Now this once-sleepy chunk of north-central Pennsylvania is a star on the map of an emerging national energy rush. Six hotels are new or being built, and about 100 companies have moved to town, sometimes so fast that the head of the local Chamber of Commerce has told executives wanting guided tours to wait.

"I've said, 'Look sir, get in line,' " says Vince Matteo, chief executive of the Williamsport/Lycoming chamber. "Now I know people in their 20s with high school (diplomas) making $120,000 a year."

Much of Wall Street and Washington is seized by the hope that the U.S.'s energy future will be as bright as Williamsport's. As Americans heave a sigh of relief at gasoline prices falling back from near $4 a gallon, big new discoveries of domestic oil and natural gas hold the promise of more substantial benefits for the U.S. economy for decades to come — even the possibility of energy independence.

Read the full story from USA Today.

HARRISBURG -- The state Public Utility Commission this morning approved final guidelines for most of the new Marcellus Shale drilling law, though rules regarding the zoning provisions being challenged in the state court system were put on hold.

Approval of those rules allows the commission to collect information from local governments so that it can distribute drilling impact fee dollars this fall. Among the provisions were finalizing the reporting forms that township officials will use to relay their budget information and producers will use to indicate their number of wells liable for the fee.

The zoning-related rules likely will not be finalized until the pending lawsuit seeking overturn that section of the law is decided. A Commonwealth Court judge issued a 120-day halt last month to the section outlining how local governments must adapt their drilling-related ordinances to comply with state law.

The commission filed its own order seeking clarification on parts of the order, and appealed the court's response to the state Supreme Court.

Also during this morning's commission meeting, a law firm was authorized to provide outside counsel regarding municipal zoning laws. Under the new law, the commission will provide advisory opinions and rule on disputes regarding whether a town's drilling ordinances comply with state statute.

The Harrisburg-based firm of McNees Wallace & Nurick LLC was selected following a bidding process, and a contract between the commission and the law firm is being crafted.

The final order and related documents can be found here.

Due to an ambiguity with an injunction imposed by the state’s Commonwealth Court, the Pennsylvania Public Utility Commission (PUC) today temporarily delayed issuing a Final Implementation Order on Act 13 of 2012, which, among other things, authorized counties to adopt an impact fee related to unconventional natural gas well drilling.

The Commission voted 5-0 to postpone finalizing its Implementation Order for Act 13 until a later public meeting due to questions surrounding the scope of an injunction issued by the state’s Commonwealth Court. The Commission issued a Tentative Implementation Order for comment in March. On April 11, 2012, the Commonwealth Court issued an Order that preliminarily enjoined portions of Act 13.

In a Secretarial Letter, the Commission said that the Court’s preliminary injunction did not provide enough direction for the Commission to proceed issuing its Final Implementation Order at this time. In an effort to receive clarity on the scope of the injunction, the Commission has filed an expedited application to modify the court’s Order.

On Feb. 14, 2012, Governor Corbett signed into law Act 13 of 2012, the Unconventional Gas Well Impact Fee Act, which amended Title 58 (Oil and Gas) of the Pennsylvania Consolidated Statutes.  The PUC is responsible for implementing the provisions contained in Chapters 23 and 33 of the Act. Chapter 23 provides for the imposition, collection and distribution of an unconventional gas well fee (also called a drilling impact fee). Chapter 33 governs local ordinances that impose conditions, requirements or limitations on oil or gas operations. The PUC has created a page on its website for Act 13 information. 

Due to an ambiguity with an injunction imposed by the state’s Commonwealth Court, the Pennsylvania Public Utility Commission (PUC) today temporarily delayed issuing a Final Implementation Order on Act 13 of 2012, which, among other things, authorized counties to adopt an impact fee related to unconventional natural gas well drilling.

The Commission voted 5-0 to postpone finalizing its Implementation Order for Act 13 until a later public meeting due to questions surrounding the scope of an injunction issued by the state’s Commonwealth Court. The Commission issued a Tentative Implementation Order for comment in March. On April 11, 2012, the Commonwealth Court issued an Order that preliminarily enjoined portions of Act 13.

In a Secretarial Letter, the Commission said that the Court’s preliminary injunction did not provide enough direction for the Commission to proceed issuing its Final Implementation Order at this time. In an effort to receive clarity on the scope of the injunction, the Commission has filed an expedited application to modify the court’s Order.

On Feb. 14, 2012, Governor Corbett signed into law Act 13 of 2012, the Unconventional Gas Well Impact Fee Act, which amended Title 58 (Oil and Gas) of the Pennsylvania Consolidated Statutes.  The PUC is responsible for implementing the provisions contained in Chapters 23 and 33 of the Act. Chapter 23 provides for the imposition, collection and distribution of an unconventional gas well fee (also called a drilling impact fee). Chapter 33 governs local ordinances that impose conditions, requirements or limitations on oil or gas operations. The PUC has created a page on its website for Act 13 information.

HARRISBURG -- A state judge has granted a 120-day halt to provisions in the new Marcellus Shale drilling law that would override local zoning ordinances for industry activity.

That order, released hours after a Commonwealth Court hearing in Harrisburg on the matter, prevents the land-use portions of that law from going from going into effect on Saturday. The bulk of the 174-page statute -- including sections related to an impact fee and an overhaul of state environmental regulations -- were not prohibited by the ruling.

The municipalities challenging the law -- Cecil, Peters, Mount Pleasant and Robinson in Washington County; South Fayette in Allegheny County; and two Bucks County towns -- argued this morning that the 120-day window included in the new law for bringing their ordinances into compliance creates a period of uncertainty.

Drilling companies and state attorneys said they believe the new state law would immediately pre-empt local rules, regardless of whether local officials are using that 120-day period to revise their ordinances. That interpretation means there would be no local rules for oil and gas operations, argued the municipalities.

Senior Judge Keith Quigley stated in the order that the local ordinances must remain in effect until a challenge under the new law finds them invalid.

"Municipalities must have an adequate opportunity to pass zoning laws that comply with Act 13 without the fear or risk that development of oil and gas operations under Act 13 will be inconsistent with later validly passed local zoning ordinances," states the order.

The decision gives towns an additional 120 days beyond that already included in the law to revise their drilling-related rules.

In the order's footnotes, the judge states that there is "an immediate and irreparable risk of harm to the municipalities," and that the decision "further restores the status quo."

He then adds some foreshadowing about the burden on the plantiffs: "While the court is not convinced that petitioners' likelihood of success on the merits is high, it has weighed this factor against the other prerequisites for a preliminary injunction and concludes the remaining factors compel issuance of an injunction."

The op-ed below appears in the April 5 Pittsburgh Post-Gazette.

With its recent so-called "report" called "Wasting Our Waterways," PennEnvironment once again proves that it is neither principled, credible nor a legitimate partner for dialogue on the environment.

The Post-Gazette carried a story detailing this report that claimed widespread pollution throughout the nation's rivers, citing the Ohio and Allegheny as examples ("Region's Rivers Are Some of Nation's Most Polluted," March 23). The Post-Gazette carried an online link to the report and then ran an uncritical editorial ("Toxic Status Quo: There's a Long Way to Go in Cleaning Up Waterways," March 26).

But the report is a fraud, starting with the cover.

The study's cover showed a drainage pipe releasing filthy water into a river. We immediately investigated the location of this photograph since, if accurate, it would be evidence of a serious environmental violation. In fact, the photograph is a purchased stock image of a discharge pipe flowing wastewater into a water purification station in South Africa.

PennEnvironment has withdrawn the photo, but this is the second time it has posted a fraudulent photograph as part of its propaganda efforts.

During last September's flooding, the organization posted a photo of a purported flooded drilling rig, suggesting it was taken during the flooding somewhere in the Marcellus Shale drilling area of Pennsylvania. But it turned out to have been a photo of a water-based drilling rig in Pakistan.

Pennsylvania has 67 counties -- neither Pakistan nor South Africa is among them. PennEnvironment's track record is so bad it has embarrassed other environmental groups and succeeded in marginalizing itself even within the community of non-government organizations.

Facts ought to matter, but they never have to Penn Environment or its nationwide affiliates. The false cover photo is not all.

What came after the fraudulent cover was a litany of statistics on the raw tonnage of chemicals released into rivers. These numbers come from the Environmental Protection Agency's Toxic Release Inventory for 2010, which is prepared as required by federal law. The report makes these discharges seem nefarious, but they are legal and permitted discharges under both federal and state law.

Also, the report downplays the fact that our environmental regulations have improved the quality of our waterways dramatically over the past few generations -- work that the Pennsylvania Department of Environmental Protection is continuing. The EPA's own fact sheet on the Toxic Release Inventory shows a decline in levels of discharges since 2002.

PennEnvironment fails to even mention calculations based on the Risk-Screening Environmental Indicators program. The RSEI is a computer-based screening tool developed by the EPA that uses TSI data to analyze the risk of discharges causing or worsening chronic health problems. The national RSEI score dropped by 43 percent from 2001 to 2007, the most recent data available.

Closer to home, as most Western Pennsylvanians know, the Bassmaster Classic fishing tournament was hosted just a few years ago at The Point in Downtown Pittsburgh where the Allegheny and Monongahela rivers form the Ohio. The Western Pennsylvania Conservancy has noted that much of the Allegheny River exhibits good water quality and that for many years public and private efforts have been improving it. The Ohio River Valley Water Sanitation Commission, which really does know something about the Ohio River, reports that since 1948 it and its member states have cooperated to improve water quality in the Ohio River Basin.

It is time that news outlets like the Post-Gazette do some investigative homework before uncritically publishing details from a group intent on stoking public hysteria with fiction.

In late February, Lou D'Amico found himself making his first trip out of North America, flying to Brussels to speak to the environmental committee of the European Parliament.

Mr. D'Amico is the executive director of the Pennsylvania Independent Oil and Gas Association, and spends his time figuring out how to grow the energy business within his state's borders.

But this trip found him way outside those borders, speaking to a Benetton ad of stakeholders in the shale global economy. Mr. D'Amico's tales of booming shale gas exploration in Pennsylvania's Marcellus Shale formation sounded like an instructional beacon of hope to some countries' representatives and a cautionary tale to others.

"You had France on one side, which prohibited fracking, and Poland on the other side, which is excited about the impact," said Mr. D'Amico.

He was joined by a professor from Carnegie Mellon University and a Polish engineer from Talisman Energy, the Calgary-based driller with significant acreage in Pennsylvania. While he was in Brussels, Mr. D'Amico received a request for an interview on shale from a Japanese news agency.

It's safe to say the natural gas rush in Pennsylvania is crossing the oceans.

Foreign firms and governments have expressed interest -- or offered investment -- nearly since the first Marcellus Shale rigs went up in 2006, but a stronger worldwide economy and new extraction technology has accelerated the trend in recent years. Major multinational firms like Chevron and Shell Oil have added Pennsylvania acreage to portfolios that include countries on nearly every continent.

The effect can be seen on a more local level as well. Land across Pennsylvania often has multiple owners, including major firms from Norway and India. Foreign firms already home to Pennsylvania are strategizing on how to get in on the game.

And industry groups like Mr. D'Amico's suddenly find themselves cast as the experts on how to build, develop and regulate a natural gas industry that they're still navigating themselves.

"What's going on in the natural gas industry is both a local story, but also part of a global energy story," said Kathryn Z. Klaber, president and executive director of the Marcellus Shale Coalition industry group. "It's evidence and re-enforcement that Pittsburgh is a global hub for innovation."

Take the case of Reliance Industries Ltd., the largest company in India and a major real estate presence in Pennsylvania.

Reliance Industries entered into a joint venture with Moon-based Atlas Energy in April 2010 worth $1.7 billion that gave the refining company 40 percent of more than 300,000 acres. That's $14,167 per acre.

Joint ventures with major firms have remained the popular way for foreign firms to invest in domestic shale acreage.

Foreign firms didn't waste time either -- the joint venture agreements started "fairly early in the game," said Mr. D'Amico.

Statoil Natural Gas LLC of Norway, for example, owns a 32.5 percent interest in 1.8 million acres of Chesapeake Energy land in the Marcellus region.

Companies aren't only interested in buying valuable acreage, Mr. D'Amico said.

"We're going to see a lot of it going into the infrastructure," he said. "Into the midstream operations, the chemical plants, all across the supply chain."

Last March, Statoil netted a deal with MarkWest Liberty to help handle processing and compressing treatments at MarkWest's facility in Houston, Pa.

The Appalachian area's combination of rural acreage and urban business districts makes possible the benefits of having field operations and regional headquarters in one place, said Ms. Klaber.

And foreign-based companies that were already here are expanding portfolios and strategically investing to include themselves in the shale sector.

"Well-known companies are finding their market opportunities as well," said Ms. Klaber.

Lanxess AG is to move its corporate headquarters from Leverkusen to Lufthansa in Germany in 2013, even as the chemical firm's local office has ramped up efforts to get involved in the natural gas development occurring around the company's American headquarters in Findlay.

In February, the firm announced a subsidiary was working with BioteQ Environmental Technologies of Canada to develop a way to treat acid mine drainage water, which could then be used in the water-heavy hydraulic fracturing process.

Hydraulic fracturing (or fracking) technology -- developed in Texas and used to shatter shale rock -- has opened up natural gas reserves around the country, and accounts for interest in places as far-flung as Israel and China.

Thanks to firms like Lanxess, systems to recycle the fracking flowback water have been where Pennsylvania "has made a mark" on the global shale technology stage, said Ms. Klaber.

Lanxess also intends to bolster production of other items used in the drilling process, such as friction reducers and corrosion inhibitors.

Randy Dearth, president and CEO of Lanxess Corp., didn't mince words when announcing the company strategy, saying, "We believe [shale development] will rejuvenate America's chemistry industry, strengthen U.S. manufacturing, boost exports, create jobs and significantly improve America's energy security."

And Bayer Corp., the German-based company with U.S. headquarters in Robinson, is offering land to build an ethylene plant that would process shale gas into plastics and other chemicals. Bayer is even a leaseholder itself, leasing about 1,400 acres last month in West Virginia to Houston-based Gastar Exploration Ltd.

Wall Street is also keeping an eye on Marcellus Shale production, with foreign firms taking center stage in the conjecture.

Range Resources, the Fort Worth, Texas-based driller with a majority of southwestern Pennsylvania acreage, is frequently cited as a possible takeover target for a foreign giant like British Petroleum of London.

At the very least, the increased attention means more jaunts abroad for industry representatives like Mr. D'Amico.

That trip to Brussels was the first stamp in his passport that didn't come from a trip to Niagara Falls.

Before the Marcellus era began, "My idea of going to a foreign country was flying to Houston," he said.

Shell Oil Co. has selected a site near Monaca where it could build a multibillion-dollar chemical plant, the Houston-based company said today.

A Shell subsidiary, Shell Chemical LP, signed a land-option agreement with Horsehead Corp. to evaluate the site in Potter and Center townships, Beaver County, the company said.

The announcement concludes a months-long, three-state competition for private investment officials believe will create thousands of jobs and attract other major businesses.

"We are very pleased to have signed this site option agreement," said Dan Carlson, general manager of new business development for Shell Chemicals. "This is an important step for the project, and we look forward to working with the communities in Pennsylvania, and gas producers across Appalachia, as we continue our efforts to develop a petrochemical complex."

Shell said it continues to assess the feasibility of building a chemical plant, which would take ethane from natural gas and turn it into the raw materials used to make plastics.

Read the full article in the Pittsburgh Tribune-Review.

PENNSYLVANIA INDEPENDENT OIL & GAS ASSOCIATION PRAISES SHELL ANNOUNCEMENT ON CRACKER FACILITY

 WEXFORD, Pa (March 15) – Pennsylvania Independent Oil & Gas Association President and Executive Director Louis D. D’Amico today issued the following statement regarding Shell Chemical’s announcement of an option agreement to purchase property in Monaca, Beaver County, a critical step in the development of a new ethane cracker production facility:

 “Today’s announcement is an important step in the emergence of Pennsylvania as the nation’s leader in the production and processing of natural gas, and represents an investment in future jobs and the growth of new industries in Pennsylvania, Ohio and West Virginia.  This facility will be built using the best available technologies and environmental management systems, create thousands of good-paying jobs and encourage manufacturers that rely on the chemical building blocks of many consumer products to locate new facilities in our region.  

 “PIOGA greatly appreciates the leadership role taken by Gov. Tom Corbett to work with Shell on this decision, and looks forward to working with Shell Chemicals, our elected officials and regulators to develop a facility that will drive our economy for decades.”

The Compelling Case for NGVs and Its Impact on the Natural Gas Exploration & Production Sector
Stephe Yborra, NGV America/Clean Vehicle Education Foundation

Marcellus Shale Impact Fee Bill
Lou D’Amico, PIOGA President & Executive Director
Richard Gmerek, Gmerek Government Relations

HB 344 Pipeline Safety Bill
Kevin Moody, PIOGA VP & General Counsel

PUC Regulation of Midstream Pipelines
Kevin Moody, PIOGA VP & General Counsel

Allegheny National Forest Litigation
Craig Mayer, General Counsel, Pennsylvania General Energy

Update on Municipal Ordinances and Litigation
Walter A. Bunt, Jr., Partner, K&L Gates

Lunch Presentation:
Think! Decide Not to Die!
Sean P. George, Health & Safety Advocate

Interstate Pipeline Expansion Projects (no presentation available)
Greg Maliken, National Fuel Gas Transmission
Robert Riga, Spectra Transmission
Robert Eckle, Appalachian Producer Services
Daniel Fowler, Dominion Transportation

Midstream Pipeline & Processing Panel (no presentation available)
Art Cantrell, Caiman Energy
Pat McGonagle, Equitrans Midstream
Christopher Zona, DTE Midstream
Robert Eckle, Appalachian Producer Services

Mergers, Acquisitions, Divestitures & Due Diligence: How Today’s Deals Are Getting Done
Michael P. Joy, JD, PhD, Reed Smith, LLP

Keynote Speaker:
Why Can’t We Just Go Back to 2008?
Mason Ender, Bentek Energy

---

Tuesday, February 7
Technical Sessions

Review of New Federal and State Air Regulations
Michael F. Szabo, Sr. Environmental  Engineer, GZA GeoEnvironmental

Gas Migration, Casing and Cementing issues in Pennsylvania
Part 1 | Part 2
Eugene Pine, PA Department of Environmental Protection
Burt Waite, Moody & Associates, Inc.
Seth Pelepko, PA Department of Environmental Protection

Deepest Fresh Water Determination
Part 1 | Part 2
Eugene Pine, PA Department of Environmental Protection
Burt Waite, Moody & Associates, Inc.
Seth Pelepko, PA Department of Environmental Protection

Master Service Agreements
Jim Miller, J.M. Miller, Inc.

Aerial Photography in Oil & Gas Operations
Vele Galovski, Pictometry

---

Wednesday, February 8
General Sessions

Spill Prevention: Regulations & BMPs for Secondary Containment
Beth Powell, New Pig Corporation

Wetland and Stream Mitigation
Russell Krauss, Resource Environmental Solutions

Getting The Waters Tested—The Marcellus Shale Factor—An Industry Perspective
Brian Oram, B.F. Environmental Consultants, Inc.

Regulation, Policy or Action: What’s the Difference?
Robert Thomson, Esq., Babst Calland

Lunch — Presentation (presentation not available)
Influencing and Persuading Public Opinion With Emotion
Greg Matusky, Gregory FCA Communications

Best Management Practices for Drill Pit/Water Impoundment Lining Requirements
Veronica Foster, Golder Associates, Inc.

Water Management Planning for Marcellus and Utica
Jeffrey Gross, Select Energy Services

---

Wednesday, February 8
Technical Sessions

Dynamic Commodity Price Hedging and Market Outlook
Art Cipriani, Asset Risk Management, LLC
Keith Barnett, Asset Risk Management, LLC

How To Transform Operational Efficiency, Drive Down Costs and Meet Regulatory Pressures Through Better Document Management
Tom Byers, Solvaire

Basic Safety Training
Wayne Vanderhoof, RJR Safety, Inc.

Design, Implementation and Maintenance of the ESGP-1 PCSM Process
E. Hardy Kern, Jr., Morris Knowles & Associates, Inc.
Nicholas Coppage, Morris Knowles & Associates, Inc.
Brian S. Majeran, Morris Knowles & Associates, Inc.

Mechanical Concrete—Roadway Design Application
John Nawn, CZOP/Specter, Inc.

Update On Federal Tax Issues
Joe Nicola, Sisterson & Company, LLP
Don Nestor, Toothman Rice, PLLC

WEXFORD, Pa (Feb. 14, 2012 )  Pennsylvania Independent Oil & Gas Association President and Executive Director Louis D. D’Amico today issued the following statement regarding the enactment of H.B. 1950:

 PIOGA and its members have been actively engaged with legislators and policy makers in the development of this new law for the past two years, working to create a vehicle to address county and local governments for uncompensated impacts and provide more predictable and consistent regulations for future natural gas drilling and operations.  We recognize this has been a challenging process for Pennsylvania’s government officials at all levels, and appreciate their efforts to develop a compromise that is reflected in this new law.

“In the face of low natural gas commodity prices, PIOGA member companies will evaluate the economic ramifications of the legislation as another component of their long-term investment strategies. Obviously, as in all competitive situations, exploration and production investments will be made in areas offering the greatest return.

“While this and other details contained in the law give our organization a level of concern, the need to resolve broader issues associated with increased drilling is equally important to the long-term potential  growth of this industry, the economic boost it will provide across the state in the future and the energy security it will provide to our nation.

 “PIOGA looks forward to continuing its efforts to truly make Pennsylvania the Keystone to America’s energy future.”

• To read a summary of the conference report, click here.
• To see a copy of the actual legislation, HB 1950, click here.
• Summary of the legislation from Spilman Thomas & Battle
• Summary of the municipal ordinance provisions from K&L Gates
• Summary of the fee provisions from K&L Gates
• Summary of the regulatory program changes from K&L Gates

The forces that once shaped western Pennsylvania into a world capital in the steel industry could remake the region into a significant supplier of plastic: an abundant natural resource and a multi-faceted transportation system.

Natural gas has joined coal as a vital natural resource and created a global potential for plastic-based industry.

"This is a very important time (for western Pennsylvania)," said Kent Noors, director of Duquesne University's Energy Policy Research Group.

Royal Dutch Shell is considering sites in Pennsylvania, Ohio and West Virginia -- reportedly including one parcel along the shore of the Ohio River in Aliquippa -- for a "world-scale" ethane cracker plant fed by the abundant natural gas reservoirs in the Marcellus shale and Utica shale region.

An ethane cracker converts natural gas into the bedrock elements of plastic, such as ethane, ethylene and polyethylene, and opens two doors to a global market: selling ethane-related products to existing plastic manufacturers, and attracting ethane-based manufacturers.

"Look at any (ethane) cracker in the world and you'll see at least one plastic manufacturing plant next to it," said Paul Badger, professor of chemistry at Robert Morris University.

The world of plastic is an intriguing market to enter.

"Ethylene is the No. 1 petrochemical in the world and is in fairly high demand ... The market fluctuates at times, but the demand for plastic will always be there," Badger said.

Shell's proposed plant would represent a significant stride in U.S. ethane industry tendency. Beyond two small, aging plants in Kentucky and Illinois, it would be the first major plant outside the Louisiana/Texas/Gulf Coast region, according to Ken Swift, chief economist for the American Chemical Council.

The American Chemical Council estimates that an ethane cracker in Pennsylvania would generate 11,000 jobs during the construction phase and 17,000 jobs, including "spillover" positions in other industries, when operational.

"(There will be) spillover effects to the extent that low-cost plastic resins (produced in a cracker) will attract other people ... investors who will use that material to manufacture any number of products," Swift said. "Then you will have additional activities on the consumer end, and in areas like the local hospital adding doctors and nurses, and maybe Geneva College expanding its engineering department."

Shell may not be alone in constructing a plant in the region. Aither Chemicals LLC, based in South Charleston, W.Va., told The Times this week that it is searching the three-state area for a site for an ethane facility.

"I've heard rumors there could be as many as three (ethane crackers built in the region), but I haven't been able to confirm them yet," Swift said.

An ethane cracker -- despite its simple moniker -- is a complicated initiative, requiring, in Shell's case, more than 300 acres and a $1 billion investment.

Badger said a cracker plant "is a very engineering-intensive process, requiring a lot of equipment."

Construction considerations include energy needs, furnaces, environmental protection, large storage tanks for raw natural gas and for derivatives and loading operations.

Natural gas enters the plant from developers and is heated by steam until ethane separates from methane. The ethane is then transported to another area where it is heated again and broken down into its derivatives. The final product is a compressed gas that, in tanks, can be loaded onto trucks, railroads or barges.

"From the Beaver Valley, you can send it down the Ohio River to the Gulf of Mexico and onto the world," Swift said.

Badger added, "This is a major industry, and it would be very important if it came to this area."

Beaver County and Western Pennsylvania could be big winners if Pennsylvania beats out other states for a chemical plant, fed by natural gas, that Royal Dutch Shell plc is planning.

The plant is likely to bring thousands of jobs and more than $1 billion in investment just from Shell, which would take ethane from shale gas and reduce it to ethylene, a building block for plastics, according to a range of experts and observers. The draw is so large that Pennsylvania officials, including Gov. Tom Corbett, have been involved in a months-long, high-stakes competition with leaders in Ohio and West Virginia -- all candidates to host the plant.

"We fit the bill perfectly because we're in the heart of the Marcellus and the Utica drill sites," said Charlie Camp, a former Beaver County commissioner. "And, yeah, we've got plenty of site-ready, shovel-ready industrial sites that have up to seven miles of riverfront and rail access, (and) heavy highway access."

All three of Beaver County's commissioners and its two top economic development officials have signed confidentiality agreements with Royal Dutch Shell's U.S. subsidiary, Shell Oil Co., Commissioner Joe Spanik said. Anyone involved in the process, including state officials, has had to sign, said Patrick Henderson, the governor's energy executive. But other political, business and industry experts said Beaver County is a prime target because of large, redeveloped old steel mills on the Ohio River.

Shell wants 350 to 400 acres, river access and freight railroad access, said state Sen. Tim Solobay, D-Canonsburg. After Shell's announcement in June that it plans to build in Appalachia, Solobay tried to work with colleagues to find a plot of land in Washington County that could be sold to Shell, but there were no sites that big. Beaver County is probably the best possibility in the state, he said.

"It's really an exciting opportunity because the job opportunities will capture the whole region," he said. "If we get this plastics stuff really cranking again, there are a lot of specialty places here in Washington County that could benefit from having the raw plastic a few miles away instead of having it shipped from a few states away."

A spokeswoman at Shell Oil Co.'s headquarters in Houston said officials expect to decide early this year but have no update from the sparse announcement in the summer. Officials at Shell's regional offices in Marshall were told to expect a decision by mid-February, said Bill Langin, who oversees Shell's Appalachian exploration.

The plant, known as a cracker, works with ethane, a valuable hydrocarbon that commonly surfaces with natural gas in parts of Western Pennsylvania and eastern Ohio. By heating the ethane, processing plants can reduce it to a smaller chemical compound, ethylene. That compound is used for products such as garbage bags, adhesives, automotive parts and pipes.

Ethane crackers nationwide average about 10,000 to 14,000 permanent jobs, said Kent Moors, scholar in residence at the Institute for Energy and the Environment at Duquesne University. Shell's project could cost more than $2 billion and bring thousands more temporary jobs during construction, he said.

The larger hope is that it would create yet more jobs by expanding the region's petrochemical industry, Moors and others said. Like an anchor tenant committing to a mall storefront, a cracker plant is likely to draw other businesses to the region to process the ethane on its way to the plant from local gas wells and then to process the products it makes or the byproducts it can't use, they said.

"One company's byproduct is another company's starting point," said David W. Patti, chief executive officer at the Pennsylvania Business Council. "There are petroleum companies that would be glad to see it -- even if it's another company -- in Pennsylvania because the petrochemicals business is so incestuous. They buy from each other all the time."

Shell has estimated 10,000 construction jobs, said Steve Kratz, spokesman for the Department of Community and Economic Development, which is handling negotiations for Pennsylvania.

An industry study estimated that, for every permanent plant job, a cracker plant creates another 5.5 jobs working with the products it makes, he added.

"It's huge," Kratz said. "You're talking about a potential project that could lead to the potential reindustrialization of Southwest Pennsylvania. When you couple that with everything that's going on with the technology renaissance of Pittsburgh ... it would be a huge boost for the region and Pennsylvania as a whole."

The unique structure of the US natural gas industry enabled development and rapid deployment of new shale gas technology, and the lack of that structure is complicating efforts of other countries to follow suit.

That's according to Laszlo Varro, head of the Gas, Coal & Power Division at the International Energy Agency, speaking at the Center for Strategic & International Studies recently.

He pointed to shale exploration done by his own country, Hungary, with ExxonMobil. All drilling equipment had to be shipped in from Houston, he said. While Europeans are experienced in off-shore oil and gas production, as there is virtually no on-shore upstream capability.

Varro contrasted that with Texas, where the hydraulic fracturing and horizontal drilling technologies were married to tap shales, and land-based natural gas and oil drilling have been going on for a century. Texas producers could tap both skilled labor and a full supplier chain, he said.

Supply Side Capacity

Developing shale plays requires "intense" activity and expertise, and companies or countries undertaking it must build "supply side capacity," Varro said.

Didier Houssin, IEA Director of Energy Markets & Security, said shale exploration in many countries is being undertaken by governments that see energy security advantages to finding domestic shale supplies. In the US, shale development was carried out on private land by private entrepreneurs who saw profit in the new resource.

However, if large fossil importers like China and Poland can develop domestic shale and displace liquefied natural gas and coal imports, it would shift world strategic balances, Houssin said.

Also shifting the balance would be entry of the US and Canada as "significant" LNG exporters, Houssin said. Right now, he noted, natural gas is "very cheap" in the US, more expensive in Europe, and most costly in Asian countries where it is imported as LNG at up to five times the US price.

For more on the potential of LNG exports from the US and the risks to consumers, read an analysis from AOL Energy here.

The Energy Information Administration this week lowered its 2012 average US domestic price forecast to $3.53/mmBtu, a drop of nearly 50 cents from a year ago, as shale wells continue to be highly productive. With prices so depressed, US shale producers are seeking permits for liquefaction facilities so they can export their surplus to more rewarding markets.

And, Houssin noted, fracking faces public resistance elsewhere over environmental fears. France has pre-emptively banned it.

Director of the CSIS Energy & National Security Program Frank Verrastro asked whether, if shale production were slowed by such concerns in the US, the country would swing back to more reliance on coal.

Varro said such a change could mean the oldest coal plants keep operating a bit longer, but the differential between gas and coal prices is now so large that gas prices have considerable room to rise before new coal plants would be economic.

The IEA is planning to report on the five-year global outlook for natural gas in June.

NEW YORK (AP) — The price of natural gas is plummeting at a pace that has caught even the experts off guard.

A 35 percent collapse in the futures price over the past year has been a boon to homeowners who use natural gas for heat and appliances and to manufacturers who power their factories and make chemicals and materials with it.

The country is flush with natural gas as a result of new drilling techniques that have enabled energy companies to tap vast supplies that were out of reach not so long ago. The country's natural gas surplus has been growing even as the country burns record amounts.

This winter's warm weather slowed the growth in demand, however, and created a glut. In the Northeast, December was the fourth warmest in the last 117 years. Winter supplies are 17 percent above their five-year average.

The natural gas futures price fell 13 percent last week, to $2.67 per 1,000 cubic feet. That's the lowest winter-time level in a decade.

"The market has been overwhelmed with gas," says Anthony Yuen, a commodities analyst at Citibank.

He and other analysts expect the price to average near $3 for all of 2012. If the weather stays mild, the price could even dip below $2, a level not seen since 2002.

Cheap natural gas is mainly a good thing for the economy:

— More than half of U.S. households use natural gas for heat, and a quarter of the nation's electricity is made from it. Falling heating and electric costs are offsetting the impact of high gasoline prices and enabling families and small businesses to spend on other things. Residential gas and electric customers are saving roughly $200 a year, according to a study by Navigant Consulting.

— For companies that make plastics, fertilizer and other chemicals derived from natural gas, the falling prices are nothing short of a windfall. The same goes for makers of products from steel to bricks to beer. All use a lot of natural gas to heat their furnaces. U.S. manufacturers are becoming more competitive globally as a result of the country's cheap natural gas, industry officials say.

Some industries aren't cheering, though.

With electricity prices falling, the profits of all electric power producers — whether they rely on coal, nuclear or wind — are shrinking.

Companies that drill solely for natural gas are earning less these days, too. That's prompting some to hunt instead for oil, whose price is near $100 a barrel.

Still, drillers aren't reducing natural gas production as much as they would have during previous periods of low prices. They've found ways to produce the fuel at much lower cost so they can be profitable at much lower prices. And, in many cases, natural gas is a byproduct of oil drilling, which is so profitable that companies are going after every barrel they can find.

Analysts say in some oil and gas fields, drillers could give the gas away and still be hugely profitable just from selling the oil.

The benefit of falling natural gas prices to homeowners is not as big as a major drop in oil and gasoline prices would provide. The average household's annual gasoline bill is about $4,000, roughly double the average annual gas and electric bill.

Also, the fuel cost is only half of a customer's bill. The rest is transmission and delivery charges, which don't change along with fuel prices. Homeowners are paying $10.18 per 1,000 cubic feet of gas on average, including transmission and delivery charges, according to the Energy Information Administration. Over a year, a customer will burn an average of 75,000 cubic feet, or about $760 worth.

The multi-year drop in natural gas prices caught most industry experts by surprise.

In the middle of the last decade, natural gas looked to be in short supply. Production in the U.S. was slowing, imports from Canada were rising and plans for importing liquefied natural gas from the Middle East and elsewhere were drawn up.

Natural gas futures hit nearly $15 in 2005. Chemical and metals manufacturers were shutting U.S. factories and moving overseas, where gas was abundant and cheaper. Farmers in need of fertilizer were turning to inexpensive imports from Canada, Trinidad and Asia.

But over the next few years, drillers perfected methods first tried in 1981 that now allow them to profitably extract gas trapped in shale formations — layers of fine-grained rock that in some cases have trapped ancient organic matter that has cooked into oil and natural gas.

Engineers combined the ability to drill horizontally into shale with a technique called hydraulic fracturing. Millions of gallons of water, sand and chemicals are pumped into wells to break rock and create escape routes for the gas. In doing so they unlocked natural gas deposits deep underground across the East, South and Midwest that are large enough to supply the U.S. for decades.

This eventually turned the shortage into a glut, and reversed the fortunes of some industries.

An ammonia plant owned by CF Industries in Donaldsville, La., that was shuttered by its former owner in 2004 is running again. Steel maker Nucor Corp. is building a factory in Louisiana; Shell Oil Co. is planning a petrochemical plant in Appalachia; and Dow Chemical is building a type of chemical feedstock plant it hasn't built in the U.S. since 1995.

"A whole slice of American industry is benefiting," says Steve Wilson, the CEO of CF Industries, which makes ammonia and other fertilizer ingredients. CF Industries, which is based in Deerfield, Ill., has seen its daily natural gas costs fall from $6 million to $2 million over the past few years. The company is planning to spend more than $1 billion expanding its U.S. plants.

While industrial customers are betting on low prices for years to come, things could change if demand increases sharply because of extreme weather or faster-than-expected economic growth, or if the U.S. begins exporting gas. It's also possible that natural gas drilling could be curtailed by environmental regulations designed to protect drinking water from hydraulic fracturing.

Legislators in New York and New Jersey have banned hydraulic fracturing temporarily, and the Environmental Protection Agency is studying it and may propose national regulations.

The most likely near-term scenario is that prices keep falling, according to Rusty Braziel, an analyst at Bentek Energy.

"This ain't the bottom," he says.

The amount of gas in the Marcellus shale reserves in Pennsylvania, New York and West Virginia, and about 25 other shale plays in the United States, estimated at 862 trillion cubic feet, is sufficient to be "absolutely a game-changer for the U.S. economy," said Jay Timmons, president of the National Association of Manufacturers, a D.C.-based trade group.

The annual savings that manufacturers could experience were determined by combining gas consumption levels with potentially lower gas prices if a large amount of shale gas is produced.

The job creation projected in the 16-page report, "Shale Gas: A Renaissance in U.S. Manufacturing," is based on a high level of shale gas production. The jobs would be created by companies expanding or building new plants, as well as companies bringing manufacturing jobs back to the United States, said Robert McCutcheon, U.S. industrial products leader for PricewaterhouseCoopers LLC, which produced the report with the manufacturer's association.

Development of the unconventional shale gas more than a mile underground would most likely result in manufacturing jobs being created by companies in the chemicals, metals and industrial manufacturing sectors, said McCutcheon, who is based in PricewaterhouseCooper's Pittsburgh office.

"The number of U.S. chemicals, metals and industrial manufacturing companies that disclosed shale gas potential and its impact so far in 2011 easily surpassed that of the last three years combined, indicating this is of growing importance in the outlook of U.S. manufacturers," McCutcheon said.

The report did not specify how much of the projected job creation would be associated with development in the Marcellus shale reserves or how many jobs Pennsylvania might gain from the increased gas exploration and production.

A potential limiting factor to the projected economic benefits is the environmental impact from hydraulically fracturing the wells with millions of gallons of water laced with chemical additives, McCutcheon said. The natural gas industry must conduct exploration and production in an environmentally safe manner, he said.

Those who heat their homes with natural gas will get a big break this heating season as rates plunge to their lowest level in more than a decade thanks largely to Marcellus Shale development.

UGI Penn Natural Gas, the dominant natural gas utility in the region, announced the average natural gas bill will be 9 percent lower than last year. The average residential heating customer's bill will fall from $108.58 to $98.83 per month, according to rates filed with the state Public Utility Commission.

The price of natural gas has fallen to its lowest level in more than a decade.

UGI's purchased gas cost rate - the price it pays for gas and directly passes through to customers - has fallen dramatically.

From Sept. 1 through Dec. 1, the cost for 1,000 cubic feet of natural gas, or Mcf, fell from $6.76 to $5.66, a 16 percent drop and the lowest since the fall of 2000. The gas cost accounts for the majority of the typical natural gas bill. The balance of the bill is customer charges and distribution rates.

The extraction of natural gas from shale formations throughout the U.S. and in Pennsylvania has made it an abundant, readily available resource.

The state's Marcellus Shale production, still considered by many to be in its infancy, can in 13 days meet UGI utility customers' needs for an entire year, said UGI spokesman Joe Swope. While UGI buys a substantial amount of gas directly from the gas drillers active in Pennsylvania, the shale gas has pulled down wholesale natural gas prices nationwide, Mr. Swope said.

The warm fall has helped, too, pushing prices even lower than many anticipated.

"A few months ago I would have said prices couldn't go much lower, but here we are with still lower prices," said Hamza Khan, an energy analyst with the Schork Group in Montgomery County.

Natural gas storage has been bursting at the seams and temperatures in the Midwest and Northeast have been as much as 20 percent above average, Mr. Khan said. With thermostats still turned low through the fall, natural gas inventories haven't been drawing down like they typical would.

The other function of the development of shale gas is stability. When the Northeast was dependent upon natural gas from the Gulf of Mexico, for example, hurricanes Rita and Katrina and the disruption cause in the natural gas industry drove UGI's gas rate to $11.18 per Mcf, more than twice the current rate.

Meanwhile, UGI has been scrambling to meet requests for conversions of homes currently on other forms of heating to natural gas. Whether UGI can accommodate those requests depends on the availability of existing gas mains in the area.

A study by Penn State researchers is being revised after test results apparently linking increased bromide in some water wells to Marcellus Shale gas drilling were traced instead to a lab error.

An error notice was published on Nov. 22 on the website of the Center for Rural Pennsylvania, which funded the study and released it in late October.

According to the notice, an accredited laboratory contracted by the researchers incorrectly reported the bromide concentration data that were used in the original report. Updated data showed that increased bromide levels were recorded in one of 42 water wells, not seven wells as originally reported.

The one affected water well also showed increased levels of chloride, hardness and other parameters days after a Marcellus well about a quarter-mile away was hydraulically fractured, but "nearly all" of the increased parameters, including bromide, "had nearly returned to pre-drilling concentrations" after 10 months, according to the notice and the original report.

The study of 233 water wells in 20 Pennsylvania counties did not find any statistically significant increases in methane after drilling or evidence of contamination from the most prominent pollutants found in the wastewater that flows out of natural gas wells after hydraulic fracturing.

In the initial report, the study's authors used the now-discredited bromide finding to advocate tripling the distance around a natural gas well where drillers in Pennsylvania are currently presumed responsible for contamination from 1,000 to 3,000 feet.

Efforts to reach project leader Bryan Swistock, a Penn State water resources extension specialist, were unsuccessful Monday.

According to the error notice, all of the study's research findings are being reviewed and a revised report will be issued "in the coming weeks."

The authors were preparing the report for submission to a peer-reviewed journal when it was released by the Center for Rural Pennsylvania in October.

"Safety is the first priority of the USP and its members, and it is critically important this year thatevery hunter watch for the presence of more people in the woods," said Steve Mohr, USP's Chairman of the Board. "There is the potential for more vehicles on public and private roads, as well as people conducting different tasks in the process of planning and drilling wells. Blaze orange should be the color of the day throughout the hunting season for anyone who ventures into our forests."

"A great many of our employees, whether they work on location or in an office environment, are also avid hunters, and they bring a commitment to safety when they go into the field to hunt," said Louis D'Amico, PIOGA president and executive director.   "We have urged our members to outfit their employees in blaze orange if they may be in any situation where they may encounter hunters, and be mindful of hunters who may be walking the woods or driving on roads to preferred locations.

"PIOGA is pleased its partnership with the Unified Sportsmen of Pennsylvania is getting the word out across Penns Woods that oil and gas operations can take place in harmony with our rich hunting traditions," added D'Amico. "And, to echo our advice from last year, storage tanks should not be used as tree stands. "

Many individuals in the oil and gas industry are supporters of game hunting. In fact, many are part of sportsman groups and enjoy being in the woods on a day off. Those sportsmen have taken the Game Commission's safety course and are familiar with the five primary safety practices known as SMART:

• Safe direction: keep your firearms pointed in a safe direction at all times.
• Make sure: positively ID your target.
• Always check: know what's beyond your target before shooting.
• Respect firearms: treat all firearms as if they are loaded.
• Trigger caution: do not touch the trigger until you are ready to shoot.

The strength of Washington County's economy was again confirmed last week as the United States Department of Labor's Bureau of Labor Statistics determined that Washington County had the third highest percentage increase of employment in the entire country. The bureau determined that between March 2010 and March 2011, Washington County's employment growth was 4.3 percent. Only two other counties in the U.S. - Elkhart County in Indiana and Ottawa County in Michigan had higher employment growth rates. This is a significant finding and is directly related to the positive economic impact of the Marcellus Shale industry in our county.

We have every reason to feel energized about Washington County's future as we are at the epicenter of Pennsylvania's natural gas development. The county was the home to the first Marcellus Shale well and the first horizontal well. We have one of the highest rates of drilling activity and production in the state. With an abundant supply of these natural resources, our county is attracting energy companies every day and this means jobs for our residents.

In Southpointe alone, over 50 energy and energy-related companies have located offices and operations. Companies such as Consol Energy, one of the nation's largest producers of natural resources, chose Southpointe for its world headquarters and Range Resources, the first company to test modern drilling and completion techniques in the Marcellus Shale, will expand on its already significant presence when it opens its new headquarters in Southpointe later this year. In addition, energy and energy-related companies such as Chesapeake Energy, Rice Energy, UniversalPegasus, Select Energy, Steptoe & Johnson and others have established operations or expanded across our county. While these companies alone are creating jobs and investment, we should not forget the positive secondary effects of the energy industry on our local economy.

New industry also brings new opportunities for local businesses and residents. Many local industrial suppliers, manufacturers, restaurants, hotels, shops and services in our county are all experiencing an increase in business because of the energy industry. New business means new jobs. In addition, our agricultural sector, which is still one of the county's largest industries, is being re-energized by leasing activities and is re-investing those resources into new equipment and improvements. This translates into new customers for farm suppliers and other businesses that support our local agricultural communities. The natural gas industry has created "economies of shale" that not only provides jobs and economic benefits for those in the energy industry itself, but also for local businesses, services and residents that are experiencing new growth by supporting the industry. All of these new jobs are why Washington County is third in the nation in percentage increase of employment growth, has one of the lowest unemployment rates in the region and why we are now considered "The Energy Capital of the East."

Washington County is at the center of the largest nonconventional natural gas reserve in the world, and it is up to us to make the most of it. Exploring for and producing clean-burning natural gas in the Marcellus Shale will generate billions of dollars and continue to generate hundreds of thousands of jobs in Pennsylvania, many of them in Washington County. With states such as Ohio and West Virginia also looking to capitalize on natural gas opportunities, we must continue to support the industry locally and work with our legislators and business community to insure their growth continues to be ours. In Washington County we do not just believe the energy industry is revitalizing our county and creating jobs, we can prove it.

The writer is president of Washington County Chamber of Commerce.

The oil and gas development industry has won against an appeal filed by the U.S. Forest Service in regard to drilling on the Allegheny National Forest.

The U.S. 3rd Circuit Court of Appeals in Philadelphia issued a decision on Tuesday that upholds an injunction put in place in December 2009 by U.S. District Court Judge Sean McLaughlin.

"We affirm the preliminary injunction entered by the District Court against appellants," Judges Julio Fuentes, Michael Chagares and Jane Richards Roth wrote in their decision on the case. "In sum, the Service does not have the broad authority it claims over private mineral rights owners' access to surface lands. Its special use regulations do not apply to outstanding rights and the limited regulatory scheme applicable to the vast majority of reserved rights in the ANF does not impose a permit requirement."

For the most part, the Forest Service owns only the surface rights on the forest. Private owners hold more than 90 percent of the subsurface mineral rights.

"Although the Service is entitled to notice from owners of these mineral rights prior to surface access, and may request and negotiate accommodation of its state-law right to due regard, its approval is not required for surface access," they wrote. "An NTP (Notice to Proceed) is an acknowledgment that memorializes any agreements between the Service and a mineral rights owner, but it is not a permit. Accordingly, on the record before it, the District Court properly concluded that issuance of an NTP is not a 'major federal action' under NEPA and an EIS need not be completed prior to issuing an NTP."

McLaughlin's ruling was against a Forest Service "moratorium" on drilling in the forest.

The stoppage was based on a settlement agreement between the Forest Service and environmental groups that had filed a previous suit. According to the settlement, the Forest Service would implement the appropriate level of analysis under the National Environmental Policy Act (NEPA) before approving any new drilling proposals.

A forest-wide environmental impact statement (EIS) was deemed a necessary part of NEPA analysis by the Forest Service before individual drilling proposals could be evaluated. Development companies argued that such a study would take multiple years to complete.

"The indefinite suspension of NTPs for several years goes far beyond the type of delay contemplated..." in previous rulings, the appeals court judges wrote.

Also, the act that allowed the government to purchase the land that is now the national forest worked against the Forest Service, according to the judges. "The language of the Weeks Act indicates that... the Service is bound by the terms of outstanding rights and cannot simply invoke its regulatory authority to override any private use of outstanding rights that it considers inconsistent with the purposes of the Weeks Act."

Similarly, state law did not uphold the Forest Service's position, according to the judges. "Pennsylvania law is flatly inconsistent with the authority asserted by the Service," they wrote in the decision. "In a case very similar to this one, the Pennsylvania Supreme Court rejected a claim by the Pennsylvania Department of Conservation and Natural Resources that, as surface owner, it could 'impose conditions restraining those exercising their rights to the subsurface.' The Court explicitly held that a surface owner has no right to determine what constitutes reasonable use in the first instance, and a mineral rights owner is under no obligation to obtain the surface owner's approval prior to accessing the surface to extract mineral rights.

Part of the court's explanation of how the Forest Service policy would cause irreparable harm was that a delay in drilling operations on the national forest would allow companies drilling on nearby land on which drilling was permitted to capture oil and gas from a "single reservoir lying beneath adjoining lands."

"The adjoining owner's only remedy against such drainage is to 'go and do likewise,'" the judges wrote. "The Service's moratorium on new drilling deprives mineral owners in the ANF of this remedy and will cause them to lose oil and gas to other landowners drilling on private lands adjoining the ANF."

Finally, the court ruled that "the balance of the equities and public interest" did not sway their decision to the Forest Service.

"While the Service has an important statutory duty to protect and maintain the natural resources of the ANF..." McLaughlin's injunction did not prevent it from doing so, they wrote. "The District Court noted that the Service had successfully completed an EIS in 1986 without imposing a moratorium on new drilling... also conceded that this framework had adequately protected its interest in preserving the environmental resources of the ANF."

A fee.

A fee with limits.

No fee at all.

Members of the Pennsylvania House of Representatives' Finance Committee heard testimony Tuesday at Warren Holiday Inn regarding the possibility of a natural gas impact fee. The gathering was hosted by Rep. Kathy Rapp (R-65) with the goal of collecting information of use to them as they work on legislation regarding Marcellus Shale natural gas development.

"I feel an impact fee would be nothing more than a penalty on the producer... passed on to the consumer," concerned citizen Stewart VanOrd said. "If an impact fee is enacted, it should be to protect the environment for future generations."

Craig Mayer of the Marcellus Shale Coalition cited a number of studies from sources including Penn State University and the University of Pittsburgh during his presentation. "Production is continuing its rapid rise," Mayer said. "The economic benefit are occurring broadly across the local community. Development has not had a major impact on municipal governments."

He asked the lawmakers to "be very careful not to stifle and discourage" the burgeoning industry.

"Any discussion regarding an impact fee should begin with the acknowledgment that... the industry is taking care of all the impacts...," Pennsylvania Independent Oil and Gas Association Vice Chairman Sam Fragale said. "Roads are often being improved before drilling activity begins. We are out there working with the landowners to restore their properties."

"Taxes are flowing to all levels of government," Fragale said, while the industry creates "high-paying, family-sustaining jobs."

Rapp said her constituents are concerned that natural gas is being shipped to China and other overseas destinations.

Mayer said he is not aware of extensive overseas exporting. "Where the gas goes... is predominantly to the northeast," he said.

Rapp also questioned Mayer and Fragale about the possibility that oil and gas development causes water quality problems.

Mayer said that, after more than 150 years of drilling in the region, U.S. Forest Service studies show "72 percent of the streams within that area are high-quality cold water fisheries" and "water quality is among the highest in the state."

Developer David White asked the legislators not to impose a fee. "I still believe free enterprise to be the best system," he said. "The property owner, the mineral owner, has been paying taxes on this for years. The producer is going to pay license fees, road use tax... workers compensation."

The price of natural gas is low in Pennsylvania and producers can make a 20 percent profit at a price that is about half of what is being charged in other parts of the country for the same profit margin, White said.

Arthur Stewart, owner of D&I Silica, testified before the panel about "the opportunities being realized by my company."

"The story is being replicated hundreds of times across the commonwealth," he said.

The company has 40 employees at an average annual pay of over $41,000 and it pays 100 percent of the employees' health benefits, according to Stewart.

"If we want to develop a world-class gas field here in Pennsylvania, we should develop world-class infrastructure," Stewart said.

He said the state's business climate is perceived as a negative, suggesting that the state follow the lead of some developers in foregoing some easy profits now to encourage the growth of the industry.

Warren County Commissioner John Bortz also asked the lawmakers to avoid a fee. "Placing onerous fees, taxes, regulations on this industry at this time may have the effect of dampening any economic effect," he said. "The Marcellus play is not the only game in town. Big oil can take their resources elsewhere."

"If legislation results in increased costs (for producers), they'll be forced to pass those costs on to consumers," Bortz said.

He stressed that any legislation that imposes a fee must differentiate between the small companies that develop shallow wells and those companies large enough to invest millions in Marcellus development.

Another concern about a fee was that the money goes to municipalities affected by the development, not the state's general fund.

Elam Herr, assistant executive director of the Pennsylvania State Association of Township Supervisors, said his group's members "support the gas drilling industry. They just want to make sure their communities are basically held whole."

"The association and members have gone on record to support an impact fee," Herr said.

Increased use of roads means higher maintenance and repair costs for the municipalities, he said.

Any water quality impacts would probably end up as the municipalities' problems and emergency response planning, training, and equipment would add to municipal expenses.

"Very little money directly flows back to the municipalities as far as tax dollars," he said.

An impact fee that was distributed to the municipalities where the development takes place would help offset those costs, Herr said.

Ridgway Fire Department Chief John Wygant outlined some of the challenges facing emergency responders.

The remote locations in which the wells are often set mean communications problems, dirt roads, and difficulty just finding the site, he said. Emergencies at the wells would also likely mean hazardous chemical situations.

"It sets a whole new set of challenges for my people," he said. "I have 140 volunteers. Approximately five have ever seen a Marcellus site."

He said training for emergency response at wells is available, "but it's very, very expensive."

The representatives in attendance were: Rapp, Finance Committee Chairman Kerry Benninghoff (R-171), Vice Chairman Gordon Denlinger (R-99), Matt Gabler (R-75), Scott Hutchinson (R-64), Martin Causer (R-67), Fred Keller (R-85), and Tim Briggs (D-149).

A delegation of attorneys from the law firm Spilman Thomas & Battle, PLLC participated in the Summit, joining industry leaders and policymakers to provide valuable perspectives and insights on legal concerns for development of the shale gas plays.

“We at Spilman are optimistic about the tremendous economic impact of the Marcellus and Utica Shale Plays,” explained Michael J. Basile, Spilman’s managing member. “If this region is going to harness the full potential of the shale-drilling opportunity, we must begin to work together toward designing and planning mutually acceptable infrastructure solutions.”

This important, two-day Summit, sponsored in part by Spilman addresses cost, capacity and ROI concerns for Marcellus infrastructure, plus critical issues surrounding the Marcellus Shale gas movement. The theme of the event is “Developing Multi-Stakeholder Strategies for Establishing the Infrastructure to Support Profitable Marcellus Development.”

About Spilman Thomas & Battle, PLLC
Spilman Thomas & Battle is a full-service law firm with more than 140 attorneys. Founded in 1864, Spilman has offices in Charleston, Morgantown and Wheeling, W.Va.; Harrisburg and Pittsburgh, Pa.; Winston-Salem, N.C.; and Roanoke, Va. For more information please visit www.spilmanlaw.com.

Marcellus gas has less impact on global warming than coal, according to a recent study by scientists at Carnegie Mellon University.

The peer-reviewed study published Aug. 5 in "Environmental Research Letters" appears to be a direct refutation of an April study from researchers Robert Howarth and Anthony Ingraffea at Cornell University that indicated that shale gas was worse for global warming than coal.

The Cornell study had a number of faults — acknowledged by its authors — including sketchy data that did not directly apply to Marcellus drilling operations.

The Carnegie Mellon study looks specifically at Marcellus and the "life cycle greenhouse gas emmissions" associated with its production and consumption.

Marcellus gas is essentially no different than conventional natural gas, the study found, and 20-50 percent cleaner than coal for producing electricity.

"Marcellus shale gas emits 50 percent fewer greenhouse gas emissions than any U.S. coal-fired plant," said study co-author Chris Hendrickson. "We favor extraction of Marcellus shale natural gas as long as the extraction is managed to minimize adverse economic, environmental and social impacts."

Former DEP Secretary John Hanger lauded the new study on his blog, saying it "debunks and decimates professor Howarth's hit piece study that the NYT gas reporter and other media gave so much attention."

"By contrast," Hanger said, "the CMU study has received very little press attention so the result remains that many people think Howarth is the final word on this important matter."

The new study does support "green completions" — in which gas is captured during the earliest stages of production rather than being vented or flared into the atmosphere. Proposed shale gas rules from the EPA would require green completions.

"Green completion... would significantly reduce the largest source of emissions specific to Marcellus gas preproduction," the study says, but it adds that such emissions are a small portion of the life cycle estimates.

The study's authors said greenhouse gas emissions are not the only challenge when it comes to extracting shale gas.

"We still need to study other environmental issues, including use of water and disruption of natural habitats," said co-author Paulina Jaramillo.

Dozens of people gathered in Rouseville, near Route 8, to mark the occasion at McClintock Well No. 1 on Tuesday, the Titusville Herald reported Wednesday.

The well, about 70 miles north of Pittsburgh, was drilled on Aug. 16, 1861, about two years after Edwin Drake drilled the world's first oil well in Titusville, about 10 miles farther north.

The Seneca Indians had gathered oil that seeped out of the ground in the area, believing it to be a natural remedy, until the Drake Well set off a boom that began in northwestern Pennsylvania and prompted well drilling on what was then Hamilton McClintock's farm.

The 200-foot deep well initially produced about 175 barrels a day for the Brewer Watson Lumber Co., which leased the land, said Dan Weaver, an educator from the Drake Well Museum.

The well's production dropped off to about 50 barrels daily, and it changed hands before it came to be owned by Quaker State, now part of Sopus Products Inc., which donated it to the museum in 1995, Weaver said.

Today, the well produces about 40 barrels per year, which is shipped to the American Refining Group in Bradford.

The National Park Service declared the well an American Treasure in 1999.

Information from: The Titusville Herald, http://www.titusvilleherald.com/

Jim Cawley is lieutenant governor of Pennsylvania and was chair of Gov. Corbett's Marcellus Shale Advisory Commission

What if there was an industry that had 70,000 Pennsylvanians working in it - or providing supplies to it - and that industry was being lobbied to move to West Virginia? Wouldn't Pennsylvanians rightly demand that our leaders do everything possible to keep these jobs here? From loans for capital improvements to tax incentives, wouldn't everything be on the table?

What if there was a new industry - one projected to hire 200,000 Pennsylvanians over the next decade - that was debating whether to set up a corporate headquarters in Edmonton, Alberta (Canada), or Williamsport, Pa.? Wouldn't we expect our elected officials to meet with those industry executives and promise them anything and everything in tax breaks and incentives to encourage them to pick Pennsylvania?

These are not hypotheticals. There is, indeed, a new industry that employs 70,000 Pennsylvanians and, according to Pennsylvania State University, is likely to hire up to an additional 200,000 Pennsylvanians in the next decade. And this industry does not want tax breaks, government loans, or incentives to make Pennsylvania its home.

The new and growing natural gas industry - working to develop the Marcellus Shale - is a vibrant industry that is transforming our economy, creating jobs, and lowering the cost of energy. (The use of cleaner-burning natural gas will have the added benefit of improving our air quality.)

So why are critics of this industry so focused on creating new, punitive taxes on it? The constant drumbeat for the imposition of a so-called severance tax is completely misguided. Having just completed my work as chairman of Gov. Corbett's Marcellus Shale Advisory Commission, allow me to point out a few facts.

First, callsfor a severance tax imply that these businesses are not already paying taxes. Not true. Since 2006, this industry has paid almost $1.1 billion in taxes - and counting. In just the first six months of 2011, more than $292 million in taxes have been paid, more than the industry paid in all of 2010. That revenue is in addition to more than $214 million in income taxes paid by natural gas employees and landowners leasing their land to gas companies.

The development of the Marcellus Shale has generated more than $1.3 billion in tax revenue. These taxes help pave our roads, educate our children, and maintain parks across the state - including in my home, Bucks County, even though the Marcellus Shale is located in places 200 miles away.

Second, Pennsylvania imposes taxes on businesses that states with a severance tax, such as Texas and Oklahoma, do not impose. Pennsylvania not only has the highest corporate net-income-tax rate in the nation, but it also has a capital stock and franchise tax. No other state has both of these taxes.

Considering those taxes and tax rates, why would Pennsylvania impose another new tax on this growing sector of our economy?

Finally, Economics 101 teaches us that taxes deter new businesses and job growth. When natural gas was discovered in Alberta, many companies flocked there. The province's government assumed that it now had a new, captive audience, and it imposed a severance tax on the natural gas companies.

What happened? The companies put their development in Alberta on hold. They moved to another shale-exploration area with a competitive market: Pennsylvania. (Alberta subsequently removed its tax in hopes of luring business back.)

There is no debate about whether we should tax the natural gas industry. We already do. There is no mystery about what happens if taxes are too high. Businesses leave. They will go to Alberta, Oklahoma, Colorado, or even Poland, all places with natural gas deposits that are accessible thanks to 21st-century technology.

Pennsylvania stands ready to create hundreds of thousands of jobs, receive billions of
dollars in tax revenue, offer businesses and families low-cost energy, and improve air quality. These are opportunities that state leaders plan to foster, not crush.

The Marcellus Shale Education & Training Center has released a study assessing
the direct workforce needs required to support Marcellus Shale development in
Pennsylvania from 2011-14. The total number of direct jobs needed to keep pace
with the growth of the industry is expected to range from 18,596 to 30,684,
including 9,800 to 15,900 new positions.

The study expands two prior regional studies published by the MSETC, a
collaborative venture between Pennsylvania College of Technology and Penn State
Cooperative Extension. It outlines the key occupations associated with natural
gas development in the Marcellus Shale region of Pennsylvania, as well as the
number of direct jobs that will be needed to bring a gas well into production
between 2011 and 2014.

The purpose of the study is to provide individuals, job seekers, communities,
businesses, workforce- and economic-development professionals, and government
officials at all levels with the ability to estimate the direct workforce
requirements for Marcellus Shale development.

The study reveals that energy companies operating in Pennsylvania are projecting a 60-percent increase in the number of wells being drilled by 2014 compared with 2011. The
model utilized for the study indicates that each well requires a workforce of
approximately 420 individuals working across 150 different occupations. The
resulting impact on Pennsylvania’s job market will be significant. The study’s
method for forecasting jobs is based on rig counts and wells to be drilled. The
companies have forecast rig counts in ranges rather than specific numbers,
resulting in job estimates also being provided in ranges.

The study breaks down the growth impact by regions within Pennsylvania. Job growth
in northeast Pennsylvania, which already has seen tremendous initial expansion,
is forecast to increase at a relatively moderate rate.

In the southwest region of the state, the rate of growth will be significant, as the
industry works to build more infrastructure for gas processing. With the recent
dramatic increase in interest in high-BTU gas, and the premium price commanded
for liquids-rich natural gas, the southwest region appears poised for
resurgence in shale gas development related to the Marcellus, Utica and other
Upper Devonian Shale formations.

The northwest region of the Pennsylvania will see an increase in the number of
wells drilled. Growth in the northwest has been limited thus far and will
initially be concentrated at the southern and eastern boundaries of that
region.

There has been no drilling activity in the southeastern region of Pennsylvania;
however, there will be an increase there in the growth of service industries
supporting the natural gas industry.

The study also notes the growing number of Pennsylvania residents in the natural
gas industry workforce statewide. Since the technologies used in development
are relatively new, the early stages of development in Pennsylvania relied
heavily on out-of-state employees with experience and knowledge developing
high-pressure natural gas. Although there still is tremendous variability
across energy, service and support companies associated with natural gas
development, the study’s interviews and survey data reveal the percentage of
new industry employees who are Pennsylvania residents averages between 65
percent and 75 percent.

The assessment focuses solely on the direct workforce needs of the industry and
does not include indirect or induced employment impacts. The projections are
not intended to serve as a measure of the total employment created by Marcellus
Shale natural gas development or to estimate the economic impact of such
development. Other recently released workforce studies estimate overall
employment and economic impact of natural gas drilling in Pennsylvania using
“multipliers” to estimate job creation in sectors other than those directly
associated with bringing a Marcellus well into production (lodging, food and
retail, for example).

The report provides the best current estimate of the direct workforce required to
bring a Marcellus well into production, and it should be viewed as a subset of
total employment created by Marcellus Shale development. No industry funds were
used in developing the assessment.

For a full copy of the report, visit  online  or contact the MSETC at 570-327-4775. 

Politicians wringing their hands over how to create more jobs might study the shale boom along the New York and Pennsylvania border. It's a case study in one state embracing economic opportunity, while the other has let environmental politics trump development.

The Marcellus shale formation—65 million acres running through Ohio, West Virginia, western Pennsylvania and southern New York—offers one of the biggest natural gas opportunities. Former Pennsylvania Governor Ed Rendell, a Democrat, recognized that potential and set up a regulatory framework to encourage and monitor natural gas drilling, a strategy continued by Republican Tom Corbett.

More than 2,000 wells have been drilled in the Keystone State since 2008, and gas production surged to 81 billion cubic feet in 2009 from five billion in 2007. A new Manhattan Institute report by University of Wyoming professor Timothy Considine estimates that a typical Marcellus well generates some $2.8 million in direct economic benefits from natural gas company purchases; $1.2 million in indirect benefits from companies engaged along the supply chain; another $1.5 million from workers spending their wages, or landowners spending their royalty payments; plus $2 million in federal, state and local taxes. Oh, and 62 jobs.

Statistics from Pennsylvania bear this out. The state Department of Labor and Industry reports that Marcellus drilling has created 72,000 jobs between the fourth quarter of 2009 and the first quarter of 2011. The average wage for jobs in core Marcellus shale industries is about $73,000, or some $27,000 more than the average for all industries.

The Pennsylvania Department of Revenue says drillers have paid more than $1 billion in state taxes since 2006—and the numbers are swelling. In 2011's first quarter, 857 oil and gas companies and affiliates paid $238 million in capital stock and foreign franchise taxes, corporate income taxes, sales taxes and employer withholding. This exceeds by some $20 million the total payments in 2010.

The revenue department also identified some $214 million in personal income taxes paid since 2006 that can be attributed to Marcellus shale lease payments to individuals, royalty income and asset sales. And all of this with no evidence of significant environmental harm.

***

Then there's New York. The state holds as much as 20% of the estimated Marcellus shale reserves, but green activists have raised fears about the drilling technique known as hydraulic fracturing and convinced politicians to enact what is effectively a moratorium.

 

Getty Images

A Minard Run Oil Company drilling team lowers steel pipe sections into a recently drilled 2100 foot gas well to "notch" the side walls before a high pressure fracturing takes place in Pleasant Valley, Pennsylvania in 2008.

The Manhattan Institute study shows that a quick end to the moratorium would generate more than $11.4 billion in economic output from 2011 to 2020, 15,000 to 18,000 new jobs, and $1.4 billion in new state and local tax revenue. These are conservative estimates based on a limited area of drilling. If drilling were allowed in the New York City watershed—which Governor Andrew Cuomo is so far rejecting—as well as in the state's Utica shale formation, the economic gains would be five times larger.

Consider New York's Broome County, which borders Pennsylvania and from which you can spot nearby rigs. The county seat of Binghamton ought to be a hub for shale commerce, but instead its population is falling as its young people leave for jobs elsewhere.

A study commissioned by the county in 2009 found that Broome could support up to 4,000 wells, but drilling even half that number would create some $400 million in wages, salaries and benefits; $605 million in property income from rents, royalties and dividends, and some $43 million in state and local tax revenue.

The Broome analysis pointed to Texas, where Chesapeake Energy paid Dallas Fort Worth International Airport $180 million for drilling rights on 18,000 acres of airport property—$10,000 per acre. The airport receives a 25% royalty on the natural gas produced by airport wells—more than $28 million in fiscal 2008. The study also noted the boon that rising oil and gas property values have been to Texas landowners, tax authorities and school districts.

***

Governor Cuomo has said he wants to lift New York's moratorium, and the state's recently released draft rules are a step forward. But they must still undergo legal review and a public comment period that could bar New York drilling for the rest of this year, if not longer. New York will also still ban drilling in about 15% of the state's portion of the Marcellus and impose more onerous rules than other states on private property drilling. Such bows toward the obsessions of rich, big-city greens explain why parts of upstate New York are the new Appalachia.

As they look across their northern border, Pennsylvanians can be forgiven for thinking of New Yorkers the way Abba Eban once described the Palestinians: They never miss an opportunity to miss an opportunity.

By Andrew Maykuth
Inquirer Staff Writer

Since the federal government deregulated natural gas prices in the 1980s, the prices of crude oil and natural gas have moved more or less in tandem.
But in the last three years, the prices have become unhinged. One reason is the dramatic increase in natural gas production from unconventional formations such as Pennsylvania's Marcellus Shale, which has driven down natural gas prices while crude oil prices have soared.

When the two fossil fuels are compared on the basis of energy equivalency, natural gas is a bargain compared with oil. A dollar spent on natural gas buys more than three times the energy that a dollar spent on crude oil buys.
The U.S. Energy Information Administration believes the disparity could last for decades.

"We think we will have relatively reasonable natural gas prices over the long term," said Philip Budzik, an analyst with the EIA. "That looks good to me because I use natural gas at home and I'm happy I don't have to pay oil prices."
The natural gas discount has more implications than a bonus for homeowners considering a switch from heating oil.

The price disparity is fueling a debate over whether the government should encourage electricity generators to accelerate the switch from coal to natural gas. And T. Boone Pickens, the Texas oilman, is lobbying Congress to subsidize converting vehicles to natural gas fuel.

Some believe that new demand for natural gas will invariably drive up prices.
"I suspect volatility will continue, and that the oil-vs.-natural gas price relationship will eventually move back to normal," said Donald B. Marron, director of the Urban-Brookings Tax Policy Center in Washington.

A few skeptics doubt the shale-gas supply is as robust as advertised - whether it could be an Enron-like Ponzi scheme, as a New York Times article implied recently.

But shale-gas production continues to go up, defying the skeptics.
Shale gas will account for 25 percent of the nation's natural gas supply by the end of this year, up from 2 percent a decade ago, according to the EIA. And a Pennsylvania State University study released this week reported that Marcellus production, which is still in its infancy, is outpacing last year's estimates by 30 percent.

"The idea that shale gas is a flash in the pan is simply incorrect," Kenneth Medlock III, a Rice University researcher, said this week after the release of a Rice study that called shale gas "perhaps the most intriguing development in global energy markets in recent memory."

There is more to the pricing dynamic than shale gas.
Two decades ago, when oil and gas traded more synchronously, electricity producers were able to arbitrage the price difference by switching to the cheaper fuel. Fuel switching kept the prices relatively close.

But oil no longer is used to generate electricity - mostly it's a transportation fuel. If natural gas is used in vehicles, it could drive up its price.
Natural gas prices are also based upon mostly a domestic market, while crude oil is governed by worldwide demand, including emerging economies.
Crude oil markets are influenced by traders who regard the commodity almost like a currency, said Ananthan Thangavel, managing director of Lakshmi Capital Management in Beverly Hills and author of a commodity newsletter.
"Natural gas, when you look at trading activity, is much more based on supply-and-demand characteristics than crude oil," he said.

Not everyone is enamored of proposals to increase demand for natural gas by encouraging its use as a motor fuel.

George Biltz, a vice president of Dow Chemical Co., told the U.S. Senate Energy and Natural Resources Committee on Tuesday the abundance of natural gas could be a "game changer" for American petrochemical manufacturers that use natural gas as a raw material. But only if the price stays low.
He encouraged Congress to "exercise extreme caution" about jumping on the Pickens bandwagon. Using natural gas to make chemicals creates more economic value.

"U.S. manufacturers provide the highest value-add of any sector," he said. "Using natural gas to make petrochemicals results in eight times the value over simply combusting it."

From the Philadelphia Inquirer
July 22, 2011

Through the group’s collective expertise, the program has already prepared more than 3,000 emergency responders for oilfield events in areas where Marcellus Shale gas development is taking place in the Commonwealth.

“I am pleased PIOGA is committed to the safety of Pennsylvania’s first responders. These funds will ensure that we can continue with the training program developed last fall through a partnership with the Marcellus Industry,’’ State Fire Commissioner Ed Mann said. “The training provides a basic understanding of the potential hazards first responders could face in the event of such an emergency.’’

PIOGA President and Executive Director Louis D. D'Amico said his organization’s safety committee will continue to provide the subject matter knowledge and experience needed to maintain the most up-to-date curriculum for drill site safety and emergency response training.

“Consistent with our industry partners, PIOGA continues to place safety as its number one priority.  The growing expanse of Marcellus development, along with the corresponding increase in Pennsylvanians working in and around drilling sites, means emergency preparedness and stringent safety policies must be engrained in every facet of our operations,” D’Amico stated.

“As we share best practices to create the most advanced emergency response procedures in the industry, we must also share in making the wise investment necessary to keep the Pennsylvania’s Fire Academy’s program intact.  I encourage all of our industry colleagues to contribute to this proven and much-needed initiative,” he added.

PIOGA safety committee members worked with professional firefighters and emergency personnel to create the first of several training modules on different response scenarios at drilling locations.   The committee continues to work with those organizations to allow the program to keep pace with new developments in the industry.

To learn more or schedule training - go to "Well Site Emergency for First Responders" training at www.osfc.state.pa.us

Inquirer Staff Writer

An updated Pennsylvania State University economic study of the Marcellus Shale gas boom is even more bullish than past reports, projecting that Pennsylvania could supply a quarter of the nation's natural gas by 2020.

The industry-sponsored study, which will be released Wednesday, says that Marcellus natural gas production is outpacing predictions made only a year ago. Production from Pennsylvania wells, which already supply more fuel than is consumed in the state, could multiply eightfold by the end of the decade.

"Our estimates suggest that in 2020 the Marcellus industry in Pennsylvania could be creating more than $20 billion in value added, generating $2 billion in state and local tax revenues, and supporting more than 250,000 jobs," said the authors associated with Penn State's department of energy and mineral engineering.

The study is likely to generate considerable controversy. Anti-drilling activists said past Penn State reports overstated the jobs created by gas development and failed to count the cost of potential environmental problems of drilling.

The study's release, coinciding with the conclusion of Gov. Corbett's Marcellus Shale Advisory Commission's inquiry into the industry, is likely to reinforce the governor's conviction that natural gas will be a major economic driver in Pennsylvania for decades to come.

"This is not meant to be in any way a policy agenda, or it's not meant to influence any particular outcome," said Kathryn Z. Klaber, the president of the Marcellus Shale Coalition, which funded the study. "But it is critical that we all understand what's at stake."

The study was written by Timothy J. Considine, a former Penn State professor who is now director of the Center for Energy Economics and Public Policy at the University of Wyoming; Robert W. Watson, a Penn State petroleum engineer; and Seth Blumsack, a Penn State energy economist.

In two previous reports, the authors argued that a proposed severance tax on gas production would retard the industry, which critics interpreted as overt advocacy on a controversial public policy issue.

The new study is less assertive on the tax issue, noting only that Marcellus operators are competing for capital with other shale regions and the absence of a severance tax in Pennsylvania helps offset the higher costs of drilling here.

"The projections developed in this report depend upon the Pennsylvania Marcellus maintaining its relative competitive position," it says.

The study says that Marcellus producers are drilling fewer wells than predicted a year ago, but the horizontal wells are more productive because the laterals are reaching greater distances.

Last year, Marcellus well production averaged 1.3 billion cubic feet per day - 30 percent more than last year's study had predicted. By the end of 2010, average daily production surpassed 2 billion cubic feet.

"These production levels are substantially higher than our previous projections because Marcellus producers are employing advanced well stimulation techniques that are dramatically increasing well productivity," the study said.

By 2020, the researchers predict the Marcellus Shale will generate 17 billion cubic feet of gas a day, which would amount to about a quarter of the nation's needs, according to the U.S. Energy Information Administration.

The Marcellus Shale is fast becoming a major star in a nationwide shift of fossil-fuel exploration into "unconventional" rock formations that require hydraulic fracturing to unlock entrapped oil and gas. "Fracking" involves the high-pressure injection of water, chemicals, and sand into deep geologic formations.

Marcellus drilling is still in its infancy. The first well was drilled in 2004, but full-scale production started only three years ago.

In addition to estimating the economic impact of the drilling industry and the royalties paid to landowners, the study's authors also attempted to estimate the economic impact that Marcellus gas production has had on consumers in the form of lower gas and electricity prices - natural gas is used for power generation, heating homes, and as a raw material in petrochemicals and fertilizer.

The researchers estimate that Marcellus production drove down natural gas prices by 12.6 percent last year, saving Pennsylvania residences and industries $633 million in energy costs.

"From the household perspective, reductions in energy expenditures act like a tax cut for the Pennsylvania economy, increasing discretionary income," the study said.

 From the Philadelphia Inquirer

www.philly.com/philly/news/20110720_Penn_State_report_even_more_bullish_on_Marcellus_Shale.html.

The Pittsburgh metropolitan area is weathering the recession better than many other parts of the country, partly because of Marcellus Shale production, researchers said Monday, projecting that the region's employment numbers will rebound to pre-slump levels by early 2012.

The Pittsburgh area lost 37,500 jobs beginning in the third quarter of 2008 but will recover that number by the first quarter of 2012, according to a report released as the U.S. Conference of Mayors closed its 79th annual meeting in Baltimore. The report was prepared for the conference and the Council for the New American City by IHS Global Insight, a Colorado-based research firm.

The report didn't say what kinds of jobs were lost, what types are likely to replace them or why Pittsburgh is faring better than other parts of the country. However, in an email, Tom Jackson, senior economist at IHS Global Insight, said:

"Many areas of Pennsylvania, including the Pittsburgh metro area, are benefitting from the Marcellus Shale drilling activity. That certainly is giving Pennsylvania a boost relative to the rest of the country in terms of employment and gross economic output."

The University of Pittsburgh, Carnegie Mellon University and other institutions have "helped in a number of ways," he added. "The universities themselves are big employers, especially when you include the medical centers ... They are also producing a large number of graduates in areas of high employment demand, which can help to encourage employers to move to or expand existing operations in the region."

Joanna Doven, spokeswoman for Pittsburgh Mayor Luke Ravenstahl, said the study reflected the region's stable real estate market and government efforts to work with private industry on the city's "Third Renaissance."

Mr. Ravenstahl did not attend the Baltimore meeting. He is at a Pennsylvania League of Cities and Municipalities meeting instead, Ms. Doven said.

In all, the report looked at employment and other indicators of economic progress for 363 metropolitan areas.

About 30 areas -- including Morgantown, W.Va., and State College, Centre County -- are expected to return to pre-recession employment numbers before Pittsburgh. The Pittsburgh area is one of about 10 areas, also including Dallas and Fort Collins, Colo. -- expected to recoup lost jobs by early 2012.

All of the other areas are expected to take longer to recover. About 35 regions, including the Youngstown, Ohio, area, are not expected to regain all of their jobs until after 2021.

It's taken the nation longer to recover from this recession than it has other post-World War II slowdowns, the authors said, counting weather disasters and a slow housing market as complicating factors.

Among the 363 metropolitan areas, Pittsburgh ranked 107th in average annual growth of real gross metropolitan product from 2007 to 2009. Real GMP is the total value of goods and services produced in an area, adjusted for inflation; the examination of real GMP from 2007 to 2009 showed an area's economic performance in the throes of the recession.

Instead of growing, Pittsburgh's real GMP on average lost one-tenth of a percent annually during those years. Together, the 363 metropolitan areas averaged a 1.3 percent annual dip in real GMP from 2007 to 2009.

On Monday, ground was broken on a proposed training site to change that.

Pennsylvania College of Technology, the state Fire Academy, Lycoming County and the gas industry are partnering to create the Natural Gas Applied Technology and Safety Training Center, which will provide emergency personnel with a realistic view of what they may encounter at a wide range of gas industry facilities.

The proposed facility will be built on a five-acre parcel at the college's Schneebeli Earth Science Center in Clinton Township.

It will contain equipment and structures typically found at gas industry facilities that can be used to create scenarios with which firefighters and other first responders can train.

"This is specific to the natural gas industry," said Tracy L. Brundage, managing director of the college workforce development and continuing education. "All of the props are going to be natural gas-related. (Emergency personnel) will see things that might be seen on a gas pad."

According to Brundage, the facility will contain "live fire props" to be used to train firefighters on how to deal with actual fires, and "static props" to be used for exercises dealing with non-fire emergencies such as confined space rescues.

Brundage said she worked closely with Craig Konkle, who heads the county Community Gas Drilling Task Force Safety Committee and is county Department of Public Safety's energy development emergency response coordinator, to shepherd the project to fruition.

They worked to determine if a need existed for such a facility, if it was economically feasible to construct it and whether the gas industry would support it, Brundage said, adding that the answer to those questions was "yes."

The Pennsylvania Independent Oil and Gas Association, a consortium of energy producers in the state, threw its support behind the project. With the organization's help, the project received donations of money and equipment from the industry, she said.

The college provided land and staff time toward the project, she said.

College President Dr. Davie Jane Gilmour said the facility, which should be up and running in October, will provide "hands-on instruction to help emergency responders understand and effectively respond to incidents they might encounter at gas field drilling and production sites."

"While our emergency responders are highly competent in conventional firefighting and emergency response, many have very little formal training or experience with the unique challenges and hazards posed by gas field emergencies," Gilmour said. "Here, they will learn to deal effectively with chemicals and equipment specific to the industry."

Gilmour added that current industry workers and new hires may also benefit by training at the facility. The facility will be available to emergency responders from throughout the state, she said.

The college and Penn State Cooperative Extension partnered in 2008 to form the Marcellus Shale Education and Training Center, a program devoted to preparing local workers with skills needed to enter the gas industry work force. Jeffery Lorson, who is the director of the center, also will oversee operations at the new training center.

According to Lorson, instructors at the facility will be contract instructors, college staff and industry experts.

State Sen. Eugene Yaw, R-Loyalsock Township, said an emergency exercise hosted two years ago at a gas well site by Range Resources attracted about 125 volunteer firefighters.

"It indicated there was a need for this type of training," Yaw said, adding that the collaborative effort to create the training center is "something that will pay dividends here."

State Fire Commissioner Ed Mann said he does not see the facility as competition for the state Fire Academy. Mann said he would like to see similar facilities in all counties where gas industry activities are occurring.

Mann said his main goals are to provide emergency responders with the tools and training they need to do their jobs, and to ensure those responders are able, at the end of the day, to go home to their families.

"That's what this facility will do," Mann said.

Lou D'Amico, president of the oil and gas association, said Pennsylvania has 150 years of oil and gas extraction experience. In spite of that long history, the training facility will be the first of its kind in the state, D'Amico said.

The need for that type of training has always been needed, but the spotlight on the development of the Marcellus Shale provided the impetus for developing the training center, he said.

D'Amico said it is fitting the center is being built in the county because it has been the most proactive in the state, creating a gas drilling task force and visiting a shale play in Texas in an effort to understand the issues and benefits of gas exploration.

"This is a milestone event for the industry and the emergency response community," said Larry L. Michael, college Workforce and Economic Development executive director. "It's an opportunity to provide training opportunities in the commonwealth for hands-on training that is greatly needed."

 Source: Williamsport Sun-Gazette

An air quality study near Marcellus Shale natural gas operations in Bradford, Lycoming, Sullivan and Tioga counties found no emission levels that would pose a public health concern, according to a report released today by the Department of Environmental Protection.

"The results show there are no emission levels that would be of concern to the health of residents living and working near these operations," DEP Secretary Mike Krancer said. "They are consistent with the results of our air monitoring in southwest and northeast Pennsylvania, the other two areas of the state with the most Marcellus drilling."

The report notes that the sampling effort, conducted between August and December 2010, was not meant to address potential cumulative impacts.

DEP's assessment focused on concentrations of volatile organic compounds, including benzene, toluene and xylene, which are typically found in petroleum products. The department also sampled for other pollutants, such as carbon monoxide and nitrogen dioxide, near natural gas extraction and processing sites.

DEP first conducted background sampling in early August 2010 at the Sones Pond parking lot in Loyalsock State Forest, Sullivan County.

The air quality sampling was conducted the weeks of Aug. 30, Nov. 15 and Dec. 6. An evening sampling event was held Nov. 17. DEP used its mobile laboratories and the equipment was set up downwind of the target sources during early morning and late evening hours.

"This study provides us with additional valuable information as part of our ongoing effort to determine the impact of these operations on air quality, public health and the environment," Krancer said.

The air monitoring surveys were located next to Talisman Energy's Thomas Compressor Station in Troy Township, Bradford County; East Energy's Shaw Compressor Station in Mainesburg Township, Tioga County; East Energy's Chicken Hawk well south of Mainesburg; and Anadarko Petroleum's Hagemeyer well in Gamble Township, Lycoming County.

Those surveys detected the main constituents of natural gas—including methane, ethane, propane and butane—as well as low levels of other compounds, such as MtBE, carbon monoxide and methyl mercaptan, the odor-producing compound.

DEP's sampling did not find concentrations of any compound that is likely to trigger air-related health issues associated with Marcellus Shale drilling activities in the northcentral region.

Results from DEP's previous air monitoring studies near Marcellus facilities in southwest and northeast Pennsylvania were announced in November 2010 and January 2011, respectively.

To view the report, log onto www.depweb.state.pa.us and click "Regional Resources," then Northcentral Region and choose the "Community Information" link on the right side of the page.

For more information, visit www.depweb.state.pa.us or call 570-327-3659.

Media contact: Daniel T. Spadoni, 570-327-3659

Following a full battery of tests at Pennsylvania American Water’s raw water intakes along the Allegheny, Clarion and Monongahela Rivers and Two Lick Creek, in Indiana, PA, the company found no elevated or harmful levels of radiological contaminants, volatile organic compounds (VOCs) or inorganic compounds (IOCs). The results confirmed that the quality of the water supplied by Pennsylvania American Water's treatment plants has not been impacted by radioactive materials, VOCs or IOCs from Marcellus Shale drilling wastewater.

Analysis of the water at all sites tested determined that no detectable levels of the following radiological contaminants were found: Gross Alpha Radiation, Gross Beta Radiation, Radium-226, Radium-228, Strontium-90 and Tritium. The results also revealed no detectable levels of the following VOCs: Benzene; Carbon Tetrachloride; Chlorobenzene (mono); cis-1,2-Dichloroethylene; 1,2-Dichloroethane; 1,2-Dichlorobenzene (Ortho); 1,4-Dichlorobenzene(Para); 1,2-Dichloroethane; 1,1-Dichloroethylene; 1,2-Dichloropropane; Ethylbenzene; Dichloromethane; Styrene; Tetrachloroethylene; Toluene; trans-1,2-Dichloroethylene; 1,2,4-Trichlorobenzene; 1,1,1-Trichloroethane; 1,1,2-Trichloroethane; Trichloroethylene (TCE); Vinyl Chloride and Xylenes (total).

The test results showed levels well within compliance standards for 32 IOCs, including chromium, mercury, arsenic, barium, copper, lead, cyanide and boron, uranium and cadmium. In addition Pennsylvania American Water, at the request of the Pennsylvania Department of Environmental Protection (DEP), sampled our finished drinking water at three sites (Pittsburgh Aldrich, Pittsburgh Hays Mine and Clarion) in late March 2011, for total alkalinity, bromide, chloride, pH, total dissolved solids, uranium, gross alpha radiation, radium 226, and radium 228. All of the data received show that all results are within all acceptable water quality standards set by the US Environmental Protection Agency and the Pa DEP.

The company performed the additional testing over and above its routine sampling and monitoring for more than 90 contaminants to ensure compliance with all water quality standards. Pennsylvania American Water is dedicated to providing our customers with high-quality water service. The company will continue to work closely with the U.S. Environmental Protection Agency (EPA) and DEP to ensure that the water we provide customers meets federal and state regulatory standards.

http://www.amwater.com/

Harrisburg, May 2 – At the direction of Governor Tom Corbett, the Department of Revenue today released an analysis showing that companies engaged in andrelated to natural gas drilling activities in Pennsylvania have paid more than $1.1 billion in state taxes since 2006.

Those taxes came on top of the billions of dollars of infrastructure investments,royalty payments and permit fees paid by the industry.

The Revenue Department’s analysis, which breaks out tax payments from oil andgas companies and their affiliates through April 2011, indicates that 857 of these companies have already paid $238.4 million in capital stock/foreign franchise tax, corporate net income tax, sales/use tax and employer withholding to the state in 2011.

These figures from the first quarter of this year already exceed by nearly $20 million the total tax payments made in all of 2010.

The department’s analysis also identified $214.2 million in personal income taxes paid since 2006 attributable to Marcellus Shale lease payments to individuals, royalty income and sales of assets.

A comprehensive analysis of personal income tax paid on Marcellus Shale business profits is not feasible because the department cannot conclusively determine what profits from Marcellus Shale partnerships, S corporations and LLCs were passed through to individuals as opposed to C corporations, which are taxed at 3.07 percent and 9.99 percent, respectively.

However, the department can determine that these oil and gas companies, and their affiliates, include 1,096 pass-through businesses. These businesses reported $675.4 million in 2008 income.

These numbers will be updated monthly. For more information, visit www.revenue.state.pa.us

.

Wexford, PA, May 3 - The Pennsylvania Independent Oil and Gas Association today announced the addition of two senior staff members to support the organization's growing membership base of more than 800 oil and gas producers, marketers and service providers.

Joining PIOGA are Kevin Moody, Vice President and General Counsel; and Al Catanzarite, Vice President, Public Outreach.

"The addition of Kevin Moody and Al Catanzarite to PIOGA's staff comes at an extremely important time in our industry's development in the Commonwealth, as we work to address the multiple regulatory and communications challenges in Harrisburg and in the communities our members operate," said President Gary Slagel.  "Having the in-house legal skills of an attorney with Kevin's abilities is going to provide a great value to our members, with the ability to represent them in the range of issues involved in the exploration, production, transportation and marketing of oil and natural gas."

Kevin Moody, Vice President and General Counsel

Moody was most recently with the Harrisburg office of Eckert Seamans Cherin & Mellott LLC, where his areas of focus included natural gas, electricity, water and sewer utilities, and competitive natural gas and electric generation suppliers.

Kevin will represent PIOGA in Public Utility Commission matters, ensure compliance with legal requirements of association management, advise on tax and legislative issues, oversee the enhancement of the PIOGA legislative committee and consult on general legal matters.

A graduate of the University of Pittsburgh and the Dickinson School of Law, Kevin began his legal career as a law member of the Board of Appeals of the Pennsylvania Department of Revenue.  He will be based in Harrisburg.

Al Catanzarite, Vice President, Public Outreach

Al will be responsible for PIOGA's external communications; developing and supporting community education, workforce training and other oil and gas industry initiatives and lobbying on behalf of the Association's membership of more than 800 Pennsylvania oil and gas producers, marketers and service providers.

A graduate of The Pennsylvania State University, Catanzarite comes to PIOGA with more than 20 years of experience in marketing, public relations, internal and external communications, sales and marketing management, and multimedia program design and development.

Most recently, Al served as Sales and Marketing Manager, Northeast US, with Select Energy Services and was responsible for developing the company's sales, marketing and public relations processes in Pennsylvania, West Virginia, Ohio and New York.

"I am pleased that both Kevin and Al have chosen to join PIOGA's team and work with both members and staff on the regulatory and public outreach initiatives the association is undertaking as Pennsylvania continues to emerge as a leader in energy production in the United States," said President and Executive Director Louis D. D'Amico.  "Our members will be well served by the experience and enthusiasm these two professionals bring to the job."

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"A consistent theme in every discussion about the concept of an impact fee has been to ensure that funds raised from this fee are dedicated to address local impacts and potential concerns with the environment, a principle that PIOGA believes is important in the continuing evaluation of any potential fee," said Louis D. D'Amico, president and executive director. "A significant proportion of these funds should be allocated directly back to the counties and municipalities where Marcellus Shale operations are taking place, allowing for decision-making based on local priorities. A similar priority-setting allocation of revenue targeted for the tangible impacts on state resources should be followed to ensure this money reimburses the Commonwealth for impacts and creates a long-term plan to protect the environment and help the people of Pennsylvania get the most from this significant economic development opportunity."

D'Amico also encouraged people across Pennsylvania to acknowledge one important fact often overlooked in the hyperbole over natural gas development. "These companies, their vendors and their employees pay hundreds of millions of dollars in state and local taxes. To suggest otherwise is a disservice to the need for educated dialogue about this industry and its contributions to the Commonwealth," he said.

PIOGA outlined its position regarding the allocation of an impact fee as it is developed and considered by the state legislature, and as presented by Sen. Scarnati. It includes:

•  Designating a significant portion of the impact fee for distribution to local and county governments where Marcellus Shale operations are taking place, based on the level of activity in each township and county, with priorities established for those funds determined by those officials and their constituents, according to their specific needs.
•  Documenting the tangible impacts Marcellus operations are having on state-owned land, resources and programs, and targeting a proportionate share of funds to address those impacts.  These can include establishing a system of water quality monitoring stations along streams and rivers throughout the Commonwealth, creating a designated funding source to respond to incidents at drilling locations, investing in infrastructure upgrades as identified at sewage, wastewater and drinking water treatment plants and other key facilities in need of improvement, targeting workforce development and training programs to provide Pennsylvanians with the skills needed to work in the industry and supporting local fire departments and emergency responders in areas with Marcellus activity with equipment and training.
•  Establishing a public-private partnership in the creation of a government/industry commission to review and designate funding support for additional needs as development activity continues in the Marcellus Shale regions of the Commonwealth.

"PIOGA recognizes that Senator Scarnati's plan to develop an impact fee is the first step in a deliberative process to reach a consensus on the most equitable formula for establishing an impact fee and best use of these funds around the Commonwealth.  Our organization is committed to achieving that goal," said D'Amico.

The new website, www.FracFocus.org, features an easy-to-use interface that gives the public and regulators access to comprehensive information about hydraulically-fractured wells nationwide. Searchable fields allow users to identify wells by location, operator, state and county, as well as a standard well identification number, known as an API number. The site also contains general information on the hydraulic fracturing process, water protection programs, descriptions of the chemicals used and their function in the process, and the Chemical Abstract Services registry number of each additive. A “Frequently Asked Questions” section is also included. The site also features information on private water wells, outlining steps landowners can take to learn more about operating and maintaining their water wells.

Participating energy companies voluntarily upload information about the chemical additives and the proportion used in each hydraulic fracturing job using a standard template. As of the launch, 24 energy companies are participating in the www.FracFocus.org project. In addition, several state regulators are actively encouraging energy companies to disclose information through the national chemical registry.

“For the past six months, our two organizations have been working together to build this first-of-its-kind web-based national chemical registry,” said Mike Paque, executive director of the GWPC. “As more and more questions were asked about the hydraulic fracturing process the past couple of years – particularly relating to chemical additives used in the process – we recognized an obstacle to greater disclosure was the lack of a uniform and efficient way to collect, report, and ensure public access. Information about additives used in the process was widely distributed, but difficult to access.”

“States have regulated the hydraulic fracturing process for more than half a century,” said Mike Smith, executive director of the IOGCC. “Until now, regulators and the public had no single site where they could easily access useful information on hydraulic fracturing and the additives used in the process. That said, the website will be a useful new tool to help the public learn about the hydraulic fracturing process. Our organizations have a responsibility to keep the public informed. We see this site as a step forward, and we expect it will evolve even more in the future.”

Sunday, March 27, 2011

Kurtis Fish is only 20 years old and he's already making $80,000 per year.

Same goes for his 24-year-old brother, Ronald Severin.

The brothers, who completed a Marcellus shale training gas well drilling program at Westmoreland County Community College in September, work as chainhands on a Marcellus rig in Northeastern Pennsylvania.

The Las Vegas natives were laid off from their sheet metal jobs in Nevada when they heard about WCCC's roustabout training program.

"We're both young guys," Fish said. "There wasn't very many opportunities in Vegas for us. We really didn't like staying on unemployment. We didn't want to waste our time."

So they ventured to Pennsylvania and graduated at the top of the class.

Within the next three years, thousands of new Marcellus shale jobs are expected to join the region's work force.

That means Fish and Severin's story will likely begin to echo.

And it gives local colleges a lot of work to do to prepare Western Pennsylvania's workers. Some are creating new programs or modifying current ones to meet the demands of expected jobs.

A study last spring conducted by Pennsylvania College of Technology, an offshoot of Penn State University, looked at expected drill and rig activity in Westmoreland, Beaver, Washington, Green and Fayette counties. Other studies have looked at central and northern Pennsylvania.

It analyzed the type and number of Marcellus occupations needed between 2010 and 2014.

In 2014, there will likely be nearly 10,900 Marcellus jobs in that five-county region, the study found.

"There's a lot of things that impact how fast this goes, but the opportunity and the amount of gas that's coming up in the high performing wells ... it's jobs for several generations," said Tracy Brundage, Penn College's managing director for work force development and continuing education.

There are three main types of jobs needed to bring a Marcellus well into use: predrilling, drilling and production, she said.

So, how do you get one of those jobs?

Many companies offer specific training, Brundage said, but they also want people who bring specific skills. Those things can be learned at community college programs, two-year college programs and four-year college programs.

Williamsport-based Penn College offers training in safety, heavy equipment, welding, commercial driver's license, electronics, fork-lift operation, instrument and programs, natural gas measurement, safety, supervisory control and data acquisition.

The college also offers roustabout training, a common program among local community colleges, that prepares workers for entry-level laborer jobs.

A two-year or four-year degree is necessary for more technical jobs, like engineering and surveying, applied science, surveying technology, construction management, electronics and computer engineering technology, welding and fabrication technology, CAD technology and heavy construction.

Penn College and WCCC are two hubs for Marcellus ShaleNET, a $4.9 million community-based job training grant from the U.S. Department of Labor.

Community College of Allegheny County also offers training, and Butler County Community College is readying training programs for this summer.

Local labor

In years past, most Marcellus well workers were from out of state, but that's changed within the past year, Brundage said.

"A lot of companies that we're meeting with now are saying most of the workers are Pennsylvania residents," she said.

But, she pointed out, some of those could be "transplants" to the state, like Fish and Severin.

The jobs are lucrative, but they're not easy money.

"I know it's significantly better than the average wages for other industries," Brundage said. "The opportunity is there, particularly if people are interested in a job where they can earn good money.

"But they have to work hard. The hours are long, the schedules are different than in a typical industry. ... It's a different type of work mentality than a lot of traditional jobs that we're used to."

Roustabout work, in particular, is tough.

"It is very, very physically demanding work -- outside in all kinds of conditions, getting the well sites set up and getting it ready to produce," CCAC spokesman David Hoovler said. "It's definitely not an easy job, not for the faint of heart."

The majority of people applying for roustabout jobs are young, local residents, Hoovler said. Roustabout base pay typically is about $28,000, but can be considerably more.

"We're not getting people coming from a great distance away," he said. "I think the majority have been from Allegheny County and directly in this region."

WCCC has run several roustabout training programs with classes on average of 15 students, said Byron Kohut, director of Marcellus ShaleNET's western hub at WCCC.

Area companies partner with the school, providing rig tours and explaining operations. That means the company will present their work to the class and take the students to a rig site for a presentation.

On the last day of class, the company gets first pick of the students.

No money changes hands, he said, between the school and the drilling companies.

The graduation rate is close to 100 percent, and the job placement rate is 60 percent.

"We don't guarantee employment, but we do provide assistance," Kohut said. "This industry is going to do nothing but help the region."

Some roustabouts work two weeks on, two weeks off, while other companies have regular day shifts.

Average hourly starting pay is $18 to $25. Between $50,000 and $100,000 is common for a full-time roustabout, Kohut said.

Classes at WCCC have had both 20-year-olds and 50-year-olds, and those students have been placed locally.

Range Resources, one of the area's largest local drilling companies, works as a sort-of general contractor, relying upon subcontractor-type companies for the actual drilling. Those service companies are hiring locally, spokesman Mike Mackin said.

Of its workers, 95 percent are local, Mackin said.

"That percentage of local workers is just getting higher and higher," he said.

Range Resources is the company that completed the well near Pittsburgh Mills mall in Frazer -- the first Marcellus shale well to be drilled in Allegheny County. The majority of its activity is in Washington County.

Drilling one well can require up to 400 people working in 100 different jobs, according to Mackin.

At first, Mackin said, out-of-towners were working in Western Pennsylvania, but that has changed as it's more cost-efficient for companies to hire local workers and as colleges begin implementing training programs.

The industry wide average salary for those working in the Marcellus shale industry is $60,000.

Halliburton, another service company that contracts with oil and natural gas companies, conducts company-specific training for safety, along with other on-the-job training, said Shawna Melton, human resources supervisor for the company's Northeast district.

Field operator positions require a high school degree, while field engineers need a college degree, she said.

Halliburton recruits throughout the state and provides training grants through Penn College, she said.

Work for local schools

Both WCCC and CCAC offer roustabout programs.

In addition to its three- to four-week, noncredit roustabout training, WCCC teaches an associate program in welding. It expects to provide more programming in the future.

"Our number one priority is jobs, training falls second, so what we're doing is developing a system that will identify talented individuals," said Byron Kohut, director of Marcellus ShaleNET's western hub at WCCC.

The college will partner with Career Link in Pennsylvania, West Virginia and Ohio to identify jobs.

Roustabout programs have begun, he said, and the curriculum for the other five positions are still in the works.

CCAC officials talked to Marcellus drilling companies, organizations and government agencies, looking ahead at what jobs would be available.

"We discovered that actually a number of our existing programs, some with some minor changes and some as they currently existed, already aligned with projected needs within the industry," CCAC's Hoovler said.

Some examples are the college's welding program, which now includes a special type of pipe welding used in the natural gas industry, and its first-responder course that now includes training for fires and accidents at wells.

CCAC also has a certification program in bio-remediation and courses in the two-year bio-technology program focusing on water used in the drilling process.

The college's roustabout program, made up of 10 students, began last week. Hoovler said the college hasn't decided if it will offer future roustabout programs.

"We are always looking at our course offerings to see when there are changes in the work force (and) how we can develop a program to fit that need," Hoovler said.

Though BCCC doesn't offer any specific Marcellus shale related programs yet, it does provide a number that apply to the industry, like emergency responder training and safety training, according to Stephen Catt, executive director of work force development at the college.

BCCC is also a part of the ShaleNET program, Catt said, working with WCCC and Penn College.

The college is trying to also look at sustainable jobs -- what will be here after the rigs leave -- in the filtration, distribution and environmental fields, he said.

BCCC plans to offer roustabout training this summer.

Some vocational and technical schools also offer Marcellus programs.

Lenape Tech in Manor Township teaches a certification course to be natural gas and oil facility technician. About a half-dozen adult learners enrolled in the program.

Steel Center Area Vocational Technical School in Jefferson Hills a program that provides general knowledge to a variety of jobs in the natural gas industry, like frac operator, welltender, line locator and rig hand.

 To learn more about Marcellus ShaleNET, visit here. 

Career not for timid, inattentive

On the day brothers Kurtis Fish and Ronald Severin completed their training to be laborers on a Marcellus shale gas drilling operation, there were suitors jumping to hire them.

Three companies interviewed the Latrobe brothers, and drilling company Nomac hired them right away.

It shipped them to Arkansas for an additional three-week training course. Then it was on to Oklahoma to work on a rig for a final company evaluation.

Now, they work near Scranton on shifts that are two weeks on/two weeks off.

The job pays well, but it's not easy.

While stationed at the rig, Fish wakes up at 3 a.m. and boards a van at 4 a.m. to ride to the rig site. He works from 5:30 a.m. to 5:30 p.m., then gets back to the main camp by 7 for dinner, a shower and to get ready to do it all again come 3 a.m.

What's more, it's hazardous work.

"A lot of people look at the money first, but people have got to realize this is one of the top-paying, most dangerous jobs out there," Fish said. "If you come to work not paying attention -- I don't mean to scare people -- but you could die."

His crew will take an extra 10 minutes to do a job safely rather than do it wrong.

On the job, the brothers clean the rig, take out trash, and "trip pipe" -- changing drilling bits. It's a promotion over their original job and it puts them one step closer to better jobs, Fish said.

He hopes to move up to the motorman job, a position that checks and works on various motors at drilling sites.

Though it is physical labor, Fish said he and his brother have always been active workers who keep in shape.

"If you don't mind getting dirty, working in the rain, wind, snow -- it wouldn't bother someone who wouldn't mind doing that," Fish said.

As for the future, Fish sees himself progressing in the oil fields.

"They've got a saying, 'You chase the rig,'" Fish said. "So this rig I'm on could go to Wyoming ... I can pick up and go with my rig and keep my position, or quit and try to find a rig in Pennsylvania that needs a hand."

He's open to going wherever the rigs go.

"It's a job, and that's how it works in the oil fields," Fish said. "You chase the rigs."

Six high-priority Marcellus occupations

• Derrick operators

• Rotary drill operators

• Service units operators

• Roustabouts

• Welding and brazing operators

• Truck drivers

Source: Westmoreland County Community College

"Illegal actions that threaten Pennsylvania's environment and waterways cannot be tolerated. If found guilty of these appalling acts, those charged must be prosecuted to the fullest extent of the law. The oil and natural gas industry speaks with one voice in condemning these unthinkable acts and blatant disregard for the environment."

 NOTE: A press release from Commonwealth's Acting Attorney General announcing these charges, ranging from 2003 and 2009, is available HERE.
 

Alternative Road Maintenance Practices for Gas and Oil Development

This is a comprehensive, one-day course on innovative and effective practices that can reduce maintenance costs and less the environmental impact of unpaved roads. Topics include:

• Environmentally Sensitive Maintenance Practices (ESMPs) to reduce road maintenance costs and control erosion from the road area.
• Roadside influences including bank maintenance and vegetation concerns.
• Stream interface considerations.
• Troubleshooting roadside ditches and ditch outlets.
• Selection and use of quality road materials to improve both road base and surface aggregates.
• Improving road durability and longevity.
• Road base considerations.
• Practical drainage solutions.

The program takes place April 12 at the Double Tree by Hilton Pittsburgh Meadow Lands, Washington. Cost is $395, lunch included. For information, contact Kathy Mori, 814-865-5355 or kam16@psu.edu.

Download the brochure

Subsidized training opportunities

The North Central Oil & Gas Industry Workforce Partnership and the North Central Workforce Investment Board are offering several training programs in which companies receive a discount of 75 percent off the usual tuition cost for Pennsylvania employees.

• GIS Software Training. This 8-hour program is instructed by Development Faction, LLC and focuses on using geographic information systems for tasks such as planning, asset management, permitting and reporting, roadway bonding management, and digital mapping. The subsidized cost of the program is $50 per employee, including lunch. The course will be held April 20 at the Holiday Inn in Indiana; April 21, NCWIB offices, Ridgway; and April 26, Holiday Inn, Clarion.

For information on registering and the requirements to obtain the subsidized tuition, contact Jim Nelson at jnelson@ncwib.org or Pam Streich, pstreich@ncwib.org, or call either at 814-773-3162.

Download the brochure

• Landman Training. This four-day program is intended for those interested in becoming a land agent or gaining a better working knowledge of the business of being a landman. Topics include geology, oil and gas real estate law, understanding contracts, titles and abstracts, and landowner negotiations. It takes place May 2-5 at the University of Pittsburgh at Bradford. Cost is $995 and includes all materials, along with breakfast and lunch each day. Information: 814-362-5078 or contined@pitt.edu.

Download the brochure

• Succession Planning. This four-hour course, aimed at executives and managers responsible for preparing a company for the future, focuses on how to establish a success plan, identify and manage talent, and prepare people for new, key assignments. Program dates are May 12, Seneca Building, Bradford; May 26, NCWIB office, Ridgway; and June 9, Indiana County Technology Center, Indiana. Cost is $19.75. Information: 814-362-5078 or contined@pitt.edu.

Download the brochure

To receive these subsidized tuition fees, companies must complete an Industry Partnership Tracking Form (click here to download a copy). The training costs are underwritten by a grant from the Pennsylvania Department of Labor & Industry. PIOGA is a member of the  North Central Oil & Gas Industry Workforce Partnership. 

The purpose of the commission, Corbett said, is “to oversee how we can build around this new industry and how we can make certain we do this while protecting our lands, our drinking water, our air – all the time growing our workforce.’’

Led by Lt. Governor Jim Cawley, the commission is to report to Gov. Corbett with its findings within 120 days of its first meeting.

The commission is to address the needs and impacts of natural gas development on local communities, as well as promote the efficient, environmentally sound and cost-effect development of Marcellus Shale and other natural gas resources.

In addition to Cawley, the following individuals were invited to join the commission:

• Mike Krancer, acting Secretary of Environmental Protection, Harrisburg.
• George Grieg, acting Secretary of Agriculture, Harrisburg.
• C. Alan Walker, acting Secretary of Community and Economic Development, Harrisburg.
• Barry Schoch, acting Secretary of Transportation, Harrisburg.
• Patrick Henderson, the Governor’s Energy Executive, Harrisburg.
• Robert Powelson, chairman of the Pennsylvania Public Utility Commission, Harrisburg.
• Glenn Cannon, executive director of Pennsylvania Emergency Management Association, Harrisburg.
• James W. Felmlee, president of the PA State Association of Boroughs, Harrisburg.
• Clifford “Kip’’ Allen, president of the PA League of Cities and Municipalities, Harrisburg.
• Gene Barr, vice president, Government & Public Affairs, Pennsylvania Chamber of Business and Industry, Harrisburg.
• Terry R. Bossert, vice president, Government & Regulatory Affairs, Chief Oil & Gas, Harrisburg.
• Jeff Wheeland, Lycoming County Commissioner, Williamsport.
• Vincent J. Matteo, president Williamsport-Lycoming Chamber of Commerce, Williamsport.
• Terry Engelder, professor of geosciences, Penn State University, Department of Geosciences, University Park.
• Matthew J. Ehrhart, executive director of the Chesapeake Bay Foundation’s Pennsylvania office, Harrisburg.
• Ronald L. Ramsey, senior policy advisor, the Nature Conservancy, Pennsylvania Chapter, Harrisburg.
• David Porges, chief executive officer, EQT, Pittsburgh.
• Christopher J. Masciantonio, general manager, State Government Affairs, U.S. Steel, Pittsburgh.
• Cynthia Carrow, vice president of Government & Community Relations, Western Pennsylvania Conservancy, Pittsburgh.
• David Sanko, executive director of the PA State Association of Township Supervisors, Enola.
• Dave Spigelmyer, vice president, Government Relations, Chesapeake Energy, Canonsburg.
• Randy Smith, U.S. Government Affairs Manager, Exxon Mobil, Fairfax, Va.
• Ray Walker, chairman Marcellus Shale Coalition, Canonsburg.
• Chris Helms, NiSource Gas Transmission and Storage, Houston, Texas.
• Terry Pegula, Delray Beach, Fla.
• Jeff Kupfer, Chevron, Washington, D.C.
• Gary Slagel, chairman, PA Independent Oil & Gas Association, Wexford.
• Anthony S. Bartolomeo, chairman, Pennsylvania Environmental Council, Philadelphia.
• Nicholas S. Haden, vice president, Reserved Environmental Services, Mt. Pleasant.

Gov. Corbett’s executive order creating the commission is available by clicking here.

CONTACT:  Katy Gresh, Department of Environmental Protection Southwest Regional Office 412-442-4203

DEP Announces Testing for Radioactivity of River Water Downstream of Marcellus Water Treatment Plants Shows Water Is Safe

HARRISBURG -- The Department of Environmental Protection today announced results of in-stream water quality monitoring for radioactive material in seven of the commonwealth's rivers. All samples showed levels at or below the normal naturally occurring background levels of radioactivity.  The tests were conducted in November and December of 2010 at stations downstream of wastewater treatment plants that accept flowback and production water from Marcellus Shale drilling. 
 
"We deal in facts based on sound science," said DEP acting Secretary Michael Krancer. "Here are the facts: all samples were at or below background levels of radioactivity; and all samples showed levels below the federal drinking water standard for Radium 226 and 228." Krancer said that these sampling stations were installed last fall specifically to monitor stream quality for potential impacts of Marcellus development.  Krancer explained that the water tested is the raw water in the river before it enters public water suppliers' intakes where the water receives further treatment.

The river testing stations that were evaluated are the Monongahela at Charleroi in Washington County; South Fork Ten Mile Creek in Greene County; Conemaugh in Indiana County; Allegheny at Kennerdell in Venango County; Beaver in Beaver County; Tioga in Tioga County; and the West Branch of the Susquehanna in Lycoming County.

For more information about DEP, visit www.depweb.state.pa.us or call 412-442-4203.

MUST-READ: Groundtruthing Academy Award Nominee 'Gasland'‎ - New York Times/E&E News

The documentary "Gasland" brought the term "hydraulic fracturing" into the nation's living rooms. With its sharp and sustained criticism of gas drilling, it highlighted the growing debate that has come with a boom in the country's domestic energy production. And it's been nominated for an Oscar. … Industry groups, such as the Independent Petroleum Association of America, have accused Fox of confusing hydraulic fracturing with drilling in general. They allege many other errors, large and small. IPAA's "Energy In Depth" campaign issued a seven-page rebuttal to the film, called "Debunking Gasland".

The policy required operators to have the Department of Conservation and Natural Resources conduct an environmental assessment of all drilling proposals on public lands. DCNR’s assessment was to consider “threatened and endangered species habitat; wildlife corridors; water resources; scenic viewsheds; public recreation areas; wetlands and floodplains; high-value trees and regeneration areas; avoiding steep slopes; pathways for invasive species; air quality; noise; and road placement and construction methods.”

The “Policy for the Evaluation of Impacts of Oil and Gas Development on State Parks and State Forests,” was rescinded by way of a notice in the February 19 Pennsylvania Bulletin. In the notice, DEP stated:

“This document, which was not subject to advanced public comment or review, is being rescinded as unnecessary and redundant of existing practice. The Department is implementing Section 205(c) and will continue to do so. The Department will continue to consider the input of all applicable parties with respect to public resources outlined in Section 205(c).”

Because DEP could deny a drilling permit application as “incomplete” if the operator did not confer with DCNR and agree to DCNR’s “response measures,” the policy was contrary to a Pennsylvania Supreme Court decision upholding an operator’s reasonable access to privately owned mineral rights, even when the surface owner is the state government. (See the article on page 18 of the February 2011 PIOGA Press.)

We have completely redesigned the site to make it easier to navigate, and we have included plenty of useful information, as well as links to additional resources. We will be adding more features in the near future, particularly for PIOGA members. If you have suggestions for further improving the site, please let us know.

In the meantime, thank you for visiting.

Two major energy trade associations announced today the creation of an alliance to create a better understanding of the important issues related to the safe development of Pennsylvania's domestic energy resources. The American Petroleum Institute (API) and the Pennsylvania Independent Oil and Gas Association (PIOGA) have formed a partnership that will serve as a forum for factual information about the vast energy resources found in Pennsylvania.

API and PIOGA are expanding their education campaign on the benefits being realized through the development of Pennsylvania's natural gas reserves in the Marcellus Shale, in new jobs for workers, economic growth for the state and energy security for our nation.  The educational effort focuses on Pennsylvania and is part of API's coordinated nationwide program on oil and natural gas priority issues.

"This partnership will increase informed dialogue among Pennsylvanians and promote a strong local economy through energy development," said Rolf Hanson, executive director of the Associated Petroleum Industries of Pennsylvania. "API is continuing to work with Pennsylvanians who are committed to improving the public's understanding of, and support for, the many opportunities presented by the Marcellus Shale natural gas reserves in the Commonwealth."

"This collaboration builds on the Pennsylvania Independent Oil and Gas Association's commitment to our members and Pennsylvanians to create an environment favorable to creating industry jobs for our neighbors," said PIOGA's Executive Director Lou D'Amico.  "We are a solution-oriented organization, and working with the American Petroleum Institute will help our members educate a larger number of Pennsylvanians."

The partnership will serve as the educational arm of API and PIOGA regarding the Marcellus Shale Play in Pennsylvania.

Hanson and D'Amico said that specific details on the partnership will be announced in the coming weeks.

About PIOGA

PIOGA is the principal non-profit trade association of the Commonwealth's independent oil and gas producers, marketers, service companies and related businesses.  PIOGA promotes the general welfare of Pennsylvania's crude oil and natural gas exploration and production industry and is committed to the economical and environmentally responsible development, production and use of the Commonwealth's crude oil and natural gas resources.

About API

API is the only national trade association that represents all aspects of America's oil and natural gas industry. Our 450 corporate members, from the largest major oil company to the smallest of independents, come from all segments of the industry. They are producers, refiners, suppliers, pipeline operators and marine transporters, as well as service and supply companies that support all segments of the industry.

CONTACT: Rolf Hanson, +1-717-234-7983, hansonr@api.org, or Lou D'Amico, +1-724-933-7306 ext. 24, lou@pioga.org

Appalling.

It is appalling to insinuate that this wastewater is "dumped into rivers," as this article claims. All wastewater from a drilling location is transported to treatment facilities, permitted and monitored by the Department of Environmental Protection, where the treated discharges must meet standards that protect the environment. New facilities coming on line are providing even higher levels of treatment.

It is appalling to suggest our industry's efforts to improve recycling technologies for flowback water is a negative development. Recycling has allowed operators to reduce total water use, and new piping and storage systems reduce truck traffic on local roads.

It is appalling to imply -- in three references in the story -- that drilling activity was a leading source of total dissolved solids in the Monongahela River in fall of 2008, ignoring scientific studies that pinpoint abandoned mine drainage as the culprit in that incident. 

It is appalling to give credibility to counting trucks entering permitted wastewater treatment facilities as some evidence that discharges have not been reduced through recycling. These facilities were operating at capacity when Marcellus activity started, and receive shipments from the state's conventional industry as well as other sources (all according to state permits).

The Associated Press has been objective in its past reporting on this industry. As Secretary Hanger also noted, this sensationalistic article is "disappointing." 

LOUIS D. D'AMICO
President/Executive Director 
Pennsylvania Independent Oil and Gas Association