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Inside P4 - Counties to receive impact fee revenue P8 - Meet driller James jones P11 - Dallas township zoning rules bring controvery P16 - Environmental impact of drilling researched P18 - online resource strives to provide most current information P22 - industry growth topic of colleges’ entrepreneurship forums P26 - nurses prepare for possible effects of drilling P28 - new ride fueled by natural gas P31 - Protesters voice opposition to use of water for drilling
Our team Project Editors Dan Burnett
Reporters Matt Hughes mhughes@timesleader.com Sarah Hite shite@timesleader.com
Design Lindsey Jones
Photographers Clark Van Orden
Jason Riedmiller Fred Adams Pete. G. Wilcox Alex Seeley Copy Editor Anne Woelfel
on the cover: Range Resources site manager Don Robinson stands with the rods that connect to drill into the shale at a well site in Washington, Pa. in July. The company is one of many drilling and “fracking” in the area to release natural gas. Experts say Marcellus Shale natural gas production is expected to keep rising in 2012. AP PHOTO
BY MATT HUGHES mhughes@timesleader.com
A
half decade after the Marcellus Shale natural gas boom came to Pennsylvania, counties and municipalities are set to receive their first drilling impact fee payments this year. Act 13, the natural gas impact fee law signed by Gov. Tom Corbett in February, is expected to generate more than $200 million in revenue this year, with the lion’s share going to counties and municipalities where Marcellus wells have been drilled.
The first $22.25 million of the first year’s impact fee income is guaranteed to statewide agencies and initiatives, including payments to the Fish and Boat Commission, State Fire Commissioner and for clean air and water projects and a natural gas vehicle program. After that, 60 percent of the revenue – minus an additional $2.5 million off-the-top fee for housing affordability programs –
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NATURAL GAS IMPACT FEE PER WELL, PER YEAR The impact fee is based on the average price of natural gas. A fee is assigned to each well once a year and is dependent on the number of years a well has been in existence. This chart shows the range of annual impact fees per well possible under the terms set by the state law known as Act 13. The expected first-year fee is circled in red.
Year 1 Year 2 Year 3 Year 4-10 Year 11-15 Total
$0 - $2.25 $2.26 - $2.99 $3.00 - $4.99 $5 - $5.99 $6 or higher $40,000 $45,000 $50,000 $55,000 $60,000 $30,000 $35,000 $40,000 $45,000 $55,000 $25,000 $30,000 $30,000 $40,000 $50,000 $10,000 $15,000 $20,000 $20,000 $20,000 $5,000 $5,000 $10,000 $10,000 $10,000 $190,000 $240,000 $310,000 $330,000 $355,000
Source: State House Appropriations Committee
will go to gas-producing counties and municipalities within them that choose to adopt the fee, with the distribution based on the number of wells in the county. That means some Northeastern Pennsylvania counties are set to receive some of the largest impact fee payments. With more than 1,000 wells, Bradford County stands to gain the most of all counties in the state at an estimated $9.5 million for the county alone, assuming all eligible counties choose to accept the fee revenue. Tioga County, which has close to 700 taxable wells, is next at an estimated $5.2 million. Lycoming and Susquehanna counties each stand to gain approximately $4 million in the first year. Counties with few Marcellus wells will see much less. With two taxable wells each, Lacka-
Mark Guydish/NEPA Energy Journal
wanna and Luzerne counties stand to gain around $20,000 each in county revenue, though because of their relatively large populations they could see much more for repairs to distressed bridges and roads. Road and bridge funding is apportioned to all counties from the 40 percent of fee revenue held by the state, based on county population. With 98 taxable wells, Wyoming County stands to gain about $850,000 in impact reimbursement. Columbia County can expect about $11,300 for its three wells and Sullivan County can expect about $352,000 for its 41 wells. All of these estimates, however, assume all eligible counties adopting the fee. The law leaves to county governments See REVENUE, Page 6
Divvying up Pennsylvania’s Natural Gas Impact Fee What the state takes off the top
(Percentages based on estimated first year total):
$1 million (0.5%) to Public Utility Commission $1 million (0.5%) to Fish and Boat Commission $6 million (2.8%) to Department of Environmental Protection for clean air and water projects $1 million (0.5%) for rail freight assistance
$2.5 million (1.2 %) to county Conservation Districts from 2011 revenue; $5 million from 2012 revenue, $7.5 million from 2013 revenue; amounts based on Consumer Price Index beginning in 2014 $750,000 (0.35%) to State Fire Commission $10 million (5%) for a natural gas vehicle program from 2011 revenue; $7.5 million from 2012 revenue; $2.5 million from 2013 revenue.
60% for counties and municipalities directly
How the rest is split, roughly 60-40:
40 % for statewide initiatives serving counties and municipalities
$2.5 million (1.2% of total) for housing affordability programs from 2011 revenue; $5 million in 2012
25% of this segment for local deteriorated bridges (8.9% of total)
36% of this segment to gas-producing counties (18.8% of total)
25% of this segment for water and sewer projects (8.9% of total)
20% of this segment to Commonwealth Financing Authority for acid mine cleanup, gas well plugging, well testing, etc. (7.1% of total) 15% of this segment to counties for parks, trails, open space and water resource managment (5.4% of total) 37% of this segment to gas-producing municipalities (19.4% of total)
10% of this segment to the Environmental Stewardship Fund (3.6% of total)
5% of this segment to Department of Community and Economic Development for liquefied natural gas facilities from 2011, 2012 and 2013 revenues; to Hazardous Sites Cleanup Fund from 2014 on. (1.8% of total) 27% of this segment to non-gas-producing municipalities (14.1% of total) Source: House Appropriations Committee Mark Guydish/NEPA Energy Journal
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REVENUE
Continued from Page 4 the decision to adopt the fee in their county, allowing a 60-day window for county governments to adopt the fee. Should a county elect not to do so, the county government’s decision could be overridden if a majority of municipalities in the county or municipalities representing a majority of the county’s population adopt the fee. At the time of this writing, that 60-day window had not yet expired, though several Northeastern Pennsylvania counties have already adopted the fee or are preparing to do so. Tioga County was one of the first in the state to adopt the fee, doing so March 13, exactly one month after the impact fee bill became law. Tioga County Commissioner Erick J. Coolidge applauded the bill as offering fair compensation for impacts on infrastructure for which taxpayers should not be burdened. Coolidge said budgets for some county services were zeroed-out for 2012 by the loss of state funding, and the impact fee would help keep those services running. “These are very different times,” Coolidge said. “There’s not a funding stream that has not been cut, and without this we’re not going anywhere. This will help alleviate some of those restrictive funding lines that we’re dependent on at the county level.” Impact fee funds may be used for 10 different purposes: • Roadway and bridge maintenance and repair, • Water, storm water and sewer maintenance, repair and construction, • Emergency preparedness • Preservation and reclamation of water, • Records management and information technology, • Affordable housing projects, • Social services, • Assistance to county conser-
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vation districts, • County or municipal planning, and • Local tax reduction. In particular, Coolidge said increased funding for housingaffordability programs is greatly needed in Tioga County, where an influx of drilling workers and a limited housing stock has sent rents soaring. “When you’re rent goes from five or six hundred dollars a month, where two wage earners were able to pay their insurances and their family’s needs and everything else, when it goes up to double that, that’s a whole displaced segment that was contributing to society that no longer could,” Coolidge said.
He said a significant portion of the county’s first-year revenue is likely to go toward stabilizing rents or otherwise helping residents afford the cost of living in the Tioga County. Wyoming County also passed an impact fee unanimously on March 20. Like Coolidge, Wyoming County Commissioner Tim Henry said much of the impact fee revenue will likely go to housing relief. “There’s definitely a problem with housing, and with the demand from the well drillers our housing has been really hurt up here,” Henry said. “I guess it’s better than what we had. I’m not saying though that a lot of the oil and gas companies haven’t been
good to our community. They’ve been good with helping with the roads and giving to charities and that.” Henry added that the county and its member municipalities are happy for the extra income. “I feel that we’re doing the right thing for the people of Wyoming County – that’s for sure – and the townships are happy for it too,” Henry said. “The townships came to our meeting when we discussed it and if we were not planning on doing it, they were.” By contrast, Bradford County Commissioner Doug McLinko staunchly opposes the fee, and said if he had it his way he would vote to not impose the fee. Before doing so, however, he and the other Bradford commissioners called a meeting with county municipal leaders in addition to representatives of various state agencies, to gauge whether municipalities would override the county’s decision against the fee. “With historic low (natural) gas prices, I cannot imagine why we’re taxing this industry,” McLinko said. “We wouldn’t do this to any of our major employers up here in this environment. Not only would we not do it, we’d be offering them money.” McLinko also said the bill could have the unintended effect of encouraging drillers to stop investing the money they have been pouring into local roads and giving to charitable causes. Most of all, though, McLinko said the “reach back” element of the fee legislation is unfair to the industry. Gas companies must pay an impact fee for wells drilled within a given year, but all wells drilled in the Marcellus prior to Jan. 1, 2012 are subject to the fee for 2011. Those companies did not set aside money for the fee in the years their wells were drilled, but now must find money to pay the fees in their current year budgets. “In the last four years (the gas See REVENUE, Page 12
747419
BY MATT HUGHES
mhughes@timesleader.com
James Jones didn’t look for his first job in the natural gas industry; it found him. A decade ago, the then 20-year-old Jones, now a senior operator for fracturing-fluid management contractor Rockwater Energy Solutions, was bagging groceries for a market in Carthage, Texas when a customer asked if he liked what he was doing. “I’m 6-feet, 2-inches and 225 pounds,” Jones said, “and this guy said, ‘I can use you in the oil fields.’ I was making like $750 a month in income, and this guy promised me I could triple that if I come work with him. That kick-started it all.” Jones started his career at the bottom – his official title was helper – and learned most of his skills on the job. A slowdown in Texas drilling brought him to Pennsylvania three years ago. Several years and companies later, Jones is now a senior operator See JAMES, Page 20
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Wendy Cominsky, right, was one of several people who opposed building a gas pipeline through Dallas Township. She attended an October zoning meeting with her daughter, Sarah Cominsky, 9, and Nick Malkemes, 13. BY SARAH HITE shite@timesleader.com
Protests made in vain
Dallas Township was one of the first Luzerne County municipalities to strengthen its zoning rules while natural gas development occurred in the township, but the passage of Act 13 in the state Legislature earlier this year has all but voided the township’s efforts to regulate the industry.
It was a chilly October evening in 2011 when protesters gathered outside the Dallas Township municipal building, wearing colorful T-shirts that depicted the Lorax and quoted the Constitution. The three supervisors were scheduled to vote on an amendment to the township zoning ordinance that would address the issue of natural gas development
– not that the subject hadn’t been addressed before. Two companies had taken steps throughout the year to construct natural gas metering stations and tap their 30-mile gathering lines to the Transco interstate pipeline. The tap site chosen for both projects was the main reason why so many residents protested the See CONTROVERY, page 20
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REVENUE
Continued from Page 6 companies) have put over $400 million into our roads,” McLinko said. “They’ve given millions back to our charities, they’ve come in and provided jobs to the point where we have the lowest unemployment in Pennsylvania. … When you go back and look at all the things they’ve budgeted money on, to go back and say we want more, it’s just not fair.” At the time of this writing, Columbia County, Sullivan County and Susquehanna County had also passed impact fees, while Lycoming County and Luzerne County had not yet done so, though Lycoming County had filed a notice of intent with the Public Utility Commission indicating they would levy a fee. Prior to approving the impact fee March 28, the Susquehanna County commissioners held a meeting to gauge the feelings of municipal leaders in the county towards the fee, with most attending the meeting indicating they support the county enacting the fee. Luzerne County’s governing body may pass the impact fee under protest, in a way. The 12-member council appeared to have majority for passing the impact fee, though it also stated its opposition to Act 13 in a resolution passed at its March 27 meeting. Though gas drilling in the county has been limited to two exploratory wells that were plugged after a single fracturing, the county is also home to a strong movement opposing gas activities that has coalesced around pipelines and other gas facilities planned in the county. After hearing from numerous local Act 13 opponents at a special meeting, the council passed a resolution to support municipalities and groups who challenge the constitutionality of the impact fee law.
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fred adams/for the times leader
Pennsylvania Department of Environmental Protection Secretary Michael Krancer looks at a may fly under a microscope during a tour of the Institute for Energy and Environmental Research.
BY MATT HUGHES mhughes@timesleader.com WILKES-BARRE – Opinions about the impact Marcellus Shale gas drilling is having in Northeastern Pennsylvania are easy to come by; hard science is not. As the gas industry continues its operations in the region, local scientists are still scrambling to understand how this new-to-the-region industrial activity may affect water quality, environmental integrity and public health,
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and the Institute for Energy and Environmental Research is on the front line of that effort. Established in September 2010 and funded through the end of 2012 by a U.S. Department of Energy Grant, the Institute is a consortium of two colleges, a conservancy nonprofit and a policy thinktank committed to building consensus around a sustainable, environmentally sound policy on energy issues facing the region through research, education and public outreach. Since it’s founding, the
Institute has begun work on projects to gauge any environmental impact of drilling, which include testing surface water near drilling and pipeline activities and monitoring insect life near water for indicators of contamination. “It looks like the impacts are not major at this point… It’s certainly not as bad as some people are saying,” Wilkes University President Tim Gilmour said, but that doesn’t make the Institute’s work is any less important. In fact, on a recent tour of
the Institute, Pennsylvania Department of Environmental Protection Secretary Michael Krancer said he was “so happy I came here to see it.” “They’re interested in science just as we’re interested in science,” Krancer said. “We can’t have too many institutions do this kind of work. It’s great work, as long as it remains unbiased.” The institute also strives to provide accurate information about drilling and the local See RESEARCH, Page 17
Marcellus Shale Briefs
Fred adams/for The Times Leader
Pennsylvania Department of Environmental Protection Secretary Michael Krancer and State Sen. John Yudichak look at a graphic during a tour of the Institute for Energy and Environmental Research.
RESEARCH
Continued from Page 16 environment to the public and to involve the public in its work. “One of the things we’ve heard from the community is, can you construct a website that would act as a clearinghouse for all kinds of information that is useful to the public,” Institute Director Kenneth Klemow said. “But especially that it’s objective, so that it doesn’t reek of industry or opponent.” That website is up and running at energy.wilkes. edu, and the Institute plans to expand its capabilities in coming months. Scientists are now working to consolidate water quality monitoring data from a variety of sources, including its own measurements and those taken by the Susquehanna River Basin and Penn State researchers, into a searchable online database. Eventually, the Institute would like to expand the volume of hydrologic data at its disposal, especially data about groundwater, and to combine that data from disparate sources to look for trends. “We see a tremendous need and an opportunity to do groundwater analysis,” Klemow said. “We’re looking at ways to work with industry data, because the
industry has mountains of data and it’s not analyzed.” They’re also looking to improve their educational outreach, possibly using their findings to develop educational modules for colleges, and to involve community members and groups in the data-gathering process. The Institute has already had success recruiting volunteers to collect insect samples from streams, IEER Outreach Coordinator Erich Schramm said. A drop in mayflies and cattisflies, which require high levels of oxygen to survive and breed, and a drop in pollution tolerant insects such as black flies can indicate water contamination. “It’s a great way for citizens to get involved,” Schramm said. State Sen. John Yudichak, D-Plymouth Township, also lauded the institute’s work, and said the findings of scientists like those at IEER should form the basis of policy decisions made in the state legislature. “We’re trying to bring science to the debate, and I think Wilkes University is doing a great job in terms of research,” Yudichak said. “… We’re really trying to bring sound science to the table so that policy makers have good scientific information when it comes time to make decisions.”
• Pennsylvania’s Department of Environmental Protection will not sacrifice any inspectors due to cuts in Gov. Tom Corbett’s 2012-2013 state budget. In his remarks to the Senate Appropriations Committee in February, DEP Secretary Michael Krancer said the department has identified ways to make its operations more efficient and businesslike through the reorganization of the department announced last July, and that there will be no furloughs at DEP due to budget cuts. Krancer also said DEP significantly increased its inspections of Marcellus Shale drilling sites from about 16,000 in 2010 to 24,000 in 2011. • The Marcellus Shale Coalition in March unveiled a new online business directory it calls Marcellus on Main Street designed to connect the natural gas industry with small- and medium-sized businesses. The Internet portal www. MarcellusOnMainStreet.org will bring together entrepreneurs and small businesses with energy and services companies, contractors and suppliers in New York, West Virginia, Maryland, Ohio and Pennsylvania. Partnering with regional chambers of commerce and economic development organizations, hundreds of small businesses have already registered in the directory, according to the coalition. • State College-based Centre Creative Media has launched TheMarcellusShaleDirectory. com, a free directory intended to connect businesses in Pennsylvania with the Marcellus Shale workers and companies. The directory features shale-workerfriendly places to get regional services, stay, eat, work and play in the shale region, along with shale-related news and links to external resources. Directory spaces are free for any relevant businesses in Pennsylvania.
• An environmental advocacy group in March sued Gov. Corbett to get Pennsylvania’s state government to stop using money from Marcellus Shale natural gas drilling in publicly owned forests for anything besides improving public lands. The Pennsylvania Environmental Defense Foundation lawsuit also singles out decisions made under Corbett’s predecessor, Ed Rendell, whose administration also diverted money from the Oil and Gas Lease Fund for the state’s general expenditures. The suit was filed in Commonwealth Court. • The Pennsylvania Department of Environmental Protection has revised its permitting procedures for the processing and reuse of water used in oil and natural gas drilling. The revised Residual Waste Beneficial Use general permit encourages using the closedloop process, or the reuse of liquid waste after it has been treated or processed in additional hydraulic fracturing, the department said. DEP Secretary Mike Krancer said the revised permit encourages wastewater recycling by providing regulatory clarity, consistency and predictability, and the permit replaces three existing general permits. The revised permit also establishes water quality criteria that, if met, allow the processed water to be managed, stored and transported as freshwater. The permit specifies the processed wastewater may be used only to develop or hydraulically fracture an oil or gas well. Wastewater that does not meet the freshwater criteria must continue to be managed, stored and transported as residual waste, a classification of industrial waste. There are 10 facilities operating under the prior general permits for processing and beneficially using oil and gas wastewater. These facilities will continue to operate under the new permit. Ten additional facilities have pending permit applications with DEP.
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online resource
strives to provide most current information BY MATT HUGHES mhughes@timesleader.com Pennsylvanians will have more complete information than ever about the substances companies use to extract natural gas from the Marcellus Shale thanks to enhanced state requirements and the expansion of the disclosure website, FracFocus.org. Since its launch in September 2010, FracFocus.org has become the most detailed and complete online resource for information about the substances used to hydraulically fracture shale gas wells in the United States, including the Marcellus Shale. The Marcellus Shale Coalition, an industry organization representing most of the companies drilling for natural gas in Pennsylvania, in October endorsed using the website for chemical disclosure, and under the natural gas impact fee law passed earlier this year, Pennsylvania becomes the fourth state to mandate that companies drilling in the state upload information about their wells to the online database. As the website will take on a more prominent role in Pennsylvania under Act 13, the state impact fee law, it will also become more sophisticated, as the law mandates that the website expand its search capabilities, and tightens requirements for information that must be uploaded to the site.
Info on thousands of sites Operated by Ground Water Protection Council and the Interstate Oil & Gas Compact Commission, FracFocus has been adopted as a state-mandated fracturing chemical disclosure tool by four states -Montana, Louisiana, Texas and Pennsylvania -- which will require drillers operating to register their wells in Pennsylvania with the site on a trial basis. Alaska, Oklahoma, North Dakota and Nebraska are also considering similar regulations, according to Mike Nickolaus, special projects director for Ground Water Protection Council and a primary developer of the site. Information about more than 12,000 gas wells is currently logged on the site, among them 1,045 wells in Pennsylvania that have been fractured since Jan. 1, 2011, Nickolaus said. The site also provides general explanations of the science used to extract gas from shale. Logs for wells in Pennsylvania contain
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information about the trade name, supplier, purpose, and ingredients of chemical additives used in fracturing and the concentration of those ingredients in the additive and the hydraulic fracturing fluid in total, in addition to general information about the well and dates of fracturing. Nickolaus anticipates the number of wells registered on the site will grow, and he said the website is also becoming more sophisticated in its search features. A FracFocus user can currently search for a well by state, county, operator name, well name or API well number, a unique code assigned to each well drilled in the United States by the American Petroleum Institute. A scalable map was also recently added to the site’s search tools.
Requirements for reporting Act 13 requires FracFocus add new search parameters for wells in Pennsylvania: chemical ingredient, chemical abstract service number and time period. The bill also may require drillers to report more information about the chemicals used to fracture a well. The law requires that drillers report to the state Department of Environmental Protection information about all substances used in fracturing a well within 60 days of fracturing, and that they post the information, minus substances held as trade secrets, to an Internet registry. FracFocus
will act as that registry for a trial period of six months, at which point the state will decide whether to continue using the site or to post chemical registry information to its own website. As Matt Watson, senior energy policy manager for Environmental Defense Fund, explained, “Ultimately, the bill leaves it to DEP to write rules regarding the FracFocus posting, but I would be shocked if they ended up requiring only partial disclosure of the chemicals on FracFocus since they’re already having to disclose all chemicals to the agency. “That would really be shooting yourself in the foot,” he continued. “It would really undermine public confidence and snatch defeat from the jaws of victory.” Watson praised Pennsylvania’s reporting requirements as setting a high bar for other states to follow; his only criticism being that the reporting requirements were not extended to all oil and gas wells that are hydraulically fractured, but only unconventional horizontal wells. The Environmental Defense Fund worked with the Pennsylvania Environmental Council to push for the reporting of all substances used to fracture a well on the site, rather than, as was originally proposed, only those materials that appear on the material safety data sheets kept on file at the well. Reporting requirements for those sheets are based on occupational safety requirements, and may only reflect half the substances used to fracture a well. “All they look at under the OSHA rule is whether something is dangerous in an occupation setting,” Watson said. “They don’t look at a situation where the exposure is through an environmental medium, which may be in low doses repeated for a period of time.” Watson also said expanding the site’s search features will make it easier to sort information and identify geographic patterns.
Approval from supporters Groups supporting drilling in the Marcellus Shale have also come out in support of the FracFocus disclosure registry. Energy in Depth, a citizens group supporting aggressive development of See RESOURCE, Page 25
CONTROVERSY Continued from Page 11
companies’ efforts. It was within 1,500 feet of the Dallas School District campus, which includes a high school, a middle school and two elementary schools as well as playgrounds and athletic fields. Another reason was that the proposed document permitted natural gas activities in the agricultural district, which comprises about 70 to 80 percent of the township, as a conditional use. Some residents demanded the township ban the planned pipelines and metering facilities, and after nearly a year of zoning hearings and planning commission meetings and hours of legal footwork, the township officials were ready to establish its rules for the industry in writing. That ordinance, a 50-page document that included regulations for natural gas wells, metering stations, compressor stations, processing facilities, hydraulic fracturing water withdrawal facilities and more, will no longer be effective in the township with the recent passage of Act 13, an update to the oil and gas act of 1984.
Playing the hand they’re given Dallas Township Supervisor Liz Martin, who was elected to her first term last November in the midst of Dallas Township’s zoning woes, said
she “has thought of little else” since the passage of Act 13. “I eat, drink and sleep it now,” she said. Martin was one of the first residents in late 2010 to address the speculation of Chief Gathering LLC’s proposed compressor station, which was going to be located about 1,200 feet from the Dallas schools. Since then she has been part of a group of residents who attend every Dallas Township meeting to watch the process of dealing with downward traveling companies in an area where local zoning reigns and natural gas drilling activities are sparse. Dallas Township planning consultant Jack Varaly told residents at a March meeting that Act 13 diminishes the township’s efforts to strengthen zoning regulations – the efforts some thought weren’t enough in the first place. “We felt that was very balanced and somewhat restrictive regulation in terms of designed to protect the township without being totally exclusionary,” he said. “With the … passage of Act 13, it has totally destroyed what was in that curative amendment.”
Director Bob Templeton said the passage of Act 13 may increase setback distances for compressor stations within the county. He said the county only requires compressor and metering stations to be located at least 300 feet from the nearest occupied structure, and Act 13 sets the distance at 750 feet. In Wyoming County, some municipalities control zoning while others don’t have zoning at all. County Planning Director Paul Weilage said the majority of the changes within municipal zoning ordinances will make them less regulatory of the industry. “They’re proposing to do it jointly, as most of the zoning ordinances are very similar in nature,” he said. The passage of Act 13 also sets where natural gas operations can be located within townships. It states a local ordinance cannot make regulations any more stringent for oil and gas operations than other industrial operations located within the township. Under Act 13, natural gas and oil operations except for impoundment areas, compressor stations and processing plants are permitted in all zoning districts.
northern counties
a legal loophole
Further north in Susquehanna County, zoning is mostly handled on the county level, making the restrictions less stringent for individual municipalities. Susquehanna County Planning
Dallas Township Solicitor Thomas Brannan unintentionally found a legal loophole around Act 13 to maintain zoning control over the companies working within the township. During the process of develop-
JAMES
Continued from Page 8 for Rockwater, managing his company’s role in the multi-staged process of hydraulic gas well stimulation.
Leader with his team Jones and his team manage the back flow of fracturing fluid and gas from the wellhead to pipelines and on-site storage tanks. He is in charge of installing the equipment leading flowback water out of the well head and through separators that divide the flowback water from gas, measuring the quantity of gas and fluids exiting the well and maintaining compliance with environmental regulations through monitoring and fluid testing. Jones said he likes his job and loves living in Pennsylvania, but he doesn’t sugar-coat it. It’s hard outdoor work under demanding conditions, he said. “The oil field is not for a lighthearted person,” Jones said. “You’ve got to be strong-willed and ready to work. It will chew you up and spit you out if you’re not ready for it. There’s an expression,
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it doesn’t rain in the oil field it rains on it. There’s no sick days, no bad weather days, no playing hookey.” Jones has no set days off – he only gets a vacation day when he requests one or when there’s no work for him to do. Last year he said had 65 days off; a fiveday-a-week worker taking 10 days vacation and national holidays off would get about twice that.
Nomadic lifestyle His work can also take him anywhere from Northeastern Pennsylvania to West Virginia and Ohio, an aspect of the job that has become more challenging since his recent engagement to a woman who lives in Pittsburgh. “I compare working in the oil field to what it would be like working in the military,” he said. “Because you’re away all the time, and you don’t know what will come until you get there… I spend a lot of time away from home. “It’s a sacrifice but that payday really makes things better. A lot of guys, they get homesick, that’s why this job has a high turnover rate.” But Jones also said he enjoys more about his job than the payday.
ing a curative amendment to the zoning ordinance, Brennan entered into negotiations with both Williams Field Services LLC and Chief. The agreements, finalized months after they began, were similar in nature and upheld three key principles: • The companies had to remove more controversial aspects of their metering stations from the actual sites, which included mercaptan tanks and communications towers; • The companies had to agree not to construct any other gas operations within a 1.75-mile radius of the Dallas School District campus; and • The companies had to accept deed restrictions on their properties that would prevent them from expanding upon the sites in the future. Brennan said these agreements are still in place and aren’t affected by Act 13. He said the township started negotiations because applications for both of the companies’ projects had been submitted before officials deemed the zoning ordinance to be inadequate for handling natural gas development issues. Varaly has told residents and supervisors that there are a few areas that aren’t stringently addressed in Act 13, such as buffer zones and setback distances. The township has until August to make necessary changes to the zoning ordinance to be in compliance with Act. 13. “We’re looking into it,” said Brennan.
“I love being outdoors, being outside working with my hands and learning every day,” Jones said. “I haven’t had a day I haven’t learned something. I’ve been doing this 10 years and I don’t know everything there is to know.” Jones’ story represents some of what the Marcellus Shale industry has promised Pennsylvanians.
Jones: Good opportunities He landed an entry-level job without special training, and learned his career from the inside. But as trucks bearing license plates from Texas, Oklahoma and other far-off places continue to pour into the state, some have questioned whether opportunities like Jones had are available to local residents. For his part, Jones said he absolutely thinks those opportunities exist. “There’s no sense in unemployment right now up here. Every company’s shorthanded right now,” he said. “The companies, they really hunt for people with experience, but the company I work for, Rockwater, I don’t think has ever turned down anybody without experience, because you’ve got to start somewhere.”
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Industry growth topic of colleges’ entrepreneurship forums
BY MATT HUGHES mhughes@timesleader.com
Goods and Services needed
SCRANTON — Few industries have spurred as much growth in Northeastern Pennsylvania in so short a span than has the development of the Marcellus Shale. So when a consortium of local colleges hosted its first in a series of entrepreneurship forums this spring, tapping into the potential the drilling industry offers made a fitting first topic. Lackawanna College, The University of Scranton and the dozen other colleges making up the Northeast Pennsylvania Technology Institute in early March invited representatives of natural gas companies, utilities and ancillary industries to offer insight on how entrepreneurs can best capitalize on the opportunities offered by the gas industry at the University of Scranton. “We want to alert people who want to take advantage of the opportunities that have opened up in the community,” said University of Scranton business school Dean Michael O. Mensah. “Anything to do with extraction industries has a lot of spin-offs for services that the shale drilling or whatever process will require.” “These oil and gas companies; they don’t want to own anything,” said Rick Marquardt, director of the Natural Gas Technology Program at Lackawanna College. “They’ve got engineers, they’ve got geologists, they’ve got leases that they own, but they want to contract everything out. Owning drilling rigs even is a new concept that Chesapeake is trying out. We can do this, but as entrepreneurs it’s all about doing your homework.” Stephen Pendrak of UGI Utilities added that opportunities abound for service providers in
Airline flights Alarms/Security Automobiles for workers Banking for employees Boring services Catering Compressor controls Conference rooms Concrete Construction Corrosion consultants Cranes Dredging Electrical Emissions measurement Engineering Environmental Excavating Fencing Fire/safety Food Gasoline/Diesel HVAC Housing for employees Hotels Instrumentation Insulation Janitorial Landscaping/lawn care Lighting Mechanical integrity Oil services Painting Pipelines/steel Pump supply Real estate transactions Rental cars Restaurants Right-of-way maintenance Sandblasting Septic tanks Signs Tires Tree clearing Trucking Valves/controls Welding X-ray and inspection
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jason riedmiller/for The Times Leader
Ryan Stalker, who works for gas transportation company Williams, explains how companies hire contractors for specific work. industries including banking and wealth management, accounting, legal services, recruiting, advertising and media, geology, trucking and entertainment, as well as for providers of tangible goods such as concrete, liquid fuels, pipe, drilling equipment and sand, among others. But breaking into the industry requires time and planning, especially since the declining price of natural gas has recently caused drilling companies to scale back their operations. “I don’t think this industry’s ever going away, but it’s definitely going to slow down,” said Adam Diaz, owner of several companies that provide services to the gas industry, including forestry, trucking, disposal and well-drilling services. “It’s happening right now. ... A lot of these companies are going back to Texas. We’re sort of going through a bust right now.” Diaz has started several companies to work with the drilling industry, as well as others dealing in wood products and blue stone. He said managing his costs and own-
ing companies in different sectors has helped insulate his business in the drilling slowdown. “To me, it’s simple — just manage your debt,” Diaz said. “I have 50 vehicles, and if I have 25 vehicles on the road I can still turn a profit.” Greg Sheer, a Montrose-based home inspector, also said entrepreneurs need to prepare to adapt to the changing needs of the gas industry locally over time. “Establishing a business that’s actually going to be viable throughout that process is going to be challenging,” Sheer said. “You need to be able to cage that (entrepreneurial) spirit, and direct it into something you believe will be viable. You’re going to need to be able to diversify.” But for those who can recognize opportunity, the results can be lucrative. Diaz said he got into the disposal business after touring a well pad and watching a company worker yell at a disposal supplier who could not get containers See GROWTH, Page 25
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Continued from Page 22 to the site fast enough for the company’s needs. “At that point I said to myself, ‘You’re gonna start a garbage business,’ ” Diaz said. To best market a company to the gas industry, Ryan Stalker of gas transportation company Williams said it’s important to first gain an understanding of who does what in the industry and how companies hire contractors. Williams doesn’t contract for portable toilets at jobsites, for example, but the companies it contracts with might, Stalker said. Knowing whom to ask for a contract
will greatly improve a company’s chance of securing one. Gas companies often use compliance prescreening databases to choose contractors – Williams uses one called ISNetworld – so signing up and becoming compliant through one of those databases is another important preliminary step, Stalker added. After that, it’s all about availability. In the 24-hour, 7-day a week 24/7 gas industry, nothing is more valuable than the ability to do a job whenever called on. “If one of my compressor stations goes down, it costs me $50,000 for one hour,” Stalker said. “So if it costs me $49,000 to get that back on board one hour faster that’s what
RESOURCES
Continued from Page 18 the Marcellus Shale, in January hosted a public forum introducing the website to a crowd of 250 in Williamsport. The group is planning to host similar events in the future, said John Krohn, spokesman for Energy in Depth. “The reason that we did this was because we felt it was very important to have a public rollout of this important resource in the communities where shale development is actually occurring,” Krohn said. “To tell folks that as this stuff is being talked about, here’s a place you can go and see what is in that fracturing fluid that everybody says is secret.” Disclosure of chemicals used in fracturing fluid has become an issue in states where the process is used to stimulate gas wells because some fear it may contaminate groundwater. The website allows those with such concerns to monitor what chemicals are being injected underground in an area. “If people have something in their water that shouldn’t be there, we believe they have a right to know about it,” Nickolaus said. “Not that we believe it gets there, but if it did, they have a right to know about it.” The industry is quick to point out that no scientific study has conclusively identified a case of fracturing fluid contaminating groundwater, and indeed none has.
Industry gets behind transparency The U.S. Environmental Protection Agency said in a draft study released in December it had identified low levels of synthetic chemicals consistent with fracturing fluids in agency-drilled monitoring wells near Pavillion, Wyoming, which could be explained by the upward migration of fracturing chemicals into the water supply, but the study stopped short of conclusively linking drilling to the contamination. Dozens of individuals have also reported their water became muddy or cloudy, took on a chemical smell or became flammable while drilling took place nearby. Marcellus Shale Coalition spokesman
I’m going to do.” Recently, a crank shaft on a William’s compressor station did break, Stalker said, requiring him to call on a trucking contractor at 2 a.m. to transport the equipment to a machine shop in West Virginia, as service Williams paid “many thousands” to obtain. “If you’re willing to get up and send your guys out at two o’clock in the morning, I’m not asking how much; I’m asking whether you can do it,” Stalker said. Joe Pipitone, owner of Top Notch Tree Care in New Milford, said his company found its niche in supplementing the work of larger forestry contractors. “There’s so much forestry activ-
Travis Windle called those reports unproven, and instead pointed to a study released in February by the University of Texas that again found no evidence that fracking is contaminating groundwater. Regardless of whether the contamination threat is real or a paper tiger, the gas industry in Pennsylvania is embracing FracFocus. In October, before Internet chemical disclosure became law, the Marcellus Shale Coalition at its annual conference adopted a measure endorsing participation in FracFocus for all operator member companies. The coalition claims to represent 95 percent of companies drilling for gas in Pennsylvania. “We say we think transparency is the best perspective,” Windle said. “We’re going post these additives online in a searchable way. Folks deserve to know what’s in these fluids, which are made up of 99 percent water and sand. … I think this demonstrates the industry’s willingness and commitment to going above and beyond what’s asked of us.”
Concern about trade secrets Dave Albright is operations manager for a subsidiary of Rockwater Energy Solutions, a service company involved in managing fluids on the surface, before and after a well is fractured. He said he personally favors disclosure of chemicals used in fracturing because it “would give people peace of mind, and set their minds at ease that we have adopted safe processes,” though it’s also important that reasonable protection be given to trade secrets, not only in materials used, but also in operating and fracturing procedures used at each well. Marcellus Shale wells being drilled and fractured today in general produce more gas than early wells because drilling and fracturing companies have adapted their practices and materials to the particular geology of the region. “All this comes at a cost; that trial-and-error process is expensive,” Albright said. “I’m not speaking against disclosure, but the industry I would think would want to be careful to do it in
ity up there and (utility work) that are being drawn from these large companies, but it also opens up opportunities to supplement their work,” Pipitone said. “What you’re really looking to do is identify a market gap, an opportunity gap, where you can offer a customer something that they need.” Many attending the forum had some interest in working with the gas industry or in learning more about it. Lee Batzel, CEO of Avoca-based Galaxy Brushes, said the forum was helpful in making industry contacts. “We manufacture brushes for the pipeline industry, but we’re not doing anything in the Marcellus,” Batzel said, adding. “We’re trying to.”
such a way that it doesn’t make companies give away secrets to their competitors.” Hydraulic fracturing chemicals are exempt from disclosure at the federal level by the “Halliburton loophole” in the 2005 energy bill, which exempts drillers from the clean streams act. Pennsylvania’s solution to protecting trade secrets has been to order drilling companies disclose all chemicals used at unconventional gas wells and the concentrations used to the Department of Environmental Protection, which will hold confidential the composition of chemical compounds companies wish to preserve as trade secrets. But citizens can request information about trade-secret chemicals through an open records right-to-know request, and if that request is denied, they maintain the option of appealing in court, where the burden falls on DEP and operators to prove a trade-secret claim is legitimate. Watson applauded the bill’s method of handling the trade-secret problem as one that gives citizens strong standing to challenge trade-secret claims. “The public concern about frack-fluid chemicals is significant enough that it merits the highest degree of scrutiny over tradesecret claims,” Watson said. “Trade-secret protections should be narrowly applied and strictly enforced; that’s the position that we’ve taken.” In the future, Nickolaus said he believes FracFocus will grow even more sophisticated in its search functions and become an official public disclosure resource in more states. “We hope that eventually what we’ll end up with is a data-portal concept, where this is a site that feeds an even larger database,” he said, adding that the database might include other information about wells, such as construction data. The site would become “a data consolidation process that would use each of these different sources of data to cherry-pick from them, and get the public the information they need as quickly and as easily as possible,” he said.
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Nurses Prepare for possible effects of drilling BY MATT HUGHES mhughes@timesleader.com
S
CRANTON – A nurse is often the first health care professional a patient sees upon arriving at a hospital and plays a critical role in diagnoses, so they need to be informed about all the potential causes of an illness.
With that thought in mind, the Pennsylvania Association of Nurses union, in conjunction with environmentalist group Conservation Pennsylvania, hosted a seminar on the potential public health impact of Marcellus Shale gas drilling in Northeastern Pennsylvania at the Radisson Lackawanna Station Hotel. “We wanted to give the nurses some real science education about what is involved in this process,” said union spokeswoman Emily Brooks Randle. “We’re not trying to make a political statement. We really want to focus on the public health aspect.” The union invited Dr. Alfonso Rodriguez, president of Luzerne County-based advocacy group The Gas Drilling Awareness Coalition and a physician specializing in kidney diseases, to speak to nurses about the potential impact of air and water contamination from gas drilling on public health. He also participated in a panel discussion with other environmental advocates and nursing union leaders. Rodriguez said the most immediate drilling-related impact hospitals are likely to see will be an increase in motor vehicle accident victims, caused by an increase in truck traffic on rural roads and drivers unfamiliar with the area, but the longer-term impacts will likely be more subtle and more difficult to trace back to drilling. “How long will it take us to see a real effect? I wish I could give an answer; I can’t,” he said. “It may be years… The most common things you’re going to see are asthmatics and more rashes, so (a potential link to
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“
Jason Riedmiler/for The Times Leader
Dr. Al Rodriguez, president of the Gas Drilling Awareness Coalition of Luzerne County, speaks about the health concerns related to the fracking process. drilling) should always be in the back of your mind when you see it.”
Volatile chemicals Rodriguez provided an overview of some of the more volatile chemicals sometimes used in hydraulic fracturing and the health effects of exposure to those chemicals. He also reviewed the potential for a decline in air quality from truck exhaust, earth disturbance and atmospheric methane leaks. Rodriguez said regulators and academics have fallen behind the rapidly developing gas industry and as such little research has probed the impact of drilling on health and none has substantiated a solid link between the two. He encouraged nurses to become front-line researchers in that investigation, recommending nurses who come into contact with patients they suspect have
been exposed to chemicals used in drilling to alert regulatory authorities like the state Department of Environmental Protection, to attempt to document the patient’s exposure history, to document the patient’s symptoms in as much depth as possible and to consult with research hospitals and academic institutions. Nurses attending the seminar called it an eye-opener. “As nursing professionals we’re right on the forefront of getting people in the hospital and recognizing what the effects of this are going to be,” said Roben Schwartz, a registered nurse at Community Medical Center in Scranton. “Seeing how the chemicals are affecting people – like asthma, endocrine problems – all of these things are going to start appearing in our households, so we need to be more cognizant of what they are,” she said.
We wanted to give the nurses some real science education about what is involved in this process.” — Pennsylvania Association of Nurses spokeswoman emily brooks randle
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New ride fueled by BY MATT HUGHES mhughes@timesleader.com
natural gas
At a company event in February, employee Kim Galella from Southwestern Energy’s Tunkhannock office took home one of 50 compressed natural gasconverted vehicles given away by the company. Galella’s new GMC Yukon has been outfitted with a conversion kit consisting of a compressed natural gas tank and regulator, separate fuel lines and injectors and a computer, all of which allows the SUV to run on either natural gas or standard gasoline. She also won a home-fueling kit that will allow her to refuel her vehicle from her own garage through existing utility gas lines. Most of the technology powering Galella’s new ride is not new, but it’s one that’s becoming more common, especially in commercial applications, due to the low price of natural gas and the expanding availability of fuel. There are 30 natural gas fueling stations in Pennsylvania, according to the U.S. Department of Energy. Most belong Alex Seeley/for The Times Leader to companies or government Kim Galella of Tunkhannock sits in her new vehicle. bodies such as school districts, but 11 are open to the public, and $10,000 more than a base Civic are about 25 percent lower than more may be coming. sedan, which starts at $15,805. those from a gasoline-powered Even using a generous estimate Better access coming engine, and compressed natural of a $2 per gallon savings for In March, GE and Chesapeake gas costs only about $2.10 for a the natural gas-powered Civic, Energy announced that they gallon of gasoline equivalent. assuming an average fuel econwould collaborate to improve But without subsidies the omy of 30 miles per gallon the access to natural gas fuel by higher price of natural gas vedeveloping “in box” commercial hicles to some extent offsets the car would need to travel more than 150,000 miles before fuel refueling facilities that are easy savings on fuel. savings offset the car’s higher to ship and maintain, developing Currently the Honda Civic sticker price, without subsidies. home refueling technologies and GX is the only consumer vehicle other partnerships. that runs on natural gas out of Emissions produced by the factory. Its suggested retail Expensive to convert natural gas combustion engines price is $26,155, more than Aftermarket conversion kits
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aren’t much cheaper either. They cost between $8,000 and $10,000 according to Southwestern spokeswoman Susan Richardson. Home-refueling kits also run a few thousand dollars, she added. For more natural gas vehicles to become more prevalent, their price needs to drop to where they can compete with traditional cars. “The fuel’s affordable; we know that,” Richardson said. “It’s making it affordable for an everyday person to get into a passenger vehicle and not being too expensive, and the key to that is to get these vehicles rolling off the assembly line ready for this. “Anytime when you have to add something aftermarket that makes it more expensive, and some of the American automakers are starting to look at doing that not just on the commercial side but on the consumer side as well.” Subsidies can also make owning a natural gas vehicle a more viable option for many. Currently, the Pennsylvania Department of Environmental Protection offers a $1000 tax rebate for the purchase of a natural gas vehicle. The federal government had also offered a $4000 for purchasing the Honda Civic GX, but that program expired in 2010. A bipartisan amendment to the Senate highway bill that would have subsidized purchases of commercial natural gas vehicles and the construction of natural gas refueling stations had President Obama’s support but was failed to gain the 60 votes it needed to pass March 13. Some Republican senators opposed the amendment because it singled-out a particular industry.
Currently, the Pennsylvania Department of Environmental Protection offers a $1,000 tax rebate for the purchase of a natural gas vehicle.
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honor thy river Protesters voice opposition to using water for drilling
BY MATT HUGHES mhughes@timesleader.com
The Susquehanna River Basin Commission’s quarterly meeting in December started out much like any other board or authority meeting; with commissioners approving minutes, passing resolutions and hearing presentations from department managers. By its end, it looked more like an Occupy Protest. Protesters stood and chanted “honor the river; honor our lives” and “this is what democracy looks like,” interspersed with shouted accusations that board members did not speak for residents living in the river’s three-state basin and that they risked environmental catastrophe. At one point in the Dec. 15 meeting, the commissioners backed away from their dais and toward a backdoor as protesters approached. The incident prompted the Commission to vote a second time to approve permits granted in December at its next meeting, and to revise its rules for speaking at its meetings. What prompted the protesters’ ire was actually one of the more administrative duties of the commission, the approval and denial of permit applications for water withdrawals within the river basin, but the size and vigor of the crowd, which numbered nearly 100, highlights the challenges the advent of natural gas drilling has posed to the commission.
Manages withdrawals The commission is an interstate agency is responsible for managing the Susquehanna watershed and permits surface water withdrawals from within its drainage basin for a variety of uses, includ-
clark van orden/the times leader
Relative calm presides at the start of the Susquehanna River Basin Commission’s December meeting in Wilkes-Barre. It would not last. ing natural gas drilling. The advent of natural gas drilling in Pennsylvania, where most of the river basin lies, has both thrust the commission into the spotlight like never before and compelled it to greatly expand the scope and detail of its monitoring. “Due to the natural gas drilling activity the numbers of applications have gone way, way up,” said Susan Obleski, spokeswoman for SRBC. “There’s a continuous flow of applications.” In two years SRBC has added 30 employees, bringing its total staff to 67, and its annual budget for water withdrawal and water quality monitoring has gone tripled from $4 million before drilling to nearly $12 million today. It has also opened its first field office in Sayre, Bradford County and installed 51 state-of-the-art water quality monitoring stations near some of the most active drilling zones in Pennsylvania’s Northern Tier and across the border in southern New York. Though it only claims authority to regulate water use, the commission has also stepped up its supervision of water quality around drilling sites using the new monitors. Those monitors and follow-up field sample collection can identify metals and salts associated with
drilling fluids in streams, as well as high sediment levels that could result from nearby well pad or pipeline construction.
Changes prompt action When anomalies are detected in the water, the commission will notify the relevant bodies, including the Pennsylvania Department of Environmental Protection and the state Fish and Boat Commission, but collecting and tracking water quality data also provides SRBC and other agencies to assess drillings impact en masse. “It can work both ways,” Obleski said. “It can show that conditions are changing or it can show that conditions may not be changing, because there are legitimate concerns that without the data people do not know if drilling is having an impact on streams…. “It’s providing a data source that wasn’t there before and obviously the longer they’re in, we’ll have comparative data. So if there were a pollution incident we would have enough data to know that it’s not a normal trend at this time of year,” he added. The commission was also proactive in instituting new permit fee schedules early on in the development of the Marcellus Shale play and in assessing penalties to those that violate consumptive use guidelines, which has ensured
the commission can finance its monitoring of the basin’s water resources, Obleski said. The commission has also worked to streamline the permitting process to handle the increase in withdrawal permit applications and work with the gas industry’s frantic and ever-developing work schedules. In order to ensure comprehensiveness in tracking the industry’s broad footprint, SRBC requires drillers be permitted for all consumptive water uses and surface water withdrawals taken within the river basin. It also has instituted an approval-by-right process to accelerate the permitting. Under that process, commission workers can approve most routine withdrawal permits, rather than requiring SRBC commissioners approve them by vote at quarterly meetings. The commission has also changed rules to make it easier for multiple companies to share water taken from a single pool and to transport flowback water from wells within the Susquehanna River Basin out of the basin for reuse in stimulation of other wells. “We know that it’s frack fluid being taken to another pad for reuse,” Obleski said. “We want to incentivize that, rather than having to get a new withdrawal.”
Raising opponents’ ire Though the commission contends they are only administrative in nature and that the regulations governing whether a water withdrawal permit is approved or denied has not changed, the changes in permitting procedure have also drawn the ire of opponents of hydraulic fracturing. Some oppose the commission issuing any new consumptive water use permits for drilling use. As gas drilling within the basin continues to develop and its opponents continue their coordinated efforts, the Susquehanna River Basin Commission will likely remain in the spotlight.
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