Gas industry wants power to force landowners to allow drilling, and donated to lawmakers who now support it
Introducing our new series "Fracktrack" ongoing coverage of the Marcellus Shale gas drilling industry in Pennsylvania. Copy or bookmark this link to check for future updates or send us an email for notifications.
When Harrisburg passed a state budget two weeks go, the legislature included in that budget a theoretical tax on the production of natural gas from the Marcellus Shale in Pennsylvania theoretical, because the tax still doesn't exist, except in theory: the details have yet to be worked out, and the gas industry, unsurprisingly, is lobbying hard for concessions.
Last Friday, I began hearing rumors that chief among those concessions desired is the power to implement "forced pooling," essentially, the power to force reluctant landowners to lease or open their land for drilling, whether they want to or not.
Sure enough: this weekend, the Scranton Times-Tribune reported that two state representatives Marc Gergely, D-35, Allegheny County, and Garth Everett, R-84, Lycoming County have co-sponsored a bill which would do just that.
The piece quotes Kathryn Klaber of the Marcellus Shale Coalition, an industry group, explaining that the law's intent is to ensure that gas development is "not a crazy quilt" and adding that, although models for such laws exist in other state, the Marcellus Coalition has "not found another state's pooling statute that stands out as a model for what they would like to see in Pennsylvania."
Meanwhile, a (very) cursory examination of Pennsylvania campaign finance records by CP shows that both representatives sponsoring the bill have received contributions from the gas industry:
Rep. Gergely received at least $6,000 from Allegheny Energy PAC in two donations last summer, at least $1,500 in donations including $1,000 donated just a few months ago from Chesapeake Energy Corp, one of PA's largest drilling companies.
Rep. Everett received donations from Chesapeake also: a $500 donation and two tickets to the Phillies, worth (according to Everett's campaign) $140.
A letter, headed up by the Campaign for Clean Water and signed by more than a dozen representatives of environmental groups is calling on the legislature to oppose so-called "forced pooling":
Forced pooling not only will require landowners to sign leases they do not want to sign, but it does this for the sole purpose of the gain of a private entity. Some landowners have decided they do not want to lease their mineral rights after deliberative consideration. The oil and gas industry would like the General Assembly to overturn the landowners' decisions. This essentially extends the concept of eminent domain but instead of using private property for the public good, it takes private property for private gain.
The recent explosion of a Marcellus Shale mine only the latest and worst in a series of spills, leaks, well contaminations, and other environmental damage resulting from the hydraulic fracturing ("fracking") method of gas drilling in Pennsylvania seems to finally have got some of our representatives questioning the pace at which fracking is allowed to develop in this state.
So far, that pace has been as fast as possible, damn the risks as evinced by the more than one thousand environmental violations racked up against the industry in just the last two years, including more than a hundred spills, according to Department of Environmental Protection documents reviewed by the City Paper.
But it looks like the pressure to keep that pace fast or increase it is mounting in the wake of the BP spill, which has investors looking at the natural gas below Pa. with new attention.
A couple of days ago, the Wall Street Journal reported that Chesapeake Energy a major player in hydraulic fracturing here is selling stock in its company like hotcakes:
"Chesapeake Energy Corp. said it has sold $900 million in preferred stock to a group of private investors, including Asian sovereign wealth funds, cashing in on heightened interest in onshore energy following the BP PLC offshore drilling disaster.
Turns out, Chesapeake isn't the only Marcellus Shale company cashing in on increasing thirst for this region's gas. Reports the Motley Fool:
The increasing presence of Asian funds clearly comes as interest in natural gas ratchets higher worldwide. Other deals have involved India's Reliance Industries forking over $1.7 billion in April to Atlas Energy (Nasdaq: ATLS) in exchange for a sizable position in the Marcellus Shale. Also, two months earlier, Japan's Mitsui paid $1.4 billion for about a third of Anadarko's (NYSE: APC) Marcellus holdings.
With this kind of global pressure to keep drilling, it becomes even more important to ask whether our state officials, legislators and the increasingly beleaguered regulators both, will be able to keep this industry in check or whether it's time for a federal agency like the EPA to take this thing over. (Currently, fracking is exempted from federal oversight by a loophole in the energy bill masterminded by former V.P. Dick Cheney).
Josh Fox's film "Gasland" an expose on deep well natural gas drilling (hydraulic fracturing, or "fracking") airs tonight, 9 PM Eastern, on HBO. Among other fascinating tidbits, the film includes footage of a homeowner in Dimock, Pennsylvania lighting his water on fire, a feat made possible by the migration of methane into his well supply after many of the small town's residents leased land for drilling.
If you're just catching up on the issue, Pennsylvania has become a unique test case in what happens when the gas drilling industry rushes headfirst into a state with (even the head of our Department of Environmental Protection has acknowledged) insufficient regulation in place.
The rush is due to a unique geologic formation known as the Marcellus Shale, which lies below much of the state. (Click here for more of our coverage of Marcellus Shale drilling.)
In light of tonight's airing, and as state lawmakers actively consider harsher regulations, a few sobering stats:
- Well permits issued so far in 2010: 1,272
- Number of permits denied, returned, or withdrawn, 2010: 15, or 1.2%
- Drilling applications submitted to DEP since 2005: 4,248
- Drilling applications denied, returned, or withdrawn since 2005: 58, or 1.3%
- Number of violations found in 2009: 638
- Number of violations recorded so far in 2010: 421
- Number of violations for illegal/improper "discharge" of toxic materials 2010: 58
New standards approved for salts in gas drilling wastewater but it's still OK to discharge carcinogens!
|Photo | Isaiah Thompson|
Yesterday, the Pennsylvania Independent Regulatory Review Commission approved new regulations aimed at protecting Pennsylvania surface waters from potential impacts of drilling in the Marcellus Shale. The regulations can still be challenged by the House or Senate environmental resources committees, but given Governor Rendell's support of these measures, it seems unlikely.
Probably most significant is a limit on Total Dissolved Solids (TDS) salty chlorides and sulfides in discharged fracking water.
Lest the gentle reader think a stream's "saltiness," isn't a big deal, check out the contamination and massive fish kill that resulted from elevated TDS levels in Dunkard Creek in western Pennsylvania.
Interestingly, Marcellus Shale Coalition executive director Kathryn Klaber issued a statement yesterday saying rather inexplicably that the standards would "not provide any additional environmental benefit."
While environmental watchdog groups like Penn Environment and Clean Water Action praise the new rules, they point out that these regulations don't cover other toxic discharges like carcinogens benzene and arsenic.
"This rule is about setting a discharge standard, but we don't have that for chemicals," Myron Arnowitt, PA State Director for Clean Water Action, told me over the phone. "There are contaminants being discharged in Marcellus Shale wastewater that there need to be more standards for."
Erika Staaf, Clean Water Advocate for Penn Environment, agreed, pointing me to a report authored by the Environmental Working Group's Dusty Horwitt, who reports that gas companies may be regularly injecting "toxic petroleum distillates" which contain benzene into wells:
Companies that drill for natural gas and oil are skirting federal law and injecting toxic petroleum distillates into thousands of wells, threatening drinking water supplies from Pennsylvania to Wyoming. Federal and state regulators, meanwhile, largely look the other way.
These distillates include kerosene, mineral spirits and a number of other petroleum products that often contain high levels of benzene, a known human carcinogen that is toxic in water at minuscule levels. Drillers inject these substances into rock under extremely high pressure in a process called hydraulic fracturing that energy companies use to extract natural gas and oil from underground formations.
Ready for the really scary quote?
In a worst case scenario, the petroleum distillates used in a single well could contain enough benzene to contaminate more than 100 billion gallons of drinking water to unsafe levels, according to drilling company disclosures in New York State and published studies. ... That is more than 10 times as much water as the state of New York uses in a single day.
The Pennsylvania Department of Environmental Protection has ordered Cabot Oil & Gas Corp to halt drilling in Dimock, PA after some 14 residential water wells were contaminated with methane gas that "migrated," into the wells, DEP says, as a result of the company's drilling activities in the area.
Funny enough, I wrote about Dimock and its bubbling wells, at which Cabot has installed vent pipes to relieve some of the methane, and which sound like turkeys gobble-gobbling in this week's "Man Overboard.":
Bubbling is only one of the magical properties the Sautners' well water has taken on since they first leased land to Texas-based Cabot Oil & Gas Corp. for natural gas drilling in the Marcellus Shale geologic formation two years ago. The water has also turned brown, tested positive for strange salts, metals and chemicals and started clogging things: "[Cabot] cut into a pipe that was less than a year old," says Craig Sautner, "and it looked like solid peanut butter in there."
Cabot, the Inquirer reports, continues to deny responsibility:
Despite agreeing to plug and abandon the three gas wells, Cabot maintains those wells are not at fault - it says the methane comes from shallow shale formations and is seeping into groundwater through natural fractures. Pre-drilling tests on more recent wells show preexisting methane concentrations in groundwater in that area, Cabot says.
"We're agreeing to plug the wells in order to comply with the order," said Kenneth S. Komoroski, a Cabot spokesman. "We do not believe they are a source of methane migration or contamination."
Interesting especially, since the order, which is signed by a Cabot attorney, says that Cabot agrees to take responsibility and not to challenge the DEP's findings in "any matter or proceeding involving Cabot and the Department" apparently that doesn't hold true for Cabot and the news media:
Not that Cabot has been put out of business. Reports the Inquirer:
But Dan O. Dinges, the Cabot chief executive who met with Hanger Wednesday, said in a news release that the DEP's order does not affect the number of wells planned for 2010, or its expected production.
The ban on drilling affects only the Dimock area, Komoroski said. Cabot has about 25 permits to drill wells in other parts of Susquehanna County.
I'm a bit late on this one, but the Post-Gazette reported last week that a wastewater pond used in Marcellus Shale natural gas drilling caught fire. Two nearby residents of the site, which is operated by Atlas Energy Copr. (one of whom is already suing Atlas for "ruining his land with toxic chemicals") say that they had smelled a gas odor for days . . . and had reported it to the Department of Environmental protection without hearing back:
Mr. Lengauer said he contacted a hotline for the state Department of Environmental Resources on Sunday, but was unable to reach agency officials because their voicemail boxes were full.
"I tried to call them for three days straight," said Mr. Lengauer.
I've called DEP for updates or further response, since the P-G seems to have dropped the story for now.
One thing that's interesting about this story is that it was the wastewater pond that caught fire. I've had several officials indicate that these ponds (like the one pictured above) are mostly storing freshwater yet I reported on a toxic mud spill resulting from a similar pond last week, and, before that, on an incident of pollution in Clearwater county that resulted from the lining of another waste pit being ruptured.
In my cover story last week ("Drill Baby Drill"), I described, among other things, the potential for wastewater spills from hydraulic fracturing, the process used to drill for gas in the Marcellus Shale.
In the latest news of contamination linked to drilling for natural gas in the Marcellus Shale, a Pennsylvania driller has admitted to dumping some 200,000 gallons of drilling wastewater into an abandoned well just outside of Allegheny National Forest.
The story was reported today by Pro Publica, a non-profit dedicated to investigative journalism in the public interest:
As part of a plea agreement with the U.S. attorney for western Pennsylvania, part-owner Michael Evans, 66, of La Quinta, Calif., and John Morgan, 54, of Sheffield, Penn., admitted dumping 200,000 gallons of brine salty wastewater thats created in the drilling process down an abandoned oil well. The maximum penalty for both Evans and Morgan is three years in prison, a fine of $250,000, or both. Sentencing will be June 24. Attorneys for both men declined to comment.
Swamp Angel Energy was drilling in the Allegheny National Forest, in McKean County in northwestern Pennsylvania, and the brine was dumped just outside the border of the federal land.
The company, Pro Publica reports, has 77 active, permitted wells in Pennsylvania, all in McKean county.
Read more CP coverage of drilling in the Marcellus Shale.
The Marcellus Memos: Privately, Rendell's State Forest tsars expressed deep concern over leasing state forest for drilling
|Former Secretary Michael DiBerardinis cautioned Rendell against leasing forest.|
A few days ago, we reported (and the Inquirer re-reports today) [correction: the Inquirer first reported in October, 2009] that Governor Rendell is considering authorizing yet another lease of state forest land for drilling into the Marcellus Shale, a geologic structure containing billions (if not trillions) of dollars worth of natural gas.
If he does, it will be the third such sale in three years âbefore 2008, state land hadn't been leased for drilling since 2002.
There are a few reasons to ask whether this is a good move. For one thing, fully one-third of our state forest has already been leased for drilling. For another, while only four Marcellus wells are currently active on forest land right now, at least 40 wells are expected to be in production by the end of the year and DCNR officials say that we could see over a thousand in the next decade â all that on land already leased.
We have, in other words, barely begun to see what impact drilling will have on the state forests already leased â leasing even more of it now could be risky indeed.
But don't take my word for it: Rendell's own state forest officials have made their concerns very clear â albeit mostly in private.
Memos and emails obtained by City Paper show that both former DCNR Secretary Michael Diberardinis and Acting Secretary John Quigley have repeatedly cautioned Rendell against leasing additional state forest for Marcellus Shale drilling.
So, in a CP exclusive, we bring you excerpts from said documents in . . . The Marcellus Memos
Background: in 2008, Governor Rendell authorized the first leasing of state forest for gas drilling since 2002. He did so at the suggestion of then-Secretary Michael DiBerardinis, who suggested leasing the land as a way of preventing the state legislature, hungry for revenue, from usurping the authority to do so from DCNR.
Perhaps to Diberardinis' surprise (he has declined comment), Rendell shortly thereafter asked DCNR to perform yet another leasing of state forest for drilling. On March 11, 2009, Rendell's office announced Sec. DiBerardinis' resignation. The following memo (abridged) was written just a week before Mr. DiBerardinis' last day of work.
Memo â March 27, 2009, Sec. DiBerardinis to Gov. Rendell
"Wholesale leasing will damage our State Forest landscape. It would scar the economic, scenic, ecological, and recreational values of the forest â especially the most wild and remote areas of our state in the Pennsylvania Wilds. Your years of work and investments in rural economic revitalization through outdoor experiences in the Pennsylvania Wilds could be erased."
" . . . A rush to drill threatens the certification of our State Forests as sustainably managed. . . Our ability to sustainably manage our State Forests is threatened by unplanned, excessive leasing activity."
". . . Finally, and perhaps most important of all is the environmental legacy you want to leave. I'm deeply concerned that your tireless work [for the environment] will be in jeopardy with large scale leasing."
"One hundred years ago, the land that would become the state's forests was a denuded landscape that was scarred by rampant resource extraction. Our State Forest system â the largest swath of publicly owned land east of the Mississippi River â grew from a visionary effort to reclaim this landscape and restore to Pennsylvania's citizens their natural birthright . . . A rush to drill places the state forest and all its benefits at great risk. . . "
Background: In this email, Acting Sec. Quigley says that DCNR is comfortable leasing only 40,000 more acres for Marcellus Shale drilling. As you'll see int he next email, within 2 days, Rendell's staff would ask DCNR to double that acreage.
Email â May 4, 2009, Acting Sec. John Quigley to Gov. Rendell
"It is important to emphasize that we cannot lease 620,000 more acres. We are approaching questionable territory with future lease sales. We are comfortable with a maximum of 40K acres for an additional lease sale . . ."
Background: Pennsylvania is one of just a handful of forests in the United States certified by the Forest Stewardship Council as a sustainable forest. Here, Acting Secretary John Quigley warns Rendell that that certification could be in danger if more state forest is leased.
Memo â May 6, 2009, Acting Sec. John Quigley to Scott Roy, Mary Soderberg (Gov. Rendell's office)
"You have asked DCNR to be prepared to offer at least a total of 80,000 acres of state forest lands for Marcellus gas development in 2009. . ."
"I want to be very explicit about the situation that this will place us in. These would likely be the last gas lease sales on State Forest land that we could manage within the context of our sustainable certification for the foreseeable future."
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