New high paying jobs are being created, right now, in the Marcellus Shale—that is, where drilling is happening. Here’s an example from Pleasant Gap, PA:
Read More “Marcellus Shale Jobs – How Does $55K a Year Starting Wage for a 19 Year-Old Grab You?”
Pennsylvania State Rep. Phyllis Mundy (Democrat, Kingston) recently reintroduced several pieces of legislation designed to stop drilling in the Marcellus Shale in PA. Not that it will make much of a difference since Republicans now control the governorship, the Senate and the House in PA.
Pennsylvania State Senator Gene Yaw from Williamsport is proposing several bills that will address ongoing concerns from landowners about drilling in the Marcellus Shale in PA. Among the items he is proposing:
Those opposed to natural gas drilling in Pennsylvania have an uphill battle with a new governor (Tom Corbett) who is pro-drilling, and with pro-drilling majorities in both the Senate and House. So they pick and chose their battles. Some groups want an outright ban or moratorium (a moratorium being nothing more than a prelude to an outright ban). Others opposed to drilling, like Jan Jarrett, the president and CEO of statewide environmental group PennFuture, are concentrating on small victories now, hoping for bigger ones later when the political climate changes. And the political climate will one day change again—that much is certain. So what is on Ms. Jarrett’s to-do list for 2011?
Here’s what the PA Department of Environmental Protection (DEP) had to say about the use of diesel fuel as a fracking fluid in PA as alleged by Congressional Democrats in their letter to EPA Administrator Lisa Jackson two days ago:
Read More “PA DEP Not Aware of Any Companies Using Diesel Fuel in Fracking Fluids”
UPDATE (July 6): It seems the list below is not completely accurate, as admitted by the PA DEP. The list below includes chemicals and substances stored on site (like diesel fuel and oil) that are not injected into the ground. MDN will furnish an updated list when it becomes available from the DEP.
An earlier version of the list, provided by DEP to the Associated Press and published in newspapers throughout the state this week, purportedly included all of the chemicals used in Pennsylvania during the gas extraction process called hydraulic fracturing. Instead, it included not just the chemicals pumped deep underground but also those stored or used on a well site, including fuel for vehicles and brake fluid.
“You can blame it on me,” Scott Perry, the director of DEP’s Bureau of Oil and Gas Management, said on Wednesday.
The original list was a compilation of the chemicals identified on safety documents called material safety data sheets that hydraulic fracturing contractors must submit to the department, but he did not realize that it included substances the contractors use both above and below ground on a well site, he said. The second list was winnowed by a DEP chemist, who recognized that some of the chemicals on the initial list are not among those injected underground during the fracturing process.
Of the 83 chemicals on the list published by the AP and the 78 on the list posted by the DEP, only 37 items are in common.
Three compounds specifically addressed in the AP article because of the risks they can pose to human health – naphthalene, toluene and xylene – are not on the list of hydraulic fracturing chemicals DEP posted on its website on Wednesday.
Scranton Times Tribune (July 1) – DEP shale chemical lists at odds over inclusion of above ground substances
Original post from June 30…
Using Material Safety Data Sheets (MSDS) from drillers, along with analysis of fracking fluid, the Pennsylvania Department of Environmental Protection (DEP) has released an updated list of 78 chemicals they say are found in fluids used by gas drillers in PA (called “fracking fluids”). MDN has obtained the list of 78 chemicals and reproduced it below. There is also a downloadable version at the end of this posting.
There are many nasty chemicals in this list, no one disputes that. But here’s a few things to keep in mind:
Range Resources, which uses contractor Frac Tech for its fracing work, says its frac fluid additives are chosen from a list of only nine compounds — hydrochloric acid, methanol propargyl, polyacrylamide, glutaraldehyde, ethanol, ethylene glycol, alcohol and sodium hydroxide.*
Chemicals Used in the Hydraulic Fracturing Process in Pennsylvania
Prepared by the Department of Environmental Protection
Bureau of Oil and Gas Management
Compiled from Material Safety Data Sheets (MSDS) obtained from Inustry
Updated June 10, 2010
| Chemical | Product Name |
| 2,2-Dibromo-3-Nitrilopropionamide | Bio Clear 1000/Bio Clear 2000/ Bio-Clear 200/BioRid20L/ EC6116A |
| 2-methyl-4-isothiazolin-3-one | X-Cide 207 |
| 5-chloro-2-methyl-4-isothiazolin-3-one | X-Cide 207 |
| Acetic Acid | Fe-1A Acidizing Composition/ Packer Inhibitor |
| Acetic Anhydride | Fe-1A Acidizing Composition |
| Acetylene | GT&S Inc./ Airco |
| Alcohol Ethoxylated | C12-16 NE-200 |
| Alkyl benzene sulfonic acid | Tetrolite AW0007/ FR-46 |
| Ammonia (aqueous) | FAW-5 |
| Ammonium Bifluoride | ABF 37% |
| Ammonium Persulfate | AP Break |
| Ammonium Bisulfite | Techni-Hib 604/ Fe OXCLEAR/ Packer Inhibitor |
| Ammonium chloride | Salt Inhibitor |
| Ammonium Salt (alkylpolyether sulfate) | Tetrolite AW0007 |
| Amorphous silica | TerraProp Plus/ Bituminous Coal Fly Ash ASTM C618 |
| Benzoic Acid | Benzoic Acid |
| Boric Acid | BC-140/ Unilink 8.5 |
| Boric Oxide | XLW-32 |
| Calcium Chloride | Dowflake |
| Calcium Oxide | Bituminous Coal Fly Ash ASTM C618 |
| carboxymethylhydroxypropyl guar blend | Unigel CMPHG |
| Choline Chloride | Clay Treat-2C |
| Cinnamaldehyde | ENVIROHIB 2001 |
| Citric Acid | Ferrotrol 300L/ IC-100L |
| Complex polyamine salt | Clay Master-5C |
| Crystalline Silica: Cristobalite | |
| Crystalline Silica: Quartz | Silica Sand/ / Atlas PRC/ Best Sand/ Bituminous Coal Fly Ash ASTM C618 |
| Cupric chloride dihydrate | Ferrotrol 280L |
| Cured resin | LiteProp 125 |
| Cyclohexanes | CS-2 |
| Dazomet | ICI-3240 |
| Diethylene Glycol | Scaletrol 720/ Scaletrol 7208 |
|
d-Limonene |
MA-844W |
| Enzyme | GBL-8X |
| EO-C7-9-iso-, C8 rich-alcohols | NE-940/ NE-90 |
| EO-C9-11-iso-, C10-rich alcohols | NE-940/ NE-90 |
| Ethoxylated Alcohol | FRW-14/ SAS-2/ Flomax 50/ WFR-3B |
| Ethyl Acetate | Castle Thrust |
| Ethyl Alcohol | FAW-5/ Castle Shop Solv/ Dallas Morris |
| Ethylbenzene | NDL-100/ PARANOX/ Uniflo II |
| Ethylbenzene | NDL-100/ PARANOX/ Uniflo II |
| Ethylene Glycol | ENVIROHIB 2001/ ICA-2/ LEB 10X/ Scaletrol 720/ Sceletrol 7208/ CC 300/ Clachek A/ Clachek LP/ Ironsta II B/ NCL-100/ BC 140/ NCL-100/ Flomax 50/ NCL/ Scalehib 100/ Unihib O/ Unilink 8.5 |
| Formic Acid | ENVIROHIB 2001 |
| Gluconic Acid | Interstate ICA-2 |
| Glutaraldehyde | Alpha 114/Alpha 125/ ICI-150 |
| Glycerol | Bio Sealers |
| Glycol Ethers | ENVIROHIB 2001/AMPHOAM 75/ PARANOX/ Uniflo II/ Unifoam/ WNE-342LN |
| Guar Gum | PROGUM 19 GUAR PRODUCT/ Unigel 19XL/ Benchmark Polymer 3400/ WGA-15/ Unigel 5F |
| Hydrochloric Acid | Hydrochloric Acid (HCL)/ TETRAClean 542/ Muriatic Acid |
| Hydrochloric Acid 3% – 35% | Hydrochloric Acid 3% – 35% |
| Isopropanol | AFS 30 Blend/ FAC-1W/ FAC-3W/ MA-844W/ NE-23/ NE-940/ Flomax 50/ Tetrolite AW0007/ FMW25 Foamer/ CS-2 |
| Isopropyl Alcohol | NFS-102/ WFT-9511/ LT-32/ AR-1/ Flomax 50/ NDL-100/ Unibac/ Uniflo II/ Uniflo/ Unihib O/ WNE-342LN |
| Methanol |
AFS 30 Blend/ NE-200/ Activator Superset-W/ CI-14/ FAW-5/ GasFlo/ Inflo-250W/ LT-32/ NE-940/ |
| Methyl Alcohol | Clearbreak 400/ Super Surf/ Castle Shop Solv |
| Methyl Salicylate | Bio Sealers |
| n-butanol | AirFoam 311 |
| Nitrilotriacetamide | Salt Inhibitor |
| Phenolic Resin | Atlas PRC |
| Polyethylene Glycol | NE-940/ EC6116A/ NE-90 |
| Polyethylene Glycol Mixture | Bio Clear 2000/ Bio-Clear 200 |
| Polyoxylalkylene sulfate | FMW25 Foamer |
| Polysaccharide Blend | GW-3LDF |
| Potassium Carbonate | BF-7L |
| Potassium Chloride | Dowflake |
| Potassium Hydroxide | B-9, pH Increase Buffer/ BXL-2 |
| Propargyl Alcohol | CI-14/ HAI-OS Acid Inhibitor |
| Propylene Glycol | SAS-2/ WFR-3B |
| Silica | S-8C, Sand, 100 mesh/ Montmorillnonite clay |
| Sodium Bicarbonate | K-34 |
| Sodium Bromide | BioRid 20L |
| Sodium Hydroxide | Caustic Soda/ ICI-3240/ BioRid B-71 |
| Sodium Persulphate | High Perm SW-LB |
| Sodium Xylene Sulfonate | FAC-2/ FAC-3W |
| Sulfuric Acid | Sulfuric Acid |
| Surfactants | AFS-30/ GasFlo/ Inflo-250W |
| Talc | Adomite Aqua |
| Tetrakis(hydroxymethyl)phosphonium sulfate | Magnacide 575 Microbiocide |
| Tetramethyl ammonium Chloride | Clay Treat-3C |
| Trimethyloctadecylammonium chloride | FAC-1W/ FAC-3W |
 |
*Pittsburgh Business Times (June 30) – DEP releases new list of frac chemicals; used in Marcellus, other Pa. operations
Now that a severance tax is coming to Pennsylvania, natural gas drillers will likely push for a provision called “forced pooling” in PA which makes it easier to gather gas from properties that are not leased but sit in-between other leased land.
The Marcellus Shale natural gas industry wants to see legislation attached to any severance tax adopted by the state that would force property owners who refuse leases to allow drillers to gather the gas beneath their land, an industry coalition leader said Monday.
Calling it the most economical and conservative land-use approach to drilling for gas, David Spigelmyer, Chesapeake Energy’s regional vice president for government relations, said in a Times-Shamrock newspapers editorial board meeting that “forced pooling” is a key element of any legislation the state’s Marcellus drillers could support and is actively being discussed during budget negotiations in the capital.
Such a statute would help avoid an unnecessary proliferation of wells, Spigelmyer said, but critics say it is a form of eminent domain.*
This is an unresolved and complex issue that’s about to become red hot in PA. There are strong arguments on both sides. MDN believes landowners should have the right to allow drilling on and under their land provided it does not harm nearby populations or the environment. It is the constitutional right for citizens of this country to use their land as they see fit. On the other hand, to force a landowner who does not want to lease their land into a pool with their neighbors who have leased, is also unfair. If it means a proliferation of wells and added expense, so be it. The drilling company will have to bear the cost. Citizens should not have to worry that portions of their property will be used against their will—both on the surface and under it. It’s wrong to stop drilling based on irrational fear (as is being done in New York), and it’s equally wrong for drillers to force landowners to allow drilling under their land.
What do you think about forced pooling? Leave a comment below and let us know.
*Wilkes-Barre Citizen’s Voice (June 29) – Gas industry wants access to unleased property
Pennsylvania has just reached a new budget agreement for the next fiscal year, weighing in at a staggering $28.05 billion. Those who smoke cigars and use smokeless tobacco can breathe easier (or perhaps not)—your bad habit has escaped the tax man yet again this year. There are no state taxes on cigars and smokeless tobacco. But if you’re a landowner who’s getting royalty payments, you’re about to get soaked. Everyone knew it was only a matter of time before the politicians, who can’t resist taxing everything under the sun, would not be able to resist a severance tax on gas drilling. It’s now happened:
The [budget] agreement calls for the Legislature to enact a severance tax on natural gas extraction in the Marcellus Shale by Oct. 1, Rendell said, with the tax becoming effective Jan. 1, 2011. He said he would like to see a tax rate close to West Virginia’s, which is roughly 6 percent.*
It makes no difference if the tax is levied on the drilling company or not—ultimately this tax will come out of the pockets of landowners because expenses are always passed back. Oh well, it was a good run while it lasted. At least they’re drilling in PA!
*Pittsburgh Business Times (June 29) – Rendell: Pa. reaches budget agreement
From a Dominion press release issued today:
Dominion today announced that its natural gas transmission and storage subsidiary, Dominion Transmission, has reached a 15-year agreement with the gas subsidiary of CONSOL Energy Inc. for firm transportation of CONSOL’s Marcellus shale natural gas production.
The project, capable of transporting 200,000 dekatherms per day, will move supplies from various receipt points in central and southwestern Pennsylvania to a nexus of market pipelines and storage facilities in Leidy, Clinton County, Pa.
“Dominion is pleased to provide CONSOL with year-round access to growing Northeast markets and to provide another supply alternative for market area customers,” said Gary Sypolt, chief executive officer of Dominion Energy.
Earlier this year Dominion sold its natural gas exploration and production business to CONSOL so that the company could concentrate on its regulated businesses, including increased transportation and storage infrastructure opportunities resulting from Marcellus shale discoveries.
Dominion plans to file for a FERC certificate in December. If the project is approved, construction is planned to begin in March 2012, and it would enter service in November 2012. Construction plans include new compression facilities at three existing compressor stations in central Pennsylvania.
Dominion Transmission provides gathering, processing, transportation and storage services, operating in the heart of the Marcellus shale production area.
Dominion is one of the nation’s largest producers and transporters of energy, with a portfolio of more than 27,500 megawatts of generation, 12,000 miles of natural gas transmission, gathering and storage pipeline and 6,000 miles of electric transmission lines. Dominion operates the nation’s largest natural gas storage system with 942 billion cubic feet of storage capacity and serves retail energy customers in 12 states.
*Dominion Press Release (June 14) – Dominion Announces 15-Year Contract for Marcellus Northeast Natural Gas Project
Once again the Delaware River Basin Commission (DRBC) is overreaching. There is no doubt the commission is packed with people opposed to shale gas drilling, and they have no regard for private property owners or their property rights. Under the guise of “protecting the water supply,” a single person—the director of the DRBC—has now banned exploratory drilling in the watershed with the stroke of a pen. What does it mean? If you’re a property owner living in the Delaware River watershed (New York or Pennsylvania), drilling for you won’t happen any time soon. Maybe never.
Today’s DRBC press release:
Delaware River Basin Commission (DRBC) Executive Director Carol R. Collier today announced that she has supplemented her May 19, 2009 determination to include natural gas exploratory wells.
“My 2009 determination that sponsors of natural gas extraction projects in shale formations must obtain commission approval before commencing such projects expressly did not cover wells intended solely for exploratory purposes,” Collier said. “Today, I am extending the provisions of my 2009 determination to include exploratory wells, subject to reservations for exploratory well projects already approved by the states on or before June 14, 2010.”
By this supplemental determination, all natural gas well project sponsors, including the sponsors of natural gas well projects intended solely for exploratory purposes, must first apply for and obtain commission approval before commencing any natural gas well project for the production from or exploration of shale formations within the drainage area of Special Protection Waters in the Delaware River Basin.
“For the purpose of this determination, any natural gas well drilled in or through shale is assumed to be targeting a shale formation and is subject to this determination, unless the project sponsor proves otherwise,” Collier added. All other aspects of the 2009 determination remain in effect.
Today’s action recognizes the risks to water resources, including ground and surface water that the land disturbance and drilling activities inherent in any shale gas well pose. “In light of the commission’s May 5, 2010 decision to finalize natural gas regulations before considering project approvals, this supplemental determination removes any regulatory incentive for project sponsors to classify their wells as exploratory wells and install them without DRBC review before the commission’s natural gas regulations are in place,” Collier said. “It thus supports the commission’s goal that exploratory wells do not serve as a source of degradation of the commission’s Special Protection Waters.”
“Where entities have invested in exploratory well projects in reliance on my May 2009 determination and information from DRBC staff, there are countervailing considerations that favor allowing these projects to move ahead,” Collier stated in her supplemental determination. “I am informed that since May of 2009, Pennsylvania has issued a limited number of natural gas well drilling permits within the Delaware River Basin targeting shale formations, while New York State has not issued any natural gas well permits targeting shales in the basin since that date. In contrast to the thousands of wells projected to be installed in the basin over the next several years, the risk to basin waters posed by only the wells approved by Pennsylvania since May 2009 are comparatively small. Not only are these wells subject to state regulation as to their construction and operation, but they continue to require commission approval before they can be fractured or otherwise modified for natural gas production. In light of these existing safeguards and the investment-backed expectations of the sponsors of these projects, this supplemental determination does not prohibit any exploratory natural gas well project from proceeding if the applicant has obtained a state natural gas well permit for the project on or before June 14, 2010.”
Most of the shale formations that may be subject to horizontal drilling and hydraulic fracturing techniques requiring large volumes of water in the basin are located within the drainage area to DRBC’s designated Special Protection Waters (SPW). The commission’s SPW program is designed to prevent degradation in streams and rivers considered to have exceptionally high scenic, recreational, ecological, and/or water supply values through stricter control of wastewater discharges, non-point pollution control, and reporting requirements. Coverage of the DRBC’s SPW anti-degradation regulations includes the 197-mile non-tidal Delaware River from Hancock, N.Y. south to Trenton, N.J. and the land draining to this stretch.
Any person adversely affected by this action may request a hearing by submitting a request in writing to the commission secretary within 30 days of the date of this supplemental determination in accordance with the DRBC’s Rules of Practice and Procedure.
*DRBC Press Release (June 14) – DRBC Executive Director Determination Extended to Include Natural Gas Exploratory Wells
East Resources, a major drilling company in the Marcellus Shale, especially in Pennsylvania, is selling itself to Royal Dutch Shell for a whopping $4.7 billion. From drilling a single horizontal Marcellus Shale gas well in 2009, East has drilled some 75 horizontal wells in the past 12 months. East did have plans to drill 6,000-7,000 wells in Tioga County, PA over the next “several years” (see this MDN story). No word on the planned drilling for Tioga County and other regions, but MDN assume Shell did not invest in East to not drill. In fact, the pace of drilling may well pick up with Shell’s investment.
From the East Resources press release:
East Resources, Inc., a Pennsylvania-based independent oil and gas producer and one of the most active explorers in the Marcellus Shale, along with its private equity investor Kohlberg Kravis Roberts & Company, signed a definitive agreement to sell the company’s principal subsidiaries to an affiliate of Royal Dutch Shell plc (“Shell”) for cash consideration of $4.7 billion. The sale includes East’s natural gas and oil exploration and production operations and most of its holdings in related businesses. With the purchase of East Resources, Shell will acquire approximately 650,000 net acres of Marcellus Shale rights in Pennsylvania, West Virginia and New York, and 1.05 million acres in total.
East Resources, founded in 1983 by Terrence M. Pegula, has been one of the Appalachian Basin’s most active exploration and production companies for more than 25 years. Since its inception, East has grown primarily through its exploration successes, several strategic acquisitions, and most recently the development of the Marcellus Shale.
East Resources employs approximately 300 office and field personnel in Pennsylvania, West Virginia, New York and Colorado. Its principal offices are located in Warrendale, PA, Broomfield, CO and Parkersburg, WV. Shell will continue to operate with East’s workforce to ensure continuing success in the growth and development of the reserves it will acquire in the purchase.
The sale of East Resources to Shell is expected to close in two phases. The first phase of the sale will be completed in mid- to late summer. The second phase of the sale, including the sale of the West Virginia business, will close later this year, pending certain regulatory approvals.
“The sale of the company to Shell will ensure that the capital needed to develop East’s significant Marcellus Shale holdings will be available,” says Mr. Pegula, East’s owner and Chief Executive Officer. “Shell’s entry into the region should benefit Pennsylvania, West Virginia and New York through significant new capital investment, new jobs and new business opportunities. I am very proud that this transaction has brought Shell into the Appalachian Basin.”
President of Shell Oil Company, Marvin Odum commented, “East Resources’ management has built an excellent organization which we are pleased to have as we enter the northeast US and specifically the Marcellus Shale play.”*
*East Resources Press Release (May 28) – East Resources Inc announces sales agreement with Royal Dutch Shell plc
Since February of this year, Mayor Calvin Tillman from DISH, Texas has visited—several times—the Marcellus Shale regions of New York and Pennsylvania, sponsored by groups like Shaleshock and other anti-drilling organizations. Mayor Tillman claims that his small town in Texas, north of the Dallas-Fort Worth metroplex area, has been contaminated by shale gas drilling. DISH is located in the Barnett Shale deposit. Some of the drilled gas wells are within the city limits, and others sit just outside of town. MDN attended one of Mayor Tillman’s presentations back in February and you can read about my impressions here. It’s a fair statement that Mayor Tillman has been a popular speaker for those opposed to drilling in the Marcellus Shale, drawing sizable crowds.
One of the claims made by Mayor Tillman in his talks is that either local gas wells, or the compressor plants used to pressurize shale gas for area pipelines, or both is polluting DISH and its citizens. DISH is unusual in that there are 11 large pipelines in the DISH area, far more than normally found in a single location (the most in one area for shale gas that MDN is aware of). Odors are coming from the compressor plants, so it’s certainly not a stretch to think that if you can smell it, it may be polluting or causing harm. That was Mayor Tillman’s suspicion, so he used city funds to conduct environmental testing in the DISH area, and separately another organization performed a health “survey” of current and former DISH residents (for free). Problem is, both the environmental testing and the health survey were flawed in their methodologies, which casts doubt on the findings. So the Texas Department of State Health Services stepped in to do a scientific health study using blood and tissue samples.
Agency officials collected biological samples from 28 Dish residents in late January to see whether levels of volatile organic compounds (VOCs) in their blood were higher than those in the broader population. “We were looking to see whether a single contaminant or a handful of contaminants were notably elevated in many or all of the people we tested,” said Dr. Carrie Bradford, the toxicologist who led the investigation.*
And what was the conclusion of the Department of State Health?
Texas health officials found no connection between pollution from a natural gas compressor station in Dish, Texas and levels of toxins in the blood of people living nearby.*
The new report from the Department of State Health Services says levels of benzene and other contaminants was no higher in Dish residents than in the nation’s population in general.**
MDN wonders if the now less than credible Mayor Tillman will still be such a large draw when he comes calling again?
*Elimra Star-Gazette (May 26) – Texas gas study finds no pattern of elevated toxins near compressor
**Dallas Fort Worth – Channel 33 News (May 12) – DISH Report: No evidence gas well hurting residents of Dish, Texas
Marcellus Shale drilling in Pennsylvania continues to bring business, and people, to the state. Now there’s a new website to assist out-of-staters who need a place to stay:
STATE COLLEGE, Pa.—Workers traveling to the Marcellus Shale natural gas deposit in Pennsylvania now have a valuable online travel guide dedicated to helping find accommodations in Pennsylvania’s Marcellus Shale region.
MarcellusShaleHotels.com offers those coming to stay in the area information on hotels with short and long-term stay options. All the hotels featured on the site offer special rates to those coming to work on the Marcellus Shale.
Michael Szczesny is the Director of Operations at the State College hotels featured on the resource site. He’s eager to assist Marcellus Shale companies with their lodging needs.
“All our State College properties are either adjacent to or within walking distance to restaurants such as Outback Steakhouse, Olive Garden, Otto’s Microbrewery and Texas Roadhouse,” Szczesny said. “We are offering both short and long-term stays to accommodate the requirements of each company.”
Each of the hotels featured on the site is just minutes away from various locations in Pennsylvania’s Marcellus Shale region and offers amenities designed to accommodate every guest.
Locations of properties on the site range from Lock Haven to State College and down to Pittsburgh. To learn more about hotels in the Marcellus Shale region of Pennsylvania, visit MarcellusShaleHotels.com today.*
*Business Wire (May 26) – Marcellus Shale Website a Resource to Those Traveling to Work Pennsylvania’s Gas Field
Pennsylvania lawmakers, both Democrat and Republican, agree that bonds posted by drillers need to increase—dramatically. The bonds are used to cover the costs of plugging or closing natural gas wells. The current bond requirements date back to 1984.
Drillers are required to post a $2,500 bond for a single well and $25,000 blanket bond to cover any number of wells under current law. A measure sponsored by Rep. Camille George, D-74, Houtzdale, would require a $150,000-per-well bond for any well in the Marcellus Shale formation and $12,000 bond on other oil and gas wells. George, chairman of the House Environmental Resources and Energy Committee, also proposes setting a $240,000 blanket bond, while prohibiting blanket bonds for wells in the Marcellus Shale formation. He suggested those amounts would cover the actual costs of decommissioning.
*Hazelton Standard Speaker (May 23) – Marcellus drilling spurs calls for higher bonds
After the PA Secretary for the Department of Environmental Protection, John Hanger, summoned Marcellus Shale drilling companies to a meeting, he proceeded to “challenge” them to comply with new drilling rules that likely won’t be adopted until this fall. Talk about arrogant.
“I urged the industry to implement the stronger standards immediately and not wait for the rule to be finalized,” Mr. Hanger said. “I challenged the industry to set a world-class example.”
The summit came ahead of action by the state Environmental Quality Board on Monday on several proposed regulations to require that oil field-grade cement be used in Marcellus Shale wells, to delineate responsibility and notification procedures for gas migration problems and to strengthen requirements for treating drilling wastewater and limiting sediment erosion from wells. Mr. Hanger expects the rules to be adopted by fall.*
Certainly nothing wrong with new rules to help prevent a repeat of the situation in Dimock, PA from recurring, which supposedly the new rules will help guard against. However, MDN continues to notice that Hanger’s tone is increasingly confrontational rather than collaborative.
*Scranton Times Tribune (May 14) – DEP head asks gas drillers to comply with new rules
Landowners in Pennsylvania have gotten property tax relief in recent years from a PA law known as “Clean and Green.” If landowners keep their property use as agricultural, open space or forest-land, they are taxed at a lower rate (for those uses) rather than the higher fair market value the land might bring for other uses. But there’s a catch—if a landowner starts using the land for another non-agricultural use, they not only start paying higher taxes on it now, they also have to pay the difference in the tax rate between Clean and Green and fair market value going back up to seven years—as a penalty.
The intent of the program, which is administered through county government, is to encourage property owners to retain their land in agricultural, open-space or forest-land use by providing real estate tax relief.
Property owners benefit through lower taxes as long as their land isn’t used for housing developments or other uses inconsistent with agricultural production, open-space or forest-land use.
If a property owner decided to use the land for a purpose inconsistent with the program, the landowner would have to pay “rollback taxes” – the difference between fair market value and use value of the land – for as many years as the property had been designated Clean and Green, up to a maximum of seven years.*
So the million dollar question: If landowners allow drilling on their land, is that land disqualified from the Clean and Green lower tax rate? Right now, as things stand, each county will interpret the law the way they see fit. There is a bill that has passed the PA Senate and is now before for the House for consideration that would allow gas drilling on Clean and Green land without penalty.
Landowners who have signed leases where drilling will soon begin (or has already begun) need to monitor this situation. Landowners in PA who have not yet signed a lease would do well to be sure there is a clause requiring the driller to pay the difference in taxes should the bill not get signed into law.
*Wilkes-Barre Times Leader (May 11) – Drilling’s effect on ‘Clean and Green’ land uncertain