july 2015 gas & oil magazine-pennsylvania edition

JULY 2015 • A FREE MONTHLY PUBLICATION

U.S. is now largest gas/oil producer

Plastics BOOM thanks to shale

EPA: No widespread water contamination

Poll: Voters support shale development

American Made Hardwoods

American Made Hardwoods is committed to using local recourses and their local talent to build beautiful, hand-crafted pieces for your home. The Furniture Heartland takes priority and pride in constructing detail, style, creativity and longevity in its furniture. Choose

pieces for every room of your house and take comfort in the fact that they were made with the care of your local craftsman.

MADE WITH AMERICAN HARDWOOD, MADE THE AMERICAN WAY.

Stop in and visit one of the stores featured, all found in Wayne and Holmes County’s Amish Heartland.WWW.fuRNITuREHEARTlAND.COM

www.GasandOilMag.com Gas & Oil July 2015 1

Gas&Oil1

• Investment Management• Retirement Planning• Trust Services• Estate Planning & Administration and more. . .

A trusted Wealth Management partner for 100 years.WesBanco Bank, Inc. is a Member FDIC. Trust & Investment Services may invest in insured deposits or nondeposit investment products. Nondeposit investment products are not insured by the FDIC or any

other government agency, are not deposits or other obligations of, or guaranteed by any bank, and are subject to investment risks, including the potential loss of principal. www.wesbanco.com

Contact one of our representatives for a private consultation.

Let us help define what it means to you.

Harold Migias, JD Senior Vice PresidentOffice: (724) 909-7055 Cell: (304) 312-4619

Lea Ridenhour, JD Senior Vice PresidentOffice: (304) 234-9446

10372819

PROTECTINGOURPLANETXTO Energy respects and protects the environment. We meet or exceed government regulations and industry standards every step of the way. Every well we drill is custom designed based on the unique needs of the site to promote safety and minimize environmental impact. We constantly examine and improve our processes because to us, respecting and protecting our planet’s resources is the right thing to do. xtoenergy.com

Gas & Oil July 2015 Pennsylvania Edition2

publication by

Subscribe or Renew Your Subscription

(1 issue sent to you each month)

www.GasandOilMag.com

YES! I want to subscribe to Gas & Oil Magazine

Please send me a year of Gas & Oil for only $35

Delivery Address (Please Print)

Company Name

Street Address Apt. #

City State Zip

Email Phone

Payment Enclosed Bill Me Later

Credit Card Number

Card Expiration (00/00)

Payment Information (Please Print)

(At the above address)

Authorized by

Subscriptions Now Available!Fill out the form below and mail to:

Gas & Oil Magazine212 E. Liberty St. • Wooster, OH 44691

330-264-1125

Gas&Oil2


Table of Contents

EXECUTIVE EDITOR

Ray [email protected]

“Gas & Oil” is a monthly publication jointly produced by Dix Communication newspapers across Ohio & PA. Copyright 2015.

Andrew S. [email protected]

Andrew S. DixAndrew S. DixAndrew S. DixAndrew S. DixAndrew S. DixAndrew S. DixAndrew S. DixAndrew S. DixAndrew S. DixAndrew S. Dix

PUBLISHER

Kelly [email protected]

330-287-1653

Ed ArchibaldAccount Executive

[email protected] 740-439-3531

ADVERTISING

Brad [email protected]

DIGITAL CONTENT MNGR

4

5

6

6

7

8

10

11

12

13

15

16

17

18

Elizabeth [email protected]

LAYOUT DESIGNER STAY CONNECTEDWith the Gas & Oil Industry

Sign up for our Gas & Oil

Newsletter that will be delivered directly to your

email inbox.

Gasandoilmag.com will keep youup-to-date with the latest industry news!

connect with @gasoilmagnews

on Twitter.

U.S. OIL PRODUCTION REDUCES GULF COAST IMPORTS

WIDGET ALLOWS INTERACTIVE VISUALS FROM EIA

INDUSTRY ASSN. FILES ACTION TO STOP ENFORCEMENT OF PROVISIONS FOUND UNCONSTITUTIONAL

LAND PURCHASE COULD LEAD TO MULTIBILLION SHELL FACILITY

SHELL CLEARS HURDLE FOR ARCTIC DRILLING

AN EYE IN THE SKY: SKYWATCH MONITORS EXISTING GAS, ENERGY PIPELINES

U.S. NOW LARGEST OIL & NATURAL GAS PRODUCER

DEVELOPMENTS FOR AREA LANDOWNERS AFFECTED BY THE ROVER PIPELINE

THE BOOM BEYOND: PLASTICS, FERTILIZER MANUFACTURING THRIVING

HYDRAULIC FRACTURING WATER CYCLE

EPA STUDY: FRACKING HAS NOT LED TO WIDESPREAD WATER CONTAMINATION

WHAT THEY ARE SAYING: POLL FINDS OVERWHELMING SUPPORT FOR FRACKING IN PA

ACT 13: PIOGA REQUESTS STATE SUPREME COURT TO FORCE DEP’S COMPLIANCE

FEDERAL JUDGE WANTS DELAY EXPLAINED

Gas&Oil3


U.S. oil production reduce Gulf Coast imports

In recent years, higher domestic production of light, tight crude oil has led to a reduction in crude oil im-ports. Certain types of crude oil have been affected

more than others; for example, the increased economic availability of domestic light, tight crude oil has virtually eliminated Gulf Coast imports of light crude oil. In the past year, Gulf Coast imports of medium crude oil have also fallen because of increased production from the Eagle Ford, Bakken, and Permian regions.

One of the key characteristics of crude oil is its density,

measured by API gravity as established by the American Petroleum Institute. Less-dense liquids have higher API gravities. Crude oils with API gravities of 35 or above are considered light; 27 to 34 are medium; less than 27 are heavy.

From the fi rst quarter of 2014 to the fi rst quarter of 2015, medium-grade crude oil imports to Gulf Coast refi neries decreased 45%, from 1.5 million barrels per day (b/d) to 0.8 million b/d. On the other hand, over that same period there was a 0.4 million b/d (22%) increase in imports to Gulf Coast refi neries of heavy crude oil. Improved refi ning margins from processing additional volumes of heavy crude have resulted in a 3% increase in gross atmospheric distilla-tion unit (ADU) throughput in the Gulf Coast region over this period, from 8.0 million b/d to 8.2 million b/d.

Almost all medium-grade crude oil imports are from Middle Eastern countries. Gulf Coast imports of medium crude oil from Saudi Arabia decreased by 52% from the fi rst quarter of 2014 to the fi rst quarter of 2015, from 0.9 mil-lion b/d to 0.4 million b/d. Similarly, Gulf Coast imports of medium crude oil from Kuwait decreased by 46% over this period, from 0.4 million b/d to 0.2 million b/d.

Source: U.S. Energy Information Administration, Petro-leum Supply Monthly

Gas&Oil4

STRAW FOR SALE WITH DELIVERY

h t t p : / / w w w . s t r a w f o r s a l e o h i o . c o m /

Semi trailer deliveries to job-sites of small square, rounds, and

large square bales.

*Certified, Weed Free straw available too*

Mary @ 740-974-8112

Transportation Office, Inc.Lancaster, OH

1032

2621


The U.S. Energy Information Administration (EIA) today released a new widget that allows internet us-ers to display interactive visualizations of current

energy data from EIA on their own websites. The widget pulls user-selected data from EIA's application programming in-terface (API) to create maps, line charts, pie charts, and bar graphs. The interactive visualizations are confi gured to always show the latest EIA data so that the embedded charts and maps never go out of date.

For example, EIA's new widget tool allows users to embed visualizations showing monthly and quarterly net electricity generation for the United States, including the map shown above, on their own websites. When a visitor clicks on the map, the visualization also retrieves and graphs how this data breaks down the generation fuel for each U.S. state, how that state's electricity supplies are generated over time by different fuel sources, and how that state compares with other states. Thus, the effects of California's current drought can be seen with a decline in hydroelectric generation.

In another example, EIA's new widget allows users to em-bed U.S. petroleum production data in an interactive world map (one of several base maps offered by the tool). U.S. petro-leum output can be easily compared to other countries' pro-

duction by selecting specifi c nations on the map, which results in a line graph showing the output of each country chosen.

A wide range of EIA customers, including policymakers and their staff, journalists working on energy articles, researchers keeping up with the latest energy trends, students gathering information, and members of the public interested in energy issues can benefi t from the new EIA widget.

The energy visualization tool joins the EIA Excel add-in and EIA's data API as a part of the agency's continuing ef-forts to share more of its energy data in easily updated, cus-tomizable ways. This version incorporates comments received during a beta testing phase earlier this year. These tools can be found on the Open Data section of EIA's website.

The product described in this press release was prepared by the U.S. Energy Information Administration (EIA), the statistical and analytical agency within the U.S. Department of Energy. By law, EIA's data, analysis, and forecasts are in-dependent of approval by any other offi cer or employee of the United States Government. The views in the product and press release therefore should not be construed as represent-ing those of the Department of Energy or other federal agen-cies.

Widget allows interactive visuals from EIA

Gas&Oil5

Club Car of the AllegheniesFinleyville, PA

World Class Utility & Golf VehiclesFactory Authorized Sales • Service • Parts

724-348-3560www.clubcar.com


Industry Assn. files action to stop enforcement of

provisions found unconstitutional

WEXFORD, Pa. -- The Pennsylvania Independent Oil & Gas Association (PIOGA) has filed legal action with the Pennsylvania Supreme Court to

enforce portions of the court’s ruling on Act 13, asking the court to stop the state Department of Environmental Protec-tion (DEP) from requiring well permit applicants to comply

with certain provisions of Act 13 the court found unconstitu-tional and unenforceable in its December 2013 decision.

“The Supreme Court made clear in its Act 13 ruling that spe-cific well permitting requirements in Section 3215 of the Act were unconstitutional, and denied the department’s request for reconsideration of that decision in February 2014,” said PIOGA General Counsel Kevin J. Moody. “It is unfortunate that PIOGA has had to take this action, but court decisions apply to government agencies in the same way they apply to others, and DEP has ignored the fact that the Supreme Court invalidated and enjoined nearly all provisions of Section 3215 in its decision on Act 13. Requiring a government agency to obey the law, just as the agency requires others to obey laws it administers, is a win for all citizens and the rule of law.

“DEP cannot continue to require our industry to comply with these invalidated and enjoined provisions without ob-taining authorization from the General Assembly,” added Moody. “In the meantime, however, DEP has simply ignored the court’s determination and is using the Section 3215 deci-sional process as if the court’s ruling does not exist. This has forced PIOGA to take action on behalf of its members and the industry to ask the court to enforce its injunction.”

The Pennsylvania Supreme Court invalidated and enjoined several provisions of Section 3215 in its decision on Act 13, including those related to the department’s consideration of impacts on certain identified public resources. DEP has continued to apply those requirements in the well permit ap-plication process, despite both the judgment of the court and the court’s denial of the department’s request that the court reconsider its invalidation of these specific provisions.

Moody emphasized that existing laws and permitting re-quirements are more than adequate to fully protect the statu-torily designated public resources outside the well permitting decisional process, and the industry will continue to comply with those laws. “Natural gas developers protect public re-sources through voluntary measures as well as by complying with provisions of federal laws that protect threatened and en-dangered species, and state laws administered by the Depart-ment of Conservation & Natural Resources, Fish and Boat Commission and Game Commission,” Moody said.

Royal Dutch Shell reportedly closed on its pur-chase of a former zinc smelter site in Beaver County, Pennsylvania, on Monday, June 15.

Previous reports said Royal Dutch Shell was consider-ing building a plant at the site that would convert ethane into plastics.

A plant for the Horsehead Holdings Corp. was previ-ously at that site near Potter, Pennsylvania. Shell did not release the purchase price for the land. The closing comes about six months after Shell exercised its option to buy the land under an agreement that was extended for more than two years.

And while Shell has bought surrounding land and be-gun site preparation and demolition at the site, the com-pany has not committed to building what would become a multibillion-dollar plant.

A published statement from spokesman Ray Fisher called the move a "necessary step for us to advance the permitting process and allows us to proceed with prelimi-nary site development work.”

Land purchase could lead to multibillion Shell facility

Gas&Oil6


Mark Thiessen Associated Press

ANCHORAGE, Alaska (AP) — Royal Dutch Shell's Arctic drilling program cleared a major bu-reaucratic hurdle to begin drilling for oil and gas

off Alaska's northwestern coast this summer.The Bureau of Ocean Energy Managementhas approved

the multi-year exploration plan in the Chukchi Sea for Shell after reviewing thousands of comments from the public, Alas-ka Native organizations and state and federal agencies.

The approval came just days before a planned protest of the drilling program in Seattle.

Shell must still obtain other permits from state and feder-al agencies, including one to drill from the Bureau of Safety and Environmental Enforcement. Both BOEM and BSEE are agencies of the U.S. Department of Interior. The compa-ny must also obtain government opinions that fi nd Shell can comply with terms and conditions of the Endangered Species Act.

Shell spokesman Curtis Smith said the approval “is an im-portant milestone and signals the confi dence regulators have in our plan. However, before operations can begin this sum-mer, it's imperative that the remainder of our permits be prac-tical, and delivered in a timely manner.

“In the meantime, we will continue to test and prepare our contractors, assets and contingency plans against the high bar stakeholders and regulators expect of an Arctic operator,” Smith said in an email to The Associated Press.

The Bureau of Ocean Energy Management's director, Abi-gail Ross Hopper, said in a statement that offi cials recognize “the signifi cant environmental, social and ecological resources in the region” and have established “high standards for the protection of this critical ecosystem, our Arctic communities, and the subsistence needs and cultural traditions of Alaska Natives.”

“As we move forward, any offshore exploratory activities will continue to be subject to rigorous safety standards,” she said.

The Port of Seattle would need to get another permit to base the Arctic drilling fl eet in Seattle for about six months of the year.

Meanwhile, Smith said that a giant fl oating oil rig currently

anchored off Port Angeles, Washington, will be towed to Se-attle this week despite the Seattle mayor's assertion that the Port of Seattle can't host the rig until it gets a new land-use permit.

Smith said in another email that the 400-foot-long Polar Pi-oneer was scheduled to arrive at the Port of Seattle's Terminal 5 “later in the week” to prepare for planned exploration in the Arctic Ocean.

Smith said his company believes its arrangements to use the terminal are valid and disagrees with Seattle's interpretation.

Seattle Mayor Ed Murray has urged the port to reconsider its two-year, $13 million lease with Foss Maritime, a company whose client is Shell.

Activists plan to protest. A so-called “festival of resistance” starts Saturday and will include protesters on land and in kay-aks, trying to block the ship's movements.

Environmental groups on Monday blasted the Bureau of Ocean Energy Management for providing the permit to Shell.

“This decision places big oil before people, putting the Arc-tic's iconic wildlife and the health of our planet on the line,” Erik Grafe, an attorney for Earthjustice, said in a statement. “The agency should not be approving such threatening plans based on a rushed and incomplete environmental and safety review. Ultimately, Arctic Ocean drilling is far too risky and undermines the administration's efforts to address climate change and transition to a clean energy future.”

Shell's drilling plan proposes to drill up to six wells within the Burger Prospect, located about 70 miles northwest of the village of Wainwright, Alaska. The wells would be drilled in about 140 feet of water by the Polar Pioneer and the Noble Discoverer. Both vessels would provide relief-well capability for the other.

Shell has said the two ships will leave the Chukchi Sea at the end of each drilling season.

Arctic offshore reserves are estimated at 26 billion barrels of recoverable oil and 130 trillion cubic feet of natural gas, ac-cording to U.S. Geological Survey estimates.

Associated Press reporter Phuong Le in Seattle contributed to this report.

Shell clears hurdle for Arctic drilling

Gas&Oil7


Dan Kubacki Dix Communications

ASHLAND, OH -- For a pipeline inspection pilot, fl ying an aircraft low to the ground and doing several things at once comes with the job.

It’s a position that isn’t for everyone who has earned their wings, but according to Steve Bechtol, president of Skywatch, it’s a job for a pilot who can safely manually fl y a small plane no higher than 500 feet from the ground all while accurately observing pipeline right of ways. Bechtol has owned the company since 2007, but Skywatch has been around locally since the 1980s, when it was owned and oper-ated by Roger Blodgett.

“It’s a very busy cockpit,” Bechtol said. “When you’re fl y-ing low to the ground and taking down observations, you’re basically multitasking, and task management is key to learn-ing to do pipeline patrolling well. Roger always used to say there’s pilots and then there’s pipeline patrol pilots, and there’s not very many of the latter. It’s very different fl ying than just taking off and going up to altitude and cruising to the next location.”

Blodgett founded Air Surveillance in 1986 and later acquired Skywatch, which was at the time based in Wad-sworth. Bechtol bought the company in 2007 two years af-ter Blodgett passed away. Since then, Skywatch’s fl eet has grown to four Cessna 182 aircrafts with eight employees,

including three full-time pilots and two part-time pilots. A hangar at Ashland County Airport is home to one half of Skywatch’s operations.

“When we bought it, there was one airplane and it was fl y-ing in Ohio only,” Bechtol said. “We’ve been able to grow it in the last seven years to four aircrafts and we fl y in 23 states now. We have a base here in Ashland and one in Iowa.”

On a typical day, Skywatch pilots take four- to six-hour fl ights on each pipeline observation assignment. Bechtol said Skywatch has contracts to monitor existing pipelines for most major energy companies.

“We fall under the damage prevention for these compa-nies, and so we’re basically protecting their resources, giving updates on vegetations, encroachments, new building going on in what they call high-consequence areas and to just doc-ument what’s close,” he said.

If the pilots spot a problem, they contact “line spotters” at ground level who can further investigate an issue on a pipe-line. Most of the issues can be avoided by a property owner calling state utility protection services before starting any digging or new construction.

Bechtol said Skywatch’s planes are equipped with the most up-to-date safety features and prospective pilots re-ceive months of training before their fi rst solo fl ight.

An eye in the sky:Skywatch monitors existing

gas, energy pipelines

Gas&Oil8


Steve Bechtol, president of Skywatch, stands in front of two of his company’s planes housed at Ashland County Airport. Skywatch has four planes in its fl eet and patrols energy pipelines in 23 states in the Midwest. Times-Gazette photo/Tom E. Puskar

“We’re very focused on safety, because the industry has a history of being a little more accident-prone, and we’re out to change that,” Bechtol said. “We do an extensive amount of training when somebody’s hired on; they usually fl y with us several months before we turn them loose.”

Skywatch has pipeline patrol contracts year round, and Bechtol still gets the chance to perform relief fl ying these days. He has been a pilot with the Air Force Reserves in Youngstown for 12 years and recently joined the Ohio Air National Guard in Mansfi eld.

“The business and the military fl ying both complement each other quite well because the C130 is a low-level air-craft that you usually fl y 300 to 500 feet, and it’s the same thing we do in pipeline patrol, we fl y at 300 to 500 feet,” Bechtol said. “The training was valuable to carry over to the business. They really go hand in hand pretty well.”

With the Air Force Reserves, Bechtol fl ew planes for personnel and equipment airdrop missions as well as trans-porting medics, wounded and soldiers’ remains from com-bat zones. He was last deployed in Afghanistan in 2011 for several months.

“Hauling remains home was a pretty big honor,” Bechtol said. “That’s something I’ll never forget.”

With the National Guard, Bechtol will continue to do the same type of fl ying, except the commute to base will be much shorter. Bechtol is a native of Wayne County, gradu-

ated from Ashland University in 1995 and said he is com-mitted to keeping Skywatch in Ashland. He recently gave a presentation at the Ashland Rotary Club about Skywatch and his small-business focus.

“It was a good location for us and we like Ashland and plan to stay here,” Bechtol said. “Something I feel pretty strongly about is supporting the local businesses that sup-port us. I think I said in the Rotary presentation that I looked in our Quickbooks and we have 70 vendors that we use with an Ashland County address, and we’re proud of that. It’s kind of neat to see the relationship between small businesses in Ashland, how we’re not large enough to have an IT department or a marketing department, but there’s a business in town to help fi ll that need for us.”

Skywatch’s contracts are located primarily in the Mid-west, but the company does have room to grow, according to Bechtol.

“We’re quite possibly the only one based out of this re-gion,” he said. “Most of our competitors are based out of Texas. There’s defi nitely room for expansion, because for one thing, we have probably some of the best and safest airplanes in the industry.”

Dan Kubacki can be reached at 419-281-0581, ext. 237, or at [email protected].

Gas&Oil9


Joe Massaro Energy In Depth - PA

Thanks to American ingenuity, the United States is now the largest producer of natural gas and oil in the world – let that sink in for a second. Just a de-

cade ago the U.S. was in a state on energy scarcity and im-ports were the highest they had been in years. Now, for the first time in years the U.S. is closer to energy independence than ever before.

Thanks to hydraulic fracturing U.S. oil & gas operators have been able to tap into shale formation miles beneath the surface and unlock huge reservoirs of oil and natural gas.

By deploying this technology in business friendly states across the country like Ohio, Pennsylvania and West Virgin-ia the U.S. has been able to cut their imports of natural gas to levels not seen in 28 years, the level since 1987. Accord-ing to the Energy Information Administration, “U.S. net im-ports decreased 9 percent in 2014, continuing an eight-year decline.”

The decrease in natural gas imports into the U.S. has translated into energy savings for American households across the country. Take a look at New York, as recently as 2008 the state was importing more of its natural gas from Canada at a premium. Now after the development of Penn-sylvania’s Marcellus Shale, there is more natural gas flowing from New York into Canada than the amount flowing into the state from Canada. A similar story is being told for do-mestic oil production as well.

When the U.S. became the world’s largest producer of oil it leap-frogged over other oil producing countries like Saudi Arabia and Russia. British Petroleum’s (BP) Chief Economist, Spencer Date, recently stated, “The implica-tions of the shale revolution for the U.S. are profound.” He went on to say, “We are truly witnessing a changing of the guard of global energy suppliers.”

According to data from BP the U.S. saw oil production go up by 1.6 million barrels per day in 2014, for a total of 11.6 million per day on average. And, for the first time in 40 years, this spike in production propelled the U.S. to become the number one producer of oil in the world.

Much like increased natural gas production, oil produc-tion also led to American consumer savings. During 2014 the price per barrel of oil went from over $100 to under $60 solely because of U.S. production. Because of the decrease in oil prices American drivers are paying less at the pumps. For instance Columbus, Ohio had under $2 per gallon of gasoline for the first time in five years. In a recent study The American Automobile Association (AAA) found that

Americans would be paying 40 cents more per gallon of gas than they’re paying now were it not for shale development.

Continued shale development across the country is con-tinuing to provide Americans with family sustaining jobs and lower energy costs. But most importantly we now have global bragging rights for pioneering shale development and making the United States and energy superpower again.

U.S. Now Largest Oil & Natural Gas Producer

Gas&Oil10

RE-STRUCTURE YOUR BACKYARD

ph 330.359.5708 toll free 800.359.75221.5 miles West of Winesburg on US 62Monday-Friday 7-5, Saturday 9-2 www.AlpineStructures.net

400.00Valid with coupon only. Not valid with any other offers. Offer expires 7.31.15OFFANY 12' WIDE OR LARGER BUILDING$

24x48' Loft Barn


Atty. David J. Wigham

WOOSTER -- The Rover Pipeline Project, spon-sored by Rover Pipeline LLC (“Rover”), is a proposed pipeline project involving the con-

struction of a series of large pipelines to transport several billion cubic feet of natural gas each day from processing and production facilities in the Utica and Marcellus Shale regions of Ohio, West Virginia, and Pennsylvania through Ohio and into Michigan and Canada.

The "Rover Pipeline" will really be a series of pipelines, with the size varying by location. In Wayne, Ashland, Tus-carawas, and Stark counties, the Rover Pipeline will consist of two 42-inch diameter high pressure pipelines.

As part of the pipeline planning and construction pro-cess, Rover is required to obtain permanent easements over property in the pipeline route. As I detailed in a previous article published on December 30, 2014, due to the com-plexity of the issues involved in negotiating easements and the frequent lack of information or abundance of disinfor-mation regarding easement terms and payments, landown-ers almost always benefi t from retaining experienced legal counsel. As a result, one of the single most important deci-sions of any landowner negotiating a pipeline easement will be who they retain to represent them in negotiations with Rover.

Since my December 30, 2014 article, a number of facts have come to light showcasing the importance of retaining adequate counsel. Initially, many landowners believed that the Rover Pipeline Project would either be abandoned or the pipeline route would be moved off of their property.

Since the project was fi rst announced Rover has actively moved the project from the pre-planning stage to the actual permit approval process. Based on the fi lings to date federal approval is likely given within the next year, and the pipe-line route in eastern Ohio will apparently remain largely unchanged. In short, if you own property in the route for the Rover Pipeline and still have doubts about whether you would even need to negotiate an easement, you can lay those doubts to rest.

Another key development since my December 30, 2014 article is Rover's issuance of initial offers to the landowners in the pipeline route. At this time, all affected landowners should have received at least one offer from Rover to ac-quire an easement. These initial offers are still signifi cantly

below the industry average per foot to acquire pipeline easements. In fact, Rover has already increased many of their initial offer for easements by anywhere from 60% to over 300%.

This development means two things for landowners. First, for those landowners who engaged an attorney on a contin-gency basis whereby the attorney receives 20%-33% of the amount Rover pays over the initial offer, those landowners can start to evaluate exactly how much their attorney(s) will receive in fees. These landowners will likely be surprised to discover that the legal fee will be much higher than per-haps originally anticipated because of Rover's negotiating strategy to issue extremely low initial offers. This means that law fi rms charging 20%-33% of the amount Rover pays over the initial offer will be set to collect staggering fees. A preferable fee structure is one based on a percentage in the range of 10% of the total amount paid by Rover. This fee structure could save landowners tens of thousands of dollars.

Second, these increases signal that Rover recognizes that their initial offers were simply too low and they are will-ing to negotiate. Nevertheless, landowners should be very cautious going forward as Rover has repeatedly displayed a high level of skill in negotiating easements.

Finally, while Rover has shown that they are willing to increase their offer, it is apparent at this point that Rover will not simply provide landowners with adequate compen-sation because the landowners refuse to accept low offers. To obtain adequate compensation, landowners will not only need to be patient but also will need to substantiate why the offer provided by Rover is too low. In the absence of this ev-idence, it is hard to believe that any landowners will be able to obtain adequate compensation for the fi nancial impact of the Rover Pipeline, particularly without legal counsel. Experienced legal counsel should also be able to provide evidence of going rate for a pipeline easement based upon their past experience.

David J. Wigham is a second generation oil and gas attor-ney at the law fi rm of Critchfi eld, Critchfi eld & Johnston, in Wooster, Ohio, with nearly 25 years of industry experience. He is also the current chair of the Natural Resources Com-mittee of the Ohio State Bar Association.

DEVELOPMENTS FOR AREA LANDOWNERS AFFECTED BY THE ROVER PIPELINE

Gas&Oil11


Joe Massaro Energy in Depth-Marcellus

From fertilizer to plastic, shale gas development continues to fuel American manufacturing and create family sustaining jobs. As EID has noted

many times, the price of natural gas remains low because of prolific shale plays being developed across the country. That, in turn, is fueling large growth for energy-intensive in-dustries like the fertilizer industry.

Prior to the shale revolution here in the United States, ni-trogen fertilizer, the most common fertilizer used by farmers across the country, was imported from other countries that had access to affordable natural gas. According to a report by CRA International:

“An unstable U.S. fertilizer supply would introduce sig-nificant risk not just to U.S. agriculture but, by extension, to the entire world food supply. There is economic value in the continued presence of a U.S.-based nitrogenous fertil-izer manufacturing industry to the extent that it minimizes reliance on global sources that may one day prove unreli-able.” (Pg.20)

Today, because of the shale revolution here in the United States, the fertilizer industry is seeing huge savings in its manufacturing process. Because of this, the domestic fertil-izer industry is currently experiencing its largest growth in 25 years. According to the Fertilizer institute:

“Low-cost gas selling for $2.76 per million British thermal units — down 40 percent from last year’s prices and well below the $9 it cost in 2003 — has invigorated the fertilizer manufacturing industry across the Midwest and Southeast, with more than 35 fertilizer plants proposed or recently

brought online.”

These savings in the manufacturing process are being passed on to farmers, which is helping to lower their annual costs.

This is a trend we’ve been seeing for years now with other energy intensive industries like plastic. Thanks to abundant affordable natural gas the plastic industry has not only recovered from the recession, but it’s expected to grow by more than 20 percent over the next decade. According to Steve Russell, vice president of the American Chemistry Council’s plastic division:

“The ready availability of large amounts of natural gas is giving the U.S. plastics industry really a renaissance, turn-ing it from among the highest-cost producers to one of the lowest in the world, increasing manufacturing in the United States, increasing exports to markets that we were not ex-porting to before, and along with all that comes jobs.”

Hydraulic fracturing has been creating family sustain-ing jobs in states that support the development of their shale resources. Now, as the natural gas developed here in the Commonwealth makes its way to manufacturing plants across the U.S. we’re witnessing a renaissance in American manufacturing. Dave Taylor, President of the Pennsylvania Manufacturers Association President recently stated that Pennsylvania’s natural gas revolution is a “one-two punch for manufacturing competiveness.”

That’s something we can all celebrate.

Joe Massaro is a spokesman for Energy in Depth – Marcel-lus

The Boom Beyond:Plastics, Fertilizer Manufacturing Thriving

Gas&Oil12


Hydraulic fracturingwater cycle

STAGE

1STAGE

2STAGE

3STAGE

4

STAGE

5

WATER ACQUISITIONVolumes of water are withdrawn from

ground water and surface water. Three resources to be used in the hydraulic frac-turing process.

CHEMICAL MIXING Once delivered to the well site, the ac-

quired water is combined with chemical additives and proppant to make the hy-draulic fracturing fl uid.

WELL INJECTIONPressurized hydraulic fracturing fl uid is

injected into the well, creating cracks in the geological formation that allow oil or gas to escape through the well to be col-lected at the surface.

FLOWBACK AND PRODUCED WATER

When pressure in the well is released, hydraulic fracturing fl uid, formation water, and natural gas begin to fl ow back up the well. This combination of fl uids, contain-ing hydraulic fracturing chemical additives and naturally occurring substances, must be stored on-sit — typically in tanks or pits — before treatment, recycling, or disposal.

WASTEWATER TREATMENT AND WASTE DISPOSAL

Wastewater is dealt with in one of sev-eral ways, including but not limited to: disposal by underground injection, treat-ment followed by disposal to surface wa-ter bodies, or recycling (with or without treatment) for use in future hydraulic fracturing operations.

Gas&Oil13


Gas&Oil14

Akron Bearing provides the area’s best source of bearings, couplings, sheaves, bushings, v-belts, chain and sprockets, electric motors and seals, including Thomas® Disc Couplings, Rexnord® Elastomeric Couplings, Link-belt® Roller Bearings and Falk® Steelflex® Grid Couplings. Akron Bearing and Rexnord are teamed up to keep your plant and equipment running.

Akron Bearing and Rexnord –Your source for Power Transmission Products and Solutions

www.rexnord.com

1965 S. Arlington Rd. Akron, OH [email protected]

Products and Solutions

GENERALRV CENTER

AKRON CANTONREGINAL AIRPORT

Mt. Pleasant St.

Greenburg Rd

Mayfair Rd.

77 Lauby Rd.

N

3063 GREENBURG RD., N. CANTON, OH 44720(330) 896-8977

OVER 3000 RV’s at

www.generalrvohio.com

GENERALRV CENTER

New 2015Grand Design Solitude 379FL

New 2015Wildwood372 Reds

Patio DoorResidentialFridge & StoveSwivel RockersBar Stools

FrontLiving Room

5 Slideouts

Four DoorFridge

High End

#110099LIST: $34,087NOW

$25,998OR $199 PER MO*

1) $99/mo. 7.75% APR for 96 mos. 2) $109/mo. 5.49% APR for 120 mos. 3) $168/m0. 5.49% APR for 120 mo. 4) $209/mo. 5.49% for 114 mos. 5) $299/mo 5.49% APR for 144 mos. 6) $309/mo. APR for 180 mos. 7) $379/mo. 5.49% APR for 180 mos. 8) $515/mo. 5.49% APR for 180 mos. 9) $579/mo. for 240 mos. 10) $968/mo 5.49% for 240 mos. All Payments are based on 20% down and with approved credit. Factory provided RV photos and fl oor plans shown in this ad are for illustration purpose only. All RV prices are plus tax, title and fees, sale prices are not valid in combination with any other advertised special offers, rebates or discounts. All units are subject to prior sale. Offers not valid on prior sales. Prices and offers valid until April 30, 2015.

#117459LIST: $86,730NOW

$61,998OR $459 PER MO*

1034133200


Katie Brown, PHDDirector, Strategic Communications FTI Consulting

On June 4th, the Environmental Protection Agency (EPA) released its long awaited, fi ve-year study, which fi nds “hydraulic fracturing activities have

not led to widespread, systematic impacts to drinking water resources.”

As many have noted, this is the most important study on hydraulic fracturing to come out over the past fi ve years – a fact that EPA’s Science Advisor and Deputy Assistant Administrator of EPA’s Offi ce of Research and De-velopment pointed to in a press release,

“It is the most complete compilation of scientifi c data to date, including over 950 sources of infor-mation, published pa-pers, numerous techni-cal reports, information from stakeholders and peer-reviewed EPA sci-entifi c reports.”

EPA today also re-leased nine peer-re-viewed scientifi c reports, which played a big role in contributing to EPA’s over-all groundwater study.

EPA’s study actually builds upon a long list of studies that show the fracking process poses an exceedingly low risk of impacting under-ground sources of drinking water. It corrobo-rates a “landmark study” by the U.S. Department of Ener-gy in which the researchers injected tracers into hydraulic

fracturing fl uid and found no groundwater contamination after twelve months of monitoring. It is also in line with re-ports by the U.S. Geological Survey, the Government Ac-countability Offi ce, the Massachusetts Institute of Technol-ogy, and the Groundwater Protection Council, to name just a few.

The report contradicts the most prevalent claim from anti-fracking activists, which have made

“water contamination” the very founda-tion of their campaign against hy-

draulic fracturing. As Energy in Depth reported in March, after

heralding the report at its in-ception, anti-fracking orga-

nizations like the NRDC and InsideClimate News (ICN) later went into damage control, down-playing the forthcom-ing report, likely due to what it would conclude.

Hydraulic fractur-ing has brought cleaner

air, signifi cantly reduced greenhouse gas emis-

sions, created millions of jobs, reduced energy prices,

strengthened national secu-rity, and turned the American

economy around.With this new report, it couldn’t be

clearer that shale development is occur-ring in conjunction with environmental protec-

tion — and the claims by anti-fracking activists have been thoroughly debunked.

EPA Study: Fracking Has Not Led toWidespread Water Contamination

Gas&Oil15


The Marcellus Shale Coalition

Pennsylvanians and Americans “overwhelmingly support” the safe and proven use of hydraulic fracturing to produce clean-burning natural gas, ac-

cording to a national survey by Robert Morris University’s Polling Institute.

HERE ARE KEY POLL TAKEAWAYS:• Support for fracing has also increased significantly – mov-

ing from 42.3% in 2013 to 55.9% majority today.• Additionally, support for fracing in Americans’ own

hometowns has also seen increased support. Today, 49.2% would support (strongly or somewhat) fracing in their own hometowns – up from 40.0% in late 2013.

• Other important findings include:• Fracing can help the U.S. economy – 73.3% agree• Fracing will help the U.S. move to energy indepen-

dence – 68.9% agree• The U.S. should begin exporting some of the resulting

natural gas – 51.6% agreeTHIS FROM RMU’S RELEASE:

A poll by The Robert Morris University Polling Insti-tute shows 57.1% of Pennsylvanians in support of hydrau-lic fracturing. … Nationally, the figures showed 55.9% of Americans hold the same view. … Among those surveyed in Pa., 74.3% said fracking has the potential to help the U.S. economy. … Among Pennsylvanians polled, 69.9% said new drilling technologies that allow fracking “will help move the U.S. to energy independence. … The poll was conducted be-fore the release of a recent report by the EPA that found fracking has not had much impact on drinking water. Once again mirroring national results, more Pennsylvanians said they would favor fracking in their own hometowns than the percentage opposed — 48.2% to 43.3%.

HERE IS WHAT THE MEDIA IS REPORTING:• “Support for Fracking Growing”: About 56% of 1,003

people polled nationwide said they support hydraulic frac-turing from shale, up from 42% in November 2013. The increase tracked overall knowledge of the process, which grew to nearly 71% from 45% nationwide, and was up to nearly 74% among 529 Pennsylvania residents polled last month. … More than 73% of national respondents (74% in Pa.) said pulling gas from shale has thepotential to help the economy, and 69% nationally said fracking will help the country move to energy independence. (Pittsburgh Tribune-Review, 6/15/15)

• “Majority Favor Fracking”: A new poll reveals more than half of Pennsylvanians favor fracking. The survey … shows 1% of Pennsylvanians support the natural gas drilling technique. … The figure is almost two percentage points higher than the national opinion of 55.9%. Nearly half of those polled — 48% — said they would welcome the industry in their own hometowns. … The poll was con-ducted weeks before a study from the EPA revealed no connection between contaminated drinking water and fracking. … According to the results, 74.3% believe frack-ing has the potential to jolt the state’s economy. (Times Leader, 6/15/15)

• Nat’l Poll “Demonstrates Strong Bipartisan Support”: MSC president Dave Spigelmyer touted the more indus-try-positive aspects of the study and took a jab at Gov. Wolf’s proposal to implement a severance tax on drillers. “Poll after poll, including this most recent one, continues to demonstrate strong bipartisan support for job-creating natural gas development, which is putting tens of thou-sands of Pennsylvanians to work, enhancing air quality and revitalizing our manufacturing sector. … Pennsylva-nians recognize the clear economic and energy security benefits of shale, and this research should serve as a re-minder to elected officials that we need common-sense policies aimed at keeping the commonwealth competitive rather than even higher energy taxes.” (Beaver County Times, 6/16/15)

• Majority of Voters Support Fracking: More than half of Pennsylvanians support hydraulic fracturing or “frack-ing,” according to a recent poll. … “I’m not surprised at all,” said Vince Matteo, president and CEO of William-sport/Lycoming Chamber of Commerce. “It’s a proven industry in the state and the country. I think they see the benefits for the economy and job growth,” Matteo said. (Williamsport Sun Gazette, 6/15/15)

• Voters “Overwhelming Support” Fracking: A majority of Pennsylvanians — 57. 1% — are in support hydraulic frac-turing, slightly more here than across the U.S., according to a new poll. Based on the nationwide poll, 9% of Amer-icans hold the same view. … More Pennsylvanians said they would favor hydraulic fracturing in and around their own hometowns than the percentage opposed — 48.2% to 43.3%. (Pittsburgh Business Times, 6/15/15)

What They Are Saying: Poll FindsOverwhelming Support for Fracking in PA

Gas&Oil16


The Pennsylvania Independent Oil & Gas Association on June 12 filed legal action with the Pennsylvania Su-preme Court to enforce portions of the court’s ruling on

Act 13, asking the court to stop the state Department of Environ-mental Protection (DEP) from requiring well permit applicants to comply with certain provisions of Act 13 the court found un-constitutional and unenforceable in its December 2013 decision.

“The Supreme Court made clear in its Act 13 ruling that spe-cific well permitting requirements in Section 3215 of the Act were unconstitutional, and denied the department’s request for recon-sideration of that decision in February 2014,” said PIOGA Gen-eral Counsel Kevin J. Moody. “It is unfortunate that PIOGA has had to take this action, but court decisions apply to government agencies in the same way they apply to others, and DEP has ig-nored the fact that the Supreme Court invalidated and enjoined nearly all provisions of Section 3215 in its decision on Act 13.

Requiring a government agency to obey the law, just as the agency requires others to obey laws it administers, is a win for all citizens and the rule of law.

“DEP cannot continue to require our industry to comply with these invalidated and enjoined provisions without obtaining au-thorization from the General Assembly,” added Moody. “In the meantime, however, DEP has simply ignored the court’s deter-

mination and is using the Section 3215 decisional process as if the court’s ruling does not exist. This has forced PIOGA to take action on behalf of its members and the industry to ask the court to enforce its injunction.”

The Pennsylvania Supreme Court invalidated and enjoined several provisions of Section 3215 in its decision on Act 13, in-cluding those related to the department’s consideration of im-pacts on certain identified public resources. DEP has continued to apply those requirements in the well permit application pro-cess, despite both the judgment of the court and the court’s denial of the department’s request that the court reconsider its invalida-tion of these specific provisions.

Moody emphasized that existing laws and permitting require-ments are more than adequate to fully protect the statutorily des-ignated public resources outside the well permitting decisional process, and the industry will continue to comply with those laws. “Natural gas developers protect public resources through volun-tary measures as well as by complying with provisions of federal laws that protect threatened and endangered species, and state laws administered by the Department of Conservation & Natural Resources, Fish and Boat Commission and Game Commission,” Moody said.

ACT 13PIOGA requests

state Supreme Court to force DEP’s compliance

Gas&Oil17


Matthew Brown Associated Press

BILLINGS, Mont. (AP) — A federal judge is press-ing U.S. offi cials to explain why it’s taken three decades to decide on a proposal to drill for natu-

ral gas just outside Glacier National Park in an area consid-ered sacred by some Indian tribes in Montana and Canada.

A frustrated U.S. District Judge Richard Leon called the delay “troubling” and a “nightmare” during a court hearing earlier this year. He ordered the Interior and Agriculture departments to report back to him with any other example of where they have “dragged their feet” for so long.

“This is no way to run a government. No way to run a government,” Leon told government attorney Ruth Ann Storey, according to a transcript of the June 10 hearing in Washington, D.C.

At issue in the case is a 6,200-acre energy lease in north-west Montana’s Badger-Two Medicine area immediately south of Glacier. Owned by Solenex LLC of Baton Rouge, Louisiana, the lease has been suspended since the 1990s.

Solenex sued in 2013 to overturn the suspension and wants to begin drilling for gas this summer. It’s represented by the Mountain States Legal Foundation, a conservative Colorado law fi rm that handles property rights cases and has numerous representatives of the oil and gas industry on its board of directors.

U.S. Justice Department spokesman Wyn Hornbuckle said Wednesday the government will submit a response to the judge’s concerns next week. He declined to elaborate.

The Badger-Two Medicine area is the home of the cre-ation story of the four Blackfoot tribes in Canada and Mon-tana and the Sun Dance that is central to their religion. The land is part of the Lewis and Clark National Forest, but it is not on Montana’s Blackfeet Reservation.

Dozens of oil and gas leases were originally sold in the area, but over the years most have been retired or surren-dered. Only 18 suspended leases remain, including Sole-nex’s.

Federal judge

Gas&Oil18


Blackfoot leaders have asked Interior Secretary Sally Jewell to cancel the leases.

The Interior Department issued the energy lease to Sole-nex in 1982, and the Forest Service in 1996 asked for it to be suspended so the agency could perform a historic pres-ervation survey of the site. That was completed in 2012, but there’s been no fi nal decision on whether the lease should remain in place.

Mountain States Legal Foundation president William Perry Pendley noted the boundaries of the traditional cul-tural area for the tribes were studied and expanded several times since the leases were issued.

“The feds have thrown money at the tribes and these con-sultants to do these additional studies,” he said. “The bot-tom line is, this is national forest land.”

But Blackfeet Tribal Historic Preservation Offi cer John Murray rejected any suggestion that the studies were a ploy to block Solenex. He said the Montana tribe opposed the

leases from the time they were issued and considered the original cultural studies of the area inadequate.

“It’s paramount that it’s protected. Bad research does not negate the importance of the area to the Blackfeet,” Mur-ray said.

Storey defended the government’s handling of the Sole-nex case in her appearance before Judge Leon. She said it took many years to conduct the necessary site studies, and working with the tribes meant the process wasn’t entirely within the agencies’ control.

The Forest Service in December determined drilling would adversely affect the sacred site and reduce its spiri-tual power for the Blackfeet.

The Advisory Council on Historic Preservation agreed with that fi nding in January. Its recommendations on how to proceed are pending.

Forest Service spokesman Dave Cunningham said he was not aware of a timeline for a decision.

wants delay explained

In this Nov. 7, 2013 photo, a train hauls oil into Glacier National Park near the Badger-Two Medicine National Forest in northwest Montana. During a June 10 hearing in U.S. District Court in Washington, D.C., U.S. District Judge Richard Leon pressed U.S. offi cials to explain why it’s taken three decades to decide on a proposal to drill for natural gas just outside Glacier in an area of the Badger-Two Medicine that is considered sacred by some Indian tribes in Montana and Canada. At issue in the case is a 6,200-acre energy lease in northwest Montana’s Badger-Two Medicine National Forest, immediately south of Glacier.

(AP Photo/Matthew Brown)

Gas&Oil19


Gas&Oil20

10372823

GP12 PermitExemption 38, GP5 Permit Regulations 3, 6 and 7

10372820

Are You in Control of Your Remote Sites?

Call 888-422-7749i2ctech.com

Providing Affordable IP Surveillance Solutions for over 10 years

Locations in Noble and Stark Counties

High Definition PTZ Cameras Provide Clarity and Control

Thermal Cameras Detect Motion, “see” Leaks and Temp Variances

Solar Powered Systems for Remote Sites

Keyless Gate Entry Solutions Keyless Gate Entry Solutions to Control Site Access

Remote Connectivity to ControlCameras and View Live and Archived Video from Mobile Devices

Video Surveillance Solutions from Drilling to Production

Optional equipment may be shown.© Kubota Tractor Corporation, 2015

www.kubota.com

We are driven.We are Kubota.

RTV-X900 Utility Vehicle• 21.6 HP Kubota Diesel Engine• Exclusive Variable Hydro Transmission• Front and Rear Independent Suspension

Standard L Series Compact Tractors• 24.8 to 47.3 HP Kubota Diesel Engines• Powerful Transmission Options• High Quality, Versatile and Affordable

BX Series Sub-Compact Tractors• 18 to 25.5 HP Kubota Diesel Engines• Hydrostatic Power Steering and 4WD• Category I 3-Point Hitch for Performance-Matched Attachments

M-GX Series Mid-Size Ag Tractors• Electronic-Shift Control with IntelliShift Transmission • Grand Cab, Among the Largest in Class• Highly Maneuverable, Featuring Kubota Exclusive Bi-Speed Turn

10356486

july 2015 gas & oil magazine-pennsylvania edition

Documents