Statewide PA

Energy Companies | Energy Corporation of America | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

Federal Judge Upholds Split Decision in PA Royalty Case
February 8, 2013February 8, 2013

A group of landowners who signed leases in western Pennsylvania with Energy Corporation of America (ECA) filed a lawsuit in June 2012 (Pollock, et al v Energy Corporation of America) alleging ECA improperly deducted certain expenses, and didn’t include certain revenues, when calculating and paying royalties. At the time, ECA counter-sued asking for summary judgment that the way they calculate royalties and revenues is OK according to accepted practice and previous court rulings.

Last fall Magistrate Judge Robert Mitchell “partially granted and partially denied” the summary judgment request from ECA. It was mostly a victory for ECA because it dismissed all but one of the charges by the landowners. The case was appealed by both sides to federal court and on Jan. 24, Judge Joy Flowers Conti of the Western District of Pennsylvania said Judge Mitchell’s interpretation of the case is correct. She upheld his decision. This is an instructive case for both landowners and drillers, and a caution to be sure the lease you sign spells out in minute detail how royalties will be calculated…

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Huntingdon County (PA) | Industrywide Issues | Pennsylvania | Regulation | Statewide PA | Supply Chain

Small Business Startup to Furnish PA Drillers with Act 9 Signs
February 7, 2013February 7, 2013

MDN loves small business—we would argue they are the backbone of job creation in this country. Score another victory for a small business that picked up on a supply chain opportunity—an opportunity to provide a product or service to the shale drilling industry. In February 2012, the Pennsylvania legislature passed a new law called Act 9. Similar to Act 13, Act 9 deals with regulating Marcellus and Utica Shale drilling in PA. Act 9’s purpose? Make well pad drill sites safer. Part of Act 9 requires drillers to post new signage with safety information at the entrance of each drill site (example below).

Enter a new small business: Unconventional Well Pad Signs. Located near Altoona, PA, Unconventional Well Pad Signs is a division of another company—HomeWaters Retreats. HomeWaters, which provides vacation retreats and camps, is a business completely unrelated to manufacturing or any of the types of businesses you normally associate with providing products and services to the drilling industry. Gotta love small business entrepreneurs…

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Air Quality | Hydraulic Fracturing | Industrywide Issues | Pennsylvania | Research | Statewide PA

2 New Studies of Marcellus Drilling’s Impact on PA Air Quality
February 4, 2013February 4, 2013

Marcellus Shale drilling in Pennsylvania was responsible for just a small fraction of PA’s air pollution in 2011 according to newly released data (the first full year of data we have) from the Dept. of Environmental Protection, and from a private study by Rand Corporation (see below). How much did it contribute? PA’s shale gas industry was responsible for about 4% of total air pollution emitted by all industrial facilities in 2011.

Although the overall numbers are low, that’s not to say there aren’t concerns or things to improve…

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Hydraulic Fracturing | Industrywide Issues | Pennsylvania | Statewide PA

PA Wants Drillers to Use Acid Mine Water in Fracking – Will They?
February 4, 2013February 4, 2013

Pennsylvania has a big problem with water seeping from abandoned coal mines—the water mixes with minerals from the mine and is highly acidic. Some 300 million gallons of it flow—every day—into Pennsylvania’s waterways, killing off fish and plant life in 4,000 miles of rivers and streams. The PA Dept. of Environmental Protection (DEP) recently launched a plan to encourage shale drillers in the state to use “mine influenced water” (MIW) for drilling and fracking operations. It kills two birds with one stone: it helps to get rid of MIW and it gives drillers a steady source of water for fracking (see PA DEP Finalizes Procedure for Using Acid Mine Water in Fracking).

Just one problem: Drillers are scared to death of “if you touch it, you own it for evermore.” That is, drillers are rightly concerned about liability in this day and age of litigate everything. Who wants to get sued for doing the right thing? What can PA do to reassure drillers to give MIW a shot?

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Industrywide Issues | Pennsylvania | Regulation | Statewide PA

PA Legislation Would Release Untapped Acreage for New Lease
February 4, 2013February 4, 2013

Help may be on the way for Pennsylvania landowners who have leased their land, but not all of their land is part of a “production unit.” PA State Sen. Gene Yaw has introduced legislation what would release the land not in production so it could, theoretically, be leased again, or leased to someone else.

This update from one of our favorite blogs, ShaleEnergyLawBlog:

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Atlas Energy | Chevron | CONSOL Energy | Energy Companies | EQT Corp | Pennsylvania | Range Resources Corp | Statewide PA

Top 5 Drillers in SW Pennsylvania by Number of Wells Drilled
February 1, 2013February 1, 2013

Each year the Pittsburgh Business Times ranks the “top 25” drillers in southwestern PA according to the total number of wells they’ve drilled to date in the Marcellus Shale. The 2013 list was published today.

Here’s the top five from that list—with driller name and the number of wells drilled:

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Beaver County | Economic Impact | Energy Companies | Ethane | Industrywide Issues | Pennsylvania | Processing Plants | Shell | Statewide PA

Gov Tom Corbett: Shell Cracker Plant in PA Not “Off the Rails”
February 1, 2013February 1, 2013

Shell was supposed to purchase land in Monaca (Beaver County), PA to build a new $2 billion ethane cracker plant (a multi-year project) by Dec. 31, 2012, but instead Shell and the owner of the site signed a six-month extension to (according to a Shell spokesperson) give Shell more time to assess the site’s suitability and time to crunch the numbers to provide Shell “confirmation that the project is economically robust and competitive” (see Shell Ethane Cracker in PA Still Not a Done Deal).

The six-month delay has led to rumors that the deal for Monaca may be in doubt. Wednesday after a speech at the Marcellus Midstream Conference in Pittsburgh, PA Gov. Tom Corbett said contrary to those pesky rumors, Shell is not checking out other states to build the ethane cracker plant and that the delay in purchasing the land is due to lawyers “dotting I’s and crossing T’s.” Here’s how it played out:

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Air Quality | Industrywide Issues | Pennsylvania | Regulation | Statewide PA

PA DEP Finalizes Air Pollution Rules for Drillers & Compressors
February 1, 2013February 1, 2013

The Pennsylvania Dept. of Environmental Protection (DEP) yesterday announced final revisions to the “general permit” (GP-5) that governs air emissions for pipeline compressor stations and for drill sites. The new allowable limits, endorsed by the PA drilling industry, are “75 to 90 percent stricter than current limits” and go beyond federal rules according to the DEP.

The new DEP rules will allow the industry to install and use more engines at compressor stations and on the drill pad (engines powered by the natural gas being produced) to encourage the overall reduction in pollution. Here’s the announcement from the DEP:

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Accidents | Columbia Pipeline Group | Energy Services | Industrywide Issues | NiSource | Pennsylvania | Pipelines | Regulation | Statewide PA | Statewide WV | West Virginia

Feds Eye Regulating PA Marcellus Gathering Pipelines
January 30, 2013January 30, 2013

In early December, the Columbia Gas Transmission pipeline (owned by Nisource) exploded near Sissonville, WV—10 miles north of Charleston (see Columbia NatGas Pipeline Explodes Near Charleston, WV). The repercussions are still being felt. WV Sen. Jay Rockefeller held a Senate “field hearing” about pipeline safety on Monday in Charleston, WV. The first person to testify was Sissonville resident Sue Bonham who thought the world was literally be blowing up. The fire that burned in Sissonville near her home for more than an hour was so hot it burned the asphalt on I-77 into cinders.

So it’s no surprise that the federal government would start nosing around non-federally regulated (smaller) pipelines. Apparently they’ve set their sites on local gathering lines in the PA Marcellus:

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Industrywide Issues | Pennsylvania | Statewide PA | Taxation

Law Firm: PA Drillers/Contractors Paying Taxes They Shouldn’t
January 29, 2013January 29, 2013

According to the law firm Reed Smith, drillers in Pennsylvania may be paying sales tax for equipment used in hydraulic fracturing and drilling that is exempt from PA sales tax. The PA Dept. of Revenue has been issuing tax assessments to drillers that are, according to Reed Smith, in contradiction of existing law.

If you’re a landowner or peripherally interested in Marcellus drilling, give this article a pass. However, if you’re a driller or a drilling contractor of any kind, you need to pay close attention…

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Economic Impact | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Range Resources Corp | Statewide PA

Royalty Payments to PA Landowners Create Big Impact
January 28, 2013January 28, 2013

An analysis by AP finds royalty payments to landowners in Pennsylvania are quickly catching up to royalty payments to landowners in other oil and gas states like Alaska and Wyoming. The National Association of Royalty Owners (NARO) said PA is their fastest growing chapter.

How much in royalty payments were PA landowners paid (collectively) for 2012? What’s the average percentage landowners are paid? And which driller has paid more than $1 billion in royalties to PA landowners since 2008? Some answers about royalties in general, and PA in particular…

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Hydraulic Fracturing | Industrywide Issues | Pennsylvania | Regulation | Statewide PA

New PA Emergency Response Planning Reg for Shale Wells Adopted
January 28, 2013January 28, 2013

The Pennsylvania Environmental Quality Board (EQB) and Pennsylvania Emergency Management Agency on Saturday published final regulations covering Emergency Response Planning at Unconventional (i.e. Marcellus) Well Sites (a copy of the new regulation is embedded below).

The regulation was adopted by the EQB in November following a review by the PA Dept. of Environmental Protection’s Oil and Gas Technical Advisory Board last September. The regulation sets requirements for the preparation and implementation of emergency plans at Marcellus Shale drilling sites.

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Hydraulic Fracturing | Industrywide Issues | Pennsylvania | Research | Soil | Statewide PA | Wastewater

PA DEP Announces New Study of Radiation in Shale Drilling
January 25, 2013January 25, 2013

Although the Pennsylvania Dept. of Environmental Protection (DEP) “routinely reviews radioactivity data in wastes the oil and natural gas industry and other industries generate,” they announced yesterday a new 12-14 month in-depth study to examine radiation levels more closely in PA’s shale drilling industry to ensure “that public health and the environment continue to be protected.”

The DEP is currently seeking a peer review of the proposed study plan (plan embedded below) and will then start sampling and analyzing naturally occurring radioactivity levels in drilling wastewater, drill cuttings, and the equipment used to transport, store and dispose of drilling wastes. The study will be conducted by the DEP working with an outside firm—Perma-Fix Environmental Services of Pittsburgh.

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Energy Companies | Energy Services | Ethane | Exporting | Industrywide Issues | Pennsylvania | Pipelines | Range Resources Corp | Statewide PA | Sunoco Logistics

Philly Refinery Strikes Deal to Export SW PA Marcellus Ethane
January 25, 2013January 25, 2013

Marcellus Shale ethane, a valuable hydrocarbon recovered from natural gas wells in areas of southwestern Pennsylvania, will be exported to Norway from the recently reopened Sunoco Logistics terminal in Marcus Hook (near Philadelphia). Ethane and propane exports from the terminal are expected to ramp up in about two years once the new Mariner East pipeline from southwest PA is completed.

So who’s buying the ethane, and who’s selling it?…

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Anti-Drilling/Fossil Fuel | Industrywide Issues | Pennsylvania | Regulation | Statewide PA | Taxation

PA DEP Pushes Back: We Did NOT Undercount Wells for Impact Fee
January 24, 2013January 24, 2013

A newly-minted Ph.D. from Penn State, Joel Gehman, got his first teaching job last year as an assistant business professor at the University of Alberta in Canada. He wasted no time in addressing the issue of “publish or perish” in academe. In May of 2012, even before he began his official duties at UA, he co-authored and published a paper titled, “Fracking Patents: The Emergence of Patents as Information Containment Tools in Shale Drilling.” The title itself tells you about Dr. Gehman’s proclivities when it comes to the issue of fracking. (Learn more about his views on his blog). This month Dr. Gehman is back as lead author of a new paper published in the journal Environmental Practice titled, “An Analysis of Unconventional Gas Well Reporting under Pennsylvania’s Act 13 of 2012.”

Dr. Gehman’s new paper makes the strong claim that the DEP did not exploit loopholes in the new Act 13 law to drain every last penny they could via the new impact fee/tax on oil and gas wells, thereby leaving up to $303 million uncollected (see our story Did PA DEP Undercount Act 13 Wells & Forfeit $303M in Revenue?). Michael Krancer, Sec. of the DEP, sent a letter to Gehman on Tuesday with some pretty strong claims of his own…

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Anti-Drilling/Fossil Fuel | Hydraulic Fracturing | Industrywide Issues | Pennsylvania | Statewide PA

Controversy Continues Over PA DEP Water Testing Near Frack Sites
January 24, 2013January 24, 2013

In November, MDN told you about a new controversy that began when PA State Rep. Jesse White (Democrat from the Pittsburgh area) claimed the PA Dept. of Environmental Protection was knowingly covering up water well testing data that may “prove” fracking activities in some cases are contaminating groundwater supplies (see PA DEP Accused of Skewing Water Tests from Wells Near Drilling). The DEP immediately responded that White and those claiming there’s a cover-up are wrong. The Marcellus Shale Coalition also jumped into the debate to shine a light on White’s anti-drilling tendencies (see MSC Responds to Allegations PA DEP Skews Drilling Water Tests). It does appear White has an ongoing blood feud with Range Resources, but in fairness, he contacted MDN to assert he is not anti-drilling.

The latest round in this controversy comes from an article that appears in the Beaver County Times on Tuesday. The article is perhaps the best we’ve seen that outlines what the controversy involves (although the article tends to the anti- side). In brief, it’s all about “Suite Codes” and whether or not the DEP intentionally did not order the appropriate tests in some cases of suspected water contamination—and in other cases did not report back full results from tests done. There are three Suite Codes potentially used by the DEP when ordering and reporting on water testing, as described in the article:

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