is part of the Lewis and Clark National Forest, but it is not on Montana’s Blackfeet Reservation.

Dozens of oil and gas leases were originally sold in the area, but over the years most have been retired or surrendered. Only 18 suspended leases remain, including Solenex’s.

Gas & Oil

www.GasandOilMag.com

July 2015

19

wants delay explained In this Nov. 7, 2013 photo, a train hauls oil into Glacier National Park near the Badger-Two Medicine National Forest in northwest Montana. During a June 10 hearing in U.S. District Court in Washington, D.C., U.S. District Judge Richard Leon pressed U.S. officials to explain why it’s taken three decades to decide on a proposal to drill for natural gas just outside Glacier in an area of the Badger-Two Medicine that is considered sacred by some Indian tribes in Montana and Canada. At issue in the case is a 6,200-acre energy lease in northwest Montana’s Badger-Two Medicine National Forest, immediately south of Glacier.

(AP Photo/Matthew Brown)

Blackfoot leaders have asked Interior Secretary Sally Jewell to cancel the leases.

The Interior Department issued the energy lease to Solenex in 1982, and the Forest Service in 1996 asked for it to be suspended so the agency could perform a historic preservation survey of the site. That was completed in 2012, but there’s been no final decision on whether the lease should remain in place.

Mountain States Legal Foundation president William Perry Pendley noted the boundaries of the traditional cultural area for the tribes were studied and expanded several times since the leases were issued.

“The feds have thrown money at the tribes and these consultants to do these additional studies,” he said. “The bottom line is, this is national forest land.”

But Blackfeet Tribal Historic Preservation Officer John Murray rejected any suggestion that the studies were a ploy to block Solenex. He said the Montana tribe opposed the

leases from the time they were issued and considered the original cultural studies of the area inadequate.

“It’s paramount that it’s protected. Bad research does not negate the importance of the area to the Blackfeet,” Murray said.

Storey defended the government’s handling of the Solenex case in her appearance before Judge Leon. She said it took many years to conduct the necessary site studies, and working with the tribes meant the process wasn’t entirely within the agencies’ control.

The Forest Service in December determined drilling would adversely affect the sacred site and reduce its spiritual power for the Blackfeet.

The Advisory Council on Historic Preservation agreed with that finding in January. Its recommendations on how to proceed are pending.

Forest Service spokesman Dave Cunningham said he was not aware of a timeline for a decision.

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July 2015

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