Sunoco Says ME1 Ready to Restart, but PUC is Dragging its Feet

Ethane and propane had been flowing through the converted Mariner East 1 (ME1) pipeline safely for more than year, hauling the two natural gas liquids (NGLs) from southwest PA all the way to the Marcus Hook refinery near Philadelphia. However, ME1 was suddenly switched off on March 3 by order of the Pennsylvania Public Utility Commission (PUC) after a sinkhole opened up under the pipeline in Chester County, exposing some of the bare steel to the open air (see PA PUC Shuts Down Mariner 1 Pipeline Due to Mariner 2 Sinkhole). Sunoco Logistics Partners, the owner of ME1, is building a new set of pipelines called Mariner East 2 (ME2) close to the existing ME1. Construction work in the area on ME2 led to the sinkhole that exposed ME1. The PUC shut down ME1 until further notice, requiring Sunoco to conduct a study of the area and provide the PUC with evidence to reassure them that ME1 is OK and will not leak or explode. Sunoco conducted the study, provided its results, and has told the PUC it’s time to restart ME1. But the PUC is dragging its feet, taking its time to review Sunoco’s work, and in no particular hurry to restart ME1–even though the outage is impacting the drilling program at companies like Range Resources…
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Insane Legislation Requires PA Residents Use 100% Renewable Energy

Right around Earth Day politicians become even nuttier than they usually are. This year is no exception. A truly breathtaking, totally insane pair of bills have just been introduced in the Pennsylvania legislature, in observance of Earth Day, that would force all Pennsylvanians to use electricity generated from 100% so-called renewable sources by the year 2050. It’s totally preposterous and lunatic–but there you have it. Actually being in your right mind is no longer a requirement for high office–at least in PA. Democrat Rep. Chris Rabb introduced the bill in the PA House, and Democrat-lite (i.e. RINO) Sen. Charles McIlhinney introduced the bill in the PA Senate. Unsurprisingly they’re both from the Philadelphia area, where living in the real world doesn’t exist. The object of the proposed law is to dump the use of all “fossil fuels” and instead rely on unreliable wind and solar to produce all electricity in the Keystone State. Do you know how much of PA’s electricity is produced by wind and solar today? A piddly 2.8%. Nuclear generation is the #1 source of electric in PA at 41%, followed by coal at 29.6% and natural gas at 25%. Do you really, in your heart of hearts, believe PA can generate 100% of its electricity from wind and solar by 2050? It’s a fantasy, totally unconnected with reality. Yet that’s all we’ll hear and read for the next few days until, blessedly, we get past so-called Earth Day…
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PA DEP Hunger Games Competition to Distribute $12.6M in ME2 Money

In February Sunoco Logistics Partners agreed to pay a massive (historically high) $12.6 million fine to the PA Dept. of Environmental Protection (DEP) for “permit violations related to the construction of the Mariner East 2 pipeline project” (see Sunoco LP Pays PA DEP $12.6M to Resume ME2 Pipeline Construction). Sunoco’s ME2 construction activities caused a few erosion issues here and some drilling mud leaks there–so-called “harms” to the environment. Surely some of the massive, historically high $12.6 million fine Sunoco is paying will be used to “fix” those problems, right? Wrong. Sunoco has to pay twice–pay to clean up the problems AND pay the fine. The fine was essentially a shakedown–Sunoco had to pay it or they would not be allowed to resume construction work on ME2. Yesterday the DEP announced a new program to distribute the $12.6 million of fine money. In Hunger Games tradition, the DEP is launching a lottery for the 85 municipalities along ME2’s path, allowing those “districts” to submit begging proposals to request some of the money for programs in their district. What kind of programs? “[P]rojects that reduce or minimize pollution and protect clean water.” In other words, just about anything contestants can dream up. They have 45 days, from May 7 to June 21, to make a grab for the cash (i.e. submit a grant application)…
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Southwestern Appeals “Trespass” Case to Entire PA Superior Court

Southwestern Energy has just taken the next very important step in a process that frankly has us holding our breath. Two weeks ago MDN brought you the news that the Pennsylvania Superior Court handed down a decision that has the power to greatly restrict, perhaps even stop, Marcellus drilling in PA (see PA Superior Court Overturns “Rule of Capture” for Marcellus Well and PA “Rule of Capture” Case has Power to Limit Marcellus Drilling). The issue, in brief, is that the Superior Court decision disallows using an age-old principle called the “rule of capture” when it comes to shale drilling and fracking. It opens the door to a myriad of frivolous lawsuits claiming that a fracture, a crack created during fracking, is draining gas from a neighbor’s property without justly compensating the neighbor for the gas. Southwestern successfully argued in a lower court that the odd crack here and there that may slip under a neighbor’s property is permissible. The landowner appealed the case to Superior Court and three judges heard the case. One of the Superior judges authored a decision overturning the lower court, with a second judge “joining” (agreeing with) the decision. The third judge was AWOL (“not participating”). Frankly, the stakes could not be higher for the future of Marcellus drilling in PA. Southwestern has just filed a request with the Superior Court asking that all 20 judges who sit on that court hear and consider the case, which makes sense given the gravity of the case and PA’s economic future…
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Did StateImpact Forum on PA Gas Royalty Issue Resolve Anything?

Perhaps our headline for this article is a tad misleading. Maybe the better question is, Was a meeting held yesterday in Towanda, PA on the topic of gas royalties *meant* to resolve anything? The answer of which is, “Probably not.” PBS StateImpact Pennsylvania organized and hosted a forum yesterday on the topic of PA landowners getting screwed over by energy companies with respect to royalty payments. Both sides were well represented at the forum. We think it’s a cool concept, to get both sides talking about a very important issue. However, StateImpact, funded and controlled by Big Green backers including the William Penn Foundation and Heinz Endowments, is not an impartial, unbiased news organization that wants to honestly explore this important issue. StateImpact is NOT an impartial broker. Their purpose is to play both sides against each other and enjoy the chaos that ensues. Whip up more animosity between both sides. Make no mistake: StateImpact abhors shale drilling and prefers it not happen at all in PA. With that as the proper context to understand the event, some good points did emerge from the discussion, despite StateImpact’s bad intentions…
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PA DEP Report – Virtually No Methane Migration from Shale Wells

The Pennsylvania Dept. of Environmental Protection (DEP) released the results of it’s industry-leading program to monitor oil and gas wells for methane (and oil and brine) migration–that is, for anything would impact groundwater. The Mechanical Integrity Assessment Program, as it’s called, is “the most rigorous routine well integrity assessment program to protect groundwater in the United States,” requiring quarterly inspections by operators of their wells. The DEP is in the process of releasing the results of those reports for the past four years–from 2014-2017. They’ve just released results for 2014 (full copy below). What did the DEP find? “[L]ess than 1 percent of operator observations indicated the types of integrity problems, such as gas outside surface casing, that could allow gas to move beyond the well footprint.” In other words, there is virtually no methane migration happening from shale (and conventional) natural gas wells because of good well casings and regular checks. It is hard to overstate how important these findings are. The DEP’s own evidence disproves wild claims that methane is migrating from shale wells everywhere, claims made by anti-fossil fuel radicals and a colluding media (see examples from StateImpact Pennsylvania). Below is the good news that there is virtually no methane migration happening in PA from Marcellus Shale wells…
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PA Supreme Court Takes a Close Look at Strippers…as in Wells

It’s always fun to talk about strippers here on MDN. Uh, stripper wells that is. Background: In 2012 Pennsylvania passed the Act 13 drilling law that includes an impact fee on wells targeting shale layers, including the Marcellus. Snyder Brothers, headquartered in PA, drills mostly conventional (vertical only) wells in southwestern PA. In 2011-2012 they drilled 45 vertical-only wells targeting the Marcellus. All 45 of the vertical-only wells were fracked. Initially those wells produced more than 90 thousand cubic feet per day (Mcf/day), but by December of the year in which they were drilled, the wells produced less than 90 Mcf/day. The way the 2012 Act 13 law is written, if a well produces less than 90 Mcf/day during “any” month it is considered a stripper well and exempt from paying the impact fee. The state’s Public Utility Commission (PUC) assessed the fee anyway because for 11 months the wells produced more than 90 Mcf/day, arguing the word “any” is not a get-out-tax-jail-free card. Snyder Bros. sued and after an appeal of the case, Snyder Bros. won the case in March 2017, exempting those wells from paying impact fees (see PA Court Says Snyder Bros Wells are Strippers, No Impact Fees Due). That sent the state Public Utility Commission (PUC) into a tizzy with claims the Act 13 impact fees are now in jeopardy. So the PUC appealed the case to the PA Supreme Court. The Supremes heard arguments in the case last Wednesday…
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Big Green Opposes Bill to Relax Regs for PA Conventional Drillers

Big Green groups are objecting to a plan to exempt Pennsylvania’s mom and pop conventional oil and gas drillers from regulations meant to apply to unconventional (shale) oil and gas drillers. The anti-drilling Environmental Defense Fund (EDF) along with the anti-drilling Pennsylvania Environmental Council (PEC) co-authored a letter to PA Senators encouraging them to vote against a bill now working its way through the Senate (and House). In March, two identical bills were introduced, one in the Senate, the other in the House, that would “roll back” (more like “lock in”) regulations that govern conventional PA drilling to the Oil and Gas Act of 1984 (see 2 PA Bills Would Roll Back Conventional Drilling Regs to 1984). The bills are in response to coming changes proposed by leftist Gov. Tom Wolf to over-regulate conventional drillers. Apparently the bills are getting traction, otherwise Big Green wouldn’t bother wasting time on opposing them. Interestingly, Big Green did not send their letter to members of the PA House. It’s well known that while the Senate is Republican in majority, many of its so-called Republican members are RINOs–Republicans in Name Only. Senators without backbone or conviction. People susceptible to bullying by groups like EDF and PEC. Big Green is targeting those most likely to cave–easy marks. Whereas the Republicans in the House are more conservative and not as susceptible to Big Green bullying…
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5 Bills to Fix PA DEP to Get Full House Debate (Vote?) Next Week

In March the Pennsylvania House State Government Committee debated and voted to approve a slate of five bills aimed at fixing not only the slowmo way the state Dept. of Environmental Protection (DEP) approves shale permits, but also roll back some of the egregious regulatory overreach that exists in PA (see PA House Committee Approves 5 “Fix DEP” Bills – What’s Next?). The vote to approve the bills was along party lines, with zero liberal Democrats voting in favor of fixing the DEP. In a move that has alarmed Big Green and its supporters, all five bills will now come to the full floor of the House, next week, for discussion and possibly for a vote. What happens if the full House votes to approve these bills?…
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LibDem PA Sen Yudichak Floats Bill to Kill Marcellus with Severance Tax

As predictable as spring dandelions (weeds that won’t give up), a Marcellus Shale severance tax is once again being pushed by leftists in Harrisburg who want to raise hundreds of millions of dollars to give it away to teachers unions in the Philadelphia area. The interesting twist is that this time the bill introduced in the PA Senate is not from a Philly Senator, but is being authored and introduced by northeast PA Democrat Sen. John Yudichak–from Luzerne County (Wilkes-Barre area). Apparently Yudichak has been nominated as Gov. Wolf’s patsy, to do Wolf’s bidding and dirty work this time around. On Monday Yudichak issued a “co-sponsorship memo” to elicit names he can list on the bill when it’s formally introduced. No doubt he’ll get at least a few sell-out Republicans, like RINOs from the Philly area, and perhaps even some Republicans from drilling areas, like Sen. Gene Yaw from Williamsport, who voted for a similar bill last year…
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PA House Bill Would Neuter SRBC, DRBC Regulation of Ground Water

Here’s one we didn’t see coming–a potential way to fix the ongoing disaster that is the Delaware River Basin Commission (DRBC) and their illegal attempt to regulate hydraulic fracturing within the Delaware River Basin under the claim they have the right to regulate anything that impacts groundwater. A Pennsylvania House of Representatives member, Dan Moul (Republican from Gettysburg), is about to introduce a bill that would replace the DRBC’s authority to regulate groundwater by vesting that authority solely in the hands of the state Dept. of Environmental Protection (DEP). The problem is, the bill appears to be targeted more at the Susquehanna River Basin Commission (SRBC) than DRBC. The bill will affect both organizations. Last time we checked, the SRBC does a fine job of regulating water withdrawals for fracking AND makes no attempt to regulate fracking, which the DRBC is attempting to do. But then, we don’t think this bill has the DRBC’s frack ban, nor fracking at all, in mind. It likely has more to do with farming and other water uses and some perceived shortcomings at the SRBC…
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ME1 Pipeline Shutdown in M-U Causing Propane Prices in TX to Drop

Propane is one of the NGLs (natural gas liquids) that come out of the ground along with natural gas and oil–especially in “wet gas” areas like southwestern PA, eastern OH, and the northern panhandle area of WV. Ethane and propane have been flowing through the converted Mariner East 1 (ME1) pipeline for more than year–hauling propane (and ethane) from southwest PA all the way to the Marcus Hook refinery near Philadelphia. At Marcus Hook, the propane is loaded onto ships and sent around the world. The world is an important market for our propane. However, ME1 was suddenly switched off on March 3 by order of the Pennsylvania Public Utility Commission (PUC) after a sinkhole opened up under the pipeline, exposing some of the bare steel to the open air (see PA PUC Shuts Down Mariner 1 Pipeline Due to Mariner 2 Sinkhole). Sunoco Logistics Partners, the owner of ME1, is building a new set of pipelines called Mariner East 2 (ME2) close to the existing ME1. ME2 will also haul ethane and propane to Marcus Hook, greatly expanding capacity. As part of their construction work in Chester County, several sinkholes developed leading to the shutdown of ME1. You might think if the supply of propane suddenly stops, prices would go up. But that’s not what happened. Because the propane ME1 was hauling to Marcus Hook was exported, that supply is now staying here at home. The effect has been to drive DOWN the cost of propane–in Texas!…
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Exposing PA Gov. Wolf’s Lies – He is No Friend of the Marcellus

The gloves have finally come off. Typically the Marcellus industry, as represented by the Marcellus Shale Coalition, has used restrained language when talking about Pennsylvania Gov. Tom Wolf. Hey, the industry has to work with the guy because the state Dept. of Environmental Protection (DEP)–the agency that regulates shale drilling–is part of the executive branch (under Wolf’s thumb). The industry often can’t say what it really thinks. No more. Wolf, who pretends to be a friend of the Marcellus industry and mouths words of support, recently launched a vicious, lying attack against the industry over the severance tax issue (as part of his re-election campaign). The gloves are now off and the MSC is punching back. MSC president Dave Spigelmyer published an editorial in today’s Philadelphia Inquirer pointing out the difference between Wolf’s words and his deeds. In a bout of political schizophrenia (some would say hypocrisy), Wolf says shale gas in PA represents “enormous economic opportunity.” He then turns around and claims high-paid Marcellus lobbyists have spread money around Harrisburg like candy, bribing legislators to block a severance tax. What Wolf doesn’t tell you is that he himself has received millions of dollars from the teacher’s unions he’s promised to give severance tax money to…
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Report: The State of Natural Gas in Pennsylvania

The Commonwealth Foundation is Pennsylvania’s premier free-market think tank. The aim of the Foundation is to “transform free-market ideas into public policies so all Pennsylvanians can flourish.” We’ve highlighted their excellent work over the years. They’ve just done it again. The Commonwealth Foundation has just published a report called “The State of Natural Gas in Pennsylvania” (full copy below). The opening begins this way: “Pennsylvania’s regulatory and tax environment is stunting job growth and deterring investment. A decade after the Marcellus Shale boom, lawmakers are still debating how to tax the industry instead of fixing the policies contributing to Pennsylvania’s increasingly uncompetitive energy market.” At the end of the report the Foundation shows a severance tax comparison of existing severance taxes in other states that PA competes against, like Ohio, West Virginia, Texas, Colorado, and Oklahoma. The chart shows that the existing impact fee (in essence a severance tax) runs around 1.1%. The severance tax in Ohio is running around 0.7%, and in West Virginia 3.5%. In places like Texas, which increasingly competes against PA with prodigious quantities of natural gas production, the severance tax is 4.2%. However, Gov. Wolf’s proposed severance tax would be 5%–the highest in the nation except for New Mexico’s 7.9% (which doesn’t compete with PA). The report shows how PA is restricting Marcellus activity with over-regulation and a high corporate income tax…
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PA “Rule of Capture” Case has Power to Limit Marcellus Drilling

As we indicated in our post yesterday, the Pennsylvania Superior Court has handed down a decision that has the power to greatly restrict, even stop, Marcellus drilling in PA (see PA Superior Court Overturns “Rule of Capture” for Marcellus Well). This is a legal issue–and MDN is not written by a lawyer. Hence our earlier misreading of the importance and facts in the Superior Court decision. The issue, in brief, is that Monday’s court decision disallows using an age-old principle called the rule of capture, which we previously described. The rule of capture works for conventional drilling where underground deposits of oil and gas are in pools and the pool may exist underneath multiple surface property owners. Whoever gets there first and sucks the oil/gas out, wins. That’s the rule of capture in a nutshell. And it makes sense. You can’t be held responsible for oil and gas moving from one place to another as it’s extracted. And who knows how much of the pool is located under your property, or your neighbor’s property? The Superior Court justices ruled that the rule of capture doesn’t work for hydraulic fracturing because gas (and oil) trapped in shale rock does not freely move from one place to another as it does in a pool. The judges say the gas would “stay forever” where it is without fracking. In the case of Briggs v. Southwestern Energy, the Briggs family (in Susquehanna County, PA) alleges that when Southwestern drilled and fracked on the Briggs’ neighbor, the fracking was done close enough to their property that some of the gas located under their property (unleased) was released and extracted through the Southwestern well–a “trepass.” Southwestern countered that IF such a “trespass” took place, it falls under the rule of capture. The ultimate issue boils down to this: How far do fractures extend from a lateral well? An expert energy attorney told MDN off the record that Monday’s decision “could change the entire Pennsylvania shale industry” in two important ways…
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Meaningless Poll Questions Yield Meaningless Results re PA Fracking

This is how it works in biased, fake news land: You make up unspecific, wide-open questions that nobody really understands, and then biased, liberal media outlets interpret the “data” the way they want–to fit the predetermined media narrative. That’s what has just happened with meaningless poll questions from Franklin & Marshall College with respect to natural gas drilling in PA. We read through the questions they asked and thought, “What do some of these questions even mean?” The average citizen being asked these questions will assume and “read into” the questions what they *think* (but aren’t sure) is being asked, and answer the questions accordingly. In the end, it’s nonsensical. Meaningless. Fake. Then the lib machine kicks in to “report” that PA citizens, while still supporting drilling by a razor thin margin, actually think Marcellus drilling is bad for the environment. The latest media narrative is born: PA citizens are turning against gas drilling…
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