Marcellus Shale
Natural Gas Roundup
Potter County, Pa.
May 2011
Top Story:
Introducing The ‘Triple Divide Watershed Coalition’
Representatives from public water suppliers across the county gathered last month at the F.W.GunzburgerCountyOfficeBuilding to form a new organization, the “Triple Divide Watershed Coalition.” Its goal is to protect water sources across PotterCounty from potential degradation from natural gas well drilling or other disturbances.
Mark Stephens (shown),a geologist from the Pa. Dept. of Environmental Protection (DEP), shared information on partnerships localpublic water authoritiescan form with DEP for source water protection programs. Before the coalition takes any further action, representatives attending the initial meeting will confer with their respective organizations to seek support of the countywide coalition.Stephens complimented the Potter County Planning Commission for already developing a Sourcewater Protection Plan, through funding from the U.S. Environmental Protection Agency.
“You folks in PotterCounty caught on before the others, so you are the leaders,” he said. “We all understand that an ounce of prevention is worth a pound of cure, and we don’t want to trade one resource — water — for another.”
The next logical step for the Triple Divide Watershed Coalition is a “risk reduction strategy,” Stephens explained, which could include elements of public education, close liaisons with industry and/or land use planning regulations such as zoning.
The group derives its names from the county’s unique geographic distinction as the headwaters for three major Northeastern U.S. watersheds. Water here flows north to the Great Lakes and St. Lawrence, south to the Ohio and Mississippi, and east to the Altantic in the largest basin and the longest river on the eastern U.S. seaboard, the Susquehanna.
Next meeting of the coalition is tentatively scheduled for Wednesday, May 18.
Pipeline Issues Generating Public Concern; Meeting May 10
Leaders from northern Pennsylvania counties are feeling some urgency in preparing their communities for increased natural gas pipeline and compressor station building across the region.The situation will be examined at the next meeting of the Potter County Natural Gas Task Force, scheduled for Tuesday, May 10, at 7 pm in the F.W.GunzburgerBuilding auditorium in Coudersport.
Many of the issues were spelled out last month during a workshop, titled “Understanding Pipeline Infrastucture,”attended by members of the task force’s Public Education Committee. They came away from the session convinced that there's important information that township/borough officials and property owners should know as the construction of the smaller gathering lines from individual wells -- as well as larger interstate distribution pipelines -- intensifies.
Construction, maintenance and inspection of pipelines are complex issues with regulatory gaps that the Pa. General Assembly is seeking to remedy.Townships and boroughs do have some power to control the location of pipelines and compressor stations to minimize their impact, while property owners should be aware of their rights when negotiating with companies seeking to locate pipelines or related facilities on private land.
Meanwhile, major interstate gas pipeline projects are moving forward.National Fuel Gas (NFG) Supply Corporation’s Northern Access Project will allow the company to transport gas produced from Pennsylvania’s Marcellus Shale to the TransCanada Pipeline at Niagara Falls, N.Y.Both National Fuel and Tennessee Gas Pipeline Co. have applied for Federal Energy Regulatory Commission (FERC) approval. Tennessee owns the Niagara Spur Loopline, which is part of this project, in addition to the “300 Line,” an interstate transmission line which traverses PotterCounty and interconnects with the National Fuel Gas line in Ellisburg. The project will include the addition of two compressor units totaling approximately 9,500 HP at the Ellisburg Compressor Station. The company expects FERC approval by October and will begin site work then.
Municipal Leaders Asked To Work With State Police
Municipal leaders from across PotterCounty attended a workshop on law enforcement and public safety issues in Coudersport. Growth of the natural gas industry has increased traffic on roads that were not designed for the greater volume or weight.Corporal Sean Batterson (shown) from the Pennsylvania State Police barracks on Denton Hill addressed approximately 70 township and borough representatives. Municipal officials learned how they can work with police to improve enforcement of laws pertaining to public safety and protection of roads and bridges from damage due to overweight and oversized vehicles.
Potter County Planning Director Charlotte Dietrich, who organized the workshop, distributed copies of a sample ordinance townships and boroughs might want to consider to regulate the travel of large or heavy vehicles on municipal-owned roads. Corporal Batterson emphasized that police are willing to patrol the roads where violations are likely to occur and issue citations, but townships also have responsibilities. "We're doing this for safety and to protect our roads," he said. "We've seen these developments already in Bradford and Tioga counties. It's a learning process for all of us and there are going to be some growing pains." State Police and the Department of Environmental Protection (DEP) have also launched Operation FracNET, a dedicated enforcement operation focusing on commercial vehicles hauling equipment and waste water from Marcellus Shale natural gas drilling operations. Police teams check vehicle braking systems, exterior lighting and other equipment that plays a role in operational safety, as well as whether drivers possess the appropriate operator licenses. DEP inspects for issues pertaining to vehicle weight, waste hauler authorizations and standards for maintaining safe and secure loads.
Local Lawmakers Tour Troubling Watershed Drilling Site
State Senator Joe Scarnati and State Representative Matt Gabler recently visited a Marcellus Shale drilling site in the Brockway Watershed for a first-hand look at issues dealing with drilling close to public water sources. Each agreed that there needs to be reasonable setbacks between wells and waterways or supplies. “It is vital that we manage this resource in a way that improves our economy, while also protecting our environment and our communities,” Scarnati concluded. The senator (left) is shown with a Brockway Municipal Authority member.
Penn Virginia Corp. Company Drilling Wells In Coudersport Borough
Penn Virginia Corporation is drilling two wells in Coudersport Borough, another sign of increased Marcellus Shale natural gas activity. The wells are located in the Niles Hill area. DEP refers to the sites as Northeast Timberlands A 1H and A 2H. Local photographer Curt Weinhold found a location onRoss Glen Roadwhere his camera could pick up both the courthouse statue of justice and a bright drilling rig on Niles Hill – a true “Kodak moment.”Penn Virginia is also drilling three wells in AlleganyTownship, north of Coudersport, two on the Risser farm and a third on the Dunn farm.The company has ambitious plans for gas production and paid $13.9 million for the rights to 3,640 acres of state forest land in Eulalia and Roulette townships. The state will also receive 18 percent of production royalties.Seneca Resources of Houston, Texas, was high bidder on 7,440 acres between Denton Hill and Fox Hill, offering $23.3 million.
‘Well Walk’ Scheduled May 22 On StateForestLand
A “Well Walk” to spotlight natural gas drilling on state forest land has been scheduled for Sunday, May 22, from 1-4 pm. Those attending will meet at the Bureau of Forestry office on Denton Hill. The tour will include the Horton Run site and a well pad near the Forestry office. Chris Firestone, field biologist for DCNR, will point out plant and animal species near the well sites. For more information, contact Melissa Troutman at . Portions of state forest land in PotterCounty have been leased for drilling, as have some tracts of state game lands. Additionally, subsurface rights on some of the state-owned land in the county are privately owned and could be drilled.
County Helping Townships, Boroughs Prepare For Gas Rush
A Municipal Checklist has been prepared for townships and boroughs inPotterCounty to help them deal with issues that could arise as the result of natural gas drilling. Planning Director Charlotte Dietrich has compiled the document. Each township and borough could have special circumstances that would require it to consider local regulation or to turn to other sources for technical or legal guidance. The checklist provides estimated timelines for different aspects of a drilling operation. Among ordinances they might consider are those affecting road bonding, hauling and road maintenance, mandatory 9-1-1 addresses and sign standards, holding tanks for sewage, temporary work camp regulations and others.Townships and boroughs are advised to communicate with gas companies and state regulators on issues related to drilling. They’re also being asked to inform the County Planning Department on the impact of each gas well site on the municipality -- traffic, roads and infrastructure, employment, housing issues, ripple effect on local business, economics, issues involving surface rights owners and contiguous properties, and other areas.
TiogaCountySpeakerOffers Glimpse Into Potter’sFuture
Potter County Natural Gas Task Force members were encouraged to stay informed and involved if they want to avoid some of the potentially negative aspects of increased natural gas development. TiogaCounty has felt the impact of Marcellus Shale drilling that is sweeping westward across the northern tier counties. Issues that have arisen there are likely to be seen locally as the industry continues to expand throughout this decade and beyond.Erick Coolidge (left), a fourth-generation dairy farmer in his 16th year as a member of the Tioga County Board of Commissioners, emphasized that the industry's economic potential is important. "Overall, I have to say, this is good, if we're able to guide it," Coolidge told the audience. "It's going to generate jobs, and income, and economic growth."At the same time, Coolidge warned that a blind pursuit of economic development, at the expense of the environment or the rural way of life, could create a legacy for future generations that will cause them to curse today's leaders."We live where we live because we love it here, and we have an obligation to protect it," he said. Local communities need to be prepared for significant impacts on roads, bridges, the criminal justice system, as well as housing availability and pricing, Coolidge advised.
He acknowledged that his board faced criticism for its letter to the Susquehanna River Basin Commission, urging that agency to prohibit any new use of groundwater to support drilling. The Tioga County Commissioners maintain there are abundant surface water resources available to meet the industry’s needs.
Training Local Residents For Jobs In Gas Industry
You’ve seen the license plates Louisiana, Oklahoma, Colorado and other states to the south and west of PotterCounty. Gas companies and their subcontractors are looking for trained workers for a wide variety of jobs so they do not have to recruit from other states. Experts say that once pipelines and other infrastructure are in place, drillers will be especially busy in the region and job opportunities will abound, from field workers, welders and truck drivers to professional careers such as biology, chemistry, geology, accounting, law and at least four engineering tracks.
Penn State Extension, in partnership with the Potter County Education Council, is helping to prepare local high school students for careers in the gas industry by providing SafeLand Orientation Certification safety training. A pilot program was held in the BradfordSchool District. It required students to attend a workshop from 8 am until 5:30 pm and pass exams. Twelve students and two instructors successfully completed the certification program.Grants and other funding sources are being explored with hopes of offering this program in other school districts.
Additionally, Potter County Education Council and Penn State Extension plan to offer a SafeLand Orientation “Train-the-Trainer” program in Coudersport or Port Allegany later this year. It will consist of two days of classroom training. Estimated cost of the program is $1,500 and includesmanuals, videos and other materials.
Companies can save money and reduce scheduling conflicts by having a certified trainer on staff.Offering SafeLand certification locally will save companies travel and lodging expenses because employees won’t have to travel to Louisiana or Texas to go earn their certification. Anyone interested in being added to the waiting list for this course or learning more about job training opportunities should call the Education Council at (814) 274-4877.
ClintonCountySchool Preparing For Gas-Related Changes
KeystoneCentralSchool District in ClintonCounty is tinkering with its curriculum and its planning process to account for the growing natural gas industry. “It’s still an unknown,” says KCSD superintendent Kelly Hastings. “We are looking at enrollment trends, building usage, and what kind of instruction we design.” As far as dawning issues, district leaders point out that families coming to the area for jobs in the natural gas industry have resulted in a slight enrollment increase and increased truck traffic on local roads could affect student transportation. With regard to education, the district is looking at what it has to offer students, as well as adults, who are interested in seeking employment in the gas industry. “We’re starting to see a desire for individuals with electronics and electrical backgrounds,” explains Scott Owens, director of career and technical education.“We’re also seeing a demand for machining.” Vocational training that’s in demand includes welding, drafting, diesel mechanics, construction trades, transportation, food service, and health occupations programs, Owens said. Keystone Central also has a transition coordinator who works with students to help them gain the skills needed to successfully transition from high school into the work world. The district will continue to host gas industry representatives to speak with students about career opportunities.
Whole New World Of Leasing Mineral Rights
Trends in Marcellus Shale natural-gas leases, royalties and production were discussed by experts in an internet-basedseminar sponsored by Penn State Cooperative Extension. Presenters were attorneys Les Greevy of Williamsport and Kris Vanderman of Charleroi, who represent clients with natural-gas interests. “A lot of leases are starting to run out, so we are starting a whole new cycle of leases,” Greevy pointed out. “It is in property owners’ best interests to become familiar with pipeline-property issues and trends in contract addenda, royalty payments and cash-bonus payments . . . Companies have largely staked out geographic areas that they’re interested in and are not competing as much. As a result, prices are down a little, and the ability to get protective addenda in leases is diminished.”
Vanderman said he has seen similar trends in the state’s southwestern corner. “Right now, there is an active swapping of leases between companies, and they are carving out their territories,” he said. “You have companies that are more or less dominant in areas, and this consolidation of territory is ongoing.” Vanderman indicated that companies from out-of-state now appear less flexible than they had been.“Some of the newest ‘standard offer’ leases are extraordinarily favorable to the interests of the gas companies,” Vanderman said. “The issue here is, what is a landowner willing to concede for money?”
The webinar is archived on the website,at on Quick Links/Webinars). Previous webinars, publications and information on topics such as water quality and zoning are also available on the website.
Senator Unveils ‘Impact Fee’ (Rather Than Severance Tax)
Senate President Pro Tempore Joe Scarnati recently went public with a plan to charge natural gas drillers an “impact fee.” It’s a response to the long debate over a proposed severance tax on gas that’s produced from the Marcellus Shale in Pennsylvania.
“A majority of revenues from the industry needs to remain local,” Scarnati said in differentiating his plan from the others. “A fee assisting those communities where the drilling takes place and where road improvements, water and safety enhancements are needed, makes sense.”
Under Scarnati’s proposal, a portion of the revenue would also go to conservation districts, environmental clean-up projects, impacted state highway improvements, as well as hazardous site clean-up. It includes a retroactive feature that is projected to generate $45 million from 2010 gas production, as well as 2011 fee revenue of $76.2 million.A high-performing well, based on the amount of first-year volume, could pay a higher fee than an average-producing well.
Based upon current prices and widely accepted production projections, the senator said, each well would generate at least $160,000in fees over a ten-year period, and a total of at least $675 million over a five-year period.
Pennsylvania Public Utility Commission would collect and distribute the impact fee. Revenue distribution between local governments would be as follows: