the pioga press, june 2015
DESCRIPTION
The monthly journal of the Pennsylvania Independent Oil & Gas Association (PIOGA), June 2015 edition.TRANSCRIPT
June 2015 • Issue 62
The
PIOGA pressThe monthly newsletter of the Pennsylvania Independent Oil & Gas Association
(Continues on page 5)
®
PIOGA believes that the Department of EnvironmentalProtection’s draft final regulations governing oil and gassurface operations will burden both conventional and
unconventional operations “to the point of stagnation.”Commenting on DEP’s Chapter 78, Subchapter 78 advancednotice of final rulemaking (ANFR), the association argued thatthe rules seem designed to do little more than micro-managePennsylvania’s oil and gas industry without meaningful environ-mental benefits and without regard to the costs and burdens therules would impose on operators.
Because DEP has divided the proposed Chapter 78 regula-tions into separate sets of rules applying to conventional(Chapter 78) and unconventional (Chapter 78a) operations,PIOGA filed two sets of formal comments in response to theANFR. However, the general comments for both focus on thesame three themes:
1. There is no demonstrated need for the revisions in thedraft final rule.
DEP has made the draft final rule significantly more restric-tive without responding to the many thousands of comments thedepartment received in response to the regulations as originallyproposed in December 2013. The department has not released acomment-and-response document explaining why the changeswere made in the draft final rule, nor did the agency provide anyregulatory analysis. As a result, neither industry nor the public isable to discern why certain changes have been made.
“In short, the Department and EQB [Environmental QualityBoard, the 20-member panel that officially proposes and adoptsDEP regulations] have the responsibility and legal obligation tofully inform the regulated community of the necessity, justifica-tion, costs and impacts of the Draft Final Rule,” PIOGA stated in
PIOGA Chapter 78 comments:Rules more stringent than regulations governing other industries
its comments. “Without this, we cannot provide fully informedcomments on the Draft Final Rule. The Department should con-duct this rulemaking in the open, not amend proposed rulesbehind closed doors without clear explanation.”
Additionally, the Regulatory Review Act (RRA) requires astatement of the need for regulations and a statement of the nec-essary reporting procedures, including copies of forms or reports.Approximately 20 new forms are referenced in the proposed reg-ulations, but copies of the forms or other manner of electronicsubmission are not included in the draft final rule. As a result,PIOGA stated, it is not possible to determine if the forms complywith the regulations and are reasonable or if they impose unjusti-fied additional burdens on operators.
2. The draft final rule is procedurally flawed. In 2014, the General Assembly directed the EQB to create
separate regulations for conventional and unconventional oil andgas wells. DEP, in response, merely separated its 2013 draft rulesinto Chapter 78 and 78a and posted them on the website of thedepartment’s Oil and Gas Technical Advisory Board (TAB) inSeptember 2014, subsequently publishing two sets of draft finalrules in its ANFR on April 4, 2015. DEP did not follow theCommonwealth Documents Law for the newly separated rules,which requires agencies to give public notice of their intent topromulgate rules, explain the changes and request written com-ments. PIOGA believes the Chapter 78 conventional rules mustbe withdrawn and go through a new public notice and associatedcomment period as a proposed, not final, rulemaking.
Beyond that, the RRA requires the department to conduct aregulatory flexibility analysis to estimate the direct and indirectcosts both the Chapter 78 and 78a rules on the private sector,with special consideration of impacts on small businesses. Such
an analysis is to include whether lessstringent compliance standards anddeadlines, simplified reporting require-ments, and exemptions from regulationare appropriate for small businesses.The regulatory analysis form was “woe-fully deficient” for the 2013 draft andmissing entirely from the draft finalrule, PIOGA pointed out.
The RRA does not allow DEP to usethe ANFR process to offer entirely newprovisions or substantial changes to
Severance tax issue heats up. . . . . . . . . . . . . 6“Waters of the U.S.” regs finalized . . . . . . . . 11PIOGA Pig Roast preview. . . . . . . . . . . . . . . 12Scenes from the Summer Outing . . . . . . . . . 13PIOGA launching membership system. . . . . 14MLP rules provide bright lines . . . . . . . . . . . 17EPA’s groundwater study released . . . . . . . . 20OSHA expands Severe Violator program . . . 22Process Safety Management . . . . . . . . . . . . 24Alternative fuel rebate extended . . . . . . . . . . 26Small scale conversion to methanol . . . . . . . 27Quigley and Dunn confirmed . . . . . . . . . . . . 27
State forming pipeline task force . . . . . . . . . 28Permitting and the northern long-eared bat . 29New DEP comment process . . . . . . . . . . . . . 29House OKs lease assignment bill . . . . . . . . . 30Teaching teachers about energy. . . . . . . . . . 31Shale Innovation Contest winners . . . . . . . . 32PIOGA Member News . . . . . . . . . . . . . . . . . 33Member Profile: Insight Environmental . . . . . 34New PIOGA members . . . . . . . . . . . . . . . . . 35Oil & Gas Trends. . . . . . . . . . . . . . . . . . . . . . 36Calendar of Events . . . . . . . . . . . . . . . . . . . . 39PIOGA contacts . . . . . . . . . . . . . . . . . . . . . . 39
Page 2 The PIOGA Press
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Chapter 78 rulemaking: Continued from page 1
previously proposed regulations. Examples of entirely new provi-sions include those requiring the mitigation of noise from theconstruction phases of unconventional operations, as well as anew requirement addressing centralized tank storage authoriza-tions, the definition of “other critical communities” and the pro-hibition of centralized wastewater impoundments, among others.
3. The draft final rule has many legally unsupported andexcessive requirements.
The department has strayed far beyond its legal authority inseveral areas, PIOGA said in its comments. For instance, DEP’sdefinitions of “Other Critical Communities” and “PublicResource Agency” in provisions of the final draft rule related to
protection of public resources dis-regard the Pennsylvania SupremeCourt’s invalidation of sections3215(b) through (e) of the Oiland Gas Act in the 2013Robinson Township decision.
In the Chapter 78a final draft,the noise mitigation provisionsfor unconventional operationsalso exceed DEP’s legal author-ity. The rule sets vague stan-dards for noise mitigation andwould then allow the depart-ment, in its sole discretion, toshut down an operation in the
middle of drilling, stimulation or servicing activities if an opera-tor’s noise mitigation plan is deemed inadequate.
Both final draft rules for Chapter 78 and 78a impose otherrequirements that exceed DEP’s legal authority of impose anexcessive burden without justification. Examples include therequirement that operators identify and monitor abandoned ororphaned wells for which they have no legal responsibility andthe mandate to restore damaged water supplies to standards high-er than they were before being disrupted.
“The Draft Final Rule would impose costs and burdens onoperators that would likely put many small businesses out ofbusiness, which would harm a long-standing core of Penn -sylvania’s economy without justification. This is unacceptable,”PIOGA wrote.
Straying from good regulation“This rulemaking package strays far from the principles of
good regulation, which must be justified by compelling necessi-ty, balanced by careful consideration of costs and impacts on theeconomy, and capable of providing clarity and predictability tothe regulated community. These revisions accomplish none ofthese critical goals,” PIOGA said in its general comments.
PIOGA emphasizes that the many new and expanded provi-sions of the draft final rulemaking “will significantly burden theoil and gas industry in Pennsylvania to the point of stagnation”and that as a whole the proposed changes are more onerous thanthe proposed Chapter 78 regulations published in December2013. PIOGA argues that the draft final rule:
—does not provide any meaningful environmental benefit andis more stringent than regulations governing other industries;
Chapter 78 rulemaking backgroundThe Department of Environmental Protection began work-
ing on revisions to its Chapter 78, Subchapter C regulations in2011. The proposed rulemaking was formally published in thePennsylvania Bulletin in December 2013, a process thatincluded a 90-day comment period and nine public hearingsacross the state. The Environmental Quality Board receivedmore than 24,000 public comments, said to be a record num-ber for a rulemaking.
Though spurred primarily by shale-gas development, theproposed rules address surface activities for both conventionaland unconventional operators. A common misconception isthat the rulemaking is implementing changes in response Act13 of 2012, the first comprehensive rewrite of the Oil & GasAct of 1984. However, PIOGA points out that most Act 13 pro-visions are self-implementing and estimates that only about 2percent of the current version of the rulemaking could be saidto be “required” by the 2012 law.
More than a year after the initial public comment periodended, DEP published an Advance Notice of Final Rulemakingon April 4, with a public comment period that ran through May19. The draft final regulations are now divided into separatesections for conventional and unconventional activities andcombined run to almost 300 pages. Many provisions are com-pletely new to this version of the regulations.
DEP has stated that these are the final versions of the reg-ulations and the agency plans to implement them by spring2016. The department already is considering its next major oiland gas rulemaking, which would address Chapter 78’sSubchapter D regulations addressing subsurface operations.
—seems to be designed to simply micro-manage the industryand to invite public scrutiny and comment on well permits in amanner that will increase the time and cost for each and everypermit application, “potentially paralyzing the issuance of wellpermits, which would be very much welcomed by many of ourindustry’s opponents”;
—exceeds DEP’s legal authority or circumvents the properlegal steps for making such additions; and
—includes some provisions that are “so ambiguous as to bemeaningless.”
Find out moreIn addition to the general comments, PIOGA submitted 34
pages of specific comments aimed at the Chapter 78 convention-al rules and 41 pages addressing the Chapter 78a draft final rulefor unconventional operations.
To read PIOGA’s comments, click on the Members link at thetop of our homepage, www.pioga.org, and then go to the Reg -ulatory Issues section. The draft final rules can be found bygoing to www.depweb.state, clicking on the Oil and GasRulemaking icon and scrolling down to Advance Notice of FinalRulemaking. ■
Page 6 The PIOGA Press
Severance tax issue heats up
As the June 30 deadline for passing a state budget beginsto loom large, Governor Tom Wolf’s desire to impose aseverance tax on natural gas production is getting an
increasing amount of attention in Harrisburg and elsewhere inthe Commonwealth. Fortunately, a lot of that attention is unfa-vorable. Here is a roundup of notable recent happenings.
➤ Diverse coalition of oppositionIt isn’t just our industry that opposes a severance tax on natu-
ral gas production. Led by the Pennsylvania Chamber ofBusiness and Industry, a broad coalition of representing manydifferent types of businesses and industries has been delivering astrong message to state lawmakers that the governor’s proposedseverance tax would harm more than just natural gas producers.
“Pennsylvania cannot afford to lose our competitive advantagein the shale play,” Chamber President Gene Barr said. “The natu-ral gas industry has revitalized Pennsylvania’s economy, bringinghundreds of thousands of family-sustaining jobs to our state,adding billions of dollars into the economy and lowering energyprices. A higher severance tax will drive our fastest growingindustry out of the state, leading to the loss of thousands of coreand supply-chain jobs.”
The coalition—of which PIOGA is an active member—partic-ipated in a hearing at the end of May called by Speaker of theHouse Mike Turzai that focused on Pennsylvania’s energy visionand severance tax myths.
Turzai (R-Allegheny) said at the hearing held in Lancasterthat supporters of Pennsylvania-produced natural gas “have beenfar too apologetic in telling the real story.” He continued, “Weare at the crossroads of determining whether downstream bene-fits of natural gas will continue to grow in places like Lancasterand Reading. We’ve toured all across the state where farmers,small businesses and workers have seen great benefits from theindustry and they’ve made it clear that another tax upon theindustry will cost jobs and money.”
The coalition’s website, www.StopNewEnergyTaxes.com,includes news and resources about how to oppose this ill-con-ceived tax proposal. We encourage all PIOGA members to directyour industry associates, family members and other supporters ofnatural gas development there as well. Of particular interest, thewebsite has an easy-to-use feature for sending a message inopposition to the tax to your state legislators.
➤ Wolf snaps backThe governor didn’t take well to having one of his corner-
stone initiatives criticized by the state’s business leaders. Wolfsent a letter to the Pennsylvania Chamber and 16 other organiza-tions involved in the coalition calling on them to stop fighting hisseverance tax proposal that is aimed at generating up to $1 bil-lion for public education.
“I am disappointed that you have come out in opposition to acommonsense severance tax that will help to fund Pennsylvania’sschools and achieve many of our shared priorities,” Wolf wrotein a letter that chides the groups for repeating “talking pointsfrom the oil and gas drillers.”
“Why aren’t you working with me to fix our schools?” heasked in the letter.
The Chamber’s Barr called the governor’s letter “disappoint-
ing,” saying it shows the administration is not interested in work-ing on priorities, including changes in the underfunded state pen-sion system.
PIOGA was one of the recipients of the Wolf letter, and in aresponse PIOGA President and Executive Director Lou D’Amicowrote, “I, too, am disappointed. I am disappointed that my gov-ernor suggests that this industry’s concerns about its future are‘simply talking points’ and ‘bogus rhetoric.’ I am disappointedthat my governor would claim that my industry has done nothingto change Pennsylvania or create jobs.”
D’Amico pointed to the substantial savings to consumers inlower natural gas prices, the middle-class jobs created and sus-tained by the industry, and the significant contributions thatclean-burning natural gas has made in reducing carbon emis-sions. He went on to inform the governor that the differencesbetween his proposal and West Virginia’s severance tax—thepurported model for Wolf’s tax—are dramatic (see the MayPIOGA Press, page 1).
➤ Lawmakers hear more about the taxAnother hearing focusing on Wolf’s severance tax plan took
place June 1 in Harrisburg before the Senate EnvironmentalResources and Energy Committee and the Senate FinanceCommittee. Among those testifying was D’Amico, who painteda stark picture of the current and near-term market conditionssuppressing the industry and warning that an additional taxwould harm not only oil and gas producers but alsoPennsylvania’s economy.
“People are losing jobs in this industry already, as a result ofthe economic environment,” D’Amico said. “Adding a severancetax will do nothing but lead to the loss of more jobs and reducedcapital expenditure programs, and further dampen the state’s eco-
Wolf severance tax factsTax rate. 5 percent of the value of the gas plus 4.7 cents per
Mcf. The 4.7-cent change includes a floor of $2.97/Mcf, no matterwhat the market price of gas. This price floor is unique amongstate severance taxes. Natural gas liquids also would be taxed at5 percent of their value.
Tax pass-through. The legislation bars producers from pass-ing along the cost of the tax to royalty owners and nullifies anyexisting or future leases that allow such deductions, a provisionthat that many have predicted would be challenged immediatelyin court.
Impact fee. The unconventional well impact fee of Act 13would be repealed, but counties, municipalities, and many stateagencies and programs would continue to be funded under a for-mula similar to the impact fee. The total amount, however, wouldbe capped in the legislation at $225 million—approximately themost that has been generated in any one year by the impact fee.Organizations representing county commissioners and townshipsupervisors are opposed to ending the impact fee and rolling itinto a fixed amount under the severance tax.
Expected revenue. Wolf claims the legislation would gener-ate approximately $1 billion in its first full year of operation. Manybelieve the tax could generate little more than half that.
Legislation. Senate Bill 116, sponsored by Senator JamesBrewster (D-Allegheny), and House Bill 1142, sponsored byRepresentative Margo Davidson (D-Delaware), are identicalmeasures titled the “Pennsylvania Education Reinvestment Act”that implement Wolf’s severance tax.
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nomic recovery. This is glaringly apparent, yet for some reasonmany members of the General Assembly and certainly everyonein this administration are oblivious to it. How many more oppor-tunities will Pennsylvania have to thrive as an economic power-house and how many more times and ways will our politicalclass find a way to sabotage that opportunity and its accompany-ing middle class job growth?”
He again took issue with the false comparison with WestVirginia’s severance tax and the administration’s singling out ofone industry for punitive tax treatment.
“In conclusion, the severance tax is by no objective, informedor reasonable analysis a fair or ‘commonsense’ tax.” D’Amicotestified. “The severance tax is bad public policy, targeting oneindustry and one alone to achieve particular goals that are notattainable in any event by the proposal. This proposal will costjobs, increase energy costs for our citizens, and squander theopportunity to make Pennsylvania an attractive state for businessand investment. This is clearly the reason why the business com-munity, led by the Pennsylvania Chamber of Business andIndustry, has spoken loudly against this proposal specifically anda severance tax generally.”
➤ Highest in the nationPerhaps the most telling testimony at the joint committee
hearing came from Matthew Knittel, director of the state’sIndependent Fiscal Office, who said the IFO’s analysis showedthe Wolf proposal would saddle Pennsylvania with the nation’shighest severance tax.
The IFO analysis concluded the Wolf tax would impose a rateof 17.3 percent in 2016, declining in the long run to an average
of 7.3 percent as prices recover and pipeline capacity improves.The IFO contrasted that against several other states, includingWest Virginia and Oklahoma at 5 percent; Arkansas, 3.7 percent;Louisiana, 3.3 percent; Texas, 3.1 percent; and Ohio, 0.8 percent.
The current unconventional well impact fee represents a tax of4.7 percent in 2015, but has averaged between 2 and 4 percent inprevious years. The impact fee would disappear under the gover-nor’s plan.
Knittel said roughly 80 percent of the future production couldbe exported. However, if regional prices remain depressed due tocapacity restraints, then it is “likely that less of the tax could bepushed forward to final consumers.”
➤ No votes for taxesAs “budget season” opened in Harrisburg with no clear indi-
cation of whether lawmakers would make the June 30 deadlinefor putting a budget in place for the next fiscal year, the first offi-cial budget-related voting was not a rousing endorsement of thegovernor’s broad package of tax changes.
In votes on approving amendments to a general appropriationsbill in the House, the minority chairman of the HouseAppropriations Committee suggested an amendment insertingWolf’s spending plan. In response, House Republican leadersmoved to insert the entire $4.6-billion package of tax increases,tax expansions and new taxes into another bill. That move failedon a vote of 193-0.
House Democrats decried the move as a political stunt, butheadline after headline simply stated that Wolf’s spending planwas defeated 193-0. Not a great start for the new governor. ■
February 2014 Page 11June 2015 Page 11
‘Waters of the U.S.’ regulations finalized
New federal regulations defining “waters of the UnitedStates”—a proposal that PIOGA had earlier lambasted assignificantly and improperly expanding the jurisdiction
of the Clean Water Act (CWA)—have been finalized by theEnvironmental Protection Agency and the Army Corps ofEngineers.
The Independent Petroleum Association of America (IPAA)warned that the 297-page rulemaking will hurt all Americanproperty owners, including energy producers.
“It comes as little surprise that this long-awaited final rule sig-nificantly expands the federal government’s authority over landand water use across the nation, affecting all American landown-ers,” said IPAA Executive Vice President Lee Fuller. “Fromfarming to golf course management and home building to energydevelopment, this new federal mandate will require landownersto obtain additional government permits and fulfill bureaucraticregulatory requirements.
“Increased federal jurisdiction over nearly all waters in theUnited States will create substantial permitting and complianceburdens for few environmental benefits. The impacts of this rulego beyond American energy development. There are serious con-cerns about retroactive applications of the rulemaking and addedcosts on business operations. This regulatory regime will resultin far more significant economic impacts and unintended conse-quences than the Obama Administration is leading the Americanpeople to believe.”
PIOGA is working closely with the IPAA to determine theimpact of the regulations on industry and press the EPA for clari-fication of certain provisions.
The rules require a federal permit for any activity that resultsin a discharge into any body of water covered by the new defini-tion of “waters of the United States,” including small streamsand wetlands. The oil and gas industry and many other interestsdisagree with the need for the rule and have argued againstexpanded federal jurisdiction. Many groups are concerned thatthe regulations significantly increase the types and numbers ofwater bodies over which the federal government is claimingjurisdiction.
Announcing the final rule on May 27, the EPA and Corps ofEngineers said that protection for many of the nation’s streamsand wetlands has been “confusing, complex and time-consum-ing” as the result of Supreme Court decisions in 2001 and 2006.A news release from the agencies stated: “The rule ensures thatwaters protected under the Clean Water Act are more preciselydefined and predictably determined, making permitting less cost-ly, easier, and faster for businesses and industry. The rule isgrounded in law and the latest science, and is shaped by publicinput. The rule does not create any new permitting requirementsfor agriculture and maintains all previous exemptions and exclu-sions.”
The agencies emphasize that among other things the rule isintended to:
• Clearly define and protect tributaries that impact thehealth of downstream waters. The CWA protects navigablewaterways and their tributaries. The rule says that a tributarymust show physical features of flowing water—a bed, bank andordinary high-water mark—to warrant protection. The rule pro-
vides protection for headwaters that have these features.• Provide certainty in how far safeguards extend to nearby
waters. The rule protects waters that are next to rivers and lakesand their tributaries, setting boundaries on covering nearbywaters for the first time that are physical and measurable.
• Focus on stream, not ditches. The rule limits protection toditches that are constructed out of streams or function likestreams. Ditches that are not constructed in streams and that flowonly when it rains are not covered.
• Reduce the use of case-specific analysis of waters.Previously, almost any water could be put through a lengthycase-specific analysis, even if it would not be subject to theCWA. The rule significantly limits the use of case-specific analy-sis by creating clarity and certainty on protected waters and lim-iting the number of similarly situated water features.
The regulations are to take effect 60 days after publication inthe Federal Register. The rules and supporting documents can befound at www2.epa.gov/cleanwaterrule/documents-related-clean-water-rule.
Congressional attentionThe U.S. House of Representatives has passed legislation
blocking implementation of the regulations in their currentform. Sponsored by Pennsylvania Congressman Bill Schuster,H.R. 1732, the “Regulatory Integrity Protection Act,” passed theHouse by a vote of 261-155 on May 12. The bill would essential-ly force the federal agencies to start over again with the regula-tions, imposing a detailed set of requirements on the process.The Senate is considering similar action.
“Today, the administration is capping off this power grab,plowing ahead with its flawed rule despite the bipartisan, bicam-eral concerns of Congress, despite the long-standing federal-statepartnership to regulate waters under the Clean Water Act, anddespite the objections and concerns from at least 32 states andrepresentatives of the nation’s large cities, smaller cities, coun-ties, towns, townships, farmers, businesses, homebuilders, con-tractors, manufacturers and more,” Schuster said the day the fed-eral agencies announced the federal rule. ■
Page 12 The PIOGA Press
Unique solutions in difficult timeshighlight PIOGA’s summer event
“Hard Times—Unique Solutions” will be the focus ofthe conference portion of the PIOGA’s Pig Roast,Equipment Show and Technical Seminar, July 28-
29 at Seven Springs Mountain Resort in Champion. But beforethe conference portion, there will plenty of fun activities
The opening day of this popular event includes morning golfand sporting clays competition, followed in the afternoon by anoutdoor equipment show and a new feature at PIOGA’s majorevents called the Product and Services Showcase. Presenting inthe Showcase will be AEREON, CleanAir Engineering, GolderAssociates and New Pig Energy. The much-anticipated pig roast,entertainment and awesome fireworks shot from the top of theSeven Springs ski slope round out the day.
The technical seminar on day two runs from 9 a.m. to 3:15p.m. and includes lunch. Scheduled presentations include:
• “Analysis of Brine Disposal in the Appalachian Basin –Linking Injection Operations and Geologic Reservoirs,” MarkMoody, Battelle
• “Safe Tank Truck Loading Alternatives,” Mark Jordan,Jordan Technologies and AEREON
• “Managing Product Fluids in Gas and Low Producing OilWells,” Tom Tonkins, Well Control Technologies
• “Ventilation Systems and Design for CompressorBuildings,” Dan Winters, Integrated Environmental Systems, Inc.
• “Restoration of Streams and Wetlands Following PipelineConstruction Projects,” Paul Kanouff, Civil & EnvironmentalConsultants
• “Operating in the Changed Shale Environment: Impact ofLow Natural Gas and Oil Prices on Small Producers,” KenFleeman, ABARTA Energy
• “Strategies a Small Business Can Use to Survive a MarketDownturn,” Dan Garcia, Leech Tishman
The complete schedule and registration are available under thePIOGA Events heading in the News/Events section atwww.pioga.org. ■
June 2015 Page 13
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Page 14 The PIOGA Press
PIOGA’s new online membership system
The new “Members Only” website capabilities include:
Ability to update your own membership profile Main Company Contacts can add/delete
employees from their account Membership renewal and online dues payment Committee portal pages for easy access to
committee news and resource documents Membership and service provider directories Online event registration Surveys Communication e-blasts and newsletters Job and resume boards Advocacy/resource page, Energy education resource page, Forums and blogs
PIOGA launching newonline membership system
PIOGA is pleased to announce the upcoming launch of ournew membership “Members Only” website powered byYourmembership.com. The new software integrates mem-
bership data within the website allowing ease of use for membersand the ability for increased communications and connections.
Capabilities of the new online system that members will findhelpful include;
• The ability to update your own membership profile.• Company main contacts can add/delete employees from
their account.• Membership renewal and online dues payment options.• Committee portal pages for members to easily access com-
mittee news and resource documents. • Membership and service provider directories.• Online event registration.• Surveys.• Communication email blasts and online newsletter capabili-
ties.• Job and resume boards.• Advocacy/resource page.• Energy education resource page.• Forums and blog options.In the coming weeks, look for an announcement email that
will be sent directly to each company membership contact andall individual members that will include your unique usernameand password. The email will also have further instructions onlogging into the Members Only area and how to update your pro-file information and customize your account. Your contact infor-mation can be viewed and edited through the “Manage Profile”page under “Edit Bio” tab. If you don’t receive the email, pleasecheck your spam filtered emails or contact Danielle Boston [email protected] to request further assistance.
In addition, the new system is secure, requiring members tosign in for access. All financial transactions comply with theIndustry Data Security Standards (PCI Compliance) and allowfor payments to be received using Visa, MasterCard, AmericanExpress and Discover. We will also still be able to accept checks.
Additional features will be rolled out over the next severalmonths and will be communicated through email blasts and addi-tional PIOGA Press articles.
We look forward to your comments and suggestions as wefurther develop this new membership platform for you. We wantto hear from you! Send any comments/suggestions to DanielleBoston at [email protected]. ■
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Pre-Drilling Water Supply Inventory and Sampling
Post-Drilling Complaint Resolution and Investigations
Gas Well Permitting for Conventional and
Unconventional Plays
Development of High Capacity Groundwater Supply Wells
Soil & Groundwater Contamination Investigations
Assistance with Water Sourcing
Water Management Plan Preparation
SPCC/Control & Disposal Plans
Pre-Drilling Water Supply Inventory and Sampling
Post-Drilling Complaint Resolution and Investigations
Gas Well Permitting for Conventional and
Unconventional Plays
Development of High Capacity Groundwater Supply Wells
Soil & Groundwater Contamination Investigations
Assistance with Water Sourcing
Water Management Plan Preparation
SPCC/Control & Disposal Plans
Disposal Well Permitting
Erosion & Sedimentation Control Planning
Fresh Water Determination Studies
Soil and Groundwater Remediation
Stray Gas Migration Investigations
Hydrogeologic Studies
Expert Witness Testimony
Wetland Delineation and Aquatic Surveys
Disposal Well Permitting
Erosion & Sedimentation Control Planning
Fresh Water Determination Studies
Soil and Groundwater Remediation
Stray Gas Migration Investigations
Hydrogeologic Studies
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New MLP rules provide brightlines and new challenges
On May 5, the Internal Revenue Service released proposedregulations that, if finalized, would provide guidance onqualifying income from minerals and natural resources
activities for master limited partnerships (MLPs).1 For the oiland gas industry, the proposed regulations provide welcome for-malization of some views that the IRS has expressed in past pri-vate letter rulings. While generally good news, the proposed reg-ulations are potentially troublesome in some respects. Incomefrom certain hydraulic fracturing activities has been “blessed,”but there are some important limitations on fracking income thatsome in the industry may find onerous. Also of potential con-cern, the proposed regulations narrow the scope of some activi-ties such as processing of natural gas and petroleum products.2Finally, because the new rules establish an exhaustive list ofqualifying activities, there is the very real risk that some currentpractices are left out and that future innovations will not be cov-ered.
The proposed regulations under section 7704(d)(1)(E) of theInternal Revenue Code replace a cumbersome but flexible rulingpractice with a defined and exclusive list of activities that giverise to qualifying income. Activities that do not fit within the def-initions under final regulations would not qualify, risking theapplication of entity-level tax for natural resources MLPs. TheIRS is inviting comments until August 4 concerning whetheradditional activities should be included. Companies shouldreview the list and consider whether current or future activitiesand technologies that are not clearly covered in the proposed def-initions should be brought to the attention of the IRS.
Regardless of industry sector, companies considering an MLPstructure should make sure their activities fit squarely within theproposed regulations. Even though the IRS has resumed issuingletter rulings with respect to activities that produce qualifyingincome, it will not issue comfort letter rulings and it remains tobe seen whether the IRS will take an expansive view of qualify-ing activities under the new regulations. Although the proposedregulations provide a 10-year transition period for existingMLPs, MLPs should not wait to review their activities for com-pliance in case any restructuring needs to be accomplished dur-ing the transition period.
SummaryAn MLP is a publicly traded partnership (PTP) that is taxed
as a partnership rather than a corporation because it meets thequalifying income exception in section 7704(d). A PTP meets thequalifying income exception when at least 90 percent of itsincome is qualifying income, which generally includes passivesources of income (e.g., dividends and interest) and under section7704(d)(1)(E), income from the “exploration, development, min-ing or production, processing, refining, transportation..., or themarketing of any mineral or natural resource.”
Under current practice, oil and gas MLPs can seek private let-ter rulings from the IRS concerning the application of the broadstatutory categories to their particular activities.3 The proposedregulations refine those broad statutory categories by providingan exclusive list of qualifying activities within each category, aswell as “intrinsic activities,” as follows:
Qualifying activities:• Exploration—an
activity performed toascertain the existence,location, extent, orquality of any depositof mineral or naturalresource before thebeginning of the devel-opment state of thenatural deposit.
• Development—anactivity performed tomake minerals or natu-ral resources accessi-ble.
• Mining or produc-tion—an activity per-formed to extract min-erals or other naturalresources from theground.
• Processing orrefining—generally, an activity that isdone to purify, separate or eliminateimpurities but industry-specific rulesare given for the following industries: natural gas, petroleum,ores and minerals, and timber.
• Transportation—the movement of minerals or naturalresources and products produced from processing and refining,including by pipeline, barge, rail, or truck.
• Marketing—the activities undertaken to facilitate the sale ofminerals or natural resources or products produced from process-ing and refining.
Intrinsic activities—certain limited support activities intrin-sic to section 7704(d)(1)(E) activities, which must be specializedto support, essential to the completion of, and require the provi-sion of significant services to support the section 7704(d)(1)(E)activity.
10-year transition periodThe proposed regulations will apply to income earned in a
taxable year that begins on or after the date on which the regula-tions are finalized. However, a 10-year transition period will alsobegin once the regulations are finalized. Existing MLPs thatreceived a private letter ruling from the IRS prior to May 6,2015, holding that a certain activity generates qualifying incomewill have 10 years until they can no longer rely on those determi-nations. MLPs that treated their activities as giving rise to quali-fying income under section 7704(d)(1)(E) based on a reasonableinterpretation of that statute will also have 10 years during whichthey can rely on those interpretations. Upon expiration of the 10-year transition period, these MLPs must satisfy the tests set forthin the regulations to maintain their tax treatment as MLPs.
Intrinsic activities and the oil and gas industryIntrinsic activities are not listed in section 7704(d)(1)(E) but
appear to be the IRS’s effort to incorporate the “integral to” doc-trine used in past private letter rulings. Activities that taxpayersrepresented as “integral to” an activity listed in section
David H.Sweeney
Christine M.Green
Authors:
J. StephenBarge
Kenneth S.Wear
Page 18 The PIOGA Press
7704(d)(1)(E), but that otherwise may not have generated quali-fying income independently, were treated as producing qualify-ing income. These letter rulings often involved taxpayers in theoil and gas industry and fall into two broad categories: (1) tax-payers that engaged in an activity that clearly fit within the list ofsection 7704(d)(1)(E) activities and also engaged in complemen-tary services to those activities,4 and (2) taxpayers that providedcomplementary services to customers engaging in section7704(d)(1)(E) activities but that were not themselves engaging inthose activities.5
Even though the use of “intrinsic activities” in the proposedregulations appears to be an attempt to preserve the past “integralto” doctrine, the proposed regulations change and pare backactivities that might have been informally considered to be quali-fying activities in the past. One such area is fracking services.Examples in the proposed regulations show that a water deliveryservice for fracking will not be treated as an intrinsic activityunless the servicer also collects and treats the flowback. In thoseexamples, the taxpayer owns natural gas pipelines but also built awater delivery pipeline to use in hydraulic fracturing. In contrast,PLR 201234005 concluded that a water delivery service was aqualifying activity, but the facts presented in the PLR do notindicate that collecting and treating flowback were part of theservice. In this PLR, the taxpayer represented that its waterdelivery service was “integral to” the exploration and productionof natural gas.
As noted above, an intrinsic activity must be one that is spe-cialized to support, essential to the completion of and requiresthe provision of significant services to support the section7704(d)(1)(E) activity. An activity is specialized if the partner-ship’s personnel are provided to support a section 7704(d)(1)(E)activity and those personnel have received unique training that isof limited utility other than to support the section 7704(d)(1)(E)activity. An activity requires significant services if it must beconducted on an ongoing basis by the partnership’s personnel atthe site of the section 7704(d)(1)(E) activity, or if offsite, the
services are offered exclusively to those engaged in a section7704(d)(1)(E) activity. The proposed regulations define as essen-tial an activity that is required to physically complete a section7704(d)(1)(E) activity (“including in a cost effective manner,such as by making the activity economically viable”) or an activ-ity required to comply with laws regulating the section7704(d)(1)(E) activity. It is unclear how activities that contributeto cost effectiveness or efficiency (for example, by increasing therate of mineral recovery) of an otherwise economically viableproject will fare under the regulatory standard. Because the pro-posed regulations provide an exclusive list of qualifying activi-ties, this proposed standard could prove to be a formidable obsta-cle for new methods and products.
ConclusionThe proposed regulations incorporate many of the IRS’s views
from past private letter rulings, but some areas are more narrowlydrawn. Existing MLPs and companies looking to form MLPsshould review their current activities and make sure they fit with-in the proposed definitions of section 7704(d)(1)(E) activities orintrinsic activities.
Given that the list of qualifying activities in the proposed reg-ulations is exclusive, companies using processes not described inthe proposed regulations or developing new technologies maywish to consider submitting comments to the IRS in an effort toexpand the scope of the proposed regulations. ■
1 A copy of the proposed regulations is available at www.gpo.gov/fdsys/pkg/FR-2015-05-06/pdf/2015-10592.pdf. Note that the proposed regulations would notchange the current treatment of income with respect to renewable, or inex-haustible, resources such as soil, air, mosses and minerals from seawater. Incomederived from renewable resources still would not be treated as qualifying income.2 For example, under the proposed regulations, the chemical conversion of natu-ral gas components into ethylene and propylene through the use a steam crackerwould not give rise to qualifying income. Yet, in PLR 201241004, the IRS deter-mined that income derived from processing natural gas components into olefinsby using a gas-fired cracking furnace gave rise to qualifying income. 3 On March 28, 2014, the IRS announced a temporary pause on issuing privateletter rulings concerning qualifying income activities but resumed its practicenearly a year later on March 6, 2015. The purpose of the pause was to give theIRS and the Treasury time to develop clearer rules.4 For example, in PLR 200909006, the taxpayer was engaged in the business ofacquiring (both by conducting its own surveys and by purchasing existing sur-veys from third parties) and licensing seismic data to oil and gas producers. Thetaxpayer represented that its seismic data services were “integral to” explorationfor oil and gas. Although any data produced by the taxpayer itself would havebeen easily classified as exploration of a mineral or natural resource, a section7704(d)(1)(E) activity itself, income from licensing purchased data was alsoviewed as qualifying income. On its own, licensing purchased seismic data doesnot constitute a section 7704(d)(1)(E) activity.5 In PLR 201226018, the taxpayer operated an extractive logistics business, pro-viding several services to customers engaged in oil and gas drilling including thedelivery and sale of refined petroleum products, maintenance and inspection ofdrilling rig equipment, and the supply of fracturing fluid and tanks to well sites.The taxpayer’s services on their own did not clearly fit within the section7704(d)(1)(E) activities, but the taxpayer represented that its services were “inte-gral to” the exploration, production, and development of oil and gas resources byothers. The IRS determined that the taxpayer’s income from its extractive logis-tics business was qualifying income but only to the extent attributable to its cus-tomers’ activities that would generally be expected to qualify as section7704(d)(1)(E) activities. For example, income from the sale of products to farmsand construction sites would not have been qualifying income.
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Long-awaited EPA study finds fracking has not led to widespread water contamination
By Katie Brown, PhDEnergy In Depth
The Environmental Protection Agency on June 4 released along-awaited, five-year study which finds “hydraulic frac-turing activities have not led to widespread, systematic
impacts to drinking water resources.”As many have noted, this is the most important study on
hydraulic fractur-ing to come outover the past fiveyears—a fact thata deputy assistantadministrator inEPA’s Office ofResearch andDevelopmentpointed to in apress release: “Itis the most com-plete compilationof scientific datato date, includingover 950 sourcesof information,published papers,numerous techni-cal reports, infor-mation from
stakeholders and peer-reviewed EPA scientific reports.”Also released were nine peer-reviewed scientific reports,
which played a big role in contributing to EPA’s overall study.EPA’s study actually builds upon a long list of studies that
show the fracking process poses an exceedingly low risk ofimpacting underground sources of drinking water. It corrobo-rates a “landmark study” by the U.S. Department of Energy inwhich the researchers injected tracers into hydraulic fracturingfluid and found no groundwater contamination after twelvemonths of monitoring. It is also in line with reports by the U.S.Geological Survey, the Government Accountability Office, theMassachusetts Institute of Technology and the GroundwaterProtection Council, to name just a few.
The report contradicts the most prevalent claim from anti-fracking activists, which have made “water contamination” thevery foundation of their campaign against hydraulic fracturing.As EID reported in March, after heralding the report at its incep-tion, anti-fracking organizations like the NRDC andInsideClimate News later went into damage control, downplay-ing the forthcoming report, likely due to what it would conclude.
Hydraulic fracturing has brought cleaner air, significantlyreduced greenhouse gas emissions, created millions of jobs,reduced energy prices, strengthened national security and turnedthe American economy around.
With this new report, it couldn’t be clearer that shale develop-ment is occurring in conjunction with environmental protec-tion—and the claims by anti-fracking activists have been thor-oughly debunked. ■
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Safety Committee CornerSafety Committee CornerOSHA expands the SevereViolator Enforcement Programto include oil and gas operations
On February 11, the OccupationalSafety and Health Administration(OSHA) issued a memorandum to
all OSHA regional directors and state plandesignees authorizing the addition ofupstream oil and gas hazards to the list ofhigh-emphasis hazards in the SevereViolator Enforcement Program (SVEP).This policy change is significant because itpermits OSHA to concentrate resources andenforcement efforts on oil andgas employers any time an inci-dent meets the SVEP criteria.
OSHA warranted the expan-sion of the SVEP to include oil and gas operations by stating inits memorandum that upstream operations have experienced afatality rate that has ranged from five to eight times greater thanthe national average for all U.S. industries over the last 20 years.Under the SVEP, employers who are designated for inclusion aresubject to more extensive sanctions, including corporate-wideand mandatory follow-up inspections, enhanced abatement andsettlement terms, and publication of every SVEP citation. Thispolicy is effective for any citations issued on or after February11.
The Severe Violator Enforcement ProgramOn June 18, 2010, OSHA instituted the SVEP to more effec-
tively focus enforcement efforts on recalcitrant employers whodemonstrate indifference to the health and safety of theiremployees through willful, repeated or failure-to-abate violationsof the Occupational Safety and Health Act of 1970. The SVEPreplaced the Enhanced Enforcement Program (EEP), an earlierprogram that was also intended to target problematic employers.In 2009, the Office of Inspector General (OIG) audited the EEPand issued a report criticizing the program’s efficiency and effec-tiveness. The OIG found that OSHA missed a number of EEP-qualifying cases, failed to conduct proper follow-up inspectionson a majority of EEP-qualifying cases, made little effort to deter-mine if non-compliance existed company-wide where there weremultiple locations and generally did not utilize the enhancedenforcement tools the EEP provided to ensure future compliance.In response to the OIG audit, OSHA replaced the EEP with themore narrowly focused SVEP.
The underlying problem of the EEP was that OSHA failed toconduct follow-up inspections because the program’s criteriawere too expansive. The criteria created so many EEP cases thatOSHA could not maintain the program’s increased enforcementefforts. To address this problem, OSHA narrowed the criteria inthe SVEP to better focus its enforcement resources. A case satis-fies the SVEP criteria if it meets one of the following criteria:
• A fatality or catastrophe inspection with one or more willfulor repeated violations or failure-to-abate notices;
• A non-fatality/catastrophe inspection with two or more will-ful or repeated violations or failure-to-abate notices that are high
gravity violations related to high-emphasis hazards;• A non-fatality/catastrophe inspection with three or more
willful or repeated violations or failure-to-abate notices that arehigh gravity violations related to the potential release of a highlyhazardous chemical; or
• An egregious (e.g., per-instance citations) case.OSHA’s recent memorandum authorized the addition of oil
and gas hazards to the list of high-emphasis hazards. High-emphasis hazards are high gravity, serious violations of specificstandards covered under falls or the National EmphasisPrograms.1 Low and moderate gravity violations will not be con-sidered for a SVEP case. According to the memorandum, “a non-fatality inspection of an employer with the NAICS code 211111,213111 and 213112 (Oil and Gas Production Services, Drillingand Well Servicing/‘Upstream Oil and Gas Industry’) in whichOSHA finds two or more willful or repeated violations or fail-ure-to-abate notices (or any combination of these violations/notices), based on high gravity serious violations related toupstream oil and gas activities will be considered a severe viola-tor enforcement case.” Because the criteria include “repeatedviolations,” it is important for an employer to abate a high gravi-ty serious violation and not repeat the violation to avoid beingnamed into the SVEP.
Procedures of a severe violator enforcement caseThe procedures of a severe violator enforcement case provide
an employer the opportunity to challenge or accept SVEP cita-tions or enter into a settlement agreement with OSHA. An SVEPcase commences upon the issuance of qualifying citations. Afterissuance of the citations, the employer has 15 days to challengethe citations. During that time, the employer and OSHA mayenter into an informal settlement agreement (ISA). The ISA maydelete or reclassify the citations so that the case no longer quali-fies for the SVEP. If this occurs, the case is lined off the SVEPlog. However, a case will be lined off the log only if there arefactual changes based on the quality of the evidence broughtforth during settlement discussions. If the citations remain afterthe ISA, or if the employer accepts the citations upon initial noti-fication, final orders are issued at the end of the 15-day period.The case is then eligible for a follow-up inspection.
If the employer contests the citations within the 15-day peri-od, the follow-up inspection is barred until the case is eitheradjudicated or settled. It is important to note that OSHA mayinspect other worksites triggered by a reasonable belief of sys-temic noncompliance. If the contest concludes with deleted orreclassified citations such that the case no longer qualifies for theSVEP, the case is lined off the log. If the citations remain, thecase is eligible for a follow-up inspection. Once a follow-upinspection is either conducted or attempted, the case remains onthe log but OSHA’s SVEP requirement to conduct a follow-upinspection is considered fulfilled.
Extensive sanctions available to OSHA under SVEPUnder the SVEP, more extensive sanctions are available to
OSHA to ensure employers abate cited violations and to preventemployers from committing similar violations in the future. The
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heart of these sanctions is OSHA’s right to perform inspections.A follow-up inspection is required in every SVEP case after cita-tions become final orders, even if abatement verification of thecited violations has been received. By conducting the follow-upinspection, OSHA can assess not only whether the cited viola-tions were abated, but also whether the employer continues tocommit similar violations. Additionally, OSHA will inspect relat-ed workplaces and worksites of the same employer when theregional administrator determines that there are reasonablegrounds to believe that the compliance problems identified in theinitial inspection are indicative of a broader pattern of non-com-pliance.
In addition to the follow-up and related workplace inspec-tions, OSHA shall consider, including in settlement agreements,additional requirements above and beyond basic hazard abate-ment as part of its extensive sanctions. OSHA may propose anyof the following settlement provisions:
• Employers shall hire a qualified safety and health consultantto develop and implement an effective and comprehensive safetyand health program or, where appropriate, a program to ensurefull compliance with the subpart under which the employer wascited under the SVEP.
• Apply the agreement company-wide.• Require interim abatement controls if OSHA is convinced
that final abatement cannot be accomplished in a short period oftime.
• Require the employer to provide a list of current and futurejobsites for a specified time period.
• Require the employer to submit, for a specified time period,its injury and illness log on a quarterly basis and to consent to
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OSHA conducting inspections based on that information.• Require the employer, for a specified time period, to notify
the area office of any serious injury or illness requiring medicalattention and to consent to an inspection,
• Obtain employer’s consent to entry of a court enforcementorder under Section 11(b) of the Occupational Safety and HealthAct.
Removal criteria for the Severe Violator EnforcementProgram
Once an employer is part of the SVEP, it is extremely difficultto be removed from the program. OSHA will consider removingan employer from the SVEP after three years from the final dis-position of the SVEP case. After three years, the regional admin-istrator will perform additional follow-up inspections to deter-mine whether the employer has: (i) abated all the SVEP viola-tions; (ii) paid all penalties; (iii) abided by and completed all set-tlement provisions; and (iv) avoided receiving any additionalserious citations related to the SVEP hazards. If the employerhas satisfied each of these obligations, the regional administratorhas discretion to remove the employer from the SVEP. If the
regional administrator determines that the employer failed tocarry out any of its obligations, it will place the employer backinto the SVEP for an additional three years.
In light of the extensive sanctions and the difficulty of beingremoved from the program, it is important for an employer toavoid being named into the SVEP. Based on the criteria, the timeto act is actually before the SVEP citation; an employer shouldconsider contesting every citation that might subject them to asubsequent SVEP case. An employer should also take advantageof the informal conference and settlement procedures to delete orreduce the severity of citations, and contest citations that cannotbe favorably resolved through settlement.If you have any additional questions regarding the SevereViolator Enforcement Program, please contact the author at 412-253-8825 or [email protected]. ■
1 High-emphasis hazards include falls under certain general industry, constructionindustry, shipyard, marine terminal and longshoring standards and amputation,combustible dust, crystalline silica, lead, excavation/trenching, shipbreaking andupstream oil and gas hazards.
Process Safety Management and why you should care
As employers, PIOGA members aresubject to workplace health andsafety inspections by the
Occupational Safety and HealthAdministration (OSHA). If you have neverbeen visited by OSHA, or think you are notlikely to be visited, the agency’s recentenforcement and rulemaking initiativesmight make you sit up and take notice. Thisarticle discusses OSHA’s increased scrutinyof upstream oil and gas operations and thepotential future imposition of the ProcessSafety Management standard in particular to those operations.
OSHA Is WatchingIt is no secret by now that the historic sea-change in oil and
gas extraction brought about by technologies permitting horizon-tal drilling in various shale plays around the country—Pennsylvania’s Marcellus Shale at the forefront among them—has brought increased scrutiny by government regulators rightalongside the job growth and economic success the industry hasrealized. And while environmental regulation, both state and fed-eral, usually gets most of the headlines, upstream employers inthe oil patch should also be attuned to workplace safety andhealth regulation. Rest assured, OSHA is watching.
For example, in February of this year, OSHA announced theaddition of upstream oil and gas hazards to its list of high-emphasis hazards (HEH), as part of its Severe ViolatorEnforcement Program (SVEP), specifically targeting upstreamoil and gas drillers and well servicers. (Seewww.osha.gov/dep/enforcement/memo_SVEP_oilandgas_022015.html, as well as the article on this topic elsewhere in thisissue.) By treating upstream hazards as HEH, these operations
can now be targeted for programmatic inspection. And if inspect-ed and issued two or more “willful” or “repeated” violations or“failure-to-abate” notices, the employer can be placed into theSVEP—an enhanced enforcement program that will cause theemployer to garner increased scrutiny and enforcement fromOSHA going forward.
Why did OSHA do this? Because it concluded based onBureau of Labor statistics compiled over the past 20 years thatthe fatality rate in these upstream operations has ranged fromfive to eight times greater than the national average for all indus-tries. The OSHA agenda for the oil patch doesn’t stop there. Inparticular, upstream operators and contractors need to be awareof OSHA’s Process Safety Management standard, or PSM.
Process Safety ManagementPromulgated in the early 1990s at the direction of Congress,
the PSM standard requires relevant industry actors to take thenecessary steps to prevent accidental releases of highly haz-ardous substances in or from their facilities, including flammablegases and liquids. In general, the standard requires employers tocompile process safety information and then use that informationto make a process hazard analysis (PHA) of each of its coveredprocesses, i.e., an evaluation of the hazards associated the use,storage, handling or on-site movement of any highly hazardouschemical. A host of employee training, testing of process equip-ment, compliance auditing and other requirements are alsoimposed by the standard.
As crafted, the PSM standard is really geared toward manu-facturing, where lots of chemicals and complex processes areemployed. It is, by design, less well suited to upstream oil andgas activities. OSHA recognized this at the outset. Importantlyfor PIOGA members, OSHA specifically exempted well drillingand servicing operations from its PSM standard because at the
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time it promulgated the standard it anticipated regulating thoseoperations under an industry-specific set of standards. The pre-processing storage of flammable liquids in atmospheric tanks isalso exempted from PSM, as are normally unoccupied remotefacilities (e.g., field stations only periodically visited by employ-ees). Then, in an April 2000 guidance memorandum, OSHAadopted the policy that it would not enforce PSM at producingwell sites pending an economic feasibility analysis (albeitemphasizing that its decision was discretionary and not becausethe regulatory exemption applied to producing well sites). Theresult has been that most upstream operations have never been,strictly speaking, subject to the PSM standard.
As it happens, however, OSHA never got around to promul-gating a set of standards specific to the oil and gas drilling andservice industry and to date has not followed through on its fea-sibility analysis of applying PSM to production operations.Given OSHA’s current negative view of the safety record ofupstream operations, oil and gas operators, drillers, and wellservice companies are back in the PSM crosshairs.
In December 2013, OSHA published a request for informa-tion, or RFI, asking for comment on a series of questions aboutpossible changes to its PSM standard, including the PSM exemp-tion for drilling and well-servicing operations, and the comple-tion of the economic feasibility analysis that could ultimatelylead to OSHA enforcing the PSM standard at producing wells.At present, OSHA is considering the comments received inresponse to the RFI and has signaled that it intends to move for-ward with a proposed PSM rulemaking over the next few years.The process is a slow one to be sure, but PIOGA membersshould expect it to be steady.
Small businesses have a right to be heardSo what can PIOGA’s members do in the meantime?
Eventually, when OSHA promulgates a proposed revision to thePSM standard (assuming it does, as expected), individual compa-nies, as well as PIOGA on its members’ behalf, can and shouldread and become familiar with the proposed revisions to theextent they affect your operations and then file comments on therule with the agency. That is how the rulemaking process worksand the more participation from affected industry, the better. Butthere may be something you could do sooner, as a small busi-ness.
Under the 1996 Small Business Regulatory EnforcementFairness Act, or SBREFA, Congress aimed to give small busi-nesses assistance in understanding and complying with regula-tions. The concern of Congress was that the volume of federalregulations was so great, the system so complex and the aggre-gate cost so high, that small businesses were at risk of not beingable to comply. Through SBREFA, Congress wanted to raise thevoice of small business.
The law attempts to do so by requiring federal agencies—including OSHA—to, among other things, produce complianceguides for small businesses, be responsive to small business con-cerns about compliance and provide for graduated relief fromcivil penalties (through penalty reduction policies). Most impor-tantly, in the context of OSHA (and also EPA) rulemakings,SBREFA mandates the establishment of panels of small busi-nesses—called Small Business Advocacy Review (SBAR) pan-els—to provide feedback on the agency’s development of certainrulemakings that are likely to have a significant impact on a sub-stantial number of small businesses.
Page 26 The PIOGA Press
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In its latest regulatory agenda, OSHA has identified the PSMrulemaking as necessitating an SBAR panel. Many (or evenmost) PIOGA members are likely to qualify as small businessesfor SBREFA purposes, which defines “small business” accordingto industry codes under the North American IndustryClassification System (NAICS). For oil and gas well operatorsand drillers, this means 500 employees or fewer. For oil and gaswell support services, this means annual revenue of $38.5 mil-lion or less. (See www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.) Needless to say, that covers a lot of opera-tors, drillers and well service providers.
The latest word from OSHA is that it is intending to convenean SBAR panel this month (June). That, however, is not set instone and could very well slip. But it is certainly more likelythan not that an SBAR panel will eventually be convened on thePSM standard, so PIOGA members should be alert to it andshow their interest now.
To participate in the SBAR panel process, a company (or evenPIOGA itself, as a trade association of mainly small businesses)should contact the U.S. Small Business Association’s Office ofAdvocacy (SBA) and ask to become a small entity representa-tive, or SER. (See www.sba.gov.) The SBA gathers the names ofinterested entities and then recommends SERs to OSHA to beconsulted on the rule and its effects. OSHA will then convenethe SBAR panel, consisting of officials from the agency, theSBA’s chief counsel for advocacy, and the Office of Managementand Budget’s Office of Information and Regulatory Affairs. Thepanel hears comments from SERs and reviews the draft proposedrule and related analyses prepared by OSHA. The import of thisprocess is the ability of small businesses to have an audiencewith agency policymakers and to influence the policymakingprocess on issues of concern to them. A written report of thisinteragency panel is submitted to OSHA within 60 days and isultimately published with the final rule in the Federal Register.
If you think you might be interested in participating in theSBAR panel process, please contact the PIOGA SafetyCommittee or this article’s author for more information. ■
Alternative fuel rebate program extended
The Department of Environmental Protection hasannounced the continuation of Pennsylvania’s Alternative
Fuel Vehicle Rebate Program, which provides incentives toassist with the incremental cost of purchasing an alternativefuel vehicle. To qualify, the vehicle must be registered inPennsylvania, operated primarily in-state and be purchased nomore than six months before the rebate application is submit-ted. The rebates are funded by the Alternative Fuels IncentiveGrant Program, which is supported by a gross receipts tax onutilities.
Included in the program are rebates of $1,000 for naturalgas and propane vehicles including any 2014-15 CNG-pow-ered car or pickup truck. CNG original equipment, manufac-turer retrofits, or certified conversions to CNG or propane areeligible for the $1,000 rebate. For more information or toapply for a rebate, go to www.depweb.state.pa.us and click onthe icon for the Natural Gas Vehicle Program.
February 2014 Page 27June 2015 Page 27
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Study investigates small scale conversion of natural gas to methanol
Using funds provided by the Pennsylvania Department ofCommunity & Economic Development, the Shale GasInnovation & Commercialization Center (SCICC) com-
missioned a study of the potential to convert natural gas tomethanol on a small- to medium-size plant scale. The report isnow available at www.sgicc.org/dced-grant-white-papers.html.
The SGICC commissioned ADI Analytics, a boutique consult-ing firm focused on oil and gas, energy, and chemicals, to per-form the study, which addresses the techno-economic feasibilityof various smaller-scale operations that could convert natural gasto methanol to serve a regional market. The study also addressesthe market needs for methanol in the Northeast.
Natural gas conversion to methanol is a mature technologyused worldwide, but currently there is no production in thenortheastern U.S, and only minimal production in NorthAmerica. Due to the surge in availability of low-cost natural gas,several plant expansions and plans for new plants have beenannounced in the Gulf Coast region over the last few years, butnone have been publicly announced in the Northeast. Typically,methanol plants are very large “world scale” operations, produc-ing on average 2,500-5,000 metric tons/day.
According to the report’s authors, conceptually small-scalemethanol plants offer advantages including lower capital costs incomparison to traditional large plants and a liquid, easily trans-portable product with many applications. Consequently, suchplants should offer potential to monetize natural gas from fieldsthat are remote, have limited pipeline connectivity, or have rela-tively poor production or economics. But, as with all opportuni-ties, these potential advantages should be assessed against risksaround technology, market demand and competition from largeplants.
“Key to the ongoing success of the shale energy industry inthe Commonwealth is finding outlets for the significant quanti-ties of natural gas being produced here that are currently over-whelming the available pipeline take-away capacity,” said BillHall, SGICC director. “Our initial analysis of ways to use the gasuncovered the conversion to methanol as one avenue worth fur-ther investigation, and the report validates this opportunity assomething worth analyzing by anyone seriously consideringinvesting in downstream uses of the gas.” ■
Quigley and Dunn nominations approvedGovernor Tom Wolf’s nominees to lead the state’s environ-
mental agencies have won Senate approval. Cindy Dunn wasconfirmed as secretary of the Department of Conservation andNatural Resources in a unanimous vote, while John Quigley’snomination as Environmental Resources secretary wasapproved by a 44-4 vote.
Both have ties to the anti-drilling organization PennFuture,and Quigley in particular faced some tough questioning duringhis committee hearing in the Senate.
Page 28 The PIOGA Press
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Pipeline infrastructure task forcebeing assembled
Governor Tom Wolf late last month announced the forma-tion of a task force to help agencies, the natural gasindustry and communities across the state collaborate
more effectively as thousands of miles ofpipelines are being proposed to transport natu-ral gas and related byproducts to markets.
Wolf created the Pipeline InfrastructureTask Force (PITF) in an effort to promote col-laboration of stakeholders to facilitate thedevelopment of what a new release describedas “a world-class pipeline infrastructure sys-tem.”
PITF will include representatives fromstate agencies, the General Assembly, federaland local governments, the pipeline and natu-ral gas industries, and environmental groups,among others.
“We need to work with the industry tomake sure that the positive economic benefitsof Pennsylvania’s rich natural resources canmore quickly be realized in a responsibleway,” said Wolf. “This taskforce is part of ourcommitment to seeing the natural gas industrysucceed.”
Department of Environmental Secretary John Quigley willserve as chairman. The task force, according to DEP, will aim torecommend a series of best practices for:
• Planning, siting and routing pipelines to avoid/reduce envi-ronmental and community impacts;
• Amplifying and engaging in meaningful public participation;• Maximizing opportunities for predictable and efficient per-
mitting; • Employing construction methods that reduce environmental
impact; and • Developing long-term operations and
maintenance plans to ensure pipeline safetyand integrity.
“Over the next decade, we could see theconstruction of as many as 25,000 miles ofgathering lines... We can also expect another4,000 to 5,000 miles of midstream and trans-mission pipelines in Pennsylvania,” Quigleysaid. “Now is the time for a collaborative con-versation among all stakeholders—state, feder-al and local governments, industry representa-tives, and environmental and conservationgroups.”
The task force will provide the governorwith a report detailing its finding by February.
PIOGA plans to participate in the taskforce, but the association is concerned that themakeup may end up being tilted toward envi-ronmental interests.
“”We will try to participate and see how this goes and see ifit’s a viable committee or not,” PIOGA President and ExecutiveDirector Lou D’Amico commented. ■
June 2015 Page 29
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Permitting and the northern long-eared bat
The U.S. Fish and Wildlife Service announced on April 1 itis protecting the northern long-eared bat (Myotis septen-trionalis) as a threatened species under the Endangered
Species Act, primarily due to the threat posed by white-nose syn-drome, a fungal disease that has devastated many bat populations(April PIOGA Press, page 10). The listing became effectiveon May 4, 30-days after publication of the final listing determi-nation in the Federal Register.
PIOGA’s Environmental Committee notes the followingpoints for permitting involving use of the Pennsylvania NaturalDiversity Index (PNDI) tool:
The PNDI tool was updated to reflect the bat’s status onMay 4, and all PNDIs dated prior to May 4 are no longer valid.
If you have a project under review by an agency with aPNDI dated prior to May 4, Department of EnvironmentalProtection and conservation district staff will run a new searchon the applicant’s behalf, although due to workload considera-tions, in some instances you may be directed to do so yourself.
Starting May 11, applications received with PNDIs datedbefore May 4 will be returned to the applicant and a review willnot commence until the applicant provides an updated PNDI.
If the permit has already been issued but construction hasnot started on the project, a new PNDI is not required. However,it is the permit tee’s responsibility to ensure compliance with theEndangered Species Act.
Any questions? Please feel free to contact Paul Kanouff ofCivil & Environmental Consultants at 724-327-5200 [email protected]. ■
DEP announces enhancements topublic comment process
The Department of Environmental Protection hasannounced improvements for public participation andtransparency through a new online engagement system.
DEP’s new online eComment system allows the public to moreeasily access technical guidance documents and other policy-related proposals open for comment. The public can also view allsupport documentation, submit comments online and view thefull text of all public comments submitted.
These changes are reflected in the notice of the interim final“Policy for Development and Publication of Technical Guidance”published in the Pennsylvania Bulletin on May 30, opening apublic comment period that will conclude on July 14.
For the first time, those commenting on proposed technicalguidance documents will be able to submit comments electroni-cally using eComment. In addition, DEP will publish the techni-cal guidance comments it receives, both electronically and inwriting, within five business days of receiving them, rather thanwait until all comments are summarized in a comment-and-response document typically published after the public commentperiod has closed. The published comments will remain onlineuntil the respective documents are finalized.
These changes do not affect the current policy for develop-ment, approval and distribution of regulations.
Page 30 The PIOGA Press
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Technical guidance documents provide practical and special-ized direction to DEP staff, the public and the regulated commu-nity. They typically summarize what statues or regulationsrequire, explain how DEP interprets a statue or regulation,explain technical or administrative procedures that assist in com-pliance with statues or regulations and establish policies.
As recommended by members of DEP’s Citizens’ AdvisoryCouncil, the department will publish a non-regulatory agendatwice each year that list all of the policies and technical guidancedocuments the agency plans to introduce or revise. DEP current-ly publishes a similar agenda of anticipated regulatory changestwice a year in the Pennsylvania Bulletin as required by theRegulatory Review Act.
In addition, the policy expands the role of advisory commit-tees by requiring DEP staff to consult with members of the cor-responding advisory committees when developing technicalguidance documents and to do so as early in the process as prac-ticable. That interaction should be detailed in a memo whentransmitting draft technical guidance documents for review.
The public is encouraged to submit comments electronicallyon the Policy for Development and Publication of TechnicalGuidance using the new eComment system atwww.ahs.dep.pa.gov/eComment.Written comments may also besent to Laura Henry, Technical Guidance Coordinator,Department of Environmental Protection, Office of Policy,Rachel Carson State Office Building, PO Box 2063, Harrisburg,PA 17105-2063, or by email to [email protected]. All com-ments, including those submitted by electronic mail, mustinclude the originator’s name and address. ■
House okays blanket lease assignment bill
Legislation creating standards for blanket assignments ofoil and gas leases by county officials has unanimouslycleared the state House of Representatives. Identical to a
measure that passed the House last session, House Bill 621would:
• Allow a county recorder of deeds (at his own discretion) torefuse documents that assign more than 50 oil or gas leases.
• Require that the lessor’s name be indexed (in addition to theparties to the document), so that property owners can more easilytrack who owns their mineral rights.
• Allow counties that have not adopted a uniform parcel iden-tifier (UPI) to charge a fee of $6 for each lease that must beindexed (UPI counties may already charge a similar fee).
The legislation, sponsored by Representative Sandra Major(R-Susquehanna), would not affect documents other than oil orgas lease assignments.
According to Major’s sponsorship memo, as a result of aCommonwealth Court decision a recorder of deeds may notrefuse to record multiple lease assignments even though suchassignments are not in a format that allows for proper indexingby the recorder since only the assignor and assignee are consid-ered parties for purposes of indexing. Consequently, the lessor’sname is not indexed, as the property owner is neither theassignee nor assignor in the assignment.
HB 621 is now before the Senate Environmental and NaturalResources Committee. PIOGA has taken a neutral position onthe bill. ■
February 2014 Page 31June 2015 Page 31
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PIOGA in partnership with Anadarko, Chief Oil & Gas LLC, Southwestern Energy and Talisman Energy sponsored a PIOGA EnergyEducation Program (PEEP) teach-the-teachers event on May 19 at Intermediate Unit 17. There were 23 teachers in attendance fromBradford, Lycoming, Sullivan and Tioga counties. To date we have been able to train 170 teachers. For more information on PEEP,please visit PIOGA’s website or contact Dan Weaver at [email protected] or 724-933-7306 ext. 30.
Page 32 The PIOGA Press
Winners announced in $100,000 Shale Gas Innovation Contest
Four companies each walked away with a check for $25,000on May 12 during the Fourth Annual Shale Gas InnovationContest, an initiative of the Ben Franklin Shale Gas
Innovation and Commercialization Center (SGICC) to supportthe commercialization of early-stage technologies that enhanceresponsible stewardship of the environment while properly utiliz-ing this energy asset. The winners included:
• Appalachian Drilling Services, Inc. to provide spill-proof,skid-mounted, rig-friendly waste storage units specifically builtto withstand life on drilling rigs and mitigate the chances of anytype of spill.
• EthosGen, offering systems that convert waste heat to elec-tricity through a unique piston-based Organic-Rankine Cyclescalable power solution available from 12 to 250 kilowatts.
• Fairmont Brine Processing for an evaporation and crystal-lization process that fully treats wastewater, extracting reusablebyproducts, and for the ability to also formulate fracture stimula-tion fluids specifically to meet an operating company’s comple-tion design.
• PixController, Inc. , offering a low-cost methane gas detec-tion system that integrates a digital methane sensor with temper-ature and barometric pressure data, providing data access via alow-power, battery-operated wireless monitoring backbone, andability to integrate optical or FLIR camera technology, fullweather station, and water quality monitoring.
The list of the 14 finalists with technology descriptions can befound at www.sgicc.org/2015-shale-gas-innovation-contest.html.
Bill Hall, SGICC director noted, “The 14 finalists once again
show the diversity of ideas being brought to the table by entre-preneurs and small companies in the region to help advance theshale energy play.”
The sponsors for this year’s contest were Ben FranklinTechnology Partners, AquaTech, Chevron Technology Ventures,CONSOL Energy, EQT, First National Bank, GE Oil & Gas,INABATA America Corporation, Little Pine Resources, theMarcellus Shale Coalition, PPG Industries, Praxair, RangeResources, Shell, Steptoe & Johnson PLLC,Williams and XTOEnergy. ■
Place nominated to PUC
Governor Wolf has nominated an EQT Corporation executiveto serve on the Pennsylvania Public Utility Commission,
replacing Commissioner Jim Cawley. Andrew Place is currentlycorporate director for energy and environmental policy at EQT.
Prior to joining EQT in 2011, he served at the Department ofEnvironmental Protection as special assistant for energy andclimate change and then as acting deputy secretary of theOffice of Energy and Technology Deployment. Place also was aresearch fellow at Carnegie Mellon University’s Department ofEngineering and Public Policy with a primary focus on carboncapture and sequestration among other technical, economic,and policy issues related to energy and the environment. TheGreene County resident holds a B.S. in economics from theUniversity of Pittsburgh and an M.S. in public policy and man-agement from Carnegie Mellon.
June 2015 Page 33
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Ronald Cusano receives Energy Leadership award
Schnader is proud to congratulate partner Ronald Cusano onhis selection as one of Pittsburgh’s Energy Leaders, asselected by the Pittsburgh Business Times in recognition of
individuals and organizations for their efforts at advancing ener-gy business interests in western Pennsylvania.
Cusano works with industry trade associations to influencefederal and state energy regulations and assists energy clientswith environmental regulatory compliance and litigation matters.He serves as Schnader’s representative to PIOGA and is a mem-ber of the association’s Environmental Committee and chair ofthe committee’s Air Quality Subcommittee. His legal practiceincludes representing energy, mining, industrial, manufacturing,and oil and gas trade association clients in matters involving fed-eral, state and local environmental protection and energy lawsincluding the Clean Air Act, the Clean Water Act and thePennsylvania Oil and Gas Act (Act 13). He has litigated cases instate and federal courts, and has defended clients in a variety ofenforcement actions brought by governmental agencies. Cusanoalso plans and directs environmental due diligence in connectionwith transactions involving the sale or transfer of industrial facil-ities and properties, and counsels clients in navigating require-ments stemming from energy and environmental protection laws.
Jackson Kelly relocates Clarksburg officeto Bridgeport
Jackson Kelly PLLC is relocating its Clarksburg, WestVirginia, office to Bridgeport, West Virginia. The new office willbe located at 45 Professional Place, Bridgeport, WV 26330. Itsphone numbers will remain the same.
Jackson Kelly CEO Ellen S. Cappellanti said the law firm’srelocation, just a few miles from the existing office space, is inresponse to continued client need. Bridgeport’s location in thecentral portion of West Virginia is two hours north of the statecapital, Charleston, and two hours south of Pittsburgh and hometo many business ventures, including a large number of oil andgas companies. The relocation will allow the firm to continue toprovide its clients with local contacts for its national resources.The firm also maintains offices in Colorado, Indiana, Kentucky,Pennsylvania, Ohio, West Virginia and the District of Columbia.
Pennsylvania Rural Water Associationhonors LB Water
The Pennsylvania Rural Water Association has recognizedLB Water for its dedication and work to improve water,wastewater and stormwater infrastructure in rural
Pennsylvania. PRWA presented the “Friend of Rural Water”honor to LB Water during the association’s annual conference,held in State College. During the past 5 years, LB Water hasworked closely with PRWA to conduct training sessions anddevelop promotional efforts designed to generate awareness, andoffer solutions to improve rural water systems.
LB Water is a value-added distributor of waterworks-infra-
structure products for the Mid-Atlantic region, including water-metering technologies, water infrastructure, sanitary sewers,storm sewers and environmental—erosion/stabilization. It is a100-percent, employee-owned organization that was votedamong the Top 100 Places to Work in Pennsylvania for two con-secutive years. Founded in 1970 by Lehman B. Mengel, the com-pany employs 185 people at eight locations in Pennsylvania,Maryland and Virginia.
CNG station opens in Bentleyville
Approximately 140 people celebrated the May 28 grand open-ing of Energy From US, a compressed natural gas (CNG) refuel-ing station in Bentleyville. This is only the second CNG refuel-ing station in Washington County and the eighth across south-western Pennsylvania. The station has a prime location off I-70halfway between Washington and New Stanton and along Route917 in Bentleyville.
Energy From US L.P. is a partnership between doctors AnantGandhi, Kamlesh Gosai, and Shashi Kumar; businessmenNainesh Desai and Dilip Desai; and builder and PIOGA memberBob Beatty of “O” Ring CNG Fuel Systems. “O” Ring is a full-service global CNG fuel solutions company based in westernPennsylvania. “O” Ring owns and operates four CNG stationsand has built over a dozen others for clients.
Curry Supply named outstanding business firm
Curry Supply Company has been selected as the OutstandingBusiness Firm in Blair County for 2014. Curry Supply was therecipient of the Alexander A. Notopoulos Award at the Annual
Page 34 The PIOGA Press
Insight Environmental, Inc. is aspecialized environmental firmwith a focus on leak detection
and repair (LDAR) that stronglyemphasizes safety, integrity andzero non-compliance.
Insight was founded in 2004 bycompany owner Todd Morrison.Based on his expertise in LDAR,Insight obtained its first contractperforming environmental regulation services for an oil companyin the Midwest. Sine these humble beginnings, Insight has con-tinued to expand while maintaining its excellence and roots inLDAR as its core service offering.
Headquartered in Superior, Wisconsin, Insight operates on anational level with clients and offices ranging from Alaska andUtah to North Dakota and Wisconsin. In 2012, we added ourPennsylvania office, allowing us to grow our dedicated team byadding two new valuable employees to our ranks. InsightEnvironmental and our trained technicians pride ourselves onour ability to provide a variety of clients with specialized LDARand data management programs, regulation compliance assis-tance, and optical gas imaging camera services. Joining thethriving Pennsylvania oil and gas industry has permitted us toeagerly contribute our unique range of services to this distin-guished field.
Our goal is simple: zero non-compliance for any program wemanage. Insight works with clients to establish cost effectiveLDAR programs that meet local, state and federal regulations.Clientele of Insight Environmental can expect safety, integrityand superior results.
Insight Environmental’s range of services includes:LDAR
• LDAR program management• Method 21 monitoring• Leak identification
• First, second and advanced repair services• LDAR compliance field assessments and audits• Tagging projects• Turnaround activities• MOC management and services• Data administration • Stream applicability assistance• QA/QC programs and manual
Optical gas imaging• FLIR GF320 infrared camera optical gas imaging• Visual display of fugitive gas emissions leaks
Beyond LDAR• BWON compliance monitoring• QQQ applicability and monitoring• Cooling tower monitoring• Process Safety Management• DraftingInsight Environmental’ s management staff and technicians
are equipped with the expertise, experience and know-how toprofessionally handle clients’ emission compliance require-ments. Our team is composed of dedicated, driven, accountableand hardworking professionals who strive for safety and zeronon-compliance. Each Insight employee has his or her ownbackground and specialties to contribute to the Insight name.These unique qualities make us a strong and prepared team—ready with the combined experience to handle any new taskthat comes our way. It is our goal to provide clients with cost-effective, efficient and personalized programs so that clientsdirectly see the benefits and superior results that come fromworking with Insight. Through open communication and cleardocumentation, we have been able to develop valued relation-ships with our clients in Pennsylvania and across the U.S.
Learn more at www.insightenv.com or call 715-398-8458(corporate office) or 610-364-8428 (Pennsylvania office).
PIOGA Member Profile
Meeting of the Altoona-Blair County Development CorporationBoard of Directors on May 15. This award was designedacknowledges outstanding business firms in Blair County.Recipients must have a substantiated history as an establishedbusiness in the community, coupled by ongoing efforts to main-tain and create quality jobs that provide family sustainable wagesand help to diversity and expand the economic base in BlairCounty. In addition, the awardee must also demonstrate a senseof community involvement by evidence of commitments to aidcommunity-oriented projects which help improve the quality oflife and provide a sense of community spirit which helps to makeBlair County a favorable place to live and work.
Curry Supply Company is a family-owned business that wasestablished in 1932 and is headquartered in Martinsburg. It hasgrown into one of America’s largest manufacturers and dealers ofcommercial service vehicles including mechanics trucks, servicetrucks, vacuum trucks, winch trucks, dump trucks, and lubeskids, as well as fuel/lube trucks and water trucks for both on-road and off-road needs. Curry Supply delivers internationally,with sales and service provided throughout the United States.
Pennoni acquires two firms in first half of 2015
Pennoni, ranked No. 95 on ENR’s Top Design Firms, ispleased to announce, the acquisition of the assets of Jones-Stuckey and Philip Post & Associates. The addition of both firmswill expand Pennoni’s reach to 27 offices throughout the easternand midwestern regions of the United States.
Jones-Stuckey will now do business as Jones-Stuckey, ADivision of Pennoni. Founded in 1965, Jones-Stuckey is a civilengineering firm headquartered in Columbus, Ohio with aregional office in Akron. The firm provides transportation,bridge, water/wastewater, water resources, structural and con-struction engineering inspection services. Firm principal DavidW. Jones, PE will remain active in the company.
Philip Post & Associates, is a civil engineering and land sur-veying firm providing land planning, site design, water/waste-water and construction inspection services. Founded in 1979,Philip Post & Associates is headquartered in Chapel Hill, NorthCarolina. The firm now does business as Philip Post &Associates, A Division of Pennoni. Philip Post, PE, president,will remain active in the company.
June 2015 Page 35
New PIOGA members — welcome!
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Insight Environmental, Inc.PO Box 1014, Superior, WI 54880-0010715-398-8458www.insightenv.comProfessional Firm
Polestar400 Dixon Boulevard, Uniontown, PA 15401724-550-4190www.polestareng.comProfessional Firm
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BP Energy expands Northeast presence
BP Energy Company recently expanded to have a gas-market-ing presence in the company Stamford, Connecticut, office for-merly dedicated to power trading, marketing and origination.Karen Wheatley, managing director, Northeast origination, hasrelocated from the House office to the One Metro Station loca-tion in Stamford and leads a team that is focused on customers inthis region. While BP Energy’s gas office in the region is new,the company is no stranger to the market. The company offersfully integrated cross-commodity solutions with the ability topurchase at the wellhead and market to the burner tip. BP Energymanages more than 20 AMAs in the region and schedules across21 different pipelines. The web of assets includes 3.59 Bcf/d oftransportation and 19.89 Bcf of storage.
Nicholson Joins Steptoe & Johnson
Steptoe & Johnson PLLC announces the addition of Roger L.Nicholson to its Energy Transactional Team. Nicholson is a 25-year veteran of the legal profession who works closely with ener-gy industry clients on commercial and transactional matters. Hewill practice in the firm’s Charleston, West Virginia, office.
Nicholson’s experience includes serving as both general coun-sel and outside counsel to major publicly traded energy produc-ing companies nationally. He has negotiated and drafted numer-ous acquisitions and divestitures in the energy field; negotiatedcoal supply agreements; arbitrated commercial disputes, includ-ing lease and supply agreement disputes; and overseen publicofferings of two energy producers. He is admitted to practicebefore the state courts of Kentucky and West Virginia. He earnedhis law degree from the University of Kentucky College of Lawand his bachelor’s degree from Georgetown College, inGeorgetown, Kentucky. ■
Page 36 The PIOGA Press
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Natural Gas Futures Closing PricesAs of June 9
Month PriceJuly 2015 $2.833August 2.864September 2.875October 2.907November 3.022December 3.201January 2016 3.301February 3.292March 3.253April 3.090May 3.088June 3.116
Oil & Gas TrendsPenn Grade Crude Prices
February 2014 Page 37June 2015 Page 37
SourcesAmerican Refining Group: www.amref.com/Crude-Prices-New.aspxErgon Oil Purchasing: www.ergon.com/prices.phpGas futures: http://quotes.ino.com/exchanges/?r=NYMEX_NGBaker Hughes rig count: http://gis.bakerhughesdirect.com/ReportsNYMEX strip chart: Emkey Energy LLC, emkeyenergy.com
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Previous Year Currrent Year
Pennsylvania Rig Count
Pittsburgh 412.497.6000
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Page 38 The PIOGA Press
Branch John D 2 5/11/15 123-47796 Warren Warren City5/21/15 123-47797 Warren Warren City
Cabot Oil & Gas Corp 11 5/19/15* 115-20950 Susquehanna Dimock Twp5/19/15* 115-20956 Susquehanna Dimock Twp5/12/15* 115-21988 Susquehanna Harford Twp5/12/15* 115-21989 Susquehanna Harford Twp5/12/15* 115-21990 Susquehanna Harford Twp5/12/15* 115-21991 Susquehanna Harford Twp5/12/15* 115-21992 Susquehanna Harford Twp5/28/15* 115-21973 Susquehanna Harford Twp5/28/15* 115-21974 Susquehanna Harford Twp5/28/15* 115-21975 Susquehanna Harford Twp5/28/15* 115-21976 Susquehanna Harford Twp
Cameron Energy Co 4 5/1/15 053-30726 Forest Howe Twp5/7/15 053-30724 Forest Howe Twp5/21/15 053-30727 Forest Howe Twp5/27/15 123-47830 Warren Sheffield Twp
Catalyst Energy Inc 6 5/6/15 121-45519 Venango Cranberry Twp5/12/15 121-45522 Venango Cranberry Twp5/14/15 121-45914 Venango Cranberry Twp5/14/15 121-45795 Venango Cranberry Twp5/21/15 121-45789 Venango Cranberry Twp5/26/15 121-45916 Venango Cranberry Twp
Chesapeake Appalachia LLC 3 5/1/15* 015-23158 Bradford Overton Twp5/1/15* 015-23148 Bradford Overton Twp5/1/15* 015-23149 Bradford Overton Twp
Chevron Appalachia LLC 7 5/7/15* 051-24622 Fayette German Twp5/8/15* 051-24623 Fayette German Twp5/8/15* 051-24624 Fayette German Twp5/9/15* 051-24625 Fayette German Twp5/9/15* 051-24626 Fayette German Twp5/10/15* 051-24617 Fayette German Twp
5/10/15* 051-24627 Fayette German TwpCoastal Petro Corp 2 5/22/15 083-56718 McKean Corydon Twp
5/28/15 083-56717 McKean Corydon TwpEQT Production Co 9 5/16/15* 059-26167 Greene Washington Twp
5/16/15* 059-26756 Greene Washington Twp5/16/15* 059-26757 Greene Washington Twp5/16/15* 059-26758 Greene Washington Twp5/16/15* 059-26759 Greene Washington Twp5/16/15* 059-26760 Greene Washington Twp5/16/15* 059-26761 Greene Washington Twp5/19/15* 125-27442 Washington Carroll Twp5/23/15* 125-27644 Washington Carroll Twp
Hilcorp Energy Co 4 5/1/15* 085-24692 Mercer Lackawannock 5/2/15* 085-24694 Mercer Lackawannock 5/3/15* 085-24730 Mercer Lackawannock 5/4/15* 085-24732 Mercer Lackawannock
Howard Drilling Inc 3 5/7/15 083-56595 McKean Wetmore Twp5/14/15 083-56594 McKean Wetmore Twp5/20/15 083-56593 McKean Wetmore Twp
Interstate Gas Mkt Inc 2 5/4/15 019-22392 Butler Center Twp5/13/15 019-22393 Butler Center Twp
McComb Oil Inc 1 5/18/15 085-24723 Mercer Sandy Lake TwpNTS Energy LLC 1 5/4/15 021-21206 Cambria West Carroll TwpPierce & Petersen 1 5/1/15 123-47776 Warren Mead TwpRange Resources Appalachia 14 5/29/15* 027-21713 Centre Snow Shoe Twp
5/28/15* 035-21308 Clinton Gallagher Twp5/28/15* 035-21309 Clinton Gallagher Twp5/12/15* 125-27552 Washington Jefferson Twp5/12/15* 125-27481 Washington Jefferson Twp5/12/15* 125-27480 Washington Jefferson Twp5/12/15* 125-27551 Washington Jefferson Twp5/13/15* 125-27393 Washington Jefferson Twp5/13/15* 125-27511 Washington Jefferson Twp5/13/15* 125-27530 Washington Jefferson Twp5/21/15* 125-27660 Washington Somerset Twp5/21/15* 125-27661 Washington Somerset Twp5/22/15* 125-27659 Washington Somerset Twp5/22/15* 125-27657 Washington Somerset Twp
RE Gas Dev LLC 1 5/13/15* 073-20506 Lawrence Little Beaver TwpRice Drilling B LLC 9 5/7/15* 125-27656 Washington Somerset Twp
5/7/15* 125-27662 Washington Somerset Twp5/7/15* 125-27663 Washington Somerset Twp5/7/15* 125-27664 Washington Somerset Twp5/6/15* 125-27632 Washington W Pike Run Twp5/6/15* 125-27628 Washington W Pike Run Twp5/6/15* 125-27629 Washington W Pike Run Twp5/6/15* 125-27630 Washington W Pike Run Twp5/6/15* 125-27631 Washington W Pike Run Twp
Seneca Resources Corp 6 5/26/15* 047-24860 Elk Jones Twp5/26/15* 047-24861 Elk Jones Twp5/26/15* 047-24862 Elk Jones Twp5/26/15* 047-24915 Elk Jones Twp5/7/15* 047-24926 Elk Saint Marys City5/10/15* 047-24927 Elk Saint Marys City
Southwestern Energy Prod Co 8 5/11/15* 115-21994 Susquehanna New Milford Twp5/11/15* 115-21997 Susquehanna New Milford Twp5/11/15* 115-21998 Susquehanna New Milford Twp5/11/15* 115-21995 Susquehanna New Milford Twp5/11/15* 115-21996 Susquehanna New Milford Twp5/18/15* 115-21831 Susquehanna Oakland Twp5/21/15* 115-21832 Susquehanna Oakland Twp5/26/15* 115-21897 Susquehanna Oakland Twp
XTO Energy Inc 1 5/7/15* 019-22356 Butler Donegal Twp
Spud Report:May
The data show below comes from the Department ofEnvironmental Protection. A variety of interactive reports are
OPERATOR WELLS SPUD API # COUNTY MUNICIPALITY OPERATOR WELLS SPUD API # COUNTY MUNICIPALITY
available at www.portal.state.pa.us/portal/server.pt/community/oil_and_gas_reports/20297.
The table is sorted by operator and lists the total wells report-ed as drilled last month. Spud is the date drilling began at a wellsite. The API number is the drilling permit number issued to thewell operator. An asterisk (*) after the API number indicates anunconventional well.
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May totalsTotal wells spudded 95Unconventional 73Conventional 22Gas 72Oil 18Combination oil/gas 5
PIOGA Board of DirectorsGary Slagel (Chairman), Steptoe & Johnson PLLC (representing
CONSOL Energy)Sam Fragale (Vice Chairman), SEF Consulting, LLCFrank J. Ross (2nd Vice Chairman), T&F Exploration, LPJames Kriebel (Treasurer), Kriebel CompaniesCraig Mayer (Secretary), Pennsylvania General Energy Co., LLCTerrence S. Jacobs (Past President), Penneco Oil Company, Inc.L. Richard Adams, Chief Oil and GasThomas M. Bartos, ABARTA EnergyStanley J. Berdell, BLX, Inc.Rob Boulware, Seneca Resources CorporationCarl Carlson, Range Resources - Appalachia, LLCMike Cochran, Energy Corporation of AmericaDon A. Connor, Open Flow EnergyTed Cranmer, TBC ConsultingJack Crook, Atlas Resource Partners, LPRobert Esch, American Refining Group, Inc.Michael Hillebrand, Huntley & Huntley, Inc.Jim Hoover, Phoenix Energy Productions, Inc. Ron McGlade, Tenaska Resources, LLCJim McKinney, EnerVest Operating, LLCSteve Millis, Vineyard Oil & Gas CompanyGregory Muse, PennEnergy Resources, LLCJoy Ruff, Dawood Engineering, Inc.Stephen Rupert, Texas Keystone, Inc.Jake Stilley, Patriot Exploration CorporationBurt A. Waite, Moody and Associates, Inc.Roger B. Willis, Universal Well Services, Inc.Thomas Yarnick, XTO Energy
Committee ChairsEnvironmental Committee
Paul Hart, Fluid Recovery Services, LLCKen Fleeman, ABARTA Energy
Legislative CommitteeBen Wallace, Penneco Oil CompanyHolly Christie, Steptoe and Johnson, PLLC
Pipeline & Gas Market Development CommitteeBob Eckle, Appalachian Producer Services, LLCRon McGlade, Tenaska Resources, LLC
Health & Safety CommitteePat Carfagna, CONSOL Energy
Meetings CommitteeLou D’Amico, PIOGA
Tax CommitteeDonald B. Nestor, Arnett Foster Toothman, PLLC
Communications CommitteeTerry Jacobs, Penneco Oil Company, Inc.
StaffLou D'Amico ([email protected]), President & Executive DirectorKevin Moody ([email protected]), Vice President & General Counsel Debbie Oyler ([email protected]), Director of Member ServicesMatt Benson ([email protected]), Director of Internal Communications
(also newsletter advertising & editorial contact)Joyce Turkaly ([email protected]), Director of Natural Gas Market
DevelopmentDan Weaver ([email protected]), Public Outreach DirectorDanielle Boston ([email protected]), Director of AdministrationChris Lisle ([email protected]), Manager of Finance Tracy Zink ([email protected]), Administrative Assistant
Pennsylvania Independent Oil & Gas Association115 VIP Drive, Suite 210 • Wexford, PA 15090-7906724-933-7306 • fax 724-933-7310 • www.pioga.org
Northern Tier Office (Matt Benson)167 Wolf Farm Road, Kane, PA 16735
Phone/fax 814-778-2291© 2015, Pennsylvania Independent Oil & Gas Association
February 2014 Page 39June 2015 Page 39
PIOGA EventsPIOGA Pig Roast, Equipment Show & Seminar
July 28-29, Seven Springs Mountain Resort, ChampionInfo: www.pioga.org/events/category/pioga-events
18th Annual Divot Diggers Golf OutingAugust 26, Tam O’Shanter of Pennsylvania, Hermitage Info: www.pioga.org/events/category/pioga-events
Eastern Oil & Gas Conference and Trade ShowOctober 27-28, Monroeville Convention Center, MonroevilleInfo: www.pioga.org/events/category/pioga-events
Industry EventsU.S. Energy Information Administration 2015 Conference
June 15-16, Renaissance Washington, DC Downtown HotelInfo: /www.fbcinc.com/e/eia
IPAA Midyear MeetingJune 24-26, Eldorado Hotel & Spa, Santa Fe, NMInfo: hwww.ipaa.org/meetings-events
KOGA Annual MeetingJuly 14-16, Hyatt Regency Lexington, KYInfo: koga.memberclicks.net/2015-annual-meeting
IOGANY Summer MeetingJuly 8-9, Peek'n Peak Resort & Conference Center,Findley Lake, NYInfo: www.iogany.org/events.php
OOGA Summer MeetingJuly 27-28, Zanesville (OH) Country ClubInfo: www.ooga.org/events
IOGAWV Summer MeetingAugust 2-4, The Greenbrier, White Sulphur Springs, WVInfo: events.iogawv.com
WVONGA Fall Meeting & Centennial CelebrationSeptember 29-October 2, Oglebay Resort, Wheeling, WVInfo: www.wvonga.com/Attend/Fall2015
IOGANY 35th Annual MeetingOctober 21-22, Buffalo Marriott Niagara, Amherst, NYInfo: www.iogany.org/events.php
IPAA Annual MeetingNovember 9-10, The Ritz-Carlton, New Orleans, LAInfo: hwww.ipaa.org/meetings-events
Calendar of Events
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