Susquehanna County

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    Northeastern PA Experiencing a Boom for Local Businesses from Marcellus Shale Drilling

    A recent meeting of the Wyoming County (PA) Chamber of Commerce saw over 400 members, mostly from area small businesses, networking and listening to presenters who have already reaped financial rewards from Marcellus drilling activity in the area. Two examples:

    Early on as the industry developed in Susquehanna County about 18 months ahead of Wyoming County, [Bill Kelley of Taylor Rental] noted an occasional need for drillers to borrow rental equipment when something broke down. Not only did Kelley enhance his inventory, but in the intervening months he saw a need and created a new spinoff business known as BX3 Oilfield Supply. He enlarged his workforce to handle the clients.

    Art Carpenter who oversees the Skidder Shop just out Rt. 92 south of Tunkhannock said his business has become a franchise dealer for water tankers and frankly can’t keep the rigs that run around $170,000 on the lot long enough.*

    It’s not only landowners and energy companies who benefit from drilling—the entire community benefits.

    *The Susquehanna Independent Weekender (May 5) – Gas boom creating opportunity

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    Breaking News: PA Supreme Court Rules Against Landowner Seeking to Invalidate Lease

    Last year, Susquehanna County landowner Herbert Kilmer sued ElexCo Land Services Inc. and Southwestern Energy Production to invalidate his lease. The reason? He said that by deducting drilling costs from his royalty payments, his payments fell below Pennsylvania’s law that a minimum one-eighth share of royalties are guaranteed to the landowner. A Susquehanna County judge ruled against the landowner and in favor of the energy companies. Other people started filing lawsuits, so the energy companies asked the PA Supreme Court to take up the matter. The Supremes did, and today they also ruled in favor of the energy companies:

    Pennsylvania’s high court sided Wednesday with the natural gas industry in a dispute with landowners who had sought to invalidate the leases they signed before the Marcellus Shale rush intensified and drove up land values.

    In a 6-0 decision, the Supreme Court upheld a Susquehanna County judge’s ruling that validated lease agreements that subtract drilling costs from the calculation of landowners’ natural gas royalties.

    Justice Max Baer, who wrote the court’s decision, noted that the term “royalty” and the method of calculating a one-eighth share is not defined by the state’s Guaranteed Minimum Royalty Act. However, he cited various texts on the industry that say a royalty is paid from the net amount remaining after deduction of certain production and well development costs.*

    This case will now force similar pending cases to be settled or dismissed. Landowners beware: (1) There is no such thing as a “standard” contract, and (2) Always have an attorney review a lease agreement first.

    *BND.com (Mar 24) – Pa. justices side with gas industry over landowner

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    Landowner Pipeline Group Forms in Northeast PA

    Some Susquehanna and Wyoming County, PA landowners are forming a group to force drilling and pipeline companies to “behave responsibly” with installation and operation of new pipelines as more and more Marcellus Shale gas wells are drilled and go online in Northeast PA. The group wants to arm landowners with information about their rights when negotiating “right-of-way” agreements for pipelines.

    Excerpts from an article in today’s WC Press Examiner:

    The Lemon Township Pipeline Group has been meeting for months and its members are looking at a range of easement and right-of-way agreements that leaseholders need to consider as more and more drilling companies come into the area looking to get the gas from the Marcellus shale to market.

    Such issues as price, nature, location, type, pipeline depth below surface, installation, road repair, pressure, timetable, abandonment, rights, restrictions and environmental responsibilities are among the many issues that individuals need to consider.*

    An email address is given for those interested in joining or finding out more: pipelinerowinfo@yahoo.com.

    *Wyoming County Press Examiner (Mar 17) – Landowners’ pipeline group forms

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    More Details on Southwestern Energy’s Marcellus Shale Plans from Earnings Call

    From a Q4 2009 earnings call* held on Feb. 26, we learn the following about Southwestern Energy’s involvement in the Marcellus Shale:

    At December 31, 2009, we had approximately 149,000 net acres in Pennsylvania prospective for the Marcellus Shale. Our undeveloped acreage position as of December 31, 2009 had an average remaining lease term of five years, an average royalty interest of 13%, and was obtained at an average cost of $594 per acre.

    During 2009, we invested $40 million in Pennsylvania, almost all of which was for acquisition of acreage, including approximately 22,800 net acres in Lycoming County that was purchased for $8.7 million, or $382 per acre.

    We are currently drilling our first horizontal well since 2008 in Pennsylvania. The Heckman Camp #1 well is located in Bradford County, and first gas production is expected in the area in the second quarter of 2010.

    Later in the call was this exchange between Jeff Hayden, an analyst with Rodman & Renshaw, and Steve Mueller, CEO of Southwestern Energy:

    Jeff Hayden: Okay, appreciate that. And then, jumping up to the Marcellus really quickly, I just wonder if you could give us an update kind of how you’re looking at the drilling program for 2010 in terms of where you’re going to spot the wells, whether it’s Bradford, Susquehanna, Lycoming, et cetera. And then, kind of building on that, sort of an update on the takeaway capacity that you’re looking at and how you’re going to manage that.

    Steve Mueller: Well, the rig that we’re running, we’ll drill between 20 and 24 wells this year. It is going to be all in Bradford County. It’s right on top of–I want to say right on top or within a mile or two of the Stagecoach Pipeline. And we have firm on that pipeline today of 20 million cubic foot and we’re building that going forward. And that’s the reason we’re drilling where we’re at, because we do have the capacity on that line to be able to do that. We’ll participate probably in another 20 wells. Most of those will probably be–a little bit maybe in the Bradford, but most will be in Susquehanna. And we’ll have a minority in those wells. And whatever the operator there is will have the takeaway, so we don’t have to worry about that portion.

    Over the next year, we’ll keep one rig running, and then you’ll see us build that activity into the future. We’ll say the one area that will have the less drilling over the next couple of years will be in Lycoming County. That’s more 2012 and beyond before you see much drilling there.

    *Southwestern Energy (Mar 1) – SWN 4Q 2009 Earnings Teleconference Transcript (PDF)

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    Susquehanna County, PA Landowner Offered $800K for Mineral Rights to 153 Acre Farm

    A landowner in Brooklyn Twp. (Susquehanna County), Pennsylvania faces a big decision. Denise Dennis owns 153 acres and a farm that is eligible to be placed on the National Register of Historic Places. Her ancestors moved to the land in 1811. They were African American and they were free landowners during a time when slavery was legal.

    Ms. Dennis does not want to “destroy the property or the landscape,” but she needs money to fix up the buildings, the cemetery and the stone walls. According to a news report, she has been offered $800,000 for the “mineral rights” to the farm. No word on which drilling company made the offer, and what those rights entail (i.e., does that include royalties?).

    Ms. Dennis is mulling over the proposition.

    See: WBNG-TV (Mar 1) – The Price of History

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    Cabot Oil & Gas Reports Increase in Production, New Wells Coming Online in 2010 in PA

    PR Newswire (Feb 21)
    Cabot Oil & Gas Provides Operations Update Current Marcellus Production Over 100 Mmcf per Day!

    From a press release just issued by Cabot Oil & Gas, we get the following update on their Marcellus drilling activities (below is exact wording from the release):

    During the third quarter call, Cabot announced its intent to complete one well per week through the end of the year in its Marcellus operation.  This effort was successful although weather at year-end and a stream-crossing delay slowed several wells from being turned in line.  During this period ten wells were completed with five wells flowing to sales and five wells waiting on pipeline.  "These five wells, that were turned in line, had an average 30 day production rate of 6 Mmcf per day," stated Dinges [Dan O. Dinges, Chairman, President and Chief Executive Officer].  "Included in this population was the Company’s first horizontal Purcell Limestone test that had a 30 day production rate of 7.3 Mmcf per day.  The Purcell is located between the Upper and Lower Marcellus under our acreage position in Susquehanna County, PA."  Dinges added, "This success potentially opens up additional locations and prospectivity."

    In total for 2009, the Company drilled 30 horizontal wells with 14 being completed and turned in line.  The average initial production (IP) rate for these wells was 7.5 Mmcf per day with an average 30 day production rate of 6.9 Mmcf per day.  "Because of the production history and the consistency of results, we are now estimating ultimate reserves of 5.5 Bcf per well, up from our original disclosure of 4.5 Bcf per well," commented Dinges.

    The enhanced pace of completions has carried through to 2010 with three more horizontal wells turned in line and gross production over 100 Mmcf per day as of February 19, 2010.  Since January 1, the range of 24-hour IP rates for the 2010 completions has been from 2.6 Mmcf to 16.1 Mmcf per day.  "We currently have 17 horizontal wells waiting on completion with five rigs running and two completions underway in Susquehanna County.  We also have a significant pipeline laying operation ongoing," said Dinges.  "One year ago in the Marcellus we were producing 16 Mmcf per day and now our rate is just above 100 Mmcf per day."

    In terms of infrastructure, Cabot recently executed binding Agreements to anchor a new 20" high pressure gathering line.  Williams Partners L.P. (NYSE: WPZ) will construct and operate the 28-mile gathering line, which will run from Cabot’s Susquehanna County operating area south to Williams Partners’ Transco interstate gas pipeline.  The new line is expected to be in service by mid-summer 2011.  Cabot will be the majority capacity holder and this firm service will add additional flexibility to its current takeaway position. "This firm takeaway commitment goes a long way to providing the next wedge of needed capacity for the Company," stated Dinges.

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    Chesapeake Energy Continues to Expand Production in the Marcellus Shale

    Houston Star-Telegram (Feb 16)
    Chesapeake reports 19 percent production increase

    Chesapeake Energy, one of the largest gas drilling companies in the U.S., recently reported a 19% increase in its natural gas production across all of its shale plays. With respect to the Marcellus, we learn from a Houston Star-Telegram article that:

    • Chesapeake has a huge leasehold of 1.6 million net acres in the Marcellus
    • Current net Marcellus production equals 65 million cubic feet of gas per day
    • Chesapeake expects its Marcellus output will rise to 270 million cubic feet of gas per day by year-end 2010 (over 4x current levels)
    • Chesapeake expects its Marcellus output will rise to 450 million cubic feet of gas per day by year-end 2011 (nearly 7x current levels)
    • Three recent wells drilled in Susquehanna County (PA) had peak 24-hour rates of 8.7 million, 8.6 million and 8.4 million cubic feet of gas
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    Waste Water Treatment Plants the Next Battleground in the Drilling Debate

    Harrisburg Patriot-News (Nov 18):
    Twelve Marcellus Shale gas drilling wastewater treatment plants proposed in northern Pennsylvania

    Water treatment plants are the next battleground in the drilling debate. There is increasing opposition to the licensing of treatment plants, not only because of the chemicals used, but the truck traffic involved. From this article out of Harrisburg:

    The state Department of Environmental Protection is reviewing permit applications associated with at least 12 different proposals to build treatment plants for chemical-tainted wastewater from natural gas drilling operations in northern Pennsylvania.

    Ten of the plants are proposed in DEP’s 14-county north-central region, which is centered on Lycoming and Clinton counties.

    Also from this article, a few stats of interest:

    Through October, 120 of the 1,592 Marcellus Shale well drilling permits issued by DEP this year were for sites in Susquehanna County.

    And this:

    DEP issued 1,592 Marcellus Shale gas well drilling permits in the first 10 months of 2009. More than one-third of them were in the 14-county north-central region.

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    Cabot Oil & Gas Fined $120K over Gas-Contaminated Wells in Susquehanna County

    PA Department of Environmental Protection (Nov 4):
    Press Release: DEP Reaches Agreement with Cabot to Prevent Gas Migration, Restore Water Supplies in Dimock Township

    Below is the unaltered press release from the PA DEP:

    Meadville – The Department of Environmental Protection and Cabot Oil and Gas Corp. have executed a consent order and agreement that will provide a long-term solution for migrating gas that has affected 13 water supplies in Dimock Township, Susquehanna County.

    The affected area covers nine square miles around Carter Road.

    The consent order and agreement outlines a process that will give DEP more oversight of Cabot’s new well construction work in the affected area. Prior to drilling and hydraulic fracturing, or hydro fracking, the company will submit well casing and cementing plans to DEP. Once DEP provides written approval, Cabot may proceed.

    “The goal of the consent order and agreement is to ensure a long-term resolution to issues that have emerged in Dimock,” said DEP Northwest Regional Director Kelly Burch. “The company will focus on the integrity of the wells in the affected area in an attempt to determine the source of the migrating gas.”

    This past week, Cabot has provided an interim solution for all of the homes where water supplies have been affected. Cabot must develop a plan by March 31 to restore or replace the affected water supplies permanently.

    Under the consent order and agreement, Cabot must additionally submit to DEP:

    • Information on all parties who have contacted the company about water quantity or quality issues; and
    • A plan that specifically identifies how the company intends to prove the integrity of the casing and cementing on existing wells and fix defective casing and cementing by March 31.

    If Cabot fails to fix the defective casing and cementing by the March deadline, the company must plug defective wells or implement another alternative as approved by DEP.

    In addition, Cabot paid a $120,000 civil penalty for violations of the Oil and Gas Act, the Solid Waste Management Act and the Clean Streams Law.

    The consent order and agreement caps a DEP investigation that began early this year when numerous Dimock area residents reported evidence of natural gas in their water supplies. DEP inspectors discovered that the well casings on some of Cabot’s natural gas wells were cemented improperly or insufficiently, allowing natural gas to migrate to groundwater.

    On Sept. 25, following a series of wastewater spills, DEP ordered Cabot to cease hydro fracking natural gas wells throughout Susquehanna County. The prohibition was removed after the company completed a number of important engineering and safety tasks.

    Cabot Oil and Gas Corp. is a Delaware-based company with a mailing address in Pittsburgh.

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    Six Regulators Police Drilling in Eastern Half of PA

    Wayne Independent (Nov 2):
    Few regulators in place for natural-gas drilling

    At a recent meeting in Preston Township (Pennsylvania), Department of Environmental Protection (DEP) officials talked about their role in inspecting gas drilling operations in the Marcellus Shale. The article attempts to make the case there are far too few inspectors for the growing number of drilling locations. In the eastern half of Pennslvania there are only six DEP officers whose job it is to monitor drilling activity and water supplies. The DEP is requesting three more, but with the recent state budget cuts, the additional positions are not assured.

    There was one bit of interesting information for landowners in Wayne and surrounding counties in the article:

    Although Wayne County has had only two natural gas wells drilled in the past two years, other areas in the region have experienced a rapid proliferation of production sites including in Susquehanna, Bradford, and Tioga counties. Hundreds of drill sites are expected to come online by the end of next year in the eastern office’s jurisdiction.

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    Cabot Resumes Drilling in Susquehanna County, PA

    Binghamton Press & Sun-Bulletin (Oct 16):
    DEP gives Cabot OK to resume gas operations in Pennsylvania

    Cabot Oil & Gas has had several spills of chemicals used in the hydraulic fracturing process at one of their drilling sites in Dimock Township, Pennsylvania. The spills have led to fish dying in the local Stevens Creek. The PA Department of Environmental Protection shut them down for a while and conducted a review. Cabot is now back in business. From the article:

    Cabot Oil & Gas has been given approval to resume work to produce natural gas from the Marcellus Shale after spills in Dimock Township halted certain operations.

    The approval came Friday after DEP officials reviewed Cabot’s plans to limit future problems and respond to emergencies.

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    Breaking News: Dimock Gas Wells Pass DEP Test, Cabot Not at Fault

    On February 27, the Pennsylvania Department of Environmental Protection (DEP) served Cabot Oil & Gas with a “Notice of Violation” claiming Cabot’s drilling activities in the Carter Road area of Dimock Township, PA caused some local private water wells to be contaminated with methane (see the MDN article Cabot Oil & Gas Served with “Notice of Violation” in Dimock, PA). One month later, the DEP seems to have reversed its position.

    Buried in the Saturday, March 28 edition of the Scranton Times-Tribune we get the story that recent test results from the DEP show no indication of water contamination due to Cabot’s hydro-fracturing activities in the area. Yes, you read that right. Cabot’s Marcellus drilling activity is not to blame for methane (natural gas) water contamination in the Dimock area according to the PA State DEP.

    The DEP will continue testing and monitoring, and Cabot will continue providing water for four homes that it has been providing water to, due to elevated levels of methane in the water. But the DEP seems to have just reversed its position that Cabot is the cause of methane appearing in a few local water wells. Big news that deserves a big headline.

    What has the DEP tested for that might indicate hydrofacturing has caused contamination?

    Indicators could include total dissolved solids, chlorides, specific conductivity, pH, alkalinity, hardness, sodium, calcium, barium, iron, manganese, potassium and aluminum.

    The DEP is promising they will continue to be vigilant in Dimock:

    Residents “expressed concern to us that methane wasn’t the only thing impacting their groundwater, their wells,” DEP spokesman Mark Carmon said. “We’ll continue to look at both.”

    Cabot spokesman Ken Komoroski said the company is “pleased” that the department has found no indication of wells being tainted from gas well hydro-fracturing activity, and will continue to work with the DEP to ensure the safety and health of residents.

    MDN will continue to cover this story as it develops.

    Read the full article: Dimock gas wells pass DEP test

    Read the full DEP press release: PA DEP Continues to Analyze Dimock Water Supplies

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    Susquehanna River Basin Commission Approves 26 Applications for Water Use

    At a recent meeting of the Susquehanna River Basin Commission held in Scranton, PA, the group approved 26 applications to use water from the Susquehanna River watershed for drilling in the Marcellus Shale deposit. At the meeting, the Commission imposed new rules about posting signs at sites along rivers and creeks where water is drawn for use in drilling.

    Among the permits approved by the commission, according to the Susquehanna Independent Weekend, is permission for ALTA Operating “to draw up to 3 million gallons per day from the Susquehanna River and 99,000 gallons per day from Snake Creek, both in Susquehanna County.”

    Read the full article: New rules for gas drillers

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    Times Leader Update on Dimock, PA Water Well Contamination

    The Wilkes-Barre Times Leader is following the story of the natural gas-contaminated water wells in Dimock, PA. Overall the article is pretty even-handed in its treatment of the issue and worth a read. In covering “both sides” of the issue, they reveal some of the facts in the case:

    The company [Cabot Oil & Gas] and DEP [PA Department of Environmental Protection] agree that the gas isn’t from Marcellus Shale, a pipeline leak or naturally occurring sources above ground. They also concur that the gas is likely from a gas-laden upper layer of underground Devonian shale, of which the Marcellus Shale is a component but thousands of feet deeper, [DEP spokesman Mark] Carmon said. Marcellus Shale is generally at least 5,000 feet underground, while DEP determined the gas contaminating the water wells came from a shale layer roughly between 1,500 feet and 2,000 feet deep, Carmon said.

    The company has cemented the upper Devonian shale layers of several wells, effectively extending the cement seals from the bottom of the water-bearing region, where the seals usually stop, to the bottom of the upper shale layers. The department has been trying to isolate the exact source of gas, seeing whether the extended seals produce a drop in water-contamination levels, Carmon said.

    Because the method of contamination hasn’t been determined, Carmon said it’s too early to tell if Cabot knowingly violated regulations. “I’m not aware of anything blatant or anything like that, but, again, we want to know how did it happen,” he said.

    Other news outlets would do well to follow the Times Leader’s example and get their facts straight before running stories about the Dimock situation.

    Read the full article: Consequences of gas drilling still unknown

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    Water Technology Magazine Gets it Wrong on Dimock Water Situation

    Marcellus Drilling News pointed out the problems in yesterday’s Reuters news story coverage of the contaminated water wells near a drilling site in Dimock, PA (see Reuters News Service Runs Hit Piece on Drilling in Dimock, PA and Cabot Oil & Gas). Exhibit A in how the slanted mainstream media perpetuates lies is Water Technology Online, the website of Water Technology Magazine (owned by EBSCO Industries). An editor at Water Technology saw the Reuters story and unquestioningly, and without research, dashed off a quick article with the headline, “PA residents blame ‘fracking’ for illness,” citing the Reuters piece as its source. The opening two paragraphs say this:

    DIMOCK, PA — Families in this northern Pennsylvania rural community and elsewhere are reporting that the gas drilling method known as hydrofracking is tainting their well water and making them and their animals sick, Reuters reported on March 13.

    Energy companies are using hydrofracking, also known as “fracking,” to tap the Marcellus Shale formation. During fracking, water mixed with chemicals is pumped into deep wells under pressure to crack rock formation and release trapped natural gas, a process that also contaminates the water. There also is concern about the chemicals used in hydrofracking water, as WaterTech Online® reported.

    Without explicitly saying so, and leading readers to the wrong conclusion, the article implies the water wells in Dimock are contaminated with chemicals used in the fracking process, which is not true. The wells have been contaminated with natural gas itself, not with chemicals from fracking. But the Water Technology article makes no mention of that little fact.

    Such is how media works. Again, my advice: Read the mainstream media’s coverage of this issue with a critical and questioning eye.

    Read the full article: PA residents blame ‘fracking’ for illnesses

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    Reuters News Service Runs Hit Piece on Drilling in Dimock, PA and Cabot Oil & Gas

    Marcellus Drilling News (MDN) has been following the story of Cabot Oil & Gas and the contamination of a few water wells with natural gas in the Dimock, PA area. The mainstream media, when it looks for stories about gas drilling and the environment, latches on to this particular story because of it’s potential to play at people’s fears about drilling. Reuters is the latest to do so. They just released an article titled, “U.S. energy future hits snag in rural Pennsylvania.” The subhead for one section of the story says: “Water tastes bad, animals lose fur.”

    It’s a very slanted story. However, I mention it here because there are several interviews of local residents affected by contamination of their well water by natural gas. We do not look away from potential problems cause by drilling. Here are a few excerpts from the story:

    When her children started missing school because of persistent diarrhea and vomiting, Pat Farnelli began to wonder if she and her family were suffering from more than just a classroom bug.

    After trying several remedies, she stopped using the water drawn from her well in this rural corner of northeastern Pennsylvania, the forefront of a drilling boom in what may be the biggest U.S. reserve of natural gas.

    “I was getting excruciating stomach cramps after drinking the water,” Farnelli said in an interview at her farmhouse, cluttered as a home with eight children would be, while her husband, a night cook at a truck stop, slept on the couch.

    “It felt like an appendicitis attack.”

    The family, which is poor enough to qualify for government food stamps, began buying bottled water for drinking and cooking. Their illnesses finally ended, and Farnelli found something to blame: natural gas drilling in the township of 1,400 people.

    And this:

    Ron and Jean Carter suspected there was a leak when the water supply to their trailer home started to taste and smell bad after Cabot started drilling 200 yards (meters) away.

    Not wanting to risk the health of a new grandchild living with them, the 70-year-old retirees scraped together $6,500 for a water purification system.

    “It was kind of funny that the water was good in July but after they drilled, it wasn’t,” said Ron Carter.

    And if people in trouble is not enough to convince you how bad drilling is, bring on the animal stories:

    Tim and Debbie Maye, a truck driver and post office worker who have three teenage children, have been cooking and drinking only bottled water since their well water turned brown in November after Cabot started drilling.

    But she can’t afford bottled water for her animals. Her cats have been losing fur and projectile vomiting because they lick drips from the spigot that carries water from their well. Her three horses — one of which is losing its hair — drink as much as 50 gallons a day.

    “I tell my husband, ‘I’m going out to poison the horses,'” she said.

    I feel for these people and would not want to be in their shoes, that’s for sure. As stated before on this site, Cabot and the PA Department of Environmental Protection still have not figured out how Cabot may have caused the contamination. But let’s be clear: The contamination is natural gas, it is not contamination with chemicals that Cabot uses to fracture the hole. That’s why stories like this one from Reuters are nothing short of journalistic malpractice. Immediately following the story of hair falling off the horses, we get this paragraph:

    Chemical Brew

    Environmental groups fear energy companies are contaminating water supplies by using a toxic mix of chemicals that are forced deep into the rock along with water and sand to release the natural gas. The process is called hydrofracturing, or “fracking” in industry jargon.

    This is not only misleading, but a lie to combine one issue (natural gas contamination of water) with another (chemical contamination of water). The people whose stories are featured are not suffering from chemical poisoning, their water supply has been contaminated with naturally occurring natural gas, likely (but not yet proven) to have crept in due to Cabot’s drilling activities in the area.

    Such is the misleading mainstream media. Cast a careful and critical eye on the stories you read and listen to!

    Read the full article: U.S. energy future hits snag in rural Pennsylvania