Northeast ONG - April 2018

PO BOX 1001 YOUNGWOOD, PA 15697

VOLUME 8 ISSUE 2

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An Interview with Governor Wolf’s Administration HEALTH & SAFETY PG. 16

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Northeast ONG

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Volume 8 Issue 2

Each weekday Marcellus Drilling News (MDN) locates and shares news, along with a healthy sprinkling of commentary, covering the Marcellus and Utica Shale region. Over 50,000 people read MDN each month, making it an excellent barometer to inform ONG Marketplace readers which topics generated the most interest for those who work in the oil, natural gas and associated industries. Below is a summary of the top 5 stories that were most-read over the past 30 days on MDN. #1 Most Read: XTO Energy Utica Well Explosion in Belmont County – 100 Evacuated (Feb. 20) On Feb. 15th, XTO Energy was drilling a fourth Utica Shale well on the Schnegg well pad near Captina Creek (York Township, Belmont County, OH) when they “lost control” of the well and it exploded and caught fire.

There were 24 people working at the well pad at the time. Fortunately, none of them were injured. Following the explosion and fire, 36 nearby homes and farms (around 100 people) were evacuated. Nearly a week later the evacuees had not been allowed to return. XTO put them up at nearby hotels in St. Clairsville, Moundsville and Wheeling. Crews worked to try and keep the brine gushing from the well from reaching Captina Creek. XTO hired Wild Well Control to put out the fire (which happened quickly). XTO also hired Cudd Energy Services to cap the well. Three wells on the pad that were producing have been shut down for the time being. This post included the chronology of the explosion and aftermath, as it happened. To read the full story, visit: https://goo.gl/3iopbc. [In a postscript, the well was finally capped 20 days after the explosion. XTO and authorities are still attempting to determine why it exploded in the first place.] #2 Most Read: PA Marcellus Production Shifting from NE to SW PA (Mar. 9) Every now and again it’s good to step back and look at the macro shale trends in a given state. Pennsylvania is the largest shale gas producing state in the country, so it’s good to take stock of what’s happening in PA. The Pittsburgh Business Times has done some excellent analysis of gas production in PA, based on reports from the Dept. of Environmental Protection. The PBT analysis shows that regionally, production of shale gas in PA over the past four years (2014-2017) has gone up in both regions. However, it’s gone up more, and faster, in southwestern PA than in northeastern PA. Why? More pipeline infrastructure is available or has come online in southwestern PA over that period, while northeastern PA remains pipeline starved. To read more about the shifting production dynamics in the Keystone State, visit: https://goo.gl/3vS7tv. #3 Most Read: EQT CEO Steve Schlotterbeck Suddenly Quits, Leaves Company (Mar. 16) We certainly didn’t see this one coming. The country’s #1 producer of natural gas, EQT, has just lost it’s President & CEO, Steven Schlotterbeck. Steve is the man who guided the company through its acquisition of Rice Energy last year. It was a tough battle against multiple corporate raiders who didn’t want to see the deal happen, but Steve held it together and made it happen. The notice from EQT (in this post) is short and sweet and says Steve has resigned immediately, due to “personal reasons.” Stepping back in to pilot the ship while the company searches for a new leader is former CEO David Porges (CEO from 2011-2017 until Steve took over). The news of Schlotterbeck’s surprise resignation came as a shock around Pittsburgh (and nationwide).

Why did he step down? MDN had the scoop before anyone else. We told readers it was a pay dispute--the board didn't want to pay Steve what he thought he was worth. You can read the details here: https://goo.gl/pnuHtK.

Page 3 #4 Most Read: Top 3 Most Productive Drillers in the Marcellus Shale (Mar. 8) We spotted an intriguing story that summarizes some of the information found in a newly-released report from private equity firm Baird Equity Research. Baird’s report purports to show, using data, “the most productive operators in the Marcellus shale.” What criteria is used? Baird uses productivity per average well along with how much money the average well is generating for the operator. We wish we had a copy of the full report. Sadly, we do not. However, we do have an article summarizing it, which shares the top three operators. The top operator stands head and shoulders above the rest. Would it surprise you to learn the top operator in the Marcellus, according to Baird, is Cabot Oil & Gas? No, it didn’t surprise us. What about the other two in the top three? And what about the top Utica operator? Read on here: https://goo.gl/VJK2My. #5 Most Read: Cabot Files for Permit to Drill Below the Utica in Ashland, OH (Mar. 16) Cabot Oil & Gas continues its quest to discover “what’s next after the Marcellus.” As we told you in December, Cabot has leased acreage in Ashland County, OH, west of most active Utica drilling. We originally thought Cabot was targeting the Utica in Ashland County, but Cabot director of external affairs, George Stark, set us straight. Cabot is targeting a layer *below* the Utica in Ashland County. (Although so far, Cabot will not reveal which layer.) The new news is that last week Cabot filed for a permit with the Ohio Dept. of Natural Resources to drill a test well in Ashland, which predictably has anti-fossil fuelers apoplectic. Read about Cabot's first permit to drill in Ashland County here: https://goo.gl/S7AaAN. Sign up to receive MDN's daily headlines email here: MarcellusDrilling. com/email-alert

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Northeast ONG

ASSOCIATION MEETINGS ADDC Region II Meeting | April 26-28, 2018 Gaylord, MI - www.addc.org

WVONGA Spring Meeting | May 1-2, 2018 Wheeling, WV - www.wvonga.com TOGA Annual Convention | May 7-8, 2018 Gatlinburg, TN - www.tennoil.com

ADDC Region I Meeting | May 17–19, 2018 Findlay, OH - www.addc.org

ADVERTISE TODAY KOGA Annual Meeting | June 12, 2018 Louisville, KY - www.kyoilgas.org

ARTICLES

ADVERTISER INDEX

MARCELLUS DRILLING NEWS............................. 3

ALBERTA RIG MATS............................................ 10 ALPINE ELECTRIC............................................... 14 AUDUBON............................................................ 11 BEG...................................................................... 21 CST INDUSTRIES................................................ 17 DREAM SLEEP..................................................... 11 ENERCORPS SAND SOLUTIONS.......................... 7 ERNST SEED.......................................................... 3 GREEN MOUNTAIN CONSTRUCTION................ 11 GUTTMAN.............................................................. 2 LEE REGER BUILDS............................................ 14 LEE SUPPLY......................................................... 19 MCCLUSKEY........................................................ 14 MID-ATLANTIC STORAGE.................................. 14 NORTH AMERICAN FIELD SERVICES................ 14 O'DONNELL CONSULTING.................................. 11 SIERRA DUST CONTROL...................................... 1 SUNNYSIDE SUPPLY........................................... 11 STEELNATION..................................................... 11 TOTAL SAFETY...................................................... 4 TD CONNECTIONS.............................................. 23 WEAVERTOWN ENVIRONMENTAL.................... 14

PIPELINE NEWS: Turning Pipe into Pipeline....... 6-7 INDUSTRY INSIGHT: Tri-State Shale Coalition Agreement Extended.............................................. 8 NEWS FROM STEPS............................................. 9 INDUSTRY INSIGHT: Weld Defects and Failures: Quantifying Fitness for Service............................. 12 HEALTH & SAFETY: The “Art” of Staying Safe: Effective Leadership............................................. 16 INDUSTRY INSIGHT: Wartime Consigliere.......... 18 SHALE CRESCENT NEWS: The World Has Changed! Are YOU Ready?............................... 20-21 PENNSYLVANIA NEWS: An interview with Governor Wolf’s Administration – Regulatory Reform, Permitting, Fee/Taxes....................................... 22-23

CALENDARS ASSOCIATION MEETINGS.................................... 4 NETWORKING EVENTS...................................... 14 TRAINING & WORKSHOPS................................ 19 UPCOMING EVENTS........................................... 10

EVENTS COATING AND CORROSION EXPO...................... 9 DUG EAST............................................................ 24 EGCR.................................................................... 15 OHIO VALLEY OIL AND GAS EXPO..................... 5 NACMF................................................................... 8 NORTHEAST PETROCHEMICAL......................... 17 MMDC.................................................................. 13

INFO@ONGMARKETPLACE.COM

CONTACT US FOR ADVERTISING, INFORMATION OR MAILING LIST CHANGES:

The Northeast ONG Marketplace PO Box 1001 • Youngwood, PA 15697 724-787-4451 E-mail: info@ongmarketplace.com

The opinions expressed in the Northeast ONG Marketplace are those of the authors and not necessarily those of the Northeast ONG Marketplace or its advertisers. Any warranties or representations made in the advertisements or articles are the responsibility of the specific contributor and not The Northeast ONG Marketplace. The Northeast ONG Marketplace will not be liable for any misprint in advertising copy which is not the fault of The Northeast ONG Marketplace. If a misprint should occur, the limits of our liability will be the amount charged for the advertisement.

Volume 8 Issue 2

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Northeast ONG

PIPELINE NEWS

TURNING PIPE INTO PIPELINE By: Ray Keller, National Sales Manager, Pipeline Division, BEG Group, LLC Q: SO HOW DOES PIPE BECOME A PIPELINE? A:

40' AT A TIME

Construction of a pipeline of any diameter and length is a very complex process.

We will skip all the need issues, what determines the need for a pipeline from point A to point B, and regulatory and permitting process and get right to the nuts and bolts of construction practices and methods. To anyone who is familiar with all the complicated issues, I defer you to next month’s article in which I will concentrate on some of the more sophisticated pieces of equipment unique to the industry. Building a pipeline can be very easily explained by making an analogy to perhaps a forgotten winter song that starts "Over the river and through the woods to Grandmothers house we go!!" Yes pipelines go under the rivers, railroad tracks, roads, through the rock and wet areas, over the mountains, and eventually get the product from point A to point B. Now there are many types of pipelines, perhaps more than one would realize.

Sewage pipelines, water pipelines, drainage pipelines, even pipelines that carry several different products at the same time, a process called "batching". For the sake of our discussion here we will consider only those that carry energy i.e. natural gas, oil, and other energy related liquids and gasses. These pipelines are the truckers of the energy industry. They are basically transportation modems whereby the truck stays in one place and the liquids and gasses moves on through. Come to think of it, the construction of a pipeline is the same. The building of a pipeline is an assembly line whereby the product (the pipeline) remains in place and the assembly line moves. Not quite the same as one would view the production of automobiles.

The pipeline assembly line is a group of machines and man power that moves along from location to location, one joint to the next, as the pipeline is built. And in as much as most pipe comes in 40' lengths or "joints", no matter what the diameter, that's how we arrive at the answer to our question. All pipelines involved in oil and gas transmission are made of cold rolled steel in different diameters and thicknesses depending upon how much energy is to be transported. Size ranges go from 8" to not usually over 48". Although a prime exception is the Russian 56" dual pipeline that stretches some 1.500 miles from Siberia to Western Europe constructed in the early 1970"s. It furnishes 80% of the energy used by Europe and the former Soviet Union block countries. It is also a very important political tool the Russians ruthlessly use to get their way in many international venues. All they have to do is threaten to shut off the flow in the dead of winter (and have done so) and countries usually give way. But I'm getting sidetracked. So, do the math. 1,500 miles X 2, 40' at a time. The individual sections require a very precise weld every 40' and, depending upon the thickness of the "wall", pipe may require over 50 lbs. of welding rod to make one complete weld. Pretty amazing? You bet. And another thing to keep in mind when thinking about construction techniques. There is no such thing as a straight pipeline. We will address that issue shortly.

PRE-CONSTRUCTION Once the route is determined, points A & B, a continuous path of land or Right of Way (ROW) must be acquired by the owner of the route. A piece of property must be fully acquired considering all environmental concerns and landowner rights approximately 100' wide and perhaps 100 miles long. Existing pipeline corridors are often used to minimize the cost of new land and more importantly, reduce overall environmental impact. Impact studies are done on public lands and private landowners are paid fairly for their property. Permits are obtained for any different

number of needs, including but not limited to, temporary access roads, stream and river crossings, and railroad/ highway crossings are obtained. Crossings of existing pipelines follow the rule that the new pipeline must go under any existing pipelines it crosses.

CONSTRUCTION PROGRESSION The assembly line begins. Clearing and preparing the ROW for installation is first out. Trees that must be removed are recycled for other uses. Topsoil is stripped and stored so it can be replaced upon completion of construction. Rock must be removed, sometimes by blasting. Trenching can then begin. The trench size is determined and then padded on the bottom to give the new pipeline a soft bed in which to lay. Streams and river crossing areas are protected to eliminate erosion, and then are drilled under to minimize disruption.

Next, the pipe is laid near the ditch in 40' sections. Each joint is numbered and identified for future reference. This process is commonly called “stringing". As we stated earlier, there is no such thing as a straight pipeline. Joints must be engineered to be bent by a very specialized crew using highly sophisticated equipment. There are side bends, over bends, sag bends, and combination bends made where needed.

In areas where the bends are too severe pre-made fittings are put in place.

Now the welding of the individual joints can begin. Welding can be done manually, a highly skilled practice called stick welding, or if the line is long enough specialized equipment is used to mechanically weld the joints together. No matter which process is used, every weld must be inspected not only visually but by X-Ray or other highly reliable means. If the weld passes, it is documented. If it is flawed, repairs must be made and re-inspected. Each weld is numbered and a permanent record is kept on file.

All pipe has a protective coating on it to prevent corrosion while in the ground.

Because the welding process generates heat that may compromise that coating each joint has a "cutback" of approximately 6" on either end that once the weld is completed, must be cleaned, and coating applied so there is a continuous layer of protection on the entire length of the line. Each coated weld joint is electronically tested to insure there are no voids in the coating. These voids or "holidays" if found are patched and retested.

The lowering in and tie in crews are next. The pipe is picked up with machinery called side booms working in tandem and the pipe is gently lowered in to the padded ditch. In areas where pre-installed sections were made at road crossings, stream crossings etc., a final weld called a "tie in weld" is made to make the pipeline one complete unit.

At this point back-filling can begin using rock free screened back fill material originally taken from the ditching operation or where necessary, soft sand or other appropriate material. The original topsoil is then used to top off the operation and the whole ROW is graded to its' original slope and contour.

There are many safeguards taken during the construction process to insure the integrity of the pipeline. One of the last phases of the construction process is to install a system of electrodes and anodes to the pipeline to insure it will not be subject to electrolysis. This system is called cathodic protection and is monitored and maintained throughout the entire life of the pipeline.

One of the final phases of construction is testing of the pipeline to insure its' integrity along the entire length. This process is called hydrostatic testing. Think of the plumbing system in your house. Your plumber fills your lines with water and increases the pressure which is monitored by gauges. If the gauges hold, the

Volume 8 Issue 2 system has no leaks and is certified by the plumber. The exact same process is used in hydrostatic testing except on a much larger scale. Tests are held for 24 hours at a pressure equal to 105% of the bursting strength of the pipe. Once the test has been certified, the test water is filtered, the line is dewatered and dried, and the water is discharged to the source from which it was taken.

Before the line is put into service, the ROW is completely restored and landscaped a process termed "Clean Up". The pipeline can now begin to deliver product from Point A to Point B. This is a rather simple overview of what goes into building a pipeline. The engineering and construction techniques have been developed and proven over a period of many decades and are constantly being fine-tuned.

Pipelines are not without flaws but are by far the safest and most efficient way of transporting our nation’s energy from where it is to where it needs to go.

PROJECTS UPDATE Project update from last month Nexus Pipeline 255 miles 36" OH Pushed from Spring to Fall Start MOUNTAINEER EXPRESS 177 miles 36" WV Work started on schedule WILLIAMS TRANSCO CONSTITUTION P/L 126 miles 36" PA & NY A court ruling over riding NY States' ability to withhold water permit could fast track this project PENN EAST PIPELINE 126 miles various diameters PA & NJ No change Howard Gathering System 10 miles 8" & 16" PA Precision P/L Still on track for April Start TRI COUNTY BARE STEEL PROJECT 12 miles 20" PA No change BATTLE RUN DISCHARGE 12 miles 24" PA No change ACCESS NORTHEAST 96 miles 24" 30" 42" PA & NY No change BIRDSBORO PIPELINE PROJECT DTE MIDSTREAM 14 miles 16" PA Awarded: Infrasource ATLANTIC COAST PIPELINE 580 miles 42" 36" & 20" WV VA NC No change DOMINION TRANSMISSION 39 miles 30" & 36"PA & WV No change EQT NEXT ERA P/L 303 miles 42" WV VA No change MARK WEST ENERGY 28 miles 20" No change WILLIAMS/TRANSCO 35 miles 42" 26" No change NEW PROJECTS OUT FOR BID

Page 7 WILLIAMS MIDSTREAM 8 MILES 24" Triadelphia OH June 2018 start Contractor TBD RH ENERGY TRANSMISSION 28.3 MILES 12" Erie County PA to Ashtabula OH July 18 start Contractor TBD WILLIAMS/TRAMSCO 10 miles 42",3.2 miles 26" 22 miles 26" Lancaster PA to Middlesex NJ 12/18 award Contractor TBD TRANSCANADA 4 miles 30" 35 miles 36" Harrison, Doddridge, Wetzel Counties WV Award Ace Pipeline May/June start TRANSCANADA 3.5 miles 8" Morgan City MD April start Contractor TBD NATIONAL FUEL GAS 14 miles 12" McKean City PA May start Contractor TBD EQT 13.6 miles 16" Waynesburg PA May start Contractor TBD MARK WEST ENERGY 24.8 miles 20" Beech Bottom, WV to Hopedale OH Minnesota Ltd June start Piedmont Natural Gas 35 miles 30" Maxton NC June start Troy Construction Piedmont Natural Gas 3 miles 20" 2.5 miles 12" Nashville, Tennessee July start Contractor TBD Duke Energy 12 miles 30" Hamilton County OH Sept start Contractor TBD Duke Energy 7 miles 20" Fairfield County OH April Start Contractor TBD This is a list of major projects only. There are many more needing skilled and unskilled workers. If you have a skill you think might be useful to a contractor and are looking for hard work and a great wage, I would encourage you to contact one or more of the contractors mentioned here. They will be looking for help. Please remember you will be working under the DOT Safety and Drug Policy rules.

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INDUSTRY INSIGHT

TRI-STATE SHALE COALITION AGREEMENT EXTENDED By: Robert Johnson, President, ADKL LLC The Governors of Ohio, Pennsylvania, and West Virginia have announced the extension of the Tri-State Shale Coalition thru December 31st, 2021. The extension will continue for three more years after being initiated in 2015.

The goal of the coalition is to maximize growth in the shale gas region and collaborate on areas critical to the success of the growing industry. The three neighboring states within the Appalachian Basin will continue to discuss new business marketing efforts, workforce development programs, infrastructure expansion, and academic research collaboration.

and the need for the three states to collaborate in regional economic development.

Progress has been made on workforce training, research, infrastructure and marketing. The three states have been successfully collaborating on the above initiatives since formation of the Tri-State Shale Coalition in 2015.

For additional information on how you can support the petrochemical industry please contact me at rjohnson@adkl.org Robert Johnson President, ADKL LLC www.adkl.org

Since entering the agreement in 2015, Ohio’s horizontal shale wells produced an average of 19.2 million barrels of oil and 1.36 trillion cubic feet of natural gas – an increase of 275.5 percent and 619.4 percent, respectively, from the three-year average preceding the agreement. Production of natural gas has increased each consecutive year since 2014.

Recent studies including Team Pennsylvania’s IHS Markit Report describe the economic significance of shale development including four proposed ethane cracker facilities in addition to the Shell cracker facility currently under construction in Monaca, PA. Other studies demonstrate the potential of shale gas development

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Volume 8 Issue 2

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NEWS FROM STEPS 301 Injury and Illness Incident Report electronically. Employers in designated industries, with 20-249 employees, are required to electronically submit their OSHA Form 300A Summary of Work-Related Injuries and Illnesses. Those industries that fall within this second category can be found HERE. Examples of such employers include: agriculture, forestry, fishing and hunting (NAICS code 11); Utilities (NAICS code 22); Construction (NAICS Code 23); Manufacturing (NAICS codes 31-33); and Wholesale Trade (NAICS code 42).

Two groups of employers, those with 10 or fewer employees and those who are in certain low-hazard industries are exempt from recordkeeping. The listing of partially exempt industries can be found HERE. Please note that the exemption from recordkeeping does not exempt these industries from reporting workplace fatalities, in-patient hospitalizations (not all must be reported), amputations, and eye losses. Please also note that OSHA counts all employees an establishment employed during each calendar year to determine the number of employees for purposes of these rules and their exceptions.

Recordkeeping Snafus: Tips to Keep You Out of the Weeds As of the week of February 12, 2018 , OSHA received about 214,000 electronically submitted 300A forms from 70,000 employers. Of those, some 20 to 30 percent were from establishments not required to submit them electronically. It seems a review of which employers are required to submit 300A forms electronically is in order.

Establishments with 250 or more employees are required to electronically submit their OSHA Form 300A Summary of Work-Related Injuries and Illnesses, OSHA Form 300 Log of Work-Related Injuries and Illnesses, and OSHA Form

This information was given by Adams and Reese LLP a multidisciplinary law firm with attorneys and advisors strategically located throughout the southern United States and Washington, DC. For information on National STEPS or a local STEPS Network near you please contact Joe Greco at joe@greco.tc

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Northeast ONG

UPCOMING EVENTS APRIL 9-10

MAY 3

OGIS New York

NGA Regional Market Trends Forum

New York, NY | www.ipaa.org

Hartford, CT | www.northeastgas.org

10-11

7

National Fluids Conference & Exhibition

Energy Capital Conference

Houston, TX | www.aade.org

Dallas, TX | www.hartenergyconferences.com

11

17

Coating and Corrosion Expo

IADC Drilling Onshore Conference & Exhibition

Weston, WV | newsletter@wvcacn.org

Houston, TX | www.iadc.org

12 Michigan Petroleum Conference Acme, MI | www.michiganoilandgas.org

16-17 WVMA Marcellus and Manufacturing Development Conference Morgantown, WV | mmdc.wvma.com

JUNE 11-13 Northeast LDC Gas Forum Boston, MA | www.ldcgasforums.com

24-25 Ohio Valley Regional Oil and Gas Expo St. Clairsville, OH | www.ohiovalleyoilgasexpo.com

19-21 DUG East Pittsburgh, PA | www.hartenergyconferences.com

25-27 PESA Annual Meeting Greensboro, GA | www.pesa.org

25-27 IPAA Midyear Meeting Houston, TX | www.ipaa.org

30-3 Offshore Technology Conference Houston, TX | www.otcnet.org

JULY 23-25 URTeC Unconventional Resources Technology Conference Houston, TX | www.urtec.org

Denotes National Event

Visit our website for links to these events

WWW.ONGMARKETPLACE.COM/EVENTS

Volume 8 Issue 2

Page 11

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Northeast ONG

INDUSTRY INSIGHT

WELD DEFECTS AND FAILURES: QUANTIFYING FITNESS FOR SERVICE By: Dr. William J. O’Donnell How finite element mathematical simulations can mitigate risk Fatigue resulting from chronological age and corrosion is a critical factor in the management of aging plants. Without proper remediation, fatigue can become a significant contributor to the loss of containment and other failures that precede major safety incidents. This article shares insight about managing risk specific to weld failures.

The predictive power of finite element mathematical simulations can often prevent the loss of millions of dollars in downtime, industrial catastrophes, injuries, and loss of life.

Cyclical Stress Factors In materials science, fatigue refers to failure that results from cyclical stress.

Most often, such failures manifest themselves in some form of mechanical or thermal fatigue, often as a result of vibration, loading and unloading, or repetitive fluctuations in temperature. These failures are often blamed on the designer or fabricator, when the real cause is transient operating conditions. For instance, operators often increase applied loads and temperatures in an eff ort to increase productivity; as a result, they inadvertently push the limits of fatigue damage and increase the risk of failures.

As a point of reference, it is estimated that fatigue contributes up to approximately 90% of all mechanical service failures. An increasing demand for high performance industrial systems has exacerbated the likelihood of structural fatigue.

Fatigue as the Cause of Weld Failures Weld failures present one of the most serious financial, safety, and reputational threats across many sectors including: chemical, petrochemical, aerospace, automotive, construction, and energy. Any component that exceeds its fatigue or endurance level can trigger a weld failure. Weld failures can occur suddenly, causing catastrophic failures that could have been avoided by prior inspections and repair. The nuclear industry was the impetus to develop Fitness-for-Service (FFS) practices. In particular, the ability to quantify the tolerance of weld defects played a key role in validating the safety of nuclear vessels. Outside of chemical and nuclear, however, few industries are well versed on the availability and exactness of FFS procedures. As a result, many companies fail to verify fatigue tolerance and safety margins before making the costly decision to replace components that exhibit surface damage.

By employing FFS measures, many companies could have the capacity to design and safely implement repairs to restore fatigue and fracture-safety margins, even given an operational environment of cyclical stresses. Making an informed decision to repair or replace the compromised component requires a multi-faceted investigation that yields quantifiable results. Companies often opt for metallurgical analyses to evaluate and act in response to weld cracks. Metallurgical analyses are limited, however, and unlikely to address fatigue or fracture analyses. Without quantifying a component’s integrity, decision makers are left to select a path of action based on an incomplete picture. Only in the presence of reliable data can the decision to extend life be made with confidence.

The Predictive Power of Mathematical Simulations and Fatigue Evaluations Modern materials science and mathematical simulations provide the most robust method of evaluating FFS. Finite element analysis is a process that integrates

engineering principles and mathematical physics. As the name implies, finite element analysis divides the entirety of a complex structure into multiple and precise elements. This exercise identifies what occurs under various conditions of cyclical stress and allows for accurate predictions about future cracking. Finite element simulations are able to quantify stresses; this is true even in the case of increased operating loads and the reduction in brittle and ductile fracture margins that can arise from higher applied static and dynamic loads.

Simulations are also useful in quantifying the reduction in fatigue life due to an increased number of operating cycles, as well as the relationship between failure causation and aggressive operating conditions. Also of importance, finite element simulations can confirm whether stress limits meet industry Codes and Standards.

When Is Fitness-for-Service the Right Choice?

Two circumstances often prevent companies from engaging an expert to conduct an FFS evaluation. First, many companies are unaware of the value of finite element analysis in identifying and resolving fatigue-related failures. Secondly, because fatigue failures can occur as a result of unexpected cyclical stresses rather than an anticipated source of stress, the existence of fatigue damage is often overlooked.

Specific to weld failures, FFS evaluations can demonstrate the structural integrity of tanks, vessels, and other process equipment. The acquired data empirically supports the decision to run, repair, or replace the component in question. At times, companies assume that weld repairs are not an option, so they replace damaged components. In many cases, however, repairs are feasible. The critical decision to repair or replace an in-service component can be guided by finite element analysis.

In general, FFS investigations are well-suited when companies need to quantify and predict continued service: the residual life of an in-service component; safe operation beyond the original design life; tolerance to defects; and the impact of an outage or shutdown.

Capturing the Value of FFS Most companies are stretched to the limit to increase production, decrease costs, and ensure safety. Unfortunately, fatigue failures are all too common, and they work in direct opposition to a company’s objectives. Decision makers can more confidently mitigate the risk and expense of failures when they can reliably assess their options. FFS evaluations can quantify and demonstrate the ability to extend service life and avoid the costly process of replacement. FFS evaluations often reduce maintenance and operating costs as well, which is one more benefit companies can glean in today’s competitive marketplace.

About the Author Dr. William J. O’Donnell is founder of O’Donnell Consulting Engineers, Inc. a firm that provides failure causation evaluations in state, federal, and international courts. In addition to materials testing for metallurgical failure analyses, the firm uses finite element simulations and materials to quantify engineering failure causations. Dr. O’Donnell is active in Codes and Standards in the areas of fatigue and fractures; he has published more than 100 technical papers related to stress analysis methods, elevated temperature design, and corrosion fatigue life. He can be reached at 412-835-5007 or by email at wjo@odonnellconsulting.com. More information is available at www.odonnellconsulting.com.

Volume 8 Issue 2

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NETWORKING EVENTS April 10 SPE Poster & Pints Carnegie, PA | www.connect.spe.org/pittsburgh/home April 17 APA Speaker Dinner Canonsburg, PA | www.appalachianpipeliners.org April 24 OVOGA Golf Outing St. Clairsville, OH | 740-695-2263 May 1-2 Junior Achievement Energy Invitational Golf Outing Centerville, PA | www.jawesternpa.org May 15 SPE Section Meeting TBD | www.abgpa.org May 15 ABGPA Midstream Speaker Luncheon Canonsburg, PA | www.abgpa.org May 24 YPE Pittsburgh Clay Shoot Dilliner, PA | www.ypepittsburgh.org

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Volume 8 Issue 2

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Northeast ONG

HEALTH & SAFETY

THE “ART” OF STAYING SAFE: EFFECTIVE LEADERSHIP By: Tony Calderelli, Crawford Custom Consulting A 1500-pound wrecking ball rolls almost a mile down the main street of a county seat in western Pennsylvania. Although there were no serious injuries, there certainly could've been, and there was a lot of property damage. An oil field hand receives life-threatening and life altering injuries when working in a location where the company's written operational standards, that he had been trained in, were not being followed. How did this happen?

Warren Bennis said: “The most dangerous leadership myth is that leaders are bornthat there is a genetic factor to leadership. That's nonsense; in fact, the opposite is true. Leaders are made rather than born.” That failing to understand how good leaders are made (and failing to develop them) is “dangerous” seems overstated. It is not In the past few decades the science of keeping workers safe has made tremendous progress. Virtually every company in Oil & Gas has dedicated safety professionals, well written safety standards, proper safety equipment, and deliver in some form, safety training. So why is there still accidents and incidents, injuries and fatalities?

The Science of safety has clearly progressed in gas and oil. Whether or not the “Art” of keeping people safe has progressed depends. The following was part of a job description / position announcement for an entry level safety officer at an operation in western PA: “- Ensure compliance with Local, State and Federal safety & health regulations.”

“- Ensure that OSHA guidelines are met and all documentation is prepared and stored for the required timeframe.”

An “entry level” safety professional can certainly take charge of safety documents, but can he or she ensure that OSHA guidelines are met or ensure compliance with anything? This person could potentially write and train employees on company policies, that if followed would ensure regulatory compliance and thus a safe work place, but only leaders can ensure safety (and all other) standards are actually being followed. The “Art” of keeping people safe, is the Art of Leadership.

We do lots of training in Oil & Gas. We do technical training, and safety training, and compliance training and etc. We train our employees in every facet of their jobs. However, if the job is leading other people we often dismiss the need to develop leaders for some reason. Without leaders with the ability to enforce the standards the employees learn in training, we are missing a huge piece of the safety puzzle. The safety puzzle only has three main pieces, and it isn’t really a puzzle, it’s a three-legged stool. Those three legs are “Write The Standards,” “Train The Standards” and Enforce The Standards.

As with any three-legged stool, if one leg is removed it all comes crashing down. As mentioned above, the Oil and Gas Industry has made tremendous advances in the science of safety. Policies and Procedures (AKA “Standards”) developed by Safety Professionals are in place virtually everywhere. Nearly every organization has a program of Safety Training, particularly for Short Service Employees. But training supervisors in the art of leadership is not nearly as common. For some reason we think the skill set involved in leading others somehow instinctual. It is not.

“Leaders are made, they are not born.

They are made by hard effort, which is the price which all of us must pay to achieve any goal that is worthwhile.”

Coach Vince Lombardi I don’t know how many times I have heard from an oilfield supervisor that “my guys won’t do that.” This is particularly true when the “that” in question is a safety policy or procedure. My first thought is always, “but as a supervisor, it is your job to ensure that they do that.”

My second thought is always a question: “Did anyone give you any tools or information to help you enforce those standards?” The answer is often, “no.”

The best, most thoughtfully developed safety procedures and policies (standards) are useless if they are not followed. Unless following these standards is enforced by a leader, there is a good chance they may not be. Unless the hard effort is made by the industry to develop leaders, the leaders (particularly new leaders) may not have the skills and confidence to effectively enforce standards (safety standards or any standards).

Developing leaders in light of “The Great Crew Change” (the talent drain about to impact the Oil & Gas industry due to the retirement of large numbers of senior personnel) is especially crucial. In industry and work force development publications there are many examples of statements such as: “Shortage of new leaders is a hangover from last market downturn” – Bloomberg News “Given the thin leadership bench, many companies are turning to intensive training programs to replace what years of on-the-job experience previously provided.” - Lucas Group White Paper The Lucas Paper said it as well as it can be said. Unfortunately, many companies are NOT yet making the hard effort to develop leaders who can enforce the standards, policies and procedures that keep the workforce safe.

My colleagues at Crawford Custom Consulting are mainly “crane guys”. They do crane training, crane inspection, rigging testing and inspection; all that sort of thing. And they do it by the book (in the case of the Crane Certification Association of America, they helped write the book). When they train, they are thorough (I have been through their classes). They cover two of the three legs of our “safety stool”; having written standards and enforcing them.

Another service they provide is incident/accident investigation. What they often find is that a standard wasn’t followed. A crane doesn’t just magically tip over. It was being operated outside the standards set in the load chart.

A leader didn’t enforce standards. A wrecking ball doesn’t roll down main street all by its self. A leader didn’t enforce standards Until we give supervisors / leaders in the Oil and Gas Industry the skills to lead well and enforce safety standards effectively, we are not being as safe as we can be. Not by a long shot.

Volume 8 Issue 2

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Northeast ONG

INDUSTRY INSIGHT

WARTIME CONSIGLIERE By: Shayla Owens, Orion Strategies There is a small percentage of the population who has top-of-mind awareness supporting energy issues – and by far, these are individuals who are directly tied to the industry or have family in it. Then, there is a massive percentage of people who just want to live their lives and not think about how their homes are heated, how their lights turn on, or how the products in their lives are made.

And that leaves the opponents.

Some opponents can be dealt with peacefully – having legitimate issues that can be addressed. Yet, there are those whose mission it is to derail energy projects, who believe that they are always right and that natural gas and oil must stay in the ground. It is fair to say this last group is an extreme minority, and that not everyone who raises a question about the industry shares their agenda. But when these organizations and individuals emerge, they must be dealt with swiftly.

It is important to employ the right “consigliere” with experience in extinguishing fires and who is in a position to handle the unthinkable. For those who are not familiar with this term, a simple definition of a consigliere is a trusted and experienced advisor. This term was made famous in The Godfather, and is best displayed when longtime family lawyer, Tom Hagen, is passed over at one point because he is not a “wartime consigliere.”

Tom’s confusion with the news of his replacement is understandable. He had been loyal to the Corleone family, but his strengths and capabilities ended there. He did not have what it took to be Michael Corleone’s wartime advisor, mostly because of his background. He was not Sicilian, so this put him at a disadvantage when trying to outmaneuver the “five families” because he was unable to understand their culture and ways.

Even before war or an emergency situation arises, energy companies should have already recruited a communication firm that can serve as a wartime consigliere.

The right communication consigliere is a public relations firm who has extensive experience in developing messaging strategies for critical situations and will be an expert in the field. That is the consigliere every energy company needs.

Opposition Research The old adage, “know thine enemy” is essential to practice. When faced with opposition, it is not wise to assume that it is a haphazard organization of volunteers with oak tag signs. Opposition research into the organization, leaders, staff, funders and networks is necessary. The right strategic communications firm will be able to provide in-depth information about who and what the client is up against and whether the person asking questions at a township meeting was an inquisitive citizen just looking for answers or a plant sent to begin a much larger disruption down the road, like the first ant at a picnic.

Many opposition groups are extremely well funded. And their money often comes from sources funneled through various other groups to hide their patronage. These

funds then become difficult to track even through IRS Form 990 research, because instead of identifying direct donations, they often “share” employees, legal expertise, office space and many other resources. Further, spin-off groups are created on a micro-local level to create the appearance of genuine grassroots efforts, only to find that they are front groups for much larger organizations. Good opposition research can uncover this.

It is also important to not automatically assume that the opposition will be leftleaning or environmental in nature. They can also represent the interests of competing industries and energy sources – masquerading as citizen groups and victims. Having the ability to research these organizations is essential to know who the opposition is and how to respond.

Disqualifying and Disarming With opposition research in hand, motive becomes more apparent. That information can then be provided to local elected officials, stakeholders and the media to unveil the wizard(s) behind the curtain – dispelling the mythic appearance and show the real agendas and organizations behind the scenes. When motive, association and funding are realized, they each become part of the narrative – which undercuts the very arguments attempting to be made.

There are many ways to disqualify and disarm the opposition. Well placed news stories, social media campaigns and sometimes full-page newspaper ads can all be used. But there are other times when it is advantageous to not have the client’s fingerprints on the efforts. This course of action takes experience in working to bring all of the information to light for third-party accusations without creating backlash.

Tactics When the time comes, if it comes, decisions must be made quickly. A thorough response plan with budget must be established that entails realistic end goals and objectives. To reach those objectives, tactics should be determined based upon the following criteria in addition to the objectives: audience, geography, pressure points, message and vehicles.

What needs to be said and to whom does it need said? Those two questions will dictate answers to the above criteria. Once established, the communications firm will then look at a variety of options from forming third-party grassroots coalitions to a frontal assault of social media, newspaper ads, direct mail, television campaigns and other paid media.

Crisis Communication Not every wound is created by the opposition. Some are unfortunately selfinflicted. This is why every energy company needs a crisis communication plan and experienced communication staff to help with the successful navigation of responding to a crisis or urgent situation. Just like hiring an emergency response company to train employees for on-the-job emergencies, energy companies should have communication experts to handle the response of any issue that may become a critical public relations situation.

The way a company responds to an emergency or conflict can outlast or greatly surpass the severity of the situation itself. And because of that, even the smallest moves can define a company and establish an unwanted reputation that outweighs years of operational success.

Choosing a Consigliere The right communication firm will have the experience and expertise needed to adhere to a company’s public relations needs in times of emergency or war and

Volume 8 Issue 2 will know how to avoid mistakes that can be detrimental to a company’s reputation for many years to come. The firm should be knowledgeable of the industry, and it should also understand the culture of the local communities, the nature of the opposition groups, and the pinch-points that can affect operations.

It is important to understand that not every situation is a battle. Knowing the difference is what makes a “wartime consigliere” an important asset. The right firm will pay close attention to the big picture while not overlooking the small details that affect a client’s reputation - and by doing so, help keep a client’s central needs in focus toward success.

Shayla Owens is a public relations specialist with Orion Strategies, a strategic communications and public relations firm. She can be reached at sowens@orionstrategies.com

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Northeast ONG

SHALE CRESCENT NEWS

THE WORLD HAS CHANGED! ARE YOU READY? By: Greg Kozera, Shale Crescent USA New Study shows Region has a $3.6 Billion advantage over the Gulf Coast!

In February my wife, Lynnda, and I were at a conference in Baltimore, Maryland.

The theme was, “The Future”. What do Polaroid, Circuit City, Blockbuster, Borders, Pan-Am, Radio Shack, Compaq and Woolworth all have in common? They are all companies that have gone bankrupt. They could not adapt to change. John Chambers, Chairman and CEO of Cisco USA said, “If you don’t innovate fast, disrupt your industry, disrupt yourself, you’ll be left behind.” The internet and smart phone are changing our world. Amazon is disrupting the retail world. We are already seeing stores close because they can’t compete with online retailers. Today, technology has become the great disrupter.

Technology disrupted the oil and gas industry. The shales in the United States were known to contain abundant natural gas and oil. But the technology to extract it didn’t exist until recently. Hydraulic fracturing is an old technology that has been around for over 70 years. Horizontal drilling goes back to the 1960s. When the oil and gas industry figured out how to put these two technologies together effectively the United States went from energy crisis to the World’s leading oil and natural gas producer in less than 10 years. That was a major global disruption. Russia and OPEC lost much of their power and half of their oil revenues costing them billions of dollars.

In 2010 the Shale Crescent USA Region of eastern Ohio, western Pennsylvania and northern West Virginia produced about 3% of the USA’s natural gas. In 2017 that number was 30%. This Region now produces more natural gas than Texas. That is disruption. The Shale Crescent USA is where almost all of the growth of the USA’s gas supply has come from. The rest of the USA has only replaced the decline. The natural gas industry in the Shale Crescent USA region caused this disruption. The rest of the world and most of the United States still thinks Texas, Oklahoma and the Gulf Coast are where most of the growth in US natural gas supply is coming from. The Japanese were shocked to learn our Region produces more natural gas than Texas. The comment we heard the most was, “We had no idea.” Maybe most important what does this disruption mean to the local natural gas industry and the people of our Region?

Last week in Houston, Texas at the World Petrochemical Conference (WPC), Shale Crescent USA announced another potentially huge disruption. The World has changed again. This big change was announced to the World as part 45-minute panel discussion from the main stage in front of 1,300+ attendees from 40+ countries. We know about the Shale Crescent USA having a huge natural gas advantage and therefore feedstock advantage. A new Study by IHSMarkit, a highly respected global company, commissioned by Shale Crescent USA looked at what this advantage means to the petrochemical industry. The study, Benefits, Risks, and Estimated Project Cash Flows: Ethylene Project Located in the Shale Crescent USA versus the US Gulf Coast did a direct comparison between the two regions.

Representatives from Shell, Bechtel (who is constructing the Shale plant at Monaca) and Mountaineer Storage were also on the panel.

Volume 8 Issue 2

Page 21 average petrochemical salary is close to $100,000 a year. That sure beats installing solar panels for $25,000 a year. The people with these jobs will need housing, vehicles, consumer goods and services, financial planners and attorneys. They will spend money in nice restaurants, movie theaters and amusement parks. They will buy tickets for concerts and sporting events. They will raise families and kick start regional growth.

When we talk about new construction and expansion the questions about workforce always come up. Joe Thompson, Senior VP of Bechtel said in Houston that he was thrilled with the local workforce. “They are safe, productive and intelligent.” This doesn’t surprise those of us who grew up here in the Region. We have a history of manufacturing. My grandfather, uncles and cousins were all steelworkers. The modern petrochemical industry started here. The first cracker was built by Union Carbide at Clendenin, WV in the 1920s. We still have a lot of work to do to train our workforce for the coming growth. We can accomplish that. The training facilities are in place.

The Study says, a new petrochemical plant built in our Shale Crescent USA Region would have a 4 times greater cash flow and save $3.6 Billion over a 20-year period, compared to similar plant built on the Gulf Coast. The Shale Crescent USA is now most profitable region in the world for a petrochemical plant. For the past 75+ years the US Gulf Coast has been the most profitable region for a petrochemical plant.

This Study compares the financial returns and risks of a major petrochemical and plastics investment in our Region with an identical investment in the US Gulf Coast. The Study will help create an understanding of the basis for decisions like Shell Cracker in Monaca and the recent PTT- Daelim announcement. It will give local companies hard data they can use to justify expansion. It will give foreign companies like those in Japan the hard data they need to justify coming here and bringing high wage jobs for our people.

Because of the Study results, the Shale Crescent Team of Jerry James, Nathan Lord and me spent most of our time at WPC with key decision makers of our prospect companies. We had meaningful meetings with CEOs, company presidents, VPs, Directors and GMs. All of this happened because of the new technology that disrupted the oil and gas industry and allowed the natural gas industry to create world class wells through horizontal drilling and hydraulic fracturing. Shale Crescent USA (the organization) sponsored a special, invitation only lunch that resulted in 4 solid leads. All were foreign companies. One man was so excited that he said to me, “Can you send these slides to my boss TODAY.” What does this all mean to you and your company? The slide that got the most attention in Houston was our slide showing the location of the wells, gas processing facilities and plant locations. How many places in the world are there where raw materials, fuel, abundant water, petrochemical plants and their customers are all in the same place? The US Gulf coast is getting their fuel and feed stocks primarily from the Permian (which is 500 miles away) and the Shale Crescent USA. This is a significant cost to Gulf Coast petrochemical plants. Once they manufacture their pellets, 70% of the polyethylene converters are in our Region or within a short drive of it, requiring Gulf Coast pellets to be shipped here at a significant cost. The converters (companies that turn the pellets into products) are in our Region because they are close to 50% of the US and Canadian markets.

We are already seeing some expansions in manufacturing and petrochemicals. The Shell cracker is under construction. All of these expansions will increase demand for natural gas. The crackers will increase demand for natural gas liquids. (NGLs) What would a significantly increased local gas demand mean for our E&P companies? The gas here is literally underneath the plants! Could this create direct sales to end users of gas or shorter pipeline hauls? Gas will still need to be shipped out of the Region, but a mix of long haul pipelines with local sales that avoid a major transportation fee would help to improve profitability for the natural gas industry?

Outside of the natural gas industry thousands of high-wage construction and manufacturing jobs will be created. These are long term career oriented jobs. The

This increased local demand isn’t going to be a sprint, it is a marathon but at least we now have several miles behind us. We got a lot of positive media on the Study the week we were in Houston. We have been told that this news has a “very long tail”. We have begun to create awareness and people all over the world are interested. We have a lot of follow up work from WPC to do. The next big event for Shale Crescent USA is the West Virginia Manufacturers’ Association Conference on April 16th and 17th in Morgantown, WV. Ron Whitfield of IHSMarkit will present the Study results there to the people in this Region. It will be a great conference.

A disruption has been created. The world has changed again and we are in the middle of it. Are YOU ready? Thoughts to ponder. For more information including the Executive Summary you can check out www.shalecrescentusa.com © 2018 Learned Leadership LLC Greg Kozera is the Director of Marketing for Shale Crescent USA www.shalecrescentusa.com . He has over 40 years of experience in the energy industry. Greg is a leadership expert with a Masters in Environmental Engineering and the author of four books and numerous published articles, including numerous presentations, radio shows and TV.

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Northeast ONG

PENNSYLVANIA NEWS

AN INTERVIEW WITH GOVERNOR WOLF’S ADMINISTRATION – REGULATORY REFORM, PERMITTING, FEE/TAXES By: Teresa Irvin McCurdy, President of TD Connections, Inc. I believe to get from point A to point B you should take the shortest route. I use the same philosophy to get information, go directly to the source. I had the pleasure of speaking with Pennsylvania Governor Wolf ’s Secretary of Policy and Planning Sarah Galbally and Deputy Chief of Staff Rob Ghormoz.

Sarah obtained a B.A. in urban studies from the University of Pennsylvania and an M.P.A. from Villanova University where she later worked as a graduate student for the PA Intergovernmental Cooperation Authority focusing on municipal financial policy and as a mayor’s Intern for the City of Philadelphia which included the School District of Philadelphia. She has experience in the government and nonprofit sectors. Sarah served as Wolf ’s policy director for his campaign prior to joining his Administration in January 2015 as deputy secretary for policy and planning.

Rob was born and raised in Wilkes-Barre where he obtained a B.A. in Political Science from Penn State University. After college he was the Personal Aide to Senator Robert Casey, then went onto hold various roles in the Wolf campaign and Transition Committee before serving as the Special Assistant to Governor Wolf during the first year before taking on his current role.

So where does the Wolf Administration stand on issues affecting Oil and Gas? I asked them a series of questions to find out.

Teresa: Over the past 10+ years, the Dept. of Environmental Protection (DEP) has proposed regulations and general permits that some say it didn’t have the authority. This has led to the introduction of numerous regulatory reform bills in the General Assembly. The House State Government recently advanced three bills to address repealing regulations, a tracking system to track permits and other reform measures. Where does the Governor stand on regulatory reform, such as those moved from Committee? Does he support any of the regulatory reform bills?

Sarah: There are already measures established to address some of these concerns such as the Independent Regulatory Review (IRRC) process which is charged with overseeing the promulgating of regulations, provides public input and takes almost two years to move a proposed regulation to final. Additionally, the Governor has recently announced major permitting reforms and the Department of Environmental Protection has already made significant strides to improve the permit process. Therefore, the Governor does not feel the need to create an additional layer of bureaucracy that is not needed.

Teresa: The conventional gas industry’s regulations have been in limbo since Act 13. Subsequent law ordered DEP to bifurcate the regulations which it did by creating Chapter 78 for conventional and 78a for unconventional. Meanwhile, Senator Hutchinson introduced SB 1088 would require DEP to make changes to the conventional regulations based on provisions outlined in his bill rather than its present path. Where does the Governor stand on this issue?

Sarah: Senator Hutchinson’s bill seeks to reenact the 1984 Oil and Gas Act which was updated by Act 13, and in some places even roles back the requirements of that 30-year-old law. There has been a lot of work done on the draft regulations that are

needed to protect the environment and bring their operations up to meet current technology and best management practices. We would like to continue to work with the industry on a redraft of the regulations.

Teresa: There has been a long-standing problem with permit approvals going months and months past their due date. DEP has implemented an initiative referred to as the Pittsburgh 100 that has resulted some success by reducing some of the backlogs and getting more permits issued in a timely manner. What are the next steps in keep that success moving forward?

Sarah: Everyone wants certainty in the process. What we found is that there were areas where we could find faster ways to do things. For instance, some complex permits may have several boxes of paper. By moving to an electronic ePermitting system it will ensure that the permit is complete when filed which will also facilitate approving them faster. Our goal is to have all our permits moved into the ePermitting system by the end of the year. The different Bureaus of Oil and Gas, Radiation Protection, Information Technology, Air, Waste, Waterways & Wetlands, Abandoned Mines, Storage Tanks and Clean Water will be released on a quarterly basis.

Rob: The first ePermitting set was in Mining last year. The plan is to test a batch aggressively for a couple of months both internally and with stakeholders before they go live at the end of each quarter. In September is when a large amount of oil and gas permits will go live. However, in June there are a few that go live that affect oil and gas such as GP-5/5A which is when those GPs are expected to be published in the PA Bulletin.

Teresa: Since the final draft was presented at the AQTAC meeting in December 2017, the department has been still working on the Comment Response document while having some additional public comment. Will there be any surprises when the GP-5/5A gets released in June?

Rob: No real surprises since December’s AQTAC meeting. We have heard back from industry and received a lot of good feedback from folks about the changes the department made since the original draft.

Teresa: In working with industry on making changes to the original draft of the GP-5/5A, we do appreciate DEP working with us to make crucial changes. It was a testament that working together can end in a win-win for both sides. Another area industry would like to work with DEP is on how to address Legacy/abandoned wells. Since this issue affects conventional operators the most I know they would like to work with the Administration to be creative in solving the issue whether it be through legislation or through other funding mechanisms.

Sarah: We’re always willing to discuss issues with stakeholders to find a reasonable solution.

Teresa: With respect to the budget coming up, DEP is seeking fee increases department wide and the Governor is seeking a severance tax. Can you please explanation to our readers what cuts the department has taken and why there remains a need for both fee increases and a severance tax?

Sarah: DEP’s funding is extremely complicated because some of its budget is through the General Fund and other parts are through special funds, such as the Oil and Gas Fund. The Office of Oil and Gas is running a deficit of $600k per month even with decreasing the number employees from 226 to 190. Decreasing staff, such as permit reviewers, has a negative impact on the permit review time.

That is why DEP has proposed a permit fee increase from $5,000 to $12,500.

Volume 8 Issue 2

Page 23

Rob: It should be noted that in PA there is no annual fee, so the one-time well permit fee of $5,000 must also pay for years of inspection and follow up. In addition, the General Assembly has not appropriated the amount needed to adequately to fund the department. Here is a link to the White Paper the Governor released on this issue - https://bit.ly/2HYFM3Z Teresa: Although not new, I’ve heard from some in the regulated community that they are hesitant to reach out to Central Office, their Legislature or even the Administration for help in resolving a regional permitting issue due to being afraid of retaliation in that the reviewer or inspector may “crack down on them harder.” If someone knows of this to happen and can verify it, what would the administration do?

Sarah: We know DEP officials work hard every day to move permits forward that comply with laws and regulations and protect our environment, and this type of behavior is not one we’ve seen from state employees. Any form of retaliation is unacceptable and should be dealt with immediately. While we are unaware of any examples, we encourage anyone who believes they have experienced any form of retaliation to reach out and report it.

I want to thank both Sarah and Rob for taking precious time from their day to provide some insights into the Governor’s Administration.

If you have a problem and/or a solution, Teresa would love to hear from you by contacting her at 717-329-6402 or Teresa@TDConnections.com.

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Northeast ONG

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8

June 5 – 6

The world depends on energy, and energy professionals depend on us.

April 24 – 25

9

10

Dallas, TX

NEW IN 2018

Sept. 19 – 21

Dallas, TX

12

Oct. 22 – 23

Dallas, TX

Sept. 5 – 6

Pittsburgh, PA

11

May 7

Denver, CO

June 19 – 21

Midland, TX

5

San Antonio, TX

13

Nov. 5 – 7

Midland, TX

Nov. 13 – 15

Oklahoma City, OK