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March 24, 2015
by David Conti

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Advice and dissent


A follow-up on the Technical Advisory Board and its most recent meeting

The Department of Environmental Protection this week announced who will fill the seats on its newly created advisory board for conventional drilling — since the original TAB will focus solely on shale drilling.

The Conventional Oil and Gas Advisory Committee (COGAC, which hopefully will be pronounced like the Telly Savalas character) will consider a separate book of regulations for legacy drilling that DEP must write.

The voting members, from DEP’s news release:

• Mark L. Cline Sr., production supervisory & on-site manager, Cline Oil Inc.
• David Ochs, senior geologist/geology and operations manager, Kriebel Resources Co.
• A. Bruce Grindle, president, Oil & Gas Management Inc.
• Dave Yingling, engineer, Rosebud Mining
• Burt A. Waite, senior geologist, Moody and Associates

If that last name sounds familiar, it means you pay way too much attention to the membership of DEP advisory boards. Mr. Waite was on the old TAB until the DEP and Gov. Tom Wolf replaced that board recently.

If the board appears to be full of industry people, some say that’s the point. It advises regulators on technical industry issues.

But like the new TAB, Wolf and the DEP appointed four non-voting members to add non-industry perspective. For the COGAC (Who loves ya, baby?), those members are:

• Jim Morrison, chief administrator, Murrysville
• Doug D’Amore, DCNR Sproul State District Forester
• R. Keith Hite, vice President of public relations, Blackford Ventures; former executive director, PA State Association of Township Supervisors
• Sherry Tune, forest supervisor, Allegheny National Forest Service

The addition of non-voting members to the TAB brought protests from industry groups that believe those environmental and community voices don’t have a place in the board’s proceedings.

The environmental group PennFuture took to Twitter to question whether the industry was trying to “quash public input” in the rule-making process.

John Walliser, vice president of the Pennsylvania Environmental Council and a new non-voting member of the TAB, today posted on his group’s website a well-reasoned defense of his presence at the new table. It included:

The TAB is an advisory board with no formal authority respective to the department. It does not have the ability to approve or reject any regulatory or policy proposal. Its purpose is solely to provide input to the department, and that purpose is certainly not harmed by the presence of new or additional members.

Like the industry, groups such as the PEC contributed to the 24,000 public comments the state got on new drilling rules, and not all of its comments were reflected in the latest draft, Walliser noted.

COGAC gets its first public airing at 10 a.m. Thursday. For those who insist on paying too much attention to DEP advisory boards, the meeting will be telecast.


March 23, 2015
by David Conti

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Going all Al Pacino


The nine people tabbed for the new TAB already were under the statutory gun.

The state Department of Environmental Protection has a tight deadline to approve before next March a sweeping set of rules aimed at protecting people, air, water and other resources around shale gas wells; so tight it can’t hold new hearings on the latest draft.

Still, the department’s leadership under Gov. Tom Wolf wanted new members for the TAB — the Oil and Gas Technical Advisory Board — to replace advisers who had been around awhile; so long that two members were appointed by Gov. Robert P. Casey, who died in 2000.

Despite the deadline for rules on which the department needs the TAB’s advice, officials postponed its meeting to allow Wolf to quickly appoint five replacements and four new nonvoting members; so quickly the Department of State did not have time to finalize their membership in time for last Friday’s meeting in Harrisburg.

The new board still met to hear an explanation of changes made in the latest draft of the rules dealing with wastewater impoundments, noise limits and setbacks from streams and playgrounds.

It could not, however, vote to establish the new structure sought by the department, such as adding the four nonvoting members and imposing staggered term limits to avoid members whose appointment paperwork is only available on microfilm.

So the board also heard from some gas industry representatives who aren’t too happy with the rush to add either new rules to their operations or nontechnical members to a technical board.

“I don’t mean to go all Al Pacino here, but this whole proceeding is really out of order,” said Kevin Moody, general counsel and vice president for government affairs at the Pennsylvania Independent Oil & Gas Association.

He urged the new voting members to reject changes that aren’t covered by the statute that created the board.

The statute dictates some of the qualifications for those five voting members. Three must be petroleum engineers or geologists, or experienced drillers. One has to be a mining engineer from the coal industry. The fifth member is a geologist or petroleum engineer nominated by the Citizens Advisory Council.

Given those parameters, the makeup of the voting portion of the board did not change drastically. Old board: a retired Penn State researcher, a former Consol Energy executive, a gas company engineer, a geologist from an environmental and engineering consultant, and an oil company head.

New board: Penn State researcher David Yoxtheimer, Consol Energy engineer Casey Saunders, Shell geologist Robert Hendricks, geoscience consulting firm owner Fred Baldassare, and Bryan McConnell, environmental manager for energy company Tenaska.

It has plenty of industry representation, and McConnell has served as vice chair of the Marcellus Shale Coalition’s Natural Gas Use Committee.

The nonvoting members could provide a decidedly non-industry voice, and provided the meeting’s only comments aimed at strengthening the latest proposal.

John Walliser is vice president of the Pennsylvania Environmental Council. Michael Griffin, director of the Center for Climate and Decision Making at Carnegie Mellon University, studies environmental impacts of energy systems. Barbara Kutchko is a researcher at the Department of Energy. Emily Krafjack leads a community group focused on how drilling impacts neighbors.


February 23, 2015
by David Conti

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Looking for greener grass


Some New York town leaders feeling stung by their governor’s ban on fracking for gas are eying what they consider greener pastures south of the border.

As WBNG-TV in Binghamton reported last week, the Upstate New York Towns Association is researching what it would take for interested communities to secede from the frack-free Empire State to join Pennsylvania, where gas drillers recently finished yet another record year of production.

Jim Finch, supervisor in the Southern Tier town of Conklin, told the station the chronically depressed area could tap riches in the shale deep below, but Gov. Andrew Cuomo won’t allow it.

“Right now, we are being deprived of work, jobs and incomes,” he said.

At least 15 unnamed towns are on board, the association said. They’ll just have to convince New York lawmakers, their counterparts in Harrisburg, and a federal government that hasn’t looked kindly on the word “secession” over the past 150 years.

Cuomo’s attitude toward natural gas development and the state’s fiscal policies make the idea worth pursuing, though, one proponent told the station.

“The tax structure in New York is just horrible to do business in,” said John Gage, owner of the Reliable Market in Conklin.

A conversation with Pennsylvania gas industry leaders might show these towns’ folk that the grass on this side of the border isn’t necessarily, well, you know… Gov. Tom Wolf this month proposed new taxes on gas production and invoked the New York ban as an alternative to his plan, though he said that was not threat.

Still, Lou D’Amico, head of the Pennsylvania Independent Oil and Gas Association, called Wolf’s comments “tantamount to extortion.” Driller Huntley & Huntley last week told officials in Harmar it was re-evaluating its leasing plans based on the tax proposal and what it considers a ban threat from Wolf.

Low gas and oil prices, meanwhile, have producers dialing back on spending and telling communities they won’t be drilling there anytime soon.

Towns eager to secede to Pennsylvania might want to consider whether they would really succeed in getting wells drilled in their pastures.


February 9, 2015
by David Conti

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How long?


“How long?” has become a common refrain in the Marcellus shale.

Initially some wondered how long the drilling would last as skeptics called the first estimates of natural gas trapped in the shale too high. Turns out, they were way too low, based on the trillions of cubic feet in reserves several shale producers announced last week.

“Several decades” seems the most appropriate answer.

When townships and boroughs started collecting impact fee money from wells, some local leaders stashed it in savings accounts because, they wondered, “How long until Harrisburg diverts it somewhere else?”

Gov. Tom Wolf’s campaign promise to institute a severance tax for education funding provides the answer to that.

The big question today is: “How long will these low prices last?”

The benchmark price for gas fell by a third since November to its lowest level since 2012, the last time producers pondered this question.

It is a cyclical business.

The answer then was “about a year.” The answer now is a topic of debate among analysts and concern in the industry.

“In my opinion, it is too early in the cycle for us to know how this will play out,” EQT Corp. CEO David Porges said last week in discussing the Downtown producer’s decision to pare its previously announced capital spending plan by nearly 20 percent because of the low prices.

Other companies’ cuts in spending on gas well development from last year’s levels range from 23 percent at Consol Energy to Range Resources’ 43 percent. Yet both of those companies promise to continue growing production by 20 percent or more annually.

How long can they do that? For at least a year or two, experts say.

“Despite the reduction in drilling activity, it’s very important to highlight that drilling efficiencies allow more production with fewer rigs,” Luke Jackson, an analyst at Bentek Energy, said in a presentation last week on gas prices.

That means drilling more and better wells at each pad, and providing higher numbers when someone asks, “How long is the lateral length on that well?”

It means answering the question, “How long are you going to leave that well unfinished?” Jackson and fellow analyst Thad Walker estimated Marcellus producers have drilled at least 1,500 wells that have not been completed or brought online.

Still, turning on those taps will just add supply to the glut that’s causing the low prices. How long will it take to get more pipelines in place to carry all this gas away? How long until utilities start burning more gas to generate electricity, increasing demand enough to level the prices?

“The summer of 2015 is the bottom,” Jackson said. “As coal plants are retired, you start to have that structural shift to more gas burn.”

It might be a long spring in the Marcellus.


February 4, 2015
by David Conti

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Better news for steel


Steelmakers have been among those most hurt by the crash in oil and natural gas prices.

Less money for the commodities has meant less drilling, so less need for all those layers of pipe and casings shale producers put in their wells.

The softening market prompted U.S. Steel to lay off 750 workers at plants in Ohio and Texas that make piping, and it put another 2,000 workers on notice in Alabama and Texas. TMK IPSCO said this week it would cut 10 percent of its workers at two Beaver County plants that make downhole pipes.

Luckily for the steel industry, midstream companies are still building pipelines to move gas to market.

The group that wants to build the massive Atlantic Coast pipeline to North Carolina today gave steel its best news in weeks.

Dominion and the other companies behind the planned 550-mile line picked Pennsylvania-based Dura-Bond to make the pipe. Dura-Bond said it will hire 150 workers to do just that at its Steelton plant outside Harrisburg.

Given the layoffs in this area, Dura-Bond should have no problem finding experienced workers for the job.


February 3, 2015
by David Conti

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Pulling permits


We’re starting to see some early effects of a slowdown in gas drilling in Washington County.

Range Resources, which cut the amount of money it intends to spend on drilling this year by 43 percent, told officials in Mt. Pleasant that it won’t develop three new well pads for which it sought conditional use zoning permits.

In a letter to township officials, Range, the state’s most prolific shale driller, blamed the “deterioration of the commodities markets” for its decision. Despite a gain on Tuesday, the national benchmark price for gas is down 30 percent since November, and the going price in Appalachia is even lower.

Hence the 43 percent cut in capital spending by Range, a similar reduction by Rex Energy, a 23 percent drop coming from Consol Energy and Chevron’s decision to cut 162 workers in Moon. Only EQT Corp. has said it will increase capital spending next year, though that was in December. We’ll see what officials say Thursday when EQT releases its latest quarterly earnings report.

The environmental group PennFuture celebrated Range’s cancellation because its lawyers were representing people who opposed the company’s application to drill within a mile of schools in a residential area.

Range is not pulling out of Mt. Pleasant, though. Or the Marcellus for that matter.

The company continues work on two other well pads in the township that it started last year. State records show Range has started drilling 27 wells since Dec. 1, all but two in Washington County.

“Range is hopeful that the next year brings forth the circumstances that will provide us with the opportunity to conduct activity on these or other locations in the township,” the company wrote in its letter to Mt. Pleasant.


January 28, 2015
by David Conti

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Tapping shale’s opportunity


The talk in the shale biz this week is all about them pipes.

Hart Energy’s Marcellus-Utica Midstream Conference started Tuesday night at the David L. Lawrence Convention Center, attracting most of the big names in gas pipeline and infrastructure development.

Builders say they’re insulated (so far) from the low natural gas prices that have some producers slashing budgets and jobs, and are moving fill-speed ahead. But a slow build-out of pipelines from the Appalachian basin has fueled the glut that’s helping to drive down prices.

A plodding and Byzantine regulatory and permitting process slows work, the industry says. That leaves overstocked producers in the Marcellus and needy consumers from Boston to Charlotte waiting.

Another group tapping their toes is a manufacturing sector eager to take advantage of what shale offers.

The American Shale & Manufacturing Partnership today released a report two years in the making that highlights challenges facing the industry and includes suggestions for moving forward. Based on brainstorming session that began in 2013 in Pittsburgh, many of the recommendations surround infrastructure, regulatory issues and permitting.

“Too often, regulatory barriers and insufficient agency personnel and resources inhibit forward motion. Industry may identify an implementation approach and plan the needed infrastructure only to return to the drawing board when government agencies express disagreement,” the report states.

Suggestions for overcoming such challenges include forming a task force or interstate board to smooth permitting and regulatory issues.

“We must commit to pursuing common sense policies that encourage capital investment into the region while identifying more practical ways to utilize these abundant resource,” said David Spigelmyer, president of the Marcellus Shale Coalition.

The report suggests speeding up some permitting processes, an idea that would likely garner some happy dances over at the Convention Center, where attendees heard about legislation aimed that way.


The report also calls for building better relationships in the community to “resolve concerns.” The infrastructure build-out hasn’t always been embraced with open arms in towns through which new pipes must run.

One suggestion in the report for companies to deal with this: Don’t rely on tap-dancing from the in-house PR staff.

“Influential and trusted partners can play key roles in enabling public understanding. Community leaders, regulators, the media, community advisory panels, chambers of commerce, faith-based organizations, and universities and extension services can serve as trusted resources,” the report says. “These messengers can help to overcome the stigma which can be associated with industry-led communication campaigns.”


January 26, 2015
by David Conti

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Round it goes


Two years ago, a critic of natural gas development warned about a revolving door in Pennsylvania government.

Too many people moved too freely between positions in government and jobs at companies involved in the industry, the nonprofit Public Accountability Initiative claimed in a report, raising “questions about whether regulators are serving the public interest or private industry interests in their oversight of fracking.”

A few recent appointments by incoming Gov. Tom Wolf highlight a revolving door in Harrisburg, though this portal points in a different direction.

John Hanger, the new Democratic governor’s secretary of planning and policy, founded the environmental advocacy group Citizens for Pennsylvania’s Future — known by most as PennFuture — before serving as then-Gov. Ed Rendell’s secretary of the Department of Environmental Protection.

Wolf’s choice for his secretary at DEP, the department with the most oversight of gas drilling and related activities, is John Quigley. After leaving Rendell’s administration as secretary of the Department of Conservation and Natural Resources, which regulates drilling in state parks and forests, Quigley started working at PennFuture. For a second time. (See update below).

Who did Wolf pick to lead his DCNR and carry the new court-affirmed power to approve leases for drilling beneath parks? Cindy Dunn, a former DCNR official under Quigley who spent the past 14 months as president and CEO of a Harrisburg-based group you might have heard of: PennFuture.

Given Wolf’s choices, one could assume a gas industry struggling with low prices and the governor’s threat of higher taxes sees a revolving gun turret pointing at them from Harrisburg.

Dunn told the Trib a few months ago that she supported stronger regulations on the industry and drew “a strong red line” around drilling on public land. “We feel there’s already enough,” she said.

Quigley has been outspoken on his blog, calling for tighter rules on drilling, and told the Trib in September that he thought “government has generally missed the boat” on scientifically studying the effects of the drilling industry.

Senate Republicans made some recent noise about Quigley’s hard line on regulations, but the industry so far has shown a friendly front. The Marcellus Shale Coalition congratulated Quigley and Dunn, and America’s Natural Gas Alliance said it looked forward to working with Wolf’s administration.

Indeed, the revolving-door report from the Public Accountability Initiative included Hanger and Wolf’s Chief of Staff Katie McGinty among the industry greenwashers. McGinty, the group complained, served on the boards of gas power plant operators NRG Energy and Iberdrola USA. The anti-fracking film “Gasland,” the group pointed out, called Hanger “an equivocating tool of the natural gas industry.”

Surely Wolf told his new staff to check their industry tools at his office’s revolving door.


Quigley’s 2011 return to PennFuture was in a contract role. He consulted with the group for about 14 months.


January 20, 2015
by David Conti

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Not so well in the field


Last month we talked with officials at GasFrac Energy Services about shale gas producers experimenting with waterless fracking technologies such as those the Calgary-based company offers.

At the time, marketing manager Adam Friio said GasFrac was getting more clients and more business, despite putting itself up for sale in November. “Things are going well in the field,” he wrote in an email.

They weren’t going so well in the boardroom, though. The company last week filed for protection from creditors under a Canadian bankruptcy law, and a Chapter 15 case in the United States.

A release from the company blamed “a combination of continuing negative operating results, limited access at the present time to capital markets … reduced industry activity resulting from depressed petroleum and natural gas commodity prices and the inability of the corporation to obtain a suitable offer for the purchase of the corporation or its assets.”

The “reduced industry activity” flowing from low oil and gas prices might become a recurring theme in some shale fields. Oilfield services firms such as Schlumberger and others are laying off workers and idling rigs as energy companies dial back activity.

A group of nine companies that include Downtown-based EQT Corp. and Houston firm EnerVest worked with GasFrac in the fall to frack an experimental well in Tuscarawas County, Ohio, using 75 percent butane and 25 percent mineral oil instead of water. The companies said it would be a few months before they knew how well it worked.


January 13, 2015
by David Conti

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Still no clarity on cracker


The only sure thing anyone can really say about Royal Dutch Shell’s proposal to put an ethane cracker in Beaver County is that it would create a lot of polyethylene to make plastics, and put a lot of compounds in the air.

“The facility will be a major source of air pollution,” said John Lee, an official at the Philadelphia-based Clean Air Council, which today released a review of the proposed plants potential health impacts.

More than two years after the international energy firm broached the idea of building the multibillion-dollar plant on the former Horsehead zinc smelter site, it has yet to make a final decision on the project.

The company has taken a few steps so it can get cracking right away if the project gets the green light; it agreed to buy the property and some nearby land and it’s moving the closest highway around. Last week it demolished the last Horsehead smokestack. Last year applied for an air quality permit from the state, which is required for major polluters.

That permit gave us our clearest look at what the plant will do as it converts ethane — which comes up with the natural gas in many Marcellus shale wells around here — into the building blocks of diapers, bottles, detergent and other plastics-based products. Analysts told the Trib last year this would be a major producer of the chemical.

And pollution. The emissions numbers Shell wants a permit for would put it among the Top 10 air polluters in the region. That’s probably why the state Department of Environmental Protection is still doing its technical review of the application, a line-by-line look at all 715 pages that began in June.

“They’re just going through it very carefully,” said DEP spokesman John Poister.

The Clean Air Council spent seven months reviewing the application and surveying neighbors for its health impact assessment. Its conclusion: “If the proposed facility is eventually constructed, it will have significant environmental, social, and economic impacts. However, the full extent of these impacts is not clear at this time.”

The council said it really wanted to get a discussion going on potential impacts, though that began last year when Shell started hosting some well-attended meetings on the project.

Civic leaders and some neighbors say they’re tired of talking about the cracker. They want to know if it’s ever coming.

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