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College in Williamsport preparing workers

By Rory Sweeney[email protected]
Staff Writer

WILLIAMSPORT – Like many of his classmates, Mike Harris already has a job in electricity-generation lined up for when he graduates this spring.

The only problem is it will require the Dalton native to relocate to Illinois.

Soon enough, though, future students in these same welding classes at Pennsylvania College of Technology could be in a curriculum that funnels them into local jobs with natural gas drillers working in the Marcellus Shale region.

The Marcellus Shale Education & Training Center at the college is in its early infancy, only envisioned late last year and opened earlier this year, but plans are for it to expand quickly.

A collaboration with the Penn State Cooperative Extension, the center will identify the industry’s work force needs and respond with education tracks that train people for those jobs, said Jeffrey Lorson, an industrial technology specialist at the college who’s running the training center.

“With the escalation and the things with the Marcellus, there was clearly a need in the work force,” he said. “We knew we had a tremendous fit to support the industry.”

The jobs are certainly here, Harris said, and there aren’t enough local workers. “They can’t find anybody,” he said about drillers.

Lorson’s family has a motel in Bainbridge, N.Y., near Binghamton, and the place is constantly packed. “There’s guys coming from all over the place” to work for the drilling companies, he said.

He felt Penn College graduates would be “competitive” for jobs in the industry, which could feed off the college for workers in fields from welding to heavy machinery operation.

“The center has the potential to provide very meaningful training options for local residents,” said Stephen Rhoads, the president of the Pennsylvania Oil & Gas Association. Certain skills, such as building and maintaining infrastructure and inspecting gauges and other moveable parts, “are all skills that could very easily find a home up in Northeastern Pennsylvania,” he said.

“If the industry grows as we expect it to, there will be long-term career opportunities.”

While he plans to enjoy traveling while starting his career, Harris said he’s looking ahead to hometown job security.

“I feel very confident, and I’d love to stay in Northeastern Pennsylvania, but right now as things are starting to take off, I think it’s easier for me to leave and get some experience,” he said.

The center could also help students outline career paths, an idea Harris has already considered. He’s planning to become certified in visual inspections.

“It keeps me out in the field, but it’s managerial,” he said. “You’re in the middle, which is pretty much where I wouldn’t mind being.”

See more photos of the Pennsylvania College of Technology Marcellus Shale Education & Training Center at www.timesleader.com.

Copyright: Times Leader

More than 650 acres are available. Drilling firms being contacted directly.

By Rory Sweeney[email protected]
Staff Writer

Luzerne County began seeking bids Monday to lease more than 650 acres at Moon Lake Park for natural gas drilling.

In an effort to entice a bidder, county engineer Joe Gibbons said he is contacting drilling companies directly.

“I’m trying to swing it in our favor. I’m sending e-mails out to the gas industry to see if anyone’s interested in receiving a set of bid documents,” he said. “It’s up in the air because the commodities are in the tank right now. … I’m kind of optimistic. I hope we get somebody.”

Potential bidders can review and pick up the documents at the county property and supply office in Penn Place at 20 N. Pennsylvania Ave., Wilkes-Barre. The bids are due by 2 p.m. April 23, but must be pre-qualified by April 9.

The proposal is modeled, Gibbons said, on that used by the state Department of Conservation and Natural Resources.

The request for proposals was structured, he said, so that the county receives several revenue sources from the deal and retains authority over where drill pads would be located in the park. “The last thing I want to do is make the place look like an open construction site. I want to maintain its recreational integrity. It’s just a unique project,” he said.

The county would receive income from the rental of the drilled acreage; the sale of the timber felled when preparing the drilling sites; other marketable fluids, such as methane or oil, that are extracted from the drilling; and storage fees for gas that is stored when an exploratory well is drilled, but capped until it can be hooked up to a pipeline, he said. “They can have the storage, that’s fine, but we get the storage rental,” he said.

All bidders would have to offer at least 16 percent royalties on the price at the well head for any marketable fluids it produces, he said.

The winning bidder will offer the highest initial-year rental fee for the acreage, he said, which was set for at least $500 per acre. After that, the fee drops to between $10 and $20 per year, he said, but there is a stipulation that drilling begin within a year.

The winning bidder would post three bonds, including one to ensure the site is restored after drilling concludes, he said. “I put restrictions on where they could take water from and how much they could take, even above and beyond what DEP (the state Department of Environmental Protection) would issue in a mining permit,” he said.

The bids would also have to be pre-qualified to ensure they are from actual drilling companies planning development and not land-holding companies expecting to resell the land, he said. “If we do get a lease, I want to deal directly with the gas company. I don’t want to go through a middle man,” he said.

Copyright: Times Leader

State is not seeing the same reduction in Marcellus Shale drilling as other areas.

By Rory Sweeney[email protected]
Staff Writer

SCRANTON – The price of natural gas has dropped nearly to levels that make drilling in the Marcellus Shale unprofitable, according to a Penn State educator, but drillers have been hedging their prices and the Northeast is still the best-paying gas market.

Freefalling from a high in 2008 of around $14 per thousand cubic feet, prices are currently around $4 per thousand cubic feet, hovering just above the $3.75 threshold that companies believe makes Marcellus Shale drilling unprofitable, said Tom Murphy, an educator with the Lycoming County Penn State Cooperative Extension. He spoke on Tuesday at a public-education meeting sponsored by the Lackawanna Heritage Valley Authority at the Steamtown National Historic Site.

But many companies hedged their gas sales months ago at around $9 per thousand cubic feet, he said, and because much of the Northeast uses natural gas for home heating, Pennsylvania isn’t seeing the same reduction in drilling rigs as other shale drilling areas.

“The proximity of that (the Marcellus Shale) is what a lot of this is about,” Murphy said. “They are leasing right now, but they’re leasing for a lot less than they were before. … It’s not a matter of is this coming. It’s a matter of how big is this going to be.”

Companies are mostly leasing strategically to fill in holes in drilling units while slowing production to reduce supply and increase prices, he said. But the usual three-month to six-month falloff between reduced production and reduced supply isn’t occurring. “There’s so much gas coming out of these shales, and the Marcellus Shale is one of those, that the lag time is nine to 12 months,” Murphy said.

Still, the “weakest link” in the industry is dealing with contaminated wastewater, he said. While there are eight deep-injection wells in the state, only one is available for industry use, and it’s in the southwestern part of the state.

The vast majority of the water is being treated at municipal sewage facilities. There, the heavy metals are removed, and the brine is simply diluted and dumped into waterways in the Susquehanna River watershed.

“It’s actually starting to get to the point where it’s starting to exceed what can be put in” the watershed, Murphy said.

Another water issue is managing pollution at the drilling site, said Jim Garner, the Susquehanna Conservation District manager. “They talk about restoration; they like to do restoration,” he said, displaying a photograph of sediment fencing at a site that had been compromised by runoff. “In practice, it’s a different situation. … We’ve only seen several sites fully restored. It can be pretty challenging.”

As the drilling ramps up, hundreds of trucks will be driving over Susquehanna County’s many dirt roads, he said. The unstable roads combined with the county’s many waterways create 2,712 potential pollution sites, he said. “In a few weeks, it’s really going to be interesting to see how these roads don’t hold up,” he said.

Garner’s district has approved only one erosion and sedimentation plan and just two others have been submitted, he said. All the activity and unresolved concerns have created a swirl of public speculation, he said. “I’ve been with the district 15 years. I have never heard anything create rumors like this.”

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader

Harveys Lake officials cite environmental concerns in opposing the water use.

EILEEN GODIN Times Leader Correspondent

HARVEYS LAKE – Council members on Tuesday night voiced concerns over a gas company’s interest in using lake water for the drilling of the Marcellus Shale.

Environmental scientists from Gannett Fleming Engineering are interested in drilling in the Marcellus Shale region, which runs through Northeastern Pennsylvania. The shale contains pockets of natural gas.

The gas company wants to use 20 million gallons of water from Harveys Lake for a process called hydrofracing. Hydrofracing is the use of high pressure water to create cracks in the rock surrounding the shale so that the gas can be recovered.

Council Chairman Lawrence Lucarino said the shale is located a mile or more below the earth’s surface.

Council members say they oppose the practice because they are trying to protect the state’s largest natural lake.

But even though the council can deny it the use of the water, “the federal government can override the council’s decision,” Councilwoman Diane Dwyer said.

The council has asked attorney Charles D. McCormick to draft a letter stating the borough’s position and reasons against using the lake water.

“Who knows how well they will filter out the contaminants before letting the water back into the lake,” Dwyer said.

She asked residents to “please be watchdogs and keep an eye on your backyard.”

The Marcellus Shale fields are located in the Appalachian Basin, running through Pennsylvania, New York, Ohio and West Virginia. According to the Web site oilshalegas.com, the Appalachian Basin could provide 50 trillion cubic feet of natural gas for the United States. The United States now produces 30 trillion cubic feet of natural gas.

In other news, emergency 911 street maps have been returned to the borough. Council members Carole Samson and Charles Musial will review the maps to make sure all the street names are correct.

This process should take about one to two weeks, Samson said. Once approved by the borough, the maps will be sent to the County 911 office for final approval.

Copyright: Times Leader

Gas drillers’ access to Harveys Lake water doesn’t seem likely.

HARVEYS LAKE – The borough is girding itself against potential plans to use lake water for natural-gas drilling, but the state Department of Environmental Protection thinks attempting to gain access to the water might be more trouble than it’s worth.

At its recent monthly meeting, borough council had solicitor Charles McCormick write to the Susquehanna River Basin Commission noting in the letter that the council “strongly opposes &hellip any consumptive use of water from the tributary system of Harveys Lake.”

Council became concerned after receiving a phone call and a notice. The notice was of Chesapeake Energy’s request to increase its one-day water-removal limit from the basin to 20 million gallons, and the phone call was from an engineering firm representing a gas company.

Brent Ramsey, an environmental scientist with Harrisburg-based international engineering consulting firm Gannett Fleming, had asked who owned the water rights at the lake and if the water could be procured for a well-drilling client, borough secretary Susan Sutton said.

He also called the borough’s Environmental Advisory Council asking similar questions, EAC secretary Denise Sult said.

Ramsey said the client directed that the operation be kept confidential, but acknowledged that his company’s involvement is in securing water-use permitting and that approval for a source of water hasn’t yet been secured. He refused to comment on whether the lake was still a target or if other sources were being sought.

Tapping the lake’s resources might prove difficult, however, said DEP spokesman Mark Carmon. “There’s been a long-standing question mark about who owns the bottom of the lake,” he said. “It’s probably a lot more complicated that it’s worth, in a legal sense, for anybody.”

He said the borough doesn’t own the water and individual lakefront landowners would have to be contacted. Deeds would have to be checked for exact descriptions of how far out into the water each property border protrudes. Any user-landowner agreement would still need to get SRBC approval “and face the wrath of the neighbors on each side of them,” he said.

“We think that’s the way it would play out,” he said.

He said that he wasn’t aware of any proposals or approvals of water usage in Luzerne County for gas drilling.

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader

Industry reps cite permitting delays; DEP head says issues to be resolved.

DALLAS TWP. – Representatives from every aspect of the state’s burgeoning natural-gas drilling industry met on Tuesday and, though differing on specifics, emphasized that Pennsylvanians stand upon a multibillion-dollar windfall, but only if the state streamlines its permitting process.

The hearing at Misericordia University was organized by the state Senate Republicans’ policy committee to identify potential problems with drilling the Marcellus Shale about a mile underground, but the senators instead were told that many of the problems lie with the state itself.

“Fundamentally, what the industry has said to us is, ‘We need to know what the rules are,’” said Tom Beauduy, the deputy director of the Susquehanna River Basin Commission. The commission oversees water removal from the river basin.

Industry representatives were dire with their characterizations. The industry is experiencing “permitting delays unlike we have ever seen in any other state,” said Wendy Straatmann, president of Ohio-based Exco-North Coast Energy Inc. “Why would I spend so much of our company’s time and resources when I can go to some other state and use the gas and oil manual and follow the regulations?”

Ray Walker, a vice president with Texas-based Range Resources Corp., agreed that an inclusive regulations manual would help companies “put our money into protecting the environment and not paperwork.” He noted that smaller companies are considering drilling here, but won’t if the permitting process remains slow and taxes increase. That could keep development slow, he said.

That’s a prospect that few at the hearing wanted. John Hanger, the acting secretary of the state Department of Environmental Protection, assured that his agency was “working to make sure that gas can be produced and water protected.” Part of the lag has come from a dearth of disposal options for the fluids used to hydraulically fracture the rock, and Hanger said his favored alternative was to find ways for the companies to simply inject them underground.

DEP would need to increase its regulatory force to keep up with the permitting and inspections demand predicted based on industry desires, he said, noting the department has recently requested substantially increasing its well-permitting fees.

Still the Republican senators felt DEP is clamping down too tightly. “When I ran for Senate, I was mad at the state for over-regulating my industry,” said Sen. Mary Jo White, R-Venango County, who had worked for an oil corporation. “I think we’re heading down that road again.”

William Brackett, the managing editor of a newsletter that reports on the Barnett Shale, said gas drilling there “is a prime reason the north Texas economy has only caught a cold and not the flu.”

John Hanger, acting DEP secretary, said part of the lag has come from a dearth of disposal options for the fluids used to hydraulically fracture the rock.

Copyright: Times Leader

Industry reps cite permitting delays; DEP head says issues to be resolved.

DALLAS TWP. – Representatives from every aspect of the state’s burgeoning natural-gas drilling industry met on Tuesday and, though differing on specifics, emphasized that Pennsylvanians stand upon a multibillion-dollar windfall, but only if the state streamlines its permitting process.

The hearing at Misericordia University was organized by the state Senate Republicans’ policy committee to identify potential problems with drilling the Marcellus Shale about a mile underground, but the senators instead were told that many of the problems lie with the state itself.

“Fundamentally, what the industry has said to us is, ‘We need to know what the rules are,’” said Tom Beauduy, the deputy director of the Susquehanna River Basin Commission. The commission oversees water removal from the river basin.

Industry representatives were dire with their characterizations. The industry is experiencing “permitting delays unlike we have ever seen in any other state,” said Wendy Straatmann, president of Ohio-based Exco-North Coast Energy Inc. “Why would I spend so much of our company’s time and resources when I can go to some other state and use the gas and oil manual and follow the regulations?”

Ray Walker, a vice president with Texas-based Range Resources Corp., agreed that an inclusive regulations manual would help companies “put our money into protecting the environment and not paperwork.” He noted that smaller companies are considering drilling here, but won’t if the permitting process remains slow and taxes increase. That could keep development slow, he said.

That’s a prospect that few at the hearing wanted. John Hanger, the acting secretary of the state Department of Environmental Protection, assured that his agency was “working to make sure that gas can be produced and water protected.” Part of the lag has come from a dearth of disposal options for the fluids used to hydraulically fracture the rock, and Hanger said his favored alternative was to find ways for the companies to simply inject them underground.

DEP would need to increase its regulatory force to keep up with the permitting and inspections demand predicted based on industry desires, he said, noting the department has recently requested substantially increasing its well-permitting fees.

Still the Republican senators felt DEP is clamping down too tightly. “When I ran for Senate, I was mad at the state for over-regulating my industry,” said Sen. Mary Jo White, R-Venango County, who had worked for an oil corporation. “I think we’re heading down that road again.”

William Brackett, the managing editor of a newsletter that reports on the Barnett Shale, said gas drilling there “is a prime reason the north Texas economy has only caught a cold and not the flu.”

John Hanger, acting DEP secretary, said part of the lag has come from a dearth of disposal options for the fluids used to hydraulically fracture the rock.

Copyright: Times Leader



Gas industry officials told state senators in Dallas that cumbersome rules make it difficult to operate.

MICHAEL RUBINKAM Associated Press Writer

DALLAS — Executives of drilling companies exploring a huge untapped reserve of natural gas say the economic windfall expected from the Marcellus Shale may not come to pass if Pennsylvania doesn’t get its regulatory house in order.

Industry officials complained Tuesday about a time-consuming and lengthy permitting process and cumbersome regulations that, on top of plummeting natural gas prices and the credit crisis, is making it difficult for them to operate in Pennsylvania.

“I have great hopes for what the Marcellus Shale play might still hold for Pennsylvania. Unfortunately, my experience to date does not lead me to be very optimistic,” Wendy Straatman, president of Exco-North Coast Energy Inc., told Republican state senators at a hearing in northeastern Pennsylvania.

She said the Akron, Ohio-based company has moved drilling equipment to West Virginia and delayed its plan to transfer a “significant number” of employees into Pennsylvania because of DEP permitting delays that are “unlike anything we have seen in any other state in which we operate.”

Another executive, Scott Rotruck of Oklahoma City-based Chesapeake Energy Corp., the largest natural gas producer in the United States, predicted “ominous” consequences for Marcellus development if Pennsylvania’s regulatory environment doesn’t become more welcoming. He said the permitting process is easier and less costly in other states.

Sympathetic GOP senators pressed acting Environmental Secretary John Hanger for answers, warning that Pennsylvania can’t afford to scare off an industry that has promised to create tens of thousands of new jobs.

The state needs to be “careful we are not killing the goose that’s laying the golden egg,” said Sen. Mary Jo White, R-Venango.

Hanger agreed that regulations need to be streamlined and said his agency is working on it, but added that most applications are processed within 45 days.

“There has to be a smart way to protect what we need to protect, and at the same time (prevent) a delay that really serves no purpose,” he said. “I believe there’s a learning curve here for everyone involved.”

Part of the problem may be a lack of DEP manpower to cope with a record number of natural gas applications. The agency is on track to issue 8,000 permits in 2008, up from 2,000 in 1999, yet staffing in the agency’s oil and gas division has remained stable at about 80. The DEP has proposed to raise fees on drilling companies to pay for additional staff to process applications and inspect wells.

Tuesday’s hearing at Misericordia University was called by the Senate Majority Policy Committee to explore the economic and environmental impact of drilling in the Marcellus, a layer of rock deep underground that experts say holds vast stores of largely untapped natural gas.

Industry executives also opposed a tax on natural gas that the administration of Gov. Ed Rendell has said it is considering.

“New taxes will stymie Marcellus development,” said Ray Walker Jr., vice president of Range Resources Corp., a Texas-based oil and gas company with an office in southwestern Pennsylvania.

Copyright: Times Leader

Senate hearing set for today at Misericordia, symposium Wednesday at Woodlands.

While landowners are imagining the gobs of cash they stand to make from natural-gas drilling in the Marcellus Shale rock layer underlying much of the region, Don Young hopes there’s room to imagine a few other images, such as gas pipelines crisscrossing once-pristine farmland, benzene contaminating groundwater supplies and an industrywide press to tap every inch of lucrative ground.

And that doesn’t include the Fort Worth, Texas, resident’s concerns about the psychological effects of celebrity-fronted publicity campaigns linking the drilling to patriotism and national security. “It’s Orwellian to see it happening here,” he said. “You’ve got American flags on each well.”

But the leader of Fort Worth Citizens Against Neighborhood Drilling Ordinance hopes the travails that now plague his home above the Barnett Shale are averted in the similar Marcellus Shale. “What you have here in Fort Worth on a grand scale is apathy. People felt, ‘We can’t stop it. It’s too big. It’s big oil,’ ” he explained. “The average busy person, they don’t have time to worry about gas drilling. … They have families, they have lives, they’re struggling, and if you have a few companies handing out money saying, ‘Here’s some money, just forget about it,’ ” they’ll do just that, he said.

Local regulators and educators are already taking steps to avoid those effects, and they’ll take a few more this week. This afternoon, the state Senate Republican’s Policy Committee will meet at Misericordia University to hear testimony from people familiar with dealings in the Barnett Shale on the potential effects awaiting Pennsylvania.

Several of the same speakers will be featured in discussions Wednesday morning at the Woodlands Inn & Resort in Plains Township, as the Joint Urban Studies Center holds a Marcellus Shale Symposium. The public is invited to either presentation, but the symposium has a registration fee.

“We are front and center to the development of this new industry,” said state Sen. Lisa Baker, R-Lehman Township, who requested the hearing. “I think having the hearing here demonstrates, in my judgment, that we’re doing all we can to ensure that our laws and regulations are appropriate and that if we need to make changes,” the legislature is ready to do so.

She said she hopes to get answers to questions she often hears from constituents, including potential downsides to drilling and whether current regulations are enough to curtail them.

According to several of the speakers, Pennsylvania might have a lot of ground to make up before it’s running even with the industry. “I just don’t understand the state’s set-up. Why wouldn’t that be a requirement to disclose how well the wells (are performing)?” asked John Baen, a University of North Texas professor and real-estate expert who has 250 wells on his property in the Barnett Shale. “If it’s all proprietary, then how do we know what the true wealth is?”

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader

Texans to share their experiences

HUGHESVILLE – As night falls over Beaver Lake Road, work lights gradually accentuate a towering structure visible between the rolling hills. In the middle of a roughly square-acre site, the drilling rig is about halfway through a four-week stay at this rural Lycoming County site.

Soon thereafter, the rig will leave, crews will arrive to tap the natural-gas well, gas will begin being pumped into regional transmission pipelines and Chief Oil & Gas LLC of Dallas, Texas, will begin reaping income.

So will Neil and Louise Barto, though hardly what they say they deserve. They signed over the mineral rights to their nearly 178 acres three years ago for $888.45 and the state-minimum 12.5-percent royalties on the production.

“Everybody made money except us,” Neil Barto said. “Hell yes, it irritates me. … Every time I see somebody from Chief, I tell them I’m not happy about it.”

That’s the sort of cautionary tale the Joint Urban Studies Center is hoping to keep to a minimum in the area by hosting the Marcellus Shale Symposium on Nov. 19 at the Woodlands Inn & Resort in Plains Township. Cost is $30. The symposium will feature experts from the Fort Worth area, which witnessed during the past two decades a historical revolution as the oil and gas industry figured out how to tap gas stores under urban centers.

“The energy companies are used to operating out in rural areas where there’s nothing to bother but some cows and horses and whatnot,” said Will Brackett, the managing editor of the weekly Powell Barnett Shale Newsletter. With people came environmental concerns, landowners organizing to leverage better offers and opposition from those left out of the Barnett Shale windfall.

John Baen, a real estate professor at the University of North Texas, said he’s in a unique position to comment on the Marcellus because he used to fish in the Susquehanna River growing up as a boy, but also watched 9,000 wells be drilled in five Texas counties within seven years. “We had a lot of people who said, ‘Not in my back yard,’ then we had a lot of people who said, ‘Well maybe,’ and people who said, ‘Drill every square foot,’” he said.

Brackett noted that people who hadn’t finished high school were landing $50,000-per-year jobs, making it difficult for other industries to keep workers. As the companies struck more and more hydrocarbon gold, they offered leases to ever more landowners, who began organizing and using the Internet to publicize offers. Bidding wars erupted, with offers at $25,000 per acre and 25-percent royalties on production. “It got to be, I’d have to say, surreal around here,” he said. “Last year, if you went to a party, everyone was talking about the Barnett Shale.”

One of the most important steps to expanding exploitation of the shale is placating objectors, Baen said.

“I have a theory that everyone should be a stakeholder, and everybody should win,” he said. “It might take some pretty big changes in some of your laws up there to have everybody benefit.”

He noted that Texas has no state income tax, but that every mineral-rights owner pays a severance tax that has left the state with an $11-billion overabundance.

Both Brackett and Baen agree Pennsylvania and its citizens stand to benefit extensively from the advances made in Fort Worth in recent years, but only if the state refocuses its mineral-rights policies from coal to gas and oil.

“I’m calling it the Jewel of the Northeast,” Baen said, but “will it be allowed to be developed? And it may not.”

If the state legislature doesn’t act quickly, he predicted the economic benefit could be delayed up to five years.

Copyright: Times Leader