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July 1, 2015
by David Conti


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Impasse

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Want to know what someone thinks about Democratic Gov. Tom Wolf’s veto last night of the Republican-crafted Pennsylvania budget? Ask their view on a severance tax on natural gas drilling.

Not surprisingly, reaction to the move falls along these lines: Supporters of the levy are happy that Wolf put the kibosh on a spending plan that didn’t consider his campaign promise to increase taxes on the industry. Those who think shale companies are paying enough took Wolf to task.

“It is unfortunate that the governor has made a severance tax on natural gas production his primary line (in) the sand in the debate over the budget,” said Lou D’Amico, head of the Marshall-based Pennsylvania Independent Oil & Gas Association.

D’Amico, who has fought against the added tax since Wolf made it a focus of his campaign last year, picked apart the governor’s strategy of painting opponents as anti-education.

“Why not place an excise tax on Gov. Wolf’s former cabinet making business to help fund education? If the governor opposed that idea because of its negative effect on the sale of cabinets, would he be against education and children?” D’Amico asked in a statement this morning.

PennFuture, an environmental group that pushes for tighter regulation of the industry, prodded supporters on its website to make their opinions known on taxes, too.

“We need to keep the pressure on. Tell your legislator that a serious budget must include a severance tax that invests in energy efficiency programs and a clean energy future,”the group said.

Wolf’s office took to Twitter to emphasize the points he made in announcing his veto. Note the top two bullets:

wolftweetIt might be a long impasse.

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June 29, 2015
by David Conti


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Adding it up

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As budget season wears on in Harrisburg, there’s little sign of lawmakers and Gov. Tom Wolf agreeing on his natural gas severance tax plan.

Despite opposition from the Republican-controlled General Assembly, Wolf’s proposals to boost sales, income and gas taxes has maintained support among about three out of five Pennsylvania voters, a Franklin & Marshall College poll showed this month.

The top reasons cited for that support line up with Wolf’s biggest campaign promises last year: Nineteen percent said we need to tax the shale drilling industry and 17 percent called for more funding for schools.

The Democrat tied the issues together by saying gas companies don’t pay their “fair share” in taxes, and by earmarking a big chunk of the money he hopes to raise through a severance tax to public schools. Indeed, he has accused those who oppose the tax scheme of being against fixing schools.

Hogwash, industry leaders say.

The issue of whether drillers pay taxes has its origins in the decision in 2012 to charge a per-well “fee.” It raises about $225 million a year.

Kevin Sunday, government affairs manager for the Pennsylvania Chamber of Business and Industry, might have summed up that issue best in a recent tweet:

“Only in PA do we say that the gov’t collecting nearly a quarter billion dollars from private sector is not a tax,” he wrote.

A more nuanced debate over the education issue has surfaced. The industry can make a strong argument that it is supporting education across the shale fields.

Chevron Corp. is putting $20 million into an initiative aimed at training a new generation of energy workers in 27 counties above the Marcellus and Utica shale plays in which it’s an active producer. Sources of the money include labs in public school districts and scholarships to the community college-based training program ShaleNet.

Cabot Oil & Gas this year awarded $10,000 grants to six career and technology school programs (we used to call those vo-tech) in northeast Pennsylvania, where the company is most active.

Consol Energy Inc. recently gave $5,000 scholarships to three seniors graduating from Moon, Montour and West Allegheny high schools and is giving smaller grants to teachers in Greene County. EQT Corp. doled out $670,000 in scholarships through its mentoring program ASPIRE since 1995.

Range Resources put $345,000 into FFA (Future Farmers of America) scholarships since 2010, $310,000 into the Pittsburgh promise scholarship program, $355,000 into the Challenge Program, and hundreds of thousands more dollars into youth agricultural programs.

Washington County districts that signed leases with Range have raked in another $15 million in royalties.

Of course, most of these industry donations are not going into the general funds of school districts that say they need more money. The industry gets to decide where these checks go, and the payments don’t add up to the $1 billion Wolf seeks.

But his plan is unlikely to raise that much either, many observers say. And if energy firms trimming budgets because of low prices need to cut further to pay more taxes, it wouldn’t be surprising to see some of these programs on the chopping block.

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June 25, 2015
by David Conti


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Local talent headed to pipeline group

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The new Pennsylvania Pipeline Infrastructure Task Force looks like it will have at least some Pittsburgh-area representation.

House Speaker Mike Turzai this week appointed a fellow North Hills resident and rising energy star to the board that is tasked with recommending ways to ease the pain of building out billions of dollars worth of gas pipelines over the next few years. Lauren Parker, 33, a civil engineer from Wexford, is a Butler native and Robert Morris University alum.

Picture of Parker

Lauren Parker

“Lauren’s knowledge of the impact of regulation on consumers and businesses in the oil and gas industry is extensive and impressive,” Turzai, a Republican from Marshall, said in a news release.  “Studious, open-minded and collegial, she will have a positive impact on the PIFT’s mission.”

(For the record, it’s PITF. PIFT sounds like you’re voicing displeasure at the topic.)

Parker works at Robinson-based Civil & Environmental Consultants and serves on several committees with the North Fayette-based Marcellus Shale Coalition. You might remember her profile in the Trib’s Energy Spotlight feature from On the Grid in April, when she was named the Breitling Energy Future Industry Leader during the Northeast Oil and Gas Awards in Pittsburgh.

We’ll keep you updated on the naming of other members to the task force, which Department of Environmental Protection Secretary John Quigley will lead.
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June 22, 2015
by David Conti


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Drainage vs. withdrawls

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A few weeks ago, we reported on a push by freshman state Sen. Camera Bartolotta to make it easier for gas drillers to use treated acid mine drainage water in fracking.

The bill has a ways to go, but passed its first test today when the Senate Environmental Resources and Energy Committee — of which the Washington County Republican is vice chair — approved it.

“Utilizing treated mine water in natural gas operations holds the potential to significantly reduce the withdrawal demands on Pennsylvania’s rivers and streams,” Bartolotta said in a release. “Questions regarding liability are the biggest barrier preventing more companies from taking advantage of this environmentally friendly process.”

Those withdrawal demands generally have been overshadowed by disposal demands because most big drillers began using recycled flowback and production water for fracking where they could several years ago.

The key to using either source of tainted water is the idea that fracking water doesn’t need to be pristine when it goes down the well.

Freshwater for fracking could be at a premium, especially in the northeast corner of the state, if the drought there persists and drilling ramps back up.

We have plenty of mine drainage across Pennsylvania, much of it leaking into creeks. If a correctable liability issue is keeping some drillers from giving it a better use, this legislation could make a real difference.

Advocates say that would be a win-win for the industry and environment.

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June 15, 2015
by David Conti


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Shale jobs recount

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The drop in natural gas prices has prompted some layoffs in Pennsylvania as shale companies slow their pace of drilling.

Certainly it hasn’t amounted to a drop of 160,000 jobs, though, as one might surmise from the quickest of glances at the state Department of Labor & Industry’s latest Marcellus Shale Update.

The department this month said natural gas extraction, suppliers to the industry and “companies that provide goods and services” to its workers employed an estimated 89,314 people in the third quarter of last year. In April, the department said Marcellus industries and related economic activity supported 249,436 jobs during that same quarter.

The new number does not reflect a rash of pink slips in the shale fields, though subsequent quarters could show some reductions given the cuts in spending by drillers this year. Instead, this resulted from a recount by Gov. Tom Wolf’s administration, which said it found “glaring errors” in the methods previous administrations used to tally up jobs.

“The numbers were so glaringly wrong they had to be corrected,” explained John Hanger, Wolf’s policy director, who said he and Labor & Industry Secretary Kathy Manderino decided to recalculate the data.

The new approach changes a counting method that dates back to Ed Rendell’s administration — in which Hanger served — and happens five months after fellow Democrat Wolf replaced Republican Tom Corbett. It also comes at a particularly prickly time for Wolf’s relationship with the industry as he seeks new taxes on gas that the Independent Fiscal Office said would be the highest of any gas-producing state.

Hanger said the timing is not related to the tax debate, and it took several months because, “there’s a lot going on starting a new administration.”

The industry still smells politics in the switch.

“Why put this important economic analysis in the hands of the governor’s political team rather than relying on career state policy analysts, and break from the good government precedent set by both Governors Rendell and Corbett?” asked Dave Spigelmyer, president of the North Fayette-based Marcellus Shale Coalition.

The old method led to inflated numbers, Hanger said, by including all members of certain job classes — including highway workers and state environmental regulators — even if their jobs didn’t touch shale. Indeed, Corbett took heat for the calculations in 2013.

The new method starts with the same number of people “directly” employed in six categories and then estimates jobs in “indirect” supply chain and “induced” industries such as food services and health care.

Hanger said data indicating nearly 90,000 jobs from gas show “it’s an important and impressive industry” that Wolf wants to succeed.

The industry sees a glaring disconnect between that wish for success and the drive to raise taxes, but Spigelmyer said “we nonetheless remain hopeful that we can work constructively with the governor and his staffers.”

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June 8, 2015
by David Conti


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Adding fuel

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One of the frequent knocks against efforts to promote use of alternative fuels in transportation is the lack of enough fueling stations in the right places.

The phrase “range anxiety” has taken hold; Sure, there’s a spot here to fill up that CNG/propane/EV-powered car, but how far can I go and will there be another filling station there?

Increasingly in the Pittsburgh region, the answer is becoming “yes.” The revamped Sunoco station at Pittsburgh International Airport is one of three local outlets that has opened a compressed natural gas (CNG) pump in the past three weeks, according Rick Price, head of the nonprofit Pittsburgh Region Clean Cities. (The others were in DuBois and Bentleyville)

The Sunoco station that reopened last month has all of the above fuels, plus gasoline (and a brand new fresh food counter inside). Spokesman Jeff Shields said the Philadelphia-based company plans to duplicate this model across the country, thanks in part to plentiful natural gas from the shale beneath our feet.

Sunoco spokesman Jeff Shields

Sunoco spokesman Jeff Shields

“This is what Pennsylvania’s future can look like,” Shields said during a ceremony this morning to show off the new pumps.

Much of the alternative fuels effort remains heavily subsidized, another knock frequently noted by critics. Shields noted the state Department of Community and Economic Development covered about 40 percent of the CNG cost. The state continues to offer rebates to buyers of alt-fuel cars.

But advocates say such high visibility fueling stations in high traffic areas can help reduce some of the anxiety that has tempered demand.

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June 1, 2015
by David Conti


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Dire days for coal

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It would be easy to dismiss some of Bob Murray’s dire predictions for the coal industry as hyperbole, given his usual rhetoric.

Those who have heard speeches from the founder and CEO of Ohio-based Murray Energy Corp. have come to expect his impassioned descriptions of how liberal elitists, radical environmentalists and President Obama are ruining his industry and America in general.

Two weeks ago in Washington County, he called Obama an outlaw. Last year at a Downtown appearance, he compared the Obama administration with Nazis.

An environmental crackdown on air pollution, prompted by what Murray considers a phony fear of climate change, is killing coal.

The most recent speech in Cecil was notable for at least two reasons, though. For one, he directed more blame for coal’s woes toward the cheap natural gas that utilities are increasingly using to fuel power plants.

“I’m competing against dollar-and-a-half gas because they have no place to put it,” Murray told a gathering of the North American Coalbed Methane Forum, noting the glut that has gas prices at three-year lows in Pennsylvania.

The second point drawing a distinction to Murray’s latest speech is that many of the predictions he has made are starting to come true. The coal industry is in deep trouble.

Employment in West Virginia coal mining and related industries fell by more than 26 percent — 7,000 jobs — between the end of 2011 and first quarter of 2014, according to an economic outlook published last week by West Virginia University. Eastern Kentucky coal mines lost the same number of jobs and production dropped in half during that time, said Bill Bissett, president of the Kentucky Coal Association.

In the days leading up to Murray’s speech, West Virginia-based Patriot Coal filed for Chapter 11 bankruptcy protection. Cecil-based Consol Energy, from whom Murray bought five mines in 2013, cut a day from workers’ shifts at the sprawling Bailey, Enlow Fork and Harvey mine complex in Greene and Washington counties.

Murray then added to the stark statistics proving his point: His company shut down one of the mines it bought from Consol and said it was laying off more than 1,800 workers across three states. Added to 439 employees who received pink slips from Alpha Natural Resources, May 22 was a dark day for Appalachian coal mining.

Murray said worse days are ahead. He predicts all but two major coal producers in the United States will “be broken up or in bankruptcy,” though he didn’t name names.

Don’t expect his company to be among the casualties, he said. Four pending lawsuits against the Obama administration and Murray’s recent purchase of a stake in Foresight Energy — which mines the more lucrative Illinois Basin — should keep him busy.

“I’m not giving up,” he yelled to the methane forum, “and you shouldn’t either.”

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May 18, 2015
by David Conti


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Second chances

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An old adage attributed to Will Rogers often echoes in the debate over responsible shale drilling in Pennsylvania.

“You will never get a second chance to make a first impression.”

The gas companies have been dealing with this for several years, it seems, tainted by the early rush to drill the Marcellus that sometimes took a more aggressive approach to securing land and water for drilling than to protecting them.

Some of their early wells didn’t have the protections mandated today, leading to leaks that fouled drinking water and continue to haunt all involved. A Penn State study this month claimed to link trace amounts of chemicals found in water at three Bradford County homes to shale wells drilled in 2009.

The lead author had worked on a lawsuit the homeowners filed against the gas company. The chemicals are used in other products and very well could have come from another source. An analyst with the Environmental Defense Fund noted in a New York Times report on the study that drillers have improved their wells and added more protections since 2009.

But the headlines in 2015 still read: “Drilling linked to chemicals in water.”

Drillers cannot shake their mistakes of the past, nor should they, according to some who attended a forum last week on shale waste at Chatham University.

About 50 people who went to the League of Women Voters’ event into the Eddy Theatre had a chance to get many impressions of how waste is handled. The panel of speakers included Nadia Steinzor from the anti-drilling group Earthworks, state Department of Environmental Protection Deputy Secretary Scott Perry, Seneca Resources spokesman Rob Boulware, Carl Spodaro from waste treatment firm Max Environmental, and Barbara Lucia, a citizen activist who fought plans to put a treatment plant in her Warren neighborhood.

The crowd also heard a stark admission from an agency dealing with its own missteps from administrations past.

“The oil and gas program we had in 2008 was not up to the task,” said Perry, who leads that office at the DEP. The department had neither the staff nor rules in place to adequately protect land and water when shale drilling started to take off.

After tripling its staff of inspectors and strengthening well integrity rules that experts say might have prevented leaks like those in Bradford County, the department started a process to enact wide ranging regulations that continues as we speak.

Environmentalists said the first version of those regulations fell short in some areas, such as dealing with open pits of waste at wells. A new draft eliminates those and takes other steps.

Those who missed a chance to give DEP their impression of those rules have a second chance: the public comment period on the proposed changes ends Tuesday.

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May 15, 2015
by David Conti


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How soon, Shell?

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“Soon” is a relative term, especially in a process that already has stretched on more than three years.

The process involves the question of whether global mega-energy company Royal Dutch Shell will build a so-called ethane cracker in Beaver County. The muiltibillion-dollar plant would convert some of the natural gas liquids coming from shale gas wells into a product used to make plastics.

The soon involves an apparent off-hand comment by a Shell official last month. IHS Chemical Week reported that Graham van’t Hoff, an executive vice president, said “on the sidelines” of an event in Germany that Shell would make a decision on the cracker soon.

Shell has said it has no time line for making a decision. This week a spokeswoman said that hasn’t changed, despite Hoff’s comments to the analyst publication.

“A number of steps remain before Shell will be in a position to make a final investment decision,” she said. “The project will be assessed on its own merits, and in the context of returns and affordability from a group perspective, before a decision is taken. This project has to compete for capital against other Shell projects worldwide.”

That competition for capital is surely a nasty one within a company whose profit during the first quarter fell 56 percent from a year ago, as least partly because of the crash in oil and gas prices.

And supporters excited by the prospect of all those jobs and related business need to keep in mind that the decision might not be what they want to hear. Shell could very easily say all those billions aren’t worth investing here.

Still, the company has given folks plenty of reason to think that soon might not be far off. It spent millions buying land at and around the site it chose along the Ohio River and continues to work on preparing the spots and surrounding roads. It filed for a major air permit from state environmental regulators, and the IHS piece said Shell finished its “front-end engineering design” study.

We’ll let you know when we hear more. We just don’t know how soon that will be.

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May 13, 2015
by David Conti


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Questions on the agenda

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You can take the future department secretary out of PennFuture. But you can’t take PennFuture out of the line of questioning she’ll face from lawmakers.

The Senate Environmental Resources and Energy Committee this morning gave its blessing to Gov. Tom Wolf’s choice to head the Department of Conservation and Natural Resources, Cindy Dunn, but not without some pointed questions connected to her last job.

Dunn, who still requires approval from the full Senate, comes back to state government from PennFuture, a statewide conservation and environmental group that has taken a hard line against the booming natural industry industry and other fossil fuel sectors. She was its CEO until January.

She’s not the only PennFuture alum whom Wolf has tabbed for his nascent administration, a point we discussed in January, and that apparently leaves some people uneasy.

“It makes a lot of folks uncomfortable that there’s so many in pretty high-profile positions. Some that are approved by the Senate … others that are not,” Sen. Scott Hutchinson, a Republican whose district stretches from Butler County into the Allegheny National Forest, told Dunn before the committee voted on her nomination.

“It leads to some uneasiness, I guess,” he said, before asking whether she planned to hire more people from the group. “I think the concern is you’re bringing in a direct agenda from an outside agency into state government.”

Dunn said PennFuture has no specific agenda that should cause concern, and promised to recuse herself from any grant-awarding decisions involving any previous employer. She left the door open to potentially hiring more PennFuture employees, though.

“Each pool of candidates is different. It’s too soon to say,” she said, noting there’s only so many experts on conservation in the state, which leads to “overlap.”

Committee Chairman Gene Yaw raised concerns about a report PennFuture issued under Dunn’s leadership that he said advocated for the department to fight in court against gas drillers who have mineral rights in the Loyalsock State Forest.

“Maybe you don’t like the rights, but they have them, and we have to honor them,” said Yaw, a Republican whose district includes that controversial piece of land.

Wolf blocked any further leasing of state land for drilling, but Dunn’s department must deal with drilling under existing leases.

Dunn said discussions about how to approach the issue would likely occur in Wolf’s office. It’s worth noting that John Hangar, Wolf’s secretary of policy and planning, founded PennFuture.

Another PennFuture alum, former DCNR Secretary John Quigley, is scheduled to appear before Yaw’s committee June 2 as it weighs in on his nomination to lead the Department of Environmental Protection.

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