Natural gas impacts discussed

Some state representatives from around the Commonwealth got an idea of the tremendous impact the Marcellus Shale natural gas play has had on Bradford County during a public hearing in Ulster Thursday.

Meanwhile, a state Department of Environmental Protection (DEP) official urged the adoption of a severance tax on natural gas during the approximately three-hour proceeding, held at the Ulster-Sheshequin Fire Association Building.

"The Marcellus play has changed our lives," Anthony Ventello, executive director of the Progress Authority, based in Towanda, said at the public hearing of the House Republican Policy Committee co-chaired by state Rep. Tina Pickett (R-Bradford/Sullivan/Susquehanna).

After hearing Ventello's remarks, one of the several representatives attending, Rep. Dan Moul (R-Adams/Franklin), referenced the saying "make hay while the sun shines" in addressing Ventello.

"You're making hay," he told him.

Ventello told the panel that the natural gas industry dominates all local conversations and agendas.

"The gas field development obviously started with the leasing frenzy, which has escalated from $25 or less an acre to $5,700 to $8,000 an acre, and now we are hearing of some leases totaling $15,000 an acre," he said, reading from his written remarks. "In many leases, the leasing bonus payment exceeded actual land value." He said the leasing impact in the down economy provided much needed money to the region.

Bradford County, he said, leads the state of Pennsylvania in new job creation with 2,000 more people employed than one year ago. And he said, contrary to many peoples' belief, many local individuals are now being hired with the support of Penn College's Marcellus Shale Work Force Needs Assessment.

Another speaker, Brian Grove, director of corporate development for Chesapeake Energy's Eastern Division, made much of a recent headline that Bradford County leads the state in job growth.

"Let me say that again - 'Bradford County Leads State in Job Growth,'" he said. "While I have long been a loyal resident of the region and vocal proponent of its many great qualities and potential for positive growth, I might have lost a wager if you would have asked me if that headline was even possible five years ago." Early last year, he said, Chesapeake employed about 215 people in Pennsylvania. Since then, he said, that number has increased to more than 1,100 employees and continues to grow "every facet of our operation experiences expansion."

In addition, Ventello noted that the Progress Authority, in partnership with Penn College and Penn State University, has finalized a special study proposal which will build a model to measure the economic impacts of the industry.

"Much like Penn College's workforce model based on a drilling rig count variable, the Progress Authority model will rely on specific measures, such as permit activity, water utilization, productive wells, leasing activity, etc. to harness the economic impact," he said.

J. Scott Roberts, Deputy Secretary for Mineral Resources Management with DEP, said the agency is strengthening its regulations in response to the industry's anticipated growth.

"On May 17, the Environmental Quality Board approved proposed rules to strengthen our existing well construction standards," he said. "A properly cased and cemented well is critical to containing gas, oil and other fluids within the well bore and avoiding the sort of problems that happened in Dimock." He said the EQB also approved final rules requiring drilling companies to treat highly polluted drilling wastewater to drinking water quality if returning drilling wastewater to rivers and streams. He also noted the department hired 37 news staff members last year, and are in the process of hiring another 68 this year, which more than doubles its oil and gas staff since 2008.

But he said local and environmental impacts can be reduced, but cannot be eliminated.

"A severance tax is one way to ensure the benefits of gas production outweigh its costs," he said in advocating for such a tax. "Pennsylvania must join nearly every other gas-producing state and enact a reasonable severance tax as part of its development of the Marcellus Shale gas reserve." He said the DEP's new wastewater and well construction regulations and a severance tax on the extraction of natural gas "will give regulators and local governments the tools they need to protect our environment and our residents."

Also speaking on taxes, Ventello said, "if the resource is taxed, careful consideration must be given to the amount and revenue returned to the host counties, school districts and municipalities who bear the financial burdens of impacts to infrastructure and communities. The majority of funding should be invested locally. With uprise of drilling this spring, substantial damage to local roads was experienced well beyond any municipal budget; although gas companies are attempting to restore the roads via bonding and agreements, clarification of funding specifically targeted for road repair must be finalized."

Thomas W. Beauduy, deputy director and counsel for the Susquehanna River Basin Commission, also spoke to the panel. He noted that the organization regulates the withdrawal and consumptive use of water associated with natural gas development activity.

He said the commission is seeing a current level of use of less than 1 million gallons a day, and it estimates that use will gradually climb to 28 million gallons a day as the industry goes to full production mode. If it reaches that point, he said, the industry would then be using 10 billion gallons per year. To put that into perspective, he said, 10 billion gallons is what is withdrawn every three days in the basin to produce electricity. According to Beauduy, the commission has issued 111 surface water withdrawal approvals to the natural gas industry, and has also approved the use of 22 public water supply systems as a source for water.

According to Beauduy, the use can be accommodated, but it needs to be managed to avoid impacts.

He noted that commission is in the process of deploying a remote water quality monitoring network that will continuously measure and report certain water quality conditions of smaller rivers and streams in the Twin Tier watersheds where the Marcellus Shale activity is under way.

Others speaking included Kathryn Z. Klaber, president of the Marcellus Shale Coalition and Stephen Rhoads, director of external affairs for East Resources, Inc.

Pickett ended the hearing by urging those in the industry to "be good business partners, good business neighbors and we can all do well with this."

Eric Hrin can be reached at (570) 297-5251; e-mail: reviewtroy@thedailyreview.com.