Friday, December 30, 2011

Frustration leads to vigilante shale gas enforcement

Because there are so many drilling rigs, and so few inspectors, regulators have called on the public to help manage the shale gas industry.

Officials at Penn State Cooperative Extension have urged landowners at informational workshops around the state to “do their best to keep an eye on things,” and report problems to the Pennsylvania State Department of Environmental Protection. Federal EPA officials, while lacking the jurisdiction to oversee hydraulic fracturing, are “very concerned about the proper disposal of waste products, and protecting air and water resources,” according to a 2010 press release that announced a citizen watch program called “Eyes on Drilling.” Through the program the agency was “counting on concerned citizens to report unusual or suspicious activity related to drilling operations” including “materials, equipment and vehicles involved and any observable environmental impacts.”

While increasing the number of “eyes” on potential problems, these programs do nothing to increase the enforcement muscle of the state or federal regulatory agencies, and that has lead to some tense moments when residents and local government officials tried to take matters into their own hands.

The late Ken Ely, a resident of Dimock and one-time drilling supporter, tried to block-aide a fracking convoy on his property in 2009 after he became convinced the operation was contaminating his water and DEP regulators were ignoring his complaints. You can read more about the standoff in my book Under the Surface, to be released this spring. Additionally, Cabot officials hired armed guards in 2010 to accompany them on the land of some leaseholders in Dimock because, according to Cabot Spokesman George Stark, company personnel sometimes encountered armed residents. (It was not the company’s usual practice to bear arms, according to Stark.)

A recent example of locals taking matters into their own hands came this week. Daniel Roupp, a supervisor in a small rural township in northern Lycoming County, cut down a half dozen trees to block drilling crews’ access to a gravel road, according to a report by John Beague of the Patriot-News.

The road was being destroyed by Range Resources rigs traveling to and from well pads, according to the report. The township asked the company to fix the road and got no response, so it pulled permits that allowed the heavy trucks to use the road, Roupp said. That didn’t stop them, either. The road continued to deteriorate to a point where the state notified the town that it was in violation of erosion and sediment regulations. So Roupp resorted to the improvised roadblock with the trees. “I’m thinking we got their attention,” he told Beague.

Meanwhile, legislators and officials in New York State are closely watching and hopefully learning as events unfold in Pennsylvania. The DEC has reported that it does not have enough people to staff enforcement measures for shale gas development. Perhaps the state will count on local residents and officials to manage the industry. Some local jurisdictions are passing their own rules that prohibit fracking, although the industry is challenging these while maintaining the position that drilling is governed by state regulations which supersede local authority. Denying local governments a say in the drilling that will shape hometown landscapes will likely add tension between the industry and the owners of the land, roads and infrastructure that it will need to extract gas.

Tuesday, December 27, 2011

Is the mainstream press anti-drilling, or just liberal?

I’m going to digress from the topic of shale gas to tell you a secret about the media that covers it: It is, in fact, liberal!

This is a hot topic, so I will elaborate: I am defining liberal as a sensibility that encourages free speech as a primary agent for social change, and along the way, embraces stories that celebrate the working class while promoting a healthy skepticism aimed at entrenched institutional and political powers. This ethos was once summed up with a saying that a journalist’s job was “to comfort the afflicted and afflict the comfortable.”

This is the way it was done in 20 Century America, especially in the early decades when robber barons accumulated unprecedented and unhealthy concentrations of wealth. This type of liberalism was at the very nature of a reporter's calling. In the 21st century newsrooms, Fox News has shifted the journalistic paradigm to the right, to a place where capital and institutional forces – depending on their political shade – are handled in a certain way spun as “fair and balanced” and aggressive reporting is painted as a liberal bias.

Regardless, many post-Fox News era journalists still aspire to a standard introduced by a 19th Century media mogul who unapologetically aimed coverage of his newspapers to the interests of the common man, not the wealthy man, the merchant, or the corporate entity. That person of course was Joseph Pulitzer, the newspaper publisher who declared that a newspaper’s role is to “Always fight for progress and reform, never tolerate injustice or corruption, always fight demagogues of all parties, never belong to any party, always oppose privileged classes and public plunderers, never lack sympathy with the poor, always remain devoted to the public welfare, never be satisfied with merely printing news, always be drastically independent, never be afraid to attack wrong, whether by predatory plutocracy or predatory poverty.”

I find this quote relevant and interesting enough to include as a sidebar on this website. That may put me in the anti-drilling camp in the eyes of some. In fact, I am neither an anti-drilling activist, nor an industry booster. As a working journalist, I try to cut through the rhetoric that has come to define the polar reaches of the shale gas debate. It’s impossible to overlook the fact that Pulitzer himself was a tycoon who became a member of the privileged class by building a publishing empire based on mass circulation newspapers (and advertising) that lowered the barrier of entry to matters of political reform for the common man. Pulitzer, the populist, was also a self made man, and his ability to articulate and exercise the principals of the free press in a way that rang true is embodied in the mythos of the prize that is named after him.

Without going too far afield, I think it’s worthwhile to offer this perspective from which to assess the daily coverage of drilling that has, in some instances, become as controversial as the drilling itself.  I write this as a reminder to people who find it unfair that the media is always snooping around for problems related to drilling and often overlooking the “good news” which is routinely advertised by an industry that portrays itself as harnessing the clean, abundant energy of tomorrow for the good of everybody. Somebody has to tell the other side of the story.  The industry has waged a public campaign against Ian Urbina, of the New York Times, for example, and other journalists raking the muck, and I have felt the criticism from some quarters discrediting my own coverage when it tended to dwell on problems rather than promotion of shale gas development. That is fine with me. Criticism that fosters debate, especially one of the magnitude and importance of the shale gas story, is healthy; and the press should not be excused from critical review and challenges of accountability from all sides.

As a reader (or maybe I should characterize myself in this modern time as a consumer of news) I still expect news agencies to employ Pulitzer's standard of journalism. Turn loose the muckrakers to let in air and light to issues, and the watchdogs to hunt the scent of corporate maleficence. The resulting reports at the morning table may cause heart burn, but at least I feel like I’m getting a view that goes beyond – and perhaps even balances out -- the easily digestible, well-funded glossy campaigns.

Thursday, December 22, 2011

Marcellus economic forecasts provide fodder for debate

Every body wants numbers and “science based” information to chart shale gas policy; but don’t confuse empirical data with objectivity in the context of the politicized and divisive debate over the merits of hydraulic fracturing.

The reports look authoritative, presented in weighty volumes bearing the air of authenticity. Don’t be fooled. In quantifying the impact of Marcellus Shale gas exploration, the body of economic analysis is scattershot, conflicting and often suspect. The most flagrant example is the “Penn State Report,” first issued in 2009, which predicted the industry would generate over 175,000 jobs for Pennsylvania over the course of a decade. (The number was later updated to 250,000). The same report warned that the industry’s economic turbo boost was conditional, and could be “stunted by high taxes and costly regulations.” It had the whiff of rhetoric, and sure enough, an internal investigation by Penn State administration determined the “study” -- funded by the industry, authored by faculty members with industry connections, and baring the university’s seal -- was a product of industry boosterism that “may have well crossed the line between policy analysis and policy advocacy.” The Pennsylvania Department of Labor and Industry, meanwhile, projected that Marcellus-related jobs would grow statewide, rising from about 8,000 in 2006 to about 12,400 in 2016.

Policy makers in New York have issued their own predictions.  These were not funded by the industry, but a product of a report commissioned by the Department of Environmental Conservation. Ecology and Environment, the firm that got the contract, determined the shale gas industry would create between 6,000 and 37,000 jobs in New York. This would significantly increase the number of workers in New York’s gas industry, which stood at 448 in 2010, but would represent only a crumb of the state’s economic pie. (Approximately 351,130 persons were employed in the travel and tourism sector in New York State in 2009; and 2.4 million in the education, health and social services.) The difference between 6,000 and 37,000 thousand is pretty big, and it should be noted that the report did not attempt to derive more specific projections “given the large uncertainties associated with the future natural gas market, the economic and demographic disparities between different parts of New York State, and other unknown factors that would influence the development of the natural gas reserves.” Most recently, John Campbell of the Press & Sun Bulletin reported that the DEC committee that commissioned the economic study has ordered a study of the costs associated with fracking to go along with it.

In this day when vast stores of information are more accessible than ever with a few keystrokes, isn’t ironic that consensus on the matter is so elusive?  We are left with numbers that really point to an absence of information. This is not surprising, given the shale gas experiment is still in its early phase. There is little in American history with which to compare it, beyond the mineral extraction and natural resource booms of a bygone era that cannot be neatly removed from their 19th and 20th century context and applied to 21st century scenarios. The Marcellus Shale economic studies are far from worthless, however. To the extent they provoke public debate – the real stuff on which policy should be derived – they are helpful, and they seem to be doing just that.

Tuesday, December 20, 2011

Fracking in NY: Multiple Factors in Play for 2012

I first started routinely covering shale gas as a reporter for the Binghamton Press & Sun-Bulletin in early 2008.  In my neck of the woods – the Southern Tier of New York -- the story came out of nowhere to become a routine fixture on the front page after a group of farmers in eastern Broome County landed a $110 million deal to lease land to a Texas drilling company.  Thanks to pioneering efforts by members of the New York Farm Bureau and other land-owner advocates in New York and Pennsylvania, residents soon learned they were sitting over a vast resource called the Marcellus Shale, while global energy companies began vying for drilling rights to fallow land over tens of thousands of square miles.

It was an irresistible and timeless story, with all the necessary journalistic elements: impact, prominence, lots of money and human drama. There were stories of rags to riches, dashed expectations, corporate exploitation, and policy conflicts dividing towns, cities and states. Soon after the $110 million deal in New York, the water well of a widow in northern Pennsylvania became saturated with methane and exploded. It was a portent of bad things and a major turning point in the story.  The ensuing policy battle, driven over issues of water, waste, health and economic development, has produced two dynamically opposing scenarios -- full-on gas exploration in Pennsylvania, and a standstill just across the border in New York.

And that’s where we stand heading into 2012. Everybody wants to know if this is the year drilling will begin in New York. We have heard much about the final release of the SGEIS -- Supplemental Generic Environmental Impact Statement – the state’s policy document, now undergoing its second revision, that sets the rules for permitting shale gas wells. One of the biggest take-aways from this thousand-plus pages of policy that's as dense as it’s name implies, is that tens of thousands of residents have actually plowed through it and offered comments for its improvement – and hundreds of thousands are familiar with its various permutations and significance.

I see other factors, though, that will influence whether and when New York State will open its doors to the shale gas industry. The first is the price of natural gas. At around $4 per thousand cubic feet, it is less than half of what it was in the summer of 2008 when the shale gas bonanza began. Gas prices are driven by demand, which in turn is driven by the economy. Generally, the hotter the economy, the higher the price. The higher the price, the more incentive for the industry to aggressively pursue the resource and ramp up public relations and lobbying leverage. With prices where they are, and plenty of work do be done in Pennsylvania, the shale gas industry is at New York’s door and pounding, but it is not yet knocking it down.

That brings us to the second factor: Politics. There are many political factors at play on a local and national level that will set the baseline for the level of resistance the industry will face. The EPA’s current study on the safety of fracking, due out in late 2012, is but one. Home Rule cases, organized by local governments who want to pre-empt state rules on drilling, represent another. These factors will most certainly be influenced by the dispositions of local and national leaders that will gain office after the 2012 elections.

And then there is the big budget question mark in New York. As John Campbell of the Press & Sun-Bulletin reported today, there is no allowance in the state’s budget to hire the staff the DEC needs to oversee the industry. Without money for at least 140 new inspectors, don’t expect the state to begin issuing permits for shale gas development. New York budget battles…. Need I say more about uncertainties and political wild cards?

These elements will interact in multiple ways, of course, creating countless scenarios that defy prediction. Three years after the farmers in Deposit became rich from gas leases and Norma Fiorentino’s water well exploded in Pennsylvania, the story has grown bigger than ever, and it carries plenty of momentum as it snowballs into the election year.

Friday, December 16, 2011

Cabot Oil & Gas report refutes whistleblower’s allegations

People following shale gas development in Dimock, Pa., might remember how the explosion of Norma Fiorentino’s well on Jan. 1, 2009 triggered a two-year investigation by the Pennsylvania Department of Environmental Protection. The agency concluded that the explosion was caused by methane from nearby shale gas drilling operations that polluted the Fiorentino well and more than a dozen others. Cabot CEO Dan Dinges has denied that the Marcellus Shale drilling operations in the small rural community had anything to do with the explosion of Norma’s well or other problems. At one point, Dinges accused John Hanger, head of DEP under Gov. Ed Rendell’s administration, of fabricating the explosion to make Cabot look bad.  

Cabot’s denial that several hundred wells being drilled within a nine-square mile area of Susquehanna County (over one of the richest sections of the Marcelles) are linked to methane problems or any other kind of pollution has become thematic in the story of Dimock, a community divided by landowners and businesses benefiting from revenue from the gas industry, and those who are suffering from the ill effects – traffic; non-potable water; and disruption of the landscape with the ongoing constructions of pads, compressors and pipelines. Cabot has been sanctioned by the DEP for numerous violations of environmental laws, and it has responded by depicting itself as the victim of overzealous and unfair regulators. After agreeing to a negotiated order by the DEP to fix the methane migration problem at numerous drilling sites, Dinges later fought the order, saying the company signed the agreement “under duress.”

The latest development of this story came this week, when URS – Cabot’s environmental consultant -- released a report about its investigation prompted by a whistleblower. The whistleblower’s name is Scott Ely, a local resident, equipment operator, and Jack of All Trades hired by Cabot in 2008 to work on well pads. Ely saw a lot of what went on at these sites, and he didn’t like what he saw. Near the end of 2009, he called up his attorney, a DEP inspector, and a Cabot official, and lead them on a tour of 11 sites where Ely claimed spills were under-reported, unreported, or covered up (sometimes literally). Many allegations involved Ely’s assertion that pits that held drilling waste had not been properly closed, and that underground pollution was a threat to aquifers and streams. A diesel spill at Teel 5 reported to the DEP as being 800 gallons in June, 2008 was, in fact, closer to 3,000 gallons, Ely said. The spill, from a faulty tank, had happened in the middle of the night and wasn’t reported until 6 a.m., and a supervisor “intentionally moved a reference point hay bale so the DEP would incorrectly obtain a clean post-remediation sample.” Scott suspected that diesel two feet below the surface was still leaching into a nearby watershed to the Susquehanna River.

Cabot hired URS to investigate the claims. Cabot’s conclusion of the report released this week: “None of Scott Ely's allegations revealed any environmental condition that required any cleanup or remediation at any of the eleven well sites.  All of Scott Ely's allegations are now confirmed by the study to have lacked substance.”

Given the course of events, skeptics might find this conclusion, based on a report by a firm hired by Cabot to handle the company's environmental issues, as unsurprising.

Monday, December 12, 2011

The Waste Pit Conundrum

New York State Department of Environmental Conservation will soon be working on its third version to the SGIES – the document that outlines how shale gas drilling will be permitted in New York State. The original draft, released in the fall of 2009, was roundly criticized by environmental advocates, and the DEC has since acknowledged its shortcomings. The executive summary of the second version, released in July, noted that the agency gained "a more detailed understanding of the potential impacts" of shale gas development since the first document. It attributed this understanding to events in Pennsylvania, reports and studies, and the public’s response, which amounted to more than 13,000 written comments.

One of the recurring problems in Pennsylvania has been pollution from waste pits that are dug beside wells pads to contain fluids and other byproducts that come up the well bore. They have been known to leak, or worse. In March 2010, a pit containing 400,000 gallons of wastewater ignited in balls of flame and black smoke in Washington County. The fire, fueled by a mixture of hydrocarbons that condense from natural gas, also consumed a tank containing fracking fluid and burned the plastic pit liner.

Those following the issue in New York have heard much about the proposal for closed loop drilling – the industry’s answer for spill-proof sites. The DEC is proposing metal tanks rather than open pits to contain “flow-back,” the mixture of fluids, brine, and other naturally occurring and manmade waste that comes from the hole after a well is stimulated by hydraulic fracturing. The agency would not eliminate pits, however.  Under certain circumstances, the operators would be allowed to stage and sometimes bury waste, such as cuttings, in on-site pits. Cuttings are pushed from the well bore prior to gas production with “drilling mud.” Although drilling mud looks like its name suggests, it’s not a benign product of nature. It’s engineered to precise chemical specifications to lubricate the drill bit, float cuttings to the surface, and to maintain hydrostatic pressure to prevent blowouts. It typically contains agents that are inert, such as clay, and many that are toxic, including barium. (For an analysis of the chemistry of drilling mud, see Jerry M. Neff, “Composition, Environmental Fates, and Biological Effects of Water Based Drilling Muds and Cuttings Discharged to the Marine Environment.”) In addition to mud, Marcellus drill cuttings also tend to contain natural occurring radioactive material (NORM) and pyrite. According to the SGEIS, pyrite can leach and produce an acidic discharge to groundwater referred to as acid rock drainage.

Pyrite is one of many factors that must be accounted for on a permit-by-permit basis, and these factors are highly variable. At certain points of the process, flow-back might mix with brine, brine might mix with drilling mud, and drilling mud might mix with cuttings. In addition to providing workable legal definitions – the foundation of regulatory enforcement -- of the various intermingled byproducts coming from a given bore hole, the DEC also faces the challenge of marshaling the resources to police, with a handful of inspectors, thousands of remote drilling sites spread over the countryside.

Wednesday, December 7, 2011

Fracking: Love Canal of the 21st Century?

The federal government has historically taken a hands-off approach to overseeing natural gas development. The result is a patchwork of regulatory infrastructure, varying state by state, based on regional attitudes, history, potential resources, and industry influence.

Industry proponents say this is all good. Environmentalists say it’s bad. The differences are stark in the boarding states of New York and Pennsylvania, which straddle some of the riches natural gas reserves in the world. In my book, Under the Surface, I recount a scene where Antoine M. Thompson, a New York State Assemblyman from Buffalo, visits residents in Dimock Pennsylvania as part of a fact-finding mission. (At the time in 2009, Thompson was head of the Assembly’s Environmental Conservation Committee.) After hearing Dimock residents of the now infamous Carter Road complain that their water wells were polluted from nearby drilling operations, Thompson offered them words of encouragement and made comparisons with a landmark environmental case study in his own district. A group of ordinary citizens in the La Salle neighborhood of Niagara Falls had been forced to take up the fight against Occidental Petroleum, the parent company of Hooker Chemical, which had dumped 21,000 tons of toxic waste in a place over which homes and schools were built. That would be Love Canal, and yes, the rest is history. Through perseverance and a belief in the system, the residents of Love Canal eventually encouraged sweeping federal action in the form of the Superfund law of 1980, which marked the beginning of the modern regulatory era.

Water pollution blamed on shale gas development (and hydraulic fracturing in particular) in Pavillion, Wyoming; Dimock, Pennsylvania; and elsewhere are now drawing keen federal attention. Will these cases become this era’s Love Canal? Waste disposal practices within the drilling industry have been a particular concern. While most industries have been federally regulated since the days of Love Canal, the drilling industry has been exempt from federal laws (through a clause known as the Haliburton Loophole) about what can be legally put in the ground. In some instances, drilling operators are allowed to literally burry certain waste in people’s back yards.   

Issues surrounding the shale gas bonanza has invigorated the Environmental Protection Agency interest in these matters. In 2010, the EPA announced plans to revisit its 2004 study that concluded fracking poses no risks – an assessment that allowed for the Haliburton Loophole. It has also since announced pending rules to mandate the disclosure of the contents of fracking solutions and regulate their disposal at municipal treatment plants.)

Like it or not, the drilling debate unfolding in New York state, where shale gas operations are on hold amid a contentious and prolonged state review of the guidelines, could ultimately be influenced by the EPA’s decision to become more involved. The EPA’s review of fracking safety – which is bound to be influential and highly controversial regardless of its conclusions -- is due out late next year, right around the time of the presidential elections. I have a feeling that, like the Obama administration’s decision about the Keystone Pipeline Project, the EPA fracking study may be delayed until after Tuesday, Nov.  6. 

Monday, December 5, 2011

Ryan to the Rescue: Behind the Binghamton mayor’s offer to Dimock

The story of natural gas drilling gone awry in Dimock, Pa., continues to be a political flashpoint in communities along both sides of New York’s border with Pennsylvania.

An offer by Binghamton, New York to aid residents in Dimock, Pennsylvania is the latest example of how attitudes about developing the Marcellus Shale are likely influenced by where you live, and how much land you own. These factors were likely at play in the political calculation of Matt Ryan. Ryan is a drilling opponent and mayor of Binghamton – a small city in the Southern Tier of New York -- who recently offered to arrange water deliveries by the city to residents of Dimock, a rural township 20 miles across the state border in the heart of a natural well field being developed by Cabot Oil & Gas. Ryan volunteered the city to provide emergency relief to about a dozen residents in particular whose wells have tested positive for pollution, which the Pennsylvania Department of Environmental Protection has linked to nearby drilling operations. Cabot, under a DEP order, had supplied water to these homes for several years under Governor Ed Rendell’s administration. Now, under Governor Tom Corbett, the agency has declared that Cabot can stop the deliveries because the company has effectively settled the matter with residents by offering them mitigation systems and payments worth twice their property value. Lawyers for 11 plaintiffs suing Cabot for damages related to the pollution disagree.

Ryan, who has been opposed to allowing development of the Marcellus Shale in New York without more environmental review, likely saw the opportunity for a political statement that would not get lost in the prolonged and often hostile battle of words from advocates on both sides of the issue. His move to provide “mutual aid” (commonly used for hurricane relief and other disasters) certainly did the trick, as it landed him, and his view in an Associated Press report featured in today’s Wall Street Journal  (among other places). “I’ll admit, it’s mostly symbolic,” Ryan told Steve Reilly, of the Binghamton Press & Sun Bulletin on Saturday.  Not surprisingly, Ryan’s motives were attacked by critics in both states. Some Binghamton City Council members derided Ryan’s offer to Dimock as his “cause of the month.” Town of Dimock leaders (to the dismay of affected residents) have been reluctant to accept Ryan’s gift-wrapped hot potato, and some pro-drilling advocates characterized it as a political stunt.

The Ryan proposal is the latest chapter of a story that grows more political by the day. Some argue politicization of the debate over developing the Marcellus Shale and other domestic gas reserves is a bad thing. I can’t see that, though. To the extent it facilitates the public discussion and awareness of issues, even in stirring passions of people on opposite sides, getting a broad section of the populous interested and engaged in government affairs might be painful, but it’s always helpful. 

Friday, December 2, 2011

Fight emerges over 'frack' usage

Frack. The word would be an attention grabber, even if it weren’t in the center of national debate over our country’s future. As many people have come to learn, Frack is the nickname for hydraulic fracturing. It’s a word invented by and commonly used within the petroleum industry, and it entered the vernacular of roughnecks on drilling platforms long before the process to which it refers – breaking apart underground rock formations with pressurized chemical solutions -- became a political hot button.

Since the debate over the merits of hydraulic fracturing hit the mainstream with Marcellus Shale development in 2008, the word frack has picked up sweeping popular connotations. For some industry proponents, it has become an unwelcome and politically incorrect epithet associate not with the dialect and culture of the drilling platform, but with the edgy red on black “Frack Off” and “No Fracking Way” signs opponents wave at anti-drilling protests. In writing for the Press & Sun-Bulletin, and for my book Under the Surface, I would occasionally hear from industry people who insisted that I stop using the word altogether and instead refer to the process by its formal name – hydraulic fracturing. (I found avoiding Frack while writing about the popular debate surrounding it was like trying to ignore an elephant in the parlor.  It just wasn’t feasible, given it’s common use in and outside of the drilling trade.)

So how did Frack – a word invented by the industry -- become a weapon by industry opponents? Somewhere along the line, it became easy for protesters to seize the word’s descriptive potency for their own purposes. Still, opposition to the term within the trade does not seem to be universal. Frack is used without inhibition by regulators and trade groups, although I’ve noticed that PR firms are growing more inclined to using the formal term, or even an abbreviation FVHF (High Volume Hydraulic Fracturing).

Although Frack is not considered a dirty word in most industry circles, it’s becoming so in some, and use of the term may well continue to evolve given the politically charged nature of events and the sloganeering associated with it.