Our team Editor Dan Burnett ReporterS Matt Hughes Ed Lewis Steve Mocarsky Photographers Bill Tarutis Clark Van Orden
Jason Riedmiller Aimee Dilger Pete G. Wilcox Matt Hughes Design Lindsey Jones Copy Editors Matt Hughes Anne Woelfel
on the cover: Dandy Mini Marts opened Northeastern Pennsylvania’s first public-access compressed natural gas fueling station in Towanda, Bradford County, in December. Story on Page 13. Photo by Bill Tarutis.
BY MATT HUGHES mhughes@timesleader.com TOWANDA – A chance conversation at a family gathering led to Chad Gorman’s first job in the natural gas industry and his return to the region where he grew up. Gorman, 35, was born and raised in Windsor, N.Y., about 40 minutes north of Montrose, but left the area after graduating from Roger Williams University with an environmental engi-
neering degree in 1996, unable to find a job in his field locally. Returning to the area from Florida for his father’s 60th birthday two years ago, Gorman found that had changed. “At that point it was probably about a year or two that the industry had been here, and a lot of friends were looking for job opportunities,” Gorman said. “It really See MEET, Page 11
bill tarutis/for the times leader
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aimee dilger/the times leader
Dry weather led to low river and creek levels last summer. In July, the Susquehanna was very low near Wilkes-Barre.
O
BY MATT HUGHES — mhughes@timesleader.com
n the heels of a long, hot and odd summer in the gas-drilling region of Northeastern Pennsylvania, the Susquehanna River Basin Commission has revised its rules for determining when companies can withdraw water from the river’s watershed to fracture natural gas wells. At its December meeting, the commission passed regulatory changes dictating how it determines when to suspend withdrawals when streams get low. SRBC spokeswoman Susan Obleski said the changes may reduce the number of suspensions in coming summers. Though there was never a drought, conditions last summer were dry enough to lead to lead the commission, which regulates withdrawals of water within the river’s basin, to suspend a higher than average number of water withdrawals in Northeastern Pennsylvania and Southern New York. “It’s a rollercoaster; it rains and a few days later the streamflow improves and the withdrawals can resume and then it’s dry
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again,” Obleski said in August. “So while people are saying, if conditions overall are normal why all these triggers, it’s because we have had these hot dry periods where these smaller streams are impacted.” Withdrawing rights Anyone has a right to withdraw surface water from the river and streams within the basin for free, but withdrawing water in large volumes or for use in natural gas drilling requires a permit from the commission. It can suspend a permitted withdrawal due to low water levels to protect the health of the stream and the plant and animal life within it. “Though conditions may look relatively normal on paper, the commission still suspended a peak number of 64 water withdrawals last summer, about twice the number it stopped the previous summer. The reason for those suspensions lies in the sporadic timing of rainfall this summer and in long periods of sustained, high temperatures, Obleski said. According to the new revisions to the
commission’s low flow protection policy, the commission will now use seasonally adjusted monthly stream flows, rather than annual averages, to determine when streamflows have dropped too low and trigger withdrawal suspensions. In general, the new guidelines are more protective, triggering at higher levels, in smaller streams and are less protective of larger streams. They also add protections for small “headwater” streams near the origin of streams. Environmentalists’ support The policy changes had the support of numerous environmental groups and state regulatory bodies, including the state Bureau of Forestry and Fish and Boat Commission, the Tioga County Conservation District and Trout Unlimited. Natural gas drilling company Range Resources also expressed its support through written comments, saying its See WATER, Page 6
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WATER Continued from Page 4
pete g. wilcox/ the times leader
Dry weather led to low river and creek levels last summer, as seen in this September photo of Solomon Creek in Wilkes-Barre.
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“water resource operations, plans and strategies are in line with the proposed changes.” Gas industry group Marcellus Shale Coalition and Chesapeake, the state’s most active drilling company, meanwhile expressed concerns about the changes. Marcellus Shale Coalition President Kathryn Z. Klaber in her comments to the commission called the proposed approach to low-flow conditions “unreasonable” and “overly conservative” and said they would preclude water withdrawals from 82 percent of the basin’s water. Chesapeake agreed with the commission that “monthly and seasonal flow recommendations have the potential to provide greater ecological benefits,” but said it did not support its approach to headwater protection. Low-stream flows and withdrawal suspensions can cut into the bottom line of companies providing water deliveries to natural gas drillers. Randy M. Wiernusz, owner of Sugar Hollow Water Services in Tunkhannock, has permits to withdraw water from the Susquehanna River and from Bowman Creek; he had both withdrawal permits suspended last summer due to low water levels. Wiernusz said he is able to fall back on income from his excavating and residential construction businesses when withdrawals are suspended or natural gas development slows down. “If the water’s low, we just push our other parts of our business a little bit harder,” he said. While it works as a side business, Wiernusz said he would never recommend making a business out of water delivery or services alone because of inherent instability. “To make a business out of having access to water… is not a good business to get into,” he said. “The fracking is too sporadic and the withdrawals can be suspended.”
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societal Effects of drilling become focus of study BY MATT HUGHES — mhughes@timesleader.com
WILKES-BARRE – More divides backers and opponents of natural gas extraction in the Marcellus Shale than disagreements over the safety of its technical processes or its potential economic benefit. People’s homes, ways of life and social identities hang in the balance, according to ethnographic researcher Simona Perry. “This has become much more than just a technical or economic issue,” Perry said. “The issue has become embedded in the beliefs, attitudes and perceptions around the local and notion of a culture, of what a place means and what health means.” Perry is an applied anthropologist who for the past three years has been studying how Northeastern Pennsylvania residents perceive the natural gas development happening around them, in conjunction with Rensselaer Polytechnic Institute in Troy, N.Y. and her own consulting firm in Maryland. She spoke at a November lecture hosted by the Institute for Energy and Environmental Research at Wilkes University about the preliminary findings of a pilot study into perceptions of the industry in Bradford County, which she called “the geographic epicenter of shale gas development in Pennsylvania to date.” Interviews, focus groups Her research is grounded in interviews and focus groups with landowners, farmers, gas workers and others; community psychology surveys; analysis of storylines in national and local news coverage, archival research and other inductive research techniques. Such research is important, Perry said, in finding real solutions to the challenges the industry’s presence poses, which the polarization of perspectives about domestic drilling has made all the more daunting. “I see the fracking debate as something that could go on forever, because it is so entrenched in the pro-gas, anti-gas
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rhetoric,” she said. “Somehow that needs to be broken down.” While new to the region, Perry said much about the boom has been seen before. Perry Proprietary, sometimes hazardous chemicals have been used in hydraulic fracturing since the process’ inception decades ago, and the tax incentives, public subsidies and regulatory exemptions that have allowed the shale gas boom follow a long history of political influence by the fossil fuels industry. What is new about the shale gas boom, and what has most affected residents of the communities it touches, Perry said, has been the enormous scale and rapid pace of development, its close proximity to private homes, workplaces, churches, schools and other social centers, and the larger storyline of energy independence and climate change surrounding domestic gas development. “Individuals that are living in the midst of this type of development … are being asked to sacrifice, everything in some cases, for some greater good,” Perry said. “And this did not seem to be a concern for most people; in fact it’s a source of great pride. But for others, they are concerned that they have no assurances that the benefits of the sacrifice will outweigh the risks.” Changing communities The boom has brought complex and diverse changes to rural communities, including population increases, environmental changes, drinking water impacts, increased truck traffic and road damage, increased income and ability to pay off debts, harassment from those with opposing viewpoints and health problems. And residents of those communities
have reacted to those changes in different ways. “We are also observing complex feelings regarding this development, such as doubt, happiness, anxiety, fear, confusion, stress, anger, loss, depression, uncertainty and excitement,” Perry said. Those emotions intersect with the history and culture of the area, which influence how residents perceive changes, such as the paving over of dirt roads that criss-crossed the region for centuries, Perry said. Previous studies of resource boomtowns undergoing rapid economic development, primarily in the western United States, identified trends with regards to social organization, quality of life, family and social ties, local government and economics, as well as in the reactions of community residents to those changes. They identified four distinct stages of boomtown attitudes, Perry said -- enthusiasm, uncertainty, near panic and fear, and adaptation and recovery. A similar pattern appears to be unraveling in Bradford County, she said. “It’s very similar to what those previous studies show,” Perry said. “And that’s played out and even some of the recovery has played out, people’s adaptations to all this.” The social science research suggests local communities should plan for the ways that extractive industries like gas drilling may exacerbate divides in communities, including “ever-widening disparities between rich and poor, women and men, young and old, and even how we define what prosperity as well as poverty look like.” “I think the next step is to stop debating and to solve these problems,” Perry said. “But I think to do that we have to ask the right questions, and we have to ask the right questions in a way that is reflective of our own biases and perceptions, and maybe even our lack of trust in institutions and each other.”
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ers finds. The paper by Lara O. Haluszczak, a Penn State student who has since graduated; professor emeritus Arthur ENGLEWOOD, COLO. W. Rose and Lee R. Kump, professor A study by an energy-industry conand head of the Department of Geosulting firm finds the Marcellus Shale sciences, analyzed data from four drilling industry has created more than sources: a report on brines from 40 103,000 jobs in Pennsylvania and preconventional oil and gas wells in Penndicts that number will grow to nearly sylvania; data on flowback waters from 400,000 by 2035. 22 Marcellus gas wells in Pennsylvania According to a state-level industry collected by the state Bureau of Oil report released in December by conand Gas Management; flowback waters sulting company IHS, Pennsylvania’s oil from two Marcellus gas wells from a and gas workforce accounts for about previous study; and an industry study 8 percent of all industry jobs associby the Marcellus Shale Coalition. ated with resource development across The analysis shows that the brine the 16 major oil and gas producing flowback had extremely high salinstates. ity that does not match the chemical The average gas industry job in composition of the solution put into Pennsylvania paid an average salary of the wells during the fracking process. $81,000, well above the state average Instead, the elements being released of $44,000, the report added. are similar to those deposited during The company also estimated the gas the Paleozoic era, hundreds of millions industry will contribute some $60 bilof years ago. lion in state and local revenues from Rose said the naturally occurring 2012 to 2035, not including impact fee radioactive materials being brought to 8 surface after having been 8,000 revenue collected by the state under Pagethe Act 13. feet deep were deposited with formations in that era. He noted that while STATE COLLEGE much attention has been focused on Brine flowback elements found in the chemicals that are injected into the the late stages of hydraulic fracturshale formation during the fracturing ing come from ancient brines trapped process, also of concern is the release underground rather than from salts of elements such as barium and radium dissolved by the water and chemicals that have been in the ground for milused as part of the fracturing process, lions of years. a paper published in December by Brine water that flows back from gas three Penn State University researchwells in the Marcellus Shale region af-
MEET, Continued from Page 3 provided an opportunity for me to come back to the area where I grew up, where before, there really wasn’t any work around for me in environmental remediation.” Water resource engineer In 2011, Gorman landed a job as a water resource engineer with Cabot, and after a year was named president of GasSearch Drilling Services Corporation, a Cabot subsidiary. GasSearch provides support services for Cabot, including road and well pad construction, roustabout services and water hauling. Gorman now oversees a workforce of 125 to 130 employees. Gorman was able to transfer some knowledge from his
previous job in Florida, where he managed construction of environmental remediation projects, but he also noted a steep learning curve in taking on his new role for the drilling industry. “This industry is, for the lack of better words, just bigger in all senses,” Gorman said, adding staff, construction equipment, water use and budgets he manages for GasSearch are all much larger than he experienced before. “… It really was a scaling factor of how much larger this industry was than any other industry I’ve ever been in.” To conquer that learning curve, Gorman, who described himself as a hands-on learner, tried to see every aspect of GasSearch’s operations in action before considering how it could be developed or made
ter hydraulic fracturing is many times more salty than seawater, with high contents of various elements, including radium and barium. Rose said the findings highlight the importance of re-use and proper disposal of fracking fluids, including those from the later stages of drilling. OKLAHOMA CITY Chesapeake Energy Corporation, one of the largest players in the Marcellus Shale natural gas drilling industry, announced in December it would offer retirement incentives to approximately 275 employees. The announcement followed a message the same week declaring the company would sell off the remaining majority of its midstream, or pipeline, assets for $2.16 billion. Those assets are located mostly in the Marcellus, Utica, Eagle Ford, Haynesville and Niobrara shales. Earlier in the year the company sold off pipeline holdings in Oklahoma and Texas for approximately $175 million as part of an exit strategy from the pipeline business. It also followed a year of low natural gas prices, brought on by a glut of natural gas harvested from North American shale deposits. According to Department of Environmental Protection well production data, Chesapeake had more than 220 unconventional wells producing gas in Bradford County, 80 producing wells in Susquehanna County and six in Wyoming County as of June.
more efficient. “Within the first year I put almost 25,000 miles on my truck traveling to every job site I could go to; to every water withdrawal site I could go to; following water trucks up and down the road,” Gorman said. “It really was being as active and involved hands on as I could.” He said his experience working for Cabot also influenced his approach to management and his goals for the company. “My comfort with Cabot lies in the fact that I see they don’t overextend themselves in ventures that they get into, and then have to cut back,” he said. “A lot of companies pour all their resources into one particular area. “Then when things change or the industry changes they’ve got to pull all those resources
out. It seems as if Cabot’s taken a very strategic approach.” Selective provider GasSearch provides services to Cabot where it can do so for less than a third-party company, but Gorman said he does not wish to provide every service the drilling company needs. GasSearch provides about 75 percent of well site construction services and 30 percent of water delivery services for Cabot, Gorman said. “We don’t go full force into supporting their operations; we strategically get into it a step at a time and we don’t over-allocate resources,” Gorman said. “If we went out and provided all the water truck services, when there’s a slow down, we’d have to lay people off, and we don’t want to do that.”
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Trucks line up for diesel fuel while CNG pumps go unused at the Dandy Mini Market in Towanda, Bradford County. BY MATT HUGHES — mhughes@timesleader.com TOWANDA – In a significant development in Pennsylvania’s natural gas infrastructure, the Northern Tier now has its first public-access station for refueling natural gas vehicles. Gas station and convenience store chain Dandy Mini Marts in December opened the first public-access compressed natural gas fueling station in Northeastern Pennsylvania off Route 6 in Towanda. According to U.S. Energy Administration data, the fueling station is
the 15th in Pennsylvania with public access, but the first to open in the northeastern corner of the state. “The (compressed natural gas) station versus vehicles question has always been a chicken-egg argument,” said Duane Phillips, operations manager for Williams Oil & Propane, which owns Dandy. “Vehicles won’t come into the market unless there’s a station to fuel them, but why would you build one if no one has the vehicles to fill up there? We tried to take that out of the
equation.” The fueling station itself is unremarkable. The compressors, drier and bank of storage tanks that ready fuel for the fast-fill station are hidden behind a utility building. The two fuel dispensers housing two fueling positions each largely resemble the gasoline and diesel pumps on the same property, or at any of Dandy’s 70-odd other gas stations. See REFUEL, Page 14
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bill tarutis/for the times leader
A CNG pump shows a sale price of less than $20 for a 9.4-gallon fill-up at the Dandy Mini Market in Towanda, Bradford County. REFUEL Continued from Page 13 The price of fuel it dispenses, by contrast, is notably low compared with competing fuel prices. Price notably lower In mid-December, while gasoline sold in the range of $3.40 per gallon and diesel cost more than $4 per gallon, Dandy offered compressed natural gas for $1.99 for a gasoline gallon equivalent. A previously used pump displayed a sale price of less than $19 for a 9.4-gallon-equivalent fill-up. Phillips said Williams and Dandy had toyed with the idea of bringing CNG fueling stations to the northern tier for five to 10 years, but a 2010 state grant program encouraged the company to make the idea a reality. After they were approached about the program by natural gas driller Chesapeake, Dandy filed a joint application for a Department of Environmental Protection alternative fuels grant with the Endless
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Mountains Transportation Authority, who pledged to begin converting five passenger buses to run on natural gas. Chesapeake was also an application partner, pledging to bring 50 CNG vehicles to the area and to refuel them at the station. In December, 2010, Dandy was awarded a $750,000 grant to invest in fueling station construction. That station, in Athens, Bradford County, is actually still under construction; Phillips anticipates it will open in February. Around the same time it received the grant, Dandy decided to build an additional station in North Towanda on its own. During a trip to meet with Chesapeake executives in Oklahoma, Phillips said he and company owner Randy Williams also met with the owners of an Oklahoma-based convenience store chain that was also selling compressed natural gas, and were impressed by that company’s commitment to natural gas fuels. “We saw that they are committed to it, that they’re excited by it and that they saw
that it can coexist with their gas and diesel offerings,” Phillips said. “It was after that trip that we really committed to the development of this infrastructure for Northeast PA.” More CNG pumps coming Dandy has plans to develop two additional CNG pumps to existing stations by the end of 2013; one in Elmira, N.Y. and another at a not-yet-disclosed location in the Northern Tier of Pennsylvania. Phillips admitted the site has seen little use thus far, but he hopes business will pick up as more commercial customers add CNG vehicles to their fleets. “I think there’s a lot of interest in it, but to this point obviously we have only a couple customers,” Phillips said. On a recent visit to the North Towanda station on busy Route 6, cars and freight trucks lined up for gasoline and diesel while the CNG pumps stood empty. “It’s been slow,” store manager Lisa S. Weiss said. “We’ve had a few Chesapeake trucks. We had an elderly couple that came from Florida; they had
a car they bought down there that runs on natural gas.” Phillips said he hopes Dandy’s infrastructure investment will inspire others, particularly fleet owners, in the region to consider converting vehicles to run on natural gas, building his customer base. The DEP natural gas vehicle grants require applicants have a plan for refueling vehicles, but will not fund fueling station construction. “Now that we have a site we hope that other businesses will start to look at CNG as an alternative fuel,” he said. “I think it all starts with the interest, and hopefully the current DEP vehicle program will encourage people to take a look at whether CNG works for them.” Phillips said he hasn’t run all the numbers, but he said if 5 to 10 percent of businesses in the area of the station acquire CNG vehicles, the station could be commercially successful in three to five years. “We’re truly looking at this as a long-term investment,” Phillips said. “We don’t expect the market to develop overnight.”
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jason riedmiller/ for the times leader
Stephe Yborra of the Clean Vehicle Education Fund and NGVAmerica speaks during a November seminar in Scranton.
BY MATT HUGHES — mhughes@timesleader.com The state is expecting fierce competition for the $20 million in grants it will release to vehicle fleet owners who switch to natural gas vehicles over the next three years. The state will provide $20 million in natural gas impact fee revenues for vehicle purchase grants over three years; $10 million in the 2012-13 fiscal year, $7.5 million in 2013-14 and $2.5 million in 2014-15. The state Department of Environmental Protection unveiled and outlined the program, which is accepting applications Dec. 1 through March 1, at a series of natural gas vehicle seminars this fall. Interest was high, with around 100 business, organization and municipal representatives attending seminars in Towanda and
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Scranton. “We want good competition in this grant program,” Geoff Bristow, coordinator of the grant program, said at a November seminar in Scranton. “We’re not going administer it just to get the dollars out there. Our goal running this grant program is to find these dollar levels the best possible projects, because what we want to do is for the grant to be a catalyst to help further demand for natural gas as a transportation fuel in Pennsylvania.” Incremental subsidies The state grants will fund up to 50 percent of the incremental purchase cost of vehicles that run on natural gas – that is, the difference between the cost of the natural gas vehicle and a comparable gasoline or
diesel powered vehicle – up to $25,000 per vehicle. Only vehicles over 14,000 pounds – garbage trucks, freight trucks and large vans, for example – are eligible and a minimum of five vehicles must be purchased together, though municipalities and businesses are encouraged to apply together under a single grant application, according to Bristow. According to Stephe Yborra of the Clean Vehicle Education Fund and NGVAmerica, those vehicles give the fleet owner the fastest return on investing in a fuel switch. Annual vehicle mileage determines how quickly a fleet owner can recoup the cost of both a natural gas vehicle, which can cost anywhere from about $5,000 See GRANTS, Page 20
jason riedmiller/ for the times leader
A November seminar in Scranton outlining DEP’s natural gas vehicle program attracted strong interest from local companies and municipalities, drawing close to 100 attendees.
page 17
clark van orden/the times leader
BY MATT HUGHES — mhughes@timesleader.com BARTONSVILLE – Both natural gas companies and Pennsylvania’s state government are turning their attention to using natural gas to power vehicles in the state by converting fleets to run on natural gas and offering state grants to encourage other entities to do so. But that change won’t happen without the infrastructure to support it. Since 2009, Bartonsville-based commercial truck dealership Pocono Peterbilt has been ramping up sales and service offerings for natural gas vehicles, and the dealership sees itself as an integral cog in the development of that infrastructure. “The infrastructure is so important,” said Ronald E. McHale Jr., the dealership’s finance and credit manager. “The manufacturers could build all the trucks in the world and put them on the road, but if there (aren’t) dealerships like Pocono Peterbilt that can maintain those
page 18
trucks and there (aren’t) fueling stations that can fill those trucks up with natural gas fuel, the trucks don’t really go anywhere; they stay parked.” Spearheading effort McHale said the dealership was the first in Northeastern Pennsylvania to sell commercial natural gas trucks. “We’re kind of spearheading it locally,” McHale said. “We don’t see a lot of other dealers embracing it; we are. We’re taking it very seriously in terms of training our technicians and the purchasing of tools that we need to fix these engines.” “There’s not thousands of natural gas trucks on the road right now either; we’re getting in at the ground floor,” added Richard Morgan, general sales manager for Pocono Peterbilt. “We see this as a very up-and-coming part of what we can do business in.”
Natural gas vehicle sales still only make up a small portion of the dealership’s overall revenue stream, but McHale said customer interest in the vehicles has been high. “It’s driven by the consumer; it’s driven by people contacting us that want to purchase these trucks,” McHale said. “If no one was contacting us and asking for quotes and information we wouldn’t be as interested in getting involved in it.” McHale said he attended a November trucking industry conference in Arlington, Va. focused on natural gas fuels. More than 550 trucking companies attended, he said. “If there wasn’t an interest there, you wouldn’t see that,” McHale said. Some of the dealership’s first natural gas vehicle customers have been See PETERBILT, Page 20
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PETERBILT Continued from Page 18 municipalities, including Dupont Borough in Luzerne County, which put a CNG-powered recycling packer truck into service in December. The borough spent about $200,000 to purchase the truck from Pocono Peterbilt, plus an additional $7,650 for a slow-fill refueling station, most of which was funded by a $149,000 alternative fuels grant from the state Department of Environmental Protection. Optimism in Dupont Dupont Council President Stanley Knick Jr. said he hopes the vehicle will save the borough money in fuel and maintenance expenses, enabling the borough to keep garbage collection fees flat. “Everybody’s thrilled, since it’s going to save us money,” Knick said of borough residents’ reaction to the purchase. “Especially with the grants.” Other customers have included food distribution and warehousing companies in the Scranton area, an energy delivery company near Towanda and a private waste hauling company in Williamsport. “Right across the board there is interest in what is this all about,” Morgan said. Morgan said the DEP natural gas vehicle grant program has fueled interest in the vehicles among the private and public sectors alike, and encouraged collaboration between entities in developing vehicle and fueling infrastructure. GRANTS Continued from Page 16 to close to $100,000, Yborra said. A high mileage, high fuelconsumption vehicle like a municipal garbage truck can pay back the cost of conversion in lower fuel and maintenance costs in as little as a year, where as a consumer passenger vehicle might not pay back the extra costs before the owner sells it. Offers price stability Besides being cheaper than fuel, price stability is another component of what Yborra called “the compelling case for natural gas vehicles in public and private fleets.” While gasoline and diesel prices swing with the price of oil, the price of extracted natural gas is a minority component of the price of compressed natural gas,
page 20
“Everybody’s reaching out right now, trying to make friends and associates and interdependencies with one another,” Morgan said. “One of the things in the Pennsylvania grant … is that they want to see a collaboration of several entities getting together, that they put a common application in for the grant money, with a common fuel system. It’s a pretty smart way of developing this infrastructure that has to happen.” But while the cost of natural gas – currently about $2 per gasoline gallon equivalent at the pump – and incentives make conversion an attractive option, dealership representatives encouraged potential customers to use caution when deciding whether the fuel is right for them. Price of converting Converting a full-size commercial truck to run on compressed natural gas can cost $40,000 or more, and liquefied natural gas options are considerably more expensive. Morgan said there are too many variables, including idle time, the trucker’s driving style, refrigerated trailer fuel use and the future cost of fuels, for him to tell a customer exactly how much converting to gas could save. “They really have to sit down like they never did before and think about whether it really works for them,” Morgan said. Customers must also consider how using the fuel will affect their corporate image – how they can “market green” – as well as
which also includes “fixed” costs of electric compression, equipment maintenance and equipment cost recovery. Yborra said the cost of natural gas doubling to $8.60 per million BTUs, which is very unlikely in the near future, would only increase the price of compressed natural gas by about $.70 per gasoline gallon equivalent. Building a place to refuel a fleet of vehicles can be the highest upfront cost for a fleet owner switching to natural gas, as compressed natural gas fueling stations can cost $400,000 and liquid natural gas fueling stations are much more expensive. The grant program will not pay for fueling stations, though having a reliable source of fuel is a requirement to apply. Bristow encouraged those applying for grants to pool their resources in building refueling infrastructure. Several
which fuel option will work best for their use, Morgan said. While suitable for lighter applications like municipal waste hauling, compressed natural gas engines produce lower horsepower and torque than diesel equivalents, making them less suitable for powering large freight trucks and preventing equipped vehicles from driving up steeper gradients under load. Liquid natural gas produces more power, but LNG fuel tanks and filling stations cost considerably more, making it a less attractive option for smaller fleets. A new engine and fuel system by Cummins Westport that stores fuel as LNG but converts it to CNG before combustion offers a compromise for heavier-load applications, providing greater horsepower than a CNG engine and burning more cleanly, but still requires an expensive LNG fueling station. Dealing in the vehicles has also created additional costs for Pocono Peterbilt. The dealership has needed to train technicians to work on the alternative-fuel engines, and is in the process of building a special garage for natural gas vehicle repair, which must meet stringent federal and state requirements for fire safety. Morgan said Pocono Peterbilt has embraced the challenge. “This is not the first time we’ve seen technically challenging events happen in this industry,” Morgan said. “We’ve always embraced them as opportunities rather than react to them as disappointments. We’ve always been first to train, first to tool and first to inventory.”
businesses in an industrial park, for example, could band together to defray costs of building a single refueling station, Bristow said. Fleet owners also can partner with existing convenience store chains to build natural gas fueling infrastructure. While Pennsylvania has only a modest 15 natural gas fueling stations, most clustered around Philadelphia and Pittsburgh, Yborra said “fleets will lead the way” in the development of natural gas fueling infrastructure. He expressed confidence that the consumer market for natural gas vehicles would follow the fueling station infrastructure developed for fleets, noting that hybrid vehicles like the Toyota Prius enjoy strong sales even though fuel savings don’t offset their extra cost doesn’t, and that some consumers are willing to pay more for electricity generated by renewable resources.
An interest in the promise of natural gas vehicles was evident in the attendance of close to 100 municipal, institutional and municipal representatives attending the event, the last of six natural gas vehicle seminars hosted by DEP. The program was sponsored by the Northeastern Pennsylvania Alliance. Natural gas shuttles Liz Ratchford, grant director for Keystone College in La Plume, said the college is considering running student shuttles on natural gas. Factoryville Councilman Tom Davis said his borough is considering purchasing a gas-powered municipal dump truck. The case for reducing fuel costs is compelling, Davis said, but he also said the grant program is too small and should be expanded. “It’s probably not the kind of thing we’ll be able to do in the next year or two,” he said.
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bill tarutis/for the times leader
Bill desRosiers of Cabot Oil and Gas stands on the company’s new “bottle truck,” used to transport CNG from a central fueling station to rigs in the field.
BY MATT HUGHES — mhughes@timesleader.com SPRINGVILLE TWP. – This year, natural gas driller Cabot Oil & Gas will explore a new concept at its Susquehanna County gas wells: Using natural gas it extracts from the ground to search for and unlock new gas deposits. The company has outfitted one of its drilling rigs with engines that run, in part, on compressed natural gas, and will keep the rigs running with a fueling station tapping into the company’s supply of locally produced fuel. Bill desRosiers, external affairs coordinator for Cabot’s north region, said CNG will replace diesel fuel in the rig, which runs on a combination of both fuels, reducing both emissions and the company’s fuel costs. “We go through 1,800 gallons of diesel per day when the rig is running, for one drilling rig,” desRosiers said. “So the hope then is that we can displace say, 800 of that 1,800 with natural gas. If we can displace 800 of that, there’s a lot of potential; that’s fuel that we’re not importing, but it’s also a lot less expensive.” DesRosiers said the company estimates it can save about $1,500 in fuel
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costs per day a drilling rig by displacing that much fuel. The company also anticipates saving some money on maintenance costs, as CNG tends to create less wear and tear on engines than conventional fuels. When burned, CNG also releases 20 to 30 percent less carbon dioxide and 75 percent less carbon dioxide than other fossil fuels, and desRosiers also said using its own gas to power the rig was also important to the company. “Cabot as a corporation is domestic; we don’t produce gas anywhere else,” desRosiers said. “It wasn’t based on economics; it was based on doing the right thing.” The rig is powered by three CAT 3516 engines, the same as on the company’s other rigs, but converted to also burn CNG. Blend of fuels Natural gas produces fewer horsepower in the engine than diesel, so the engines use a blend of both fuels to maintain adequate power for drilling. Under normal conditions, a 50-50 blend is used, with diesel entering
the engines through the regular fuel lines and natural gas injected with air through turbochargers. Diesel entering the engine can be stepped up when the drill hits harder rock and requires extra power. The company will refill the rig using a “bottle truck,” a standard freight truck equipped with nine Kevlar wrapped CNG canisters that can be driven to wherever the rig may be drilling. The truck holds the equivalent of 980 gasoline gallons, enough to offset about 600 gallons of diesel fuel and to keep the rig in operation for about 40 hours. Cabot also is leasing a second bottle truck that can be refueled while the other powers the rig, enabling the company to keep the rig in continuous service. When the company converts a second of its five rigs in the region, likely later this year, they will lease a third truck, desRosiers said. Springville Twp. station Cabot can refill the trucks from See DEPOSITS, Page 24
State distributes impact fees BY steve mocarsky — smocarsky@timesleader.com HARRISBURG – Marcellus Shale drilling companies shelled out $204.2 million in impact fees to Pennsylvania in 2012, and county and municipal governments finally received their share – $111.67 million – by Dec. 1. Recipients of the largest payouts were, of course, counties that had the most wells drilled and producing natural gas in 2011. The top five counties: • Bradford – $8,375,502 • Tioga – $4,757,003 • Washington – $4,253,943 • Lycoming – $3,927,396 • Susquehanna – $3,900,919 Michelle Shedden, chief clerk of Bradford County, which had more than 900 shale-producing wells in 2011, said commissioners there decided to use the revenue to eliminate the county’s funded debt. Although the state does not allow impact fee revenue to be used for that purpose, Shedden said the money will
be placed into the General Fund and will free up funds that had been dedicated to addressing impacts of shale drilling, such as those on the human services department, the court system, the jail and the county Emergency management Agency. Shedden said the county has seen a significant increase in crimes committed by shale industry employees, and the county jail is now overcrowded. The county is undergoing a justice study, which should provide specific data within a few months. The county EMA has been burdened with increases in traffic-related problems such as crashes and spills, she said. Counties in which drilling has not taken place also are guaranteed impact fee revenue from the Marcellus Legacy Fund, which was allotted $72.5 million of the $204.2 million; $23 million was divvied up between state agencies and conservation districts.
Counties can apply for funding based on financial impacts from drilling in surrounding counties. Even counties that saw no impacts from drilling received a payment from the fund based on the county’s population, with each county guaranteed a minimum payment of $25,000, according to Jennifer Kocher, press secretary for the Public Utility Commission that receives and distributed the fees. Some have complained that counties that sustained no impacts of drilling, such as Philadelphia, which received $1.29 million, should not share in the pot. The Northeastern Pennsylvania counties that received the largest Legacy Fund disbursements: • Luzerne – $272,267 • Lackawanna – $181,929 • Monroe – $144,094 • Northumberland – $80,198 • Carbon – $55,357
page 23
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bill tarutis/for the times leader
DEPOSITS, Continued from Page 22 a newly built CNG fueling station in Springville Township, which contains both a slow-fill pump for the bottle truck and a fast fill pump to refill the company’s fleet of Cabot has CNG pickup trucks. The station is linked to an adjacent 24-inch gathering pipeline operated by Williams Midstream, which carries gas produced locally by Cabot. DesRosiers said the CNG fueling station and rig option makes sense for Cabot’s Northeastern Pennsylvania operations, which are mostly confined to Susquehanna and Wyoming counties. The station is located at the heart of the company’s lease holdings, and a bottle truck can reach any well pad in that region within about 45 minutes, saving transport time and additional diesel costs. Companies with broader geographic footprints have also experimented with liquid natural gas, which uses a much higher compression to store more energy in a smaller space, as a power source, he said. “For most people, their drill rigs are too far apart to connect to CNG,” desRosiers said. Cabot’s fueling station is not open to the public, but Craig Almquist, the Cabot engineer who designed the Springville Township station, said it could be a model for other businesses in the region, which could eventually help the company. “It makes sense, just from the standpoint of, let’s create the market for our own fuel,” Almquist said. “If everybody gets the idea that natural gas fuel is a good idea, then maybe that will bring the price of gas up. Plus, why not sell it to ourselves, instead of buying it from Saudi Arabia?”
LEFT: Pressure gauges on Cabot’s natural gas fueling station, which are used to refuel fleet vehicles as well as a natural-gas-powered drilling rig. BELOW: Cabot engineer Craig Almquist speaks next to a desiccant dryer at Cabot’s private natural gas fueling station in Springville Township, Susquehanna County. The dryer removes moisture from natural gas for use in CNG vehicles, including a naturalgas-powered drilling rig.
page 24
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switching uniforms From tennis court to journalist, Kevin Lynn finds circuitous route to gas industry BY KEVIN LYNN - Special to the NEPA Energy Journal
I wasn’t always in the gas business. I am one of thousands of Pennsylvanians who did something else before this new industry called. My own route to Marcellus Shale was slightly more circuitous and turned me into a most strange Lynn “bedfellow” of the gas folks. will burn if you’re exposed long enough. I do communications for Linde Corporation. We lay pipeline for Drillers’ mindset Before the Marcellus Shale ‘play,’ the gas companies, connecting their gas companies behaved very differently. wells to gathering lines and the Since most of the gas people hail larger distribution lines. from the South and West, they came My boss, Scott Linde, refers to us as “plumbers with really big wrenches.” We all come from somewhere, as the saying goes, but I came to Linde from — the media. Yes, from those people. For years I was a television news and sports reporter and anchor. I won The Associated Press award as the best news reporter in Pennsylvania and on the sports side I anchored Sportscenter on ESPN. Prior to broadcasting, I was a professional tennis player and the coach at Yale. Then, tragically, I grew a face for radio. Who knew? On radio, I twice won the AP award as the best talk show host in Pennsylvania. All of which means that not only am I nosy – like reporters should be; I’m opinionated – like talk show hosts inevitably become. We’re only a problem if you did something wrong, or decided to live your life out in public. Once you step into — or are dragged into — that public arena, we own you. And it is a sad fact that even a faint sun
page 26
from a culture with a different view of oil exploration. There are fewer people, more open spaces and it is not uncommon to see oil derricks and other petroleum equipment on any horizon. People had a century to get used to the industry and didn’t ask too many questions. The oil companies traditionally played their cards close to their vests. Who could blame them? That all changed with the Marcellus Shale find. Pennsylvania has more people and fewer open spaces. In addition, the Keystone State has a long history of journalistic activism. More than a century ago, Ida Tarbell wrote a famous history of the mess left behind — here in Pennsylvania--by John D. Rockefeller and Standard Oil. It is considered by many historians to be the first example of investigative journalism. So when you combine the skepticism which accompanies our state history with a non-responsive oil industry, you’ve got a formula for conflict.
The solution? Hire your adversaries. Simply put, I used to be the guy who grilled the oil company schmos for information. Now, I’m the schmo. Sure enough, when I began with Linde in 2010, I had a resistance to drilling through the water table to get to the shale thousands of feet below. After all, modern man survived for hundreds of thousands of years without oil; we’ve only needed it for a century or so. But in all that time, no human could go a week without water and live. In addition, I saw the documentaries; I saw the flaming faucets. Learned the business But I was a good reporter and I did my homework. I read everything on our business. I learned how safely and carefully the drillers treat any intrusion through the water table. I also learned that just like human DNA, petrochemicals have their own unique signature. The signatures prove that the gas that flames in sinks doesn’t come from the Marcellus layer; it comes from ambient gas already in the ground. Yes, those sinks have always burned and will continue to burn with no help from Marcellus Shale. Finally, a word on the Liberal Media, from which I sprang. My position has changed on many issues based on what I’ve learned. But am I more liberal? I was for nuclear power until I learned there’s nowhere to safely dispose of the spent fuel rods. I was for capital punishment until I learned that since 8 percent of those executed are innocent, they could kill me – by mistake! And yes, I was against fracking until I learned more. So, uh, does that make me more liberal about drilling, or more conservative? Get back to me on that …
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natural gas drilling: The issue nearly everyone has a view on By STATE SEN. LISA BAKER - Special to the NEPA Energy Journal
Because of the substantial economic and environmental stakes involved, the issue of natural gas drilling in the Marcellus Shale has produced extensive involvement on the part of individuals and groups, far beyond what is typical. Landowners, environmentalists, workers, local officials, business owners, emergency responders, property rights advocates, sportsmen, outdoors enthusiasts, realtors, school officials, motorists, and many others have voiced opinions and posed questions. Adding to the local commentary, state and national organizations have weighed in too. Countless informational forums, hearings, debates, and protests have been held. Concerned individuals and groups have played a contributing role by spotlighting gaps in state law and regulation that needed to be plugged and weak points strengthened. At the outset, there were hard questions being asked that sometimes even the experts struggled to answer, because there were more than a few unknowns about the drilling process and its potential impacts. Two researchers recently catalogued more than 1,000 studies on the subject, which means that each side in the debate has a lot of anecdotal material, facts, statistics, and conclusions to draw from in arguing their case. Yet, even with this volume of information, some aspects of the impacts of drilling remain understudied. No matter how many studies are done, there will be people who do not believe it is possible to strike a balance between the economy and the environment.
page 28
Taxing issue There was heated debate over whether to impose a tax or structure a set of fees charged to drilling companies to offset the costs incurred by communities. Baker Extended negotiations were conducted to sort through the positions of competing interests and assemble a package that Governor Corbett would sign. The first distribution of the revenue from impact fees – slightly more than $200 million will be collected in this cycle – was recently announced. The money will be helpful to communities contending with a variety of impacts and responsibilities – inspection, protection, restoration – as a result of the increased drilling activity. Once the tax versus fee debate was decided, attention quickly shifted to ways of maximizing the economic and job benefits within Pennsylvania. The direct drilling jobs are just the beginning. There are indirect jobs for shippers and service providers. There are plans to process the byproducts of natural gas in-state, cutting costs for existing companies that now bring such raw materials from farther away. There are practical uses for this natural gas, once the cost-savings are understood. For homeowners and business owners, there is the prospect of a cheaper and cleaner energy source. As fueling stations become more available, companies may decide to convert their vehicle fleets. Natural gas plants are coming on line to generate electricity, to replace coal-fired plants that are being retired because of stricter clean air standards. These benefits are neither pipedreams nor remote to our region. One major employer is converting their plant and their
vehicle fleet to natural gas, producing substantial savings that can be reinvested into jobs and equipment. In another place, natural gas processed locally will save jobs, create opportunities for several smaller businesses, and offer more affordable options for families to heat and cool their homes. An array of standards and protections has been put in place, making drilling safer than it was at the outset, but the job is not yet complete. Protecting water supplies is a paramount concern, and so is ensuring air quality. Keep responders informed Emergency responders needed to know where the drilling sites are located, how to best access them, what sorts of problems are likely to occur, and what substances may need to be dealt with in case of spills or leaks. A package containing standards for emergency planning, disclosure, notification, and directional assistance was signed into law. Residents and officials figured out that pipeline safety was not just a concern in urban areas, and that there were big holes in oversight. Legislation is pending to bring miles of rural pipelines under construction and inspection standards. Part of my district is in the Susquehanna River drainage basin, and part in the Delaware River drainage basin. Each is controlled by a commission, but these are uniquely structured with different powers, so there are two sets of rules in place at present. Another open issue is the power of municipalities to adopt restrictive ordinances, which is currently being argued in the courts. There will always be disputes over the benefits and drawbacks of gas drilling. But it is indisputable that several things have resulted: more jobs and opportunities, stronger environmental standards, greater regulatory oversight, more attention to infrastructure improvements, broader public awareness of the responsibilities and risks in resource development, and most of all, a more engaged citizenry.
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A Pennsylvania state trooper speaks with a freight truck driver during an enforcement effort targeted at trucks working for the natural gas industry.
Crime increases as towns grow larger By EDWARD LEWIS elewis@timesleader.com In Marcellus Shale drilling regions, one offense stands above all others. The number of drunken driving offenses has risen substantially – triple digits in two counties. DUI offenses rose 122 percent in Tioga County and 109 percent in Bradford County, and 75 percent in Susquehanna County from 2002 to 2011, according to statistics from the state police Uniform Crime Report. Other offenses, such as burglaries and thefts, had double-digit increases in those three counties during the same period. Many rural communities in Bradford, Susquehanna and Tioga counties rely upon state police for protection, the same counties that have experienced growth in criminal offenses since the Marcellus Shale boom several years ago. “We’ve seen a definite increase in arrests for various offenses, including some serious offenses,” Tioga County District Attorney George Wheeler said. “Generally speaking, when you see an increase in population, you’ll see an increase in crime. We’re now seeing the population numbers holding steady after a few years of drilling. Fortunately, where we are at right now with crime, we’re going to be close to last year.” Tioga County ended 2011 with 651 seri-
page 30
ous crimes (rape, robbery, aggravated assault, burglaries) and 1,527 lesser offenses (simple assault, fraud, vandalism, DUI, drugs), according to UCR statistics. In 2002, there were 452 serious crimes and 1,423 minor offenses in Tioga County. Wheeler said it is difficult to establish that Marcellus Shale employees are the contributing factor for Tioga County’s increase crime rate. “I can’t give you specific statistics,” Wheeler said. “Honestly, we haven’t had time to keep those statistics. I’m certain it’s a big part of it but we don’t have a mechanism in place to say this defendant is connected to gas drilling.” Wheeler is the lone full-time prosecutor in Tioga County with two part-time assistant district attorneys. A study by Penn State’s Justice Center for Research on the impact of crime and Marcellus Shale drillers released in February 2012 says more time is needed to find a conclusion that crime rates are affected by natural gas employees. Case studies of several counties in the Fayetteville Shale region of North-Central Arkansas and the Barnett Shale territory of northern Texas indicates crime rates increased with population booms and natural gas drilling. Towanda Police Chief Randy Epler in Bradford County said there is no doubt the boom of natural gas employees has strained law enforcement.
“We certainly have had to respond to more calls and do more services than ever before,” Epler said. “You can’t take a town of 5,000 people and 2,000 more show up without seeing an increase in crime, which is what took place.” Epler said a majority of natural gas employees are “transients” from other states, such as Texas, Arkansas and Mississippi. He quickly noted, however, natural gas companies have been cooperative when finding employees. “We had one incident where a man ran up a $1,500 hotel bill and took off,” Epler said. “We charged him accordingly and knew where he went. He was picked up in Texas and he forwarded us the $1,500 to get out of jail.” There were 22 drunken driving offenses in Towanda in 2002. In 2011, there were 64 DUI offenses. “The type of worker for the gas business is younger to middle-age male who has money in his pocket and some time on his hands,” Epler noted. “Of course, a good share of the time is in a bar room and there starts the problem. “Are they bad folks? I would say no but it wouldn’t be any different then dumping a bunch of farm boys from Pennsylvania in a different environment. They don’t have their mothers, wives or girlfriends, and they get into trouble,” the chief said.
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COMMERCIAL DOORS
We offer a wide variety of doors to meet your industrial needs from production areas, clean room applications, warehousing & loading dock areas. Our doors are the most versatile in the industry. Available in steel, aluminum, or stainless steel. Built for superior operation and durability.