Pennsylvania

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    PA DEP’s Short-Term Solution to Get More Help – Hire 92 Interns

    Everybody has a “fix” for the chronically slow Pennsylvania Dept. of Environmental Protection (DEP). The DEP has a policy of issuing erosion and sedimentation permits for shale drilling 14 days from the date of application. At last check, it was taking the agency over 250 days to issue those permits. The Marcellus industry has been pressuring the PA legislature for a fix. As we noted in a companion story today, the PA Senate’s “fix” is to study it (see PA Senate Passes Meaningless Resolution to “Study” DEP Slow Permits). The PA House is more proactive, with a series of 5 bills that would, among other things, enlist the help of independent third parties to take up the slack (see PA House Advances “Fix DEP & Other Agencies” Plan with 5 Bills). Even PA Gov. Tom Wolf got in the act, offering his own solution, which involves hiking fees and hiring more people (see PA Gov Wolf Floats Plan to Fix DEP Slow Drilling Permits: Hike Fees). Perhaps the DEP has found a way to fix itself. The DEP recently posted 92 openings for paid internships. Many of the openings are for “Engineering and Scientific Technical Interns” for which the intern will earn $13.23/hour. While some of the openings are in the coal program, or the water resources program, many of positions (we’d say most, judging by a random check) are in the oil and gas program. But wait, the DEP is on a tight budget, right? They don’t have an extra two nickels to rub together. That’s what we always hear. That’s why fees need to go up, right? Somehow the DEP has been able to find money for an intern program. If 92 interns work for a 3-month period earning $13.23 per hour (40 hour weeks), that’s more than $580,000. Maybe the DEP will pull the money from one of the slush funds Republicans wanted to empty as part of balancing the budget? At any rate, here’s the deets on becoming an intern for the PA DEP…
    Read More “PA DEP’s Short-Term Solution to Get More Help – Hire 92 Interns”

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    PA DEP Plans to Raise Marcellus Well Permit Fee by 250%

    Pennsylvania Gov. Tom Wolf’s Dept. of Environmental Protection (DEP), the agency charged with overseeing oil and gas drilling in the state, has “blindsided” the shale industry with a proposal to hike the fee required when submitting an application to drill a new shale well. The current fee is $5,000. The proposed new fee is $12,500–or 2.5 times greater (i.e. 250% higher). The DEP Oil and Gas Technical Advisory Board (TAB) is scheduled to meet next week, on Feb. 14, to discuss the permit fee increase. The fee funds the oil and gas program within the DEP. Wells must be visited and inspected throughout their life–decades after they are initially drilled. The permit fee is a one-time, up-front fee. Over the past couple of years the number of new wells getting drilled has decreased (although in 2017 it went back up, see PA Shale Wells Drilled Soars 56% in 2017; Impact Fee Up $5,400/Well). Because there have been fewer wells drilled in recent years, there’s a lot less money in the DEP’s budget for well inspectors. Hence the plan to hike the fee. The industry does not object to a measured increase–but going up 250% is “excessive” and not called for, according to the Marcellus Shale Coalition. In addition to the permit fee hike, the TAB meeting will also hold a discussion on finalizing new GP-5 and GP-5A General Permits to control methane emissions from oil and gas operations. Buckle up, the next TAB meeting looks like it may get heated…
    Read More “PA DEP Plans to Raise Marcellus Well Permit Fee by 250%”

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    Sunoco Appeals DEP’s ME2 Pipe Suspension to Enviro Hearing Board

    PA State Sen. Andy Dinniman

    In early January, the Pennsylvania Dept. of Environmental Protection (DEP) issued an order shutting down all construction for the Sunoco Logistics Partners Mariner East 2 (ME2) pipeline project (see PA DEP Caves to Big Green Pressure, Stops All Work on ME2 Pipeline). The DEP claims Sunoco had violated the conditions of the permits that allow it to drill and trench for the project. In particular, the DEP is hot and bothered about drilling mud spills associated with underground horizontal directional drilling (HDD). The DEP said Suonco can restart work when/if certain conditions are met. So far the DEP has not allowed Sunoco to restart work. In the meantime, thousands of workers are in the unemployment line, and have been since Jan. 3rd. Sunoco has just appealed the DEP’s cease and desist order to the PA Environmental Hearing Board–a special court set up to hear appeals of DEP decisions. Sunoco lays out their case in a filing (below) for why the DEP is incorrect in issuing their stop work order…
    Read More “Sunoco Appeals DEP’s ME2 Pipe Suspension to Enviro Hearing Board”

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    XTO Plans 5 Shale Wells at Former Golf Course in Armstrong County

    You don’t hear much about XTO Energy drilling in the Marcellus these days. That’s not to say they aren’t busy. They certainly are/have been. In PA’s Butler County, XTO had spud (begun to drill or completed drilling) some 145 shale wells as of 2016. In neighboring Armstrong County, XTO had spud/drilled 4 shale wells as of 2016. The number in Armstrong will more than double if XTO wins approval for a series of wells they plan to drill on a single well pad. Last night XTO presented a plan to build a drill pad on what used to the seventh green at the former Phoenix at Buffalo Valley Golf Course in Freeport, PA. The plan calls for drilling 4 Marcellus wells and 1 Utica well on the pad. Some 20 residents showed up for the meeting. Not a single one spoke out against the plan. Nor did any of the Freeport officials. Here’s the details on XTO’s plans to sink a hole (in one!) on the seventh green in Armstrong County…
    Read More “XTO Plans 5 Shale Wells at Former Golf Course in Armstrong County”

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    PA Shale Wells Drilled Soars 56% in 2017; Impact Fee Up $5,400/Well

    In early 2012, Pennsylvania enacted the most sweeping rework of oil and gas laws in the state in decades (see Gov. Corbett Signs New Marcellus Drilling Law). Called Act 13, one of the provisions of the law is an “impact fee” collected on each horizontal shale well drilled. The fee is intended to offset the impacts of drilling in places where drilling happens, hence the name. However, in order to get enough support to pass Act 13, politics were played and 40% of the “fee” got re-allocated to non-impact uses–i.e., 40% of the fee became a tax (see PA’s New Tax on Drilling (er Sorry, Impact Fee)). In reality, PA’s impact “fee” is the equivalent of a severance tax. The main difference is that the fee is calculated according to a sliding schedule based on how long a well has been around. Beginning with the first year a shale well is drilled, and every year thereafter, drillers pay a set fee, regardless of how much gas is produced. If a driller drills a well but doesn’t complete it in year one, that driller still pays the same (very steep) fee, regardless of no production. In that way, an impact fee is superior to a severance tax as a revenue generator for the state. Impact fees are paid for 15 years. In setting up the somewhat complicated schedule for how much a driller will pay, it depends on how old the well is. The PA Public Utility Commission (PUC), the agency in charge of assessing and collecting the fee, periodically adjusts the fee schedule up to account for inflation. The fee assessed depends on how much the price of natural gas is selling for at the benchmark Henry Hub trading point (in Louisiana). In 2017 (which collected fees from drilling in 2016), if the price of natgas at Henry Hub averaged between $2.26 – $2.99 for the year (which it did, at $2.46/Mcf), the impact fee for a newly drilled well during the year of 2016 was $45,300. In 2018 (collecting fees from 2017), the price of natgas at Henry Hub was in the next higher bracket, averaging between $3.00 – $4.99 (2017 averaged $3.11/Mcf). So the fee for first year wells drilled last year will be $50,700–which is $5,400 higher than a driller would have paid the previous year. Our point: Drillers in PA pay big bucks in “fees” (i.e. taxes) to drill in the state. Slapping a severance tax on top of the impact fee would be a disaster, virtually shutting down any new Marcellus drilling. Yet that’s what Gov. Wolf and his Democrat comrades insist on doing. Below is the newly released impact fee schedule for 2018 (covering wells drilled in 2017), along with details on the whopping increase in the number of wells drilled in 2017 vs. 2016…
    Read More “PA Shale Wells Drilled Soars 56% in 2017; Impact Fee Up $5,400/Well”

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    PennEast Pipe Forced to Do It Hard Way – Using Eminent Domain

    As we told you last week, today (Monday, Feb. 5) is the final day for landowners who live along the path of the PennEast Pipeline to accept an offer from PennEast to lease their land for the pipeline (see PennEast Pipe Gives Holdout Landowners Feb 5 Deadline to Sign). The landowners have had near three years to deal in good faith negotiations with PennEast, and now time has run out. On Friday, a group of holdout landowners symbolically tore up their PennEast lease offers in a vain media stunt. Starting later this week they will receive something via certified mail they better not tear up–a court summons for an eminent domain proceeding. It’s a shame when it has to come to that, but denial is a strong emotion. Now it’s off to court they go where they’ll get a splash of reality…
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    Atlantic Sunrise Pipe’s Positive Impact in Lancaster Already Felt

    Money–a lot of money–is flowing into Lancaster County because of construction work now being done on Williams’ $3 billion, 198-mile Atlantic Sunrise natural gas pipeline project running through 10 Pennsylvania counties to connect Marcellus Shale natural gas from northeastern PA with the Williams’ Transco pipeline in southern Lancaster County. Local media pitches the revenue and jobs created by the project as “temporary.” MDN once heard a union pipeline worker respond to that very argument at a FERC hearing (for the Constitution Pipeline) by saying he’s had an entire career of “temporary” pipeline jobs that last a few months or a year–making enough money to put his kids through college and make a nice living for himself and his family. Lancaster residents should jump for joy at their “temporary” blessing of this pipeline’s construction. Among the beneficiaries of these “temporary benefits” are “dozens of local businesses” and “more than 100 workers” who are employed full-time working on the project. An estimated $75 million (!) is now flooding into the Lancaster County economy, thanks to Atlantic Sunrise…
    Read More “Atlantic Sunrise Pipe’s Positive Impact in Lancaster Already Felt”

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    Ambridge Water Authority Strongly Opposes Shell Ethane Pipe Route

    Shell has had pretty smooth sailing with their proposed 97-mile Falcon ethane pipeline project–a pipeline that will feed the mighty $6 billion cracker plant Shell is building in Beaver County, PA. Shell did not use eminent domain but instead negotiated with (paid big bucks for) rights of way along the pipeline’s path. That process continues. There have been some grumblings here and there, particularly from Big Green groups. But all in all, there has been remarkably little opposition–that is, until now. Shell filed an application to build the Falcon project back in October (see Shell Files PA Application for Ethane Pipe to Feed Cracker Plant). On Jan. 20, Shell filed an application for federal stream crossing permits–something the PA State Dept. of Environmental Protection (DEP) issues (see PA DEP Invites Public Comment on Shell 60-Mile Ethane Pipeline). Because of the stream crossing application, the Ambridge Water Authority (in Beaver County), an organization that oversees a reservoir that provides drinking water for ~30,000 people, is expressing “strong opposition” to the route of the Falcon pipeline. Wait a minute. Didn’t Ambridge know the route back in October, when Shell first filed? Yes. However, the stream crossing permit application reveals details either not in, or not obvious, in the original application–details that the pipeline will go under three streams that feed the Ambridge reservoir. That’s got the board up in arms. In a statement, the Water Authority said, “we will do everything in our power to try and have the pipeline relocated outside of our watershed and away from our main, and only, raw water line.” Whether or not there’s any legitimacy to their concerns, Shell now has a PR situation on its hands–the old “it’s going to poison our drinking water” canard that’s a favorite of those who oppose drilling and pipelines. It will be interesting to see how Shell handle’s this situation…
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    Locals Opposed to Jessup Power Plant Question Emissions “Credits”

    Invenergy is currently building the Lackawanna Energy Center, a 1,480 megawatt plant in Jessup, PA (near Scranton) that will cost “well over $1 billion” according to an exclusive MDN source working on the project. When the plant is done (first phase ready sometime this month), and when it goes online (to be determined), it will be Pennsylvania’s largest natural gas-fired electric generating plant. Unfortunately, a group of Democrats got themselves elected to the Jessup Borough Council specifically to try and block the completion of the project (see Jessup Town Board Continues Effort to Stop Gas-Fired Elec Plant). They just took office in January and already have thrown up roadblocks. Wednesday the PA Dept. of Environmental Protection held a hearing about the facility’s potential impacts on local (and regional) air quality. Some three dozen folks showed up to trash talk the project. They’re questioning the plant’s Emission Reduction Credits (ERC). This plant will put some bad stuff in the air (small quantities), as all electric generating plants do. In order to “offset” the negatives of putting those small quantities of bad stuff in the air, the plant must purchase ERCs. That is, someone somewhere else will sell their “right” to emit the same bad stuff (i.e. pollute) in return for cash. That’s a grossly oversimplified and perhaps not totally accurate way to say it–but it serves the purpose of understanding the complex issue of ERCs. At the DEP hearing, those who oppose the plant were questioning the ERCs for this facility. Their argument is, maybe the air quality in the entire region will benefit from having a clean-burning natgas-fired plant, but will that benefit for the region (and country) be at the expense of making the air worse for the neighbors who live near the plant? As much as we disagree with those who oppose this project, their question is valid and important…
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    UGI Energy Tweaks LNG Peak Shaver for Bethlehem, PA

    UGI LNG’s Temple I peak shaver near Reading, Pa. with 3-million-gallon storage tank

    It’s time to learn something new (there’s always something new to learn in this industry). Ever hear of a peak shaver? No, nothing to do with that thing guys use in the morning to shave off the stubble. An LNG peak shaver is a unit used for storing surplus natural gas, to have extra natgas on hand and ready during times of peak consumption during really hot summers or really cold winters. Sometimes your local gas utility will build and use a peak shaver (small LNG storage facility), so they don’t run out of natgas at a critical time, and to help with keeping prices lower by drawing down from storage if prices spike. Low prices make for happy customers. UGI, a diversified energy company with both midstream (pipeline) operations and one of PA’s largest utility companies, uses peak shavers. We’ve written about their use of peak shavers in the past (see UGI Building LNG Plant in NEPA, Local Marcellus Gas to Feed It). We’re interested in such facilities because of their potential as a new demand source for our plentiful gas supplies. UGI is proposing a new peak shaver for Bethlehem, PA. The project hit some early opposition, so UGI has tweaked the design, meaning they can proceed…
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    Penn State Students Brainwashed by “Fossil Free” Campaign

    Crazy Bernie Sanders (yes THAT Bernie Sanders, U.S. Senator from Vermont) along with ultra-radical 350.org and its leader Bill McKibben, have launched a new campaign called Fossil Free. It’s actually “thinking free” (as in the absence of all thinking), but we’ll leave that for another post. The new campaign is the ultimate outcome of global warming belief metastasized. Bernie, who is a political rock star for naive young Millennials, appeared with several other speakers at an event in Washington, D.C. that was live streamed to more than 300 “watch parties” across the country. The theme of the campaign is to end the use of all fossil fuels. One of the watch parties was a group of students at Penn State. By all accounts, the young skulls full of mush sat there bedazzled by Crazy Bernie–mouths open, drool trickling down the corner of their mouths. They were brainwashed. They worship this almost-octogenarian for who knows why? The problem is, these kids have not been taught to think critically. They accept, at face value, the lies spread by people like Sanders and McKibben. The kids just automatically believe it–like a blind faith–because Bernie says it. Penn State is (or was) a good school. What’s going on that they’re turning out kids who don’t, and won’t, think for themselves? Here’s recap of the Penn State Crazy Bernie “watch party”…
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    PA IFO Says 2017 Impact Fee Revenue Near Record High

    Since 2012, Pennsylvania has collected the equivalent of a severance tax from Marcellus Shale drillers via something called an impact fee. Same concept as a severance tax. You drill a well, gas comes out, you pay a tax. Except with an impact fee you pay whether or not anything comes out of the ground (a more reliable source of tax revenue than a severance tax). The impact fee quickly started to generate hundreds of millions of dollars a year in extra revenue for Pennsylvania–60% of which goes back to the communities where drilling happens (which Philadelphia politicians hate), and 40% of which goes to the black hole of Harrisburg for redistribution (which Philadelphia politicians love). Drilling began to slow in 2014, and crashed in 2015/2016, with low low commodity prices for natgas. As the price went down, so too did the number of new wells drilled. Impact fee revenue (which is delayed a year) also went down. The impact fee doled out this year is based on revenues raised in 2017. The PA Independent Fiscal Office (IFO) does a pretty good job of guesstimating how much impact fee revenue will be generated. Last July, the IFO predicted impact fee revenue from 2017 would end up being around $222 million in revenue (see IFO Predicts PA Impact Fees for 2017 Will Soar, Near Record High). Now that the year is in the can and production reports are rolling in, the IFO now predicts impact fee revenue will end up at $219.3 million. The all-time high for a single year’s impact fee revenue was 2013, when it was $225.7 million. Looks like 2017 will come within a whisker of that record. Meaning higher levels of new drilling is now “back” in the PA Marcellus…
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    PA Senate Ctte Passes Resolution to Restore Drilling in State Parks

    On Tuesday, Pennsylvania State Senate Resolution 104 passed in the Senate Environmental Resources and Energy Committee (party line vote, Republicans voted for, Democrats against). SR 104, introduced by Sen. Camera Bartolotta, urges PA Gov. Tom Wolf to get off his rear-end and reauthorize drilling in PA state forest land. The bill stands a good chance of being passed by the full Senate, which has the radicals at PennFuture up in arms. They issued a press release (i.e. marching orders to slavish Democrat Senators) to oppose the resolution. Frankly, they don’t have anything to worry about. As we pointed out yesterday with respect to the Senate’s so-called bipartisan resolution to study the sloooooow way DEP issues permits, resolutions aren’t worth the paper they’re written on (see PA Senate Ctte Sends “Study Slow DEP” Resolution for Full Vote). A resolution is a suggestion–it does not have the weight of law. Wolf can (and almost certainly will), ignore it. Resolutions are an exercise in futility. Still, it may score a political point or two–illuminating how Wolf is blocking an important revenue source from being tapped…
    Read More “PA Senate Ctte Passes Resolution to Restore Drilling in State Parks”

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    PA DEP Tries to Convince Landowners/Drillers to Plug Orphan Wells

    Earlier this week MDN told you about a new bill that passed the Ohio legislature and now awaits Gov. John Kasich’s signature called House Bill 225, which triples the amount of money set aside to cap orphan wells in the Buckeye State (see OH Orphan Well Bill Wins Praise from Both Drillers & Enviros). The bill also “creates a more streamlined and efficient process for identifying and plugging” orphan wells. The amazing thing about the bill is this: both Big Green groups and the drilling industry support it! So-called orphan wells are old conventional oil and gas wells that have been abandoned (for decades). They are hazards for shale drillers who stumble across them when drilling new wells. If you drill horizontally and clip an old/abandoned well, it becomes like an elevator pumping fluids and gas to the surface. Ohio has an estimated 600 orphan wells. In Pennsylvania, it’s a whole other story. PA has some 200,000 orphan wells! The main issue in PA has been who will pay to cap them? Most of PA’s orphan wells are not mapped or known. Yet some of them are known–by the landowners on whose land they sit. A second (very important) issue in PA is that if a landowner or driller tries to cap an orphan well they come across, the party doing the work may be liable if there are any environmental impacts from the effort. Let’s see, nobody to pay for it–and if you assume all the legal risk. It’s a recipe for “Don’t touch that orphan well with a 10 foot pole!” In what is too coincidental to be a coincidence, the PA Dept. of Environmental Protection has just launched a program “encouraging private-sector partners to become Good Samaritans, by participating in a program that helps cap dangerous abandoned oil and gas wells statewide.” Was the DEP goaded into doing something about orphan wells after seeing the success Ohio is having? Whether coincidence or not, the DEP is telling landowners and drillers: If you pay for it and plug it yourself, first getting the DEP’s “mother may I?” permission, you will not be on the hook legally (i.e. can’t be sued) later on if “this old well” ends up harming the environment…
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    PA Senate Ctte Sends “Study Slow DEP” Resolution for Full Vote

    You have to understand something about politicians–a lesson we learned long ago when working in Washington, D.C. If a politician floats a plan to “study” something, that really means “we’re not going to do a single thing about it.” Over the past couple of years the Pennsylvania Dept. of Environmental Protection (DEP) has gotten slower and slower in issuing permits for shale drilling–for simple things, like erosion permits a driller needs to push dirt around to create a well pad. The DEP has a policy of issuing erosion and sedimentation permits 14 days from the date of application. These types of permits are common and necessary when building roads, well pads, etc. As of last summer it was taking the DEP 250 days to issue those permits (see More Pushback on PA Senate Plan to Fix Slow DEP Permit Reviews). The drilling industry has been loudly pushing for a change. The DEP says it has fewer people on staff and that’s the reason for the slowdown. The thing is, the number of requests for permits has gone down too–so that particular argument doesn’t hold a lot of water. PA House Republicans have introduced a number of bills to “fix” the DEP, not least of which is a bill introduced that allows certified third parties to assist the DEP in reviewing permit applications (see Bill Introduced to Fix PA DEP’s Extreme Delays Issuing Permits). The House bill got Gov. Wolf’s attention. Last week he introduced his own plan to fix the DEP–by hiring more people and hiking fees on the drilling industry to pay for it (see PA Gov Wolf Floats Plan to Fix DEP Slow Drilling Permits: Hike Fees). Not to be outdone, the PA Senate now wants to weigh in. Last fall a Democrat Senator from Wilkes-Barre, John Yudichak, floated a “let’s study the problem” resolution (see PA Dem Senator Calls for “Study” to Address DEP Permit Delays). That resolution was just reported out of the Senate Energy Committee (of which Yudichak is the Minority Chair). Yep, both the swamp-dwelling Republicans and Democrats on the committee voted to “study” the DEP slowness problem, meaning they plan to do NOTHING about it…
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    Marcellus Industry AWOL at Philadelphia DRBC Frack Ban Hearings

    Last week the Delaware River Basin Commission (DRBC) held two public hearings in Philadelphia about its proposed plan to ban fracking in the Delaware River Basin (see Low Turnout for Philly DRBC Frack Ban Hearing, Antis Dominate). As we pointed out in our post, you would think a city with 1.5 million residents would turn out more than 120 people on a topic that is sold as “threat to everyone’s drinking water.” But no. Just a relative handful. However, the handful was almost exclusively in favor of the ban. One of two speaker who spoke against the ban was Dan Markind, an attorney in Philly. We’ve highlighted Dan’s comments here on MDN a few times over the years. Smart guy. We don’t always agree with his take, but we do this time. Dan circulated his thoughts after the DRBC hearing. His words are humbling. Dan makes the point that although many who spoke in favor of the frack ban have made up their minds and won’t change, some in the audience were open to being persuaded otherwise. Problem is, nobody from “our side” was there! One rep from the API spoke and left. And that’s it, beside Dan. We fielded nobody to present our side of the argument. As hard as it is to attend these types of events, attend we must. Here’s Dan’s take–that we missed a big opportunity by being AWOL at the DRBC hearings in Philly…
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