Gas industry threatens to pull out of Pennsylvania

GOP panel presses for streamlined regs

By LAURIE STUART

DALLAS, PA - Some called it smoke and mirrors. Others thought that it was an accurate reflection of the consequences facing the Pennsylvania Legislature and its regulatory bodies as they regulate activities in the Marcellus Shale play.

“The play” is how the natural gas industry describes the geological formation of shale that lies under most of Pennsylvania and the southern tier of New York State. And if industry representatives are to be taken at their word, that shale might not be developed if Pennsylvania does not make it easier and quicker for the industry to “ramp up” its harvesting activities.

Speaking at the Senate Majority Policy Committee public hearing on Tuesday, November 18 at Misericordia University, gas industry officials complained about the lengthy application and delays in getting permits. They advocated that Pennsylvania adopt a one-page application form and create a gas and oil manual that they could follow.

"I have great hopes for what the Marcellus shale play might still hold for Pennsylvania. Unfortunately, my experience to date does not lead me to be very optimistic," said Wendy Straatman, president of Exco-North Coast Energy Inc.

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

Another executive, Scott Rotruck of Oklahoma City-based Chesapeake Energy Corp., the largest natural gas producer in the United States, predicted "ominous" consequences for Marcellus development if Pennsylvania's regulatory environment doesn't become more welcoming.

Ray Walker of Range Resources contrasted the seven-day permit time in Texas with the 45-day process in Pennsylvania.

Seemingly sympathetic GOP senators pressed Department of Protection acting Secretary John Hanger to streamline the process, warning that Pennsylvania can't afford to scare off an industry that has promised to create tens of thousands of new jobs. Representatives from the Delaware River Basin Commission (DRBC) and the Susquehanna River Basin Committee (SRBC) were identically pressed.

Everyone admitted that there were no solutions as to what to do with the cumulative billions of gallons of wastewater that would be created in the hydrofracturing process, containing a variety of added chemicals, plus heavy metals and salts that occur naturally in this deep underground drilling procedure. Texas is currently injecting the fluid into deep wells, but according to Hanger, due to Pennsylvania’s geology, injections had not been favored up to this point.

And despite the early testimony from Will Brackett, editor-in-chief of the Powell Barnett Shale Newsletter, that the North Texas economy is booming because of a 7.5 percent oil production or severance tax, gas industry representatives cautioned the panel that, due to Pennsylvania’s high corporate income tax, any new taxes would stymie Marcellus development and ruin the traditional natural gas industry in Pennsylvania.

The DEP, SRBC and DRBC testified that they recover about 10 percent of their costs related to natural gas through application fees.

Visit www.senatorbaker.com for copies of the written testimony and a full video recording of the hearing.