More on the history of New York’s fracking ban

I accepted a recent assignment for the Press & Sun-Bulletin – recounting how fracking was stopped in New York – with feelings of both eagerness and uneasiness.

Eagerness was due to having a chance to recap the history of a story I have been covering for seven years. The uneasiness stemmed from how I would do this in a newspaper-length article on a 48-hour deadline.

The results ran both in abbreviated and longer versions in the Press & Sun-Bulletin, Pressconnects, and this blog. The long version was 3,700 words -- about 10 times the length of a standard newspaper article. But it was still short considering the scope of the subject. By comparison, I needed more than 90,000 words to tell the story more comprehensively in my book, Under the Surface.

The key players that have shaped New York’ story from the onset number well into the hundreds, and I had space to reference perhaps a dozen in the newspaper piece. Not surprisingly, I have heard feedback from people that my story lacked some perspective. As one source put it, the story of the battle has become the battle for the story.

Two readers touched on particular events relating to a bill, signed by Gov. Paterson in 2008, that was the catalyst for events to follow. The bill would make spacing units for the large unconventional Marcellus gas wells conformable with existing state policy — a move that would effectively streamline the permitting process. Without it, shale gas development would get hung-up on an administrative process designed for the much smaller conventional wells.

The bill was the kind of wonkish-policy instrument that few lay people have the appetite for, and one that induces migraines to reporters writing for mainstream audiences. But it was also the sort of under-the-radar document that offers stakeholders who master it a strategic advantage in influencing important decisions. In this case, it was a necessary component for the gas industry to get things moving in New York. While this policy-making was different from the grass roots aspect of the movement that I report on, the bill ended up being a notable reference point and precursor to the anti-fracking movement.

Although the bill passed overwhelmingly, Assemblywoman Donna Lupardo and a small group of her colleagues voted against, she said, to “send a message to Paterson.” At the same time, she added, “local and statewide activists raised red flags about what this bill would do to speed up the process as well. That helped put the brakes on the whole matter.”

Paterson ordered a hold on permitting pending an environmental review when he signed the bill. But the bill had, for the record, a certain symbolic relevance. More importantly, it was a magnet for organizational involvement in state affairs that, by some accounts, was a forerunner of the anti-fracking movement.

Roger Downs, a program director with the Sierra Club, noted that several environmental organizations were among the first to recognize the significance of this spacing bill, and engage and challenge the DEC about what its impact would be.These groups included the Sierra Club Atlantic Chapter, Catskill Mountainkeeper, Riverkeeper, Delaware Riverkeeper Network, Natural Resources Defense Council, Catskill Center for Conservation and Development, The Wilderness Society and Catskill Citizens for Safe Energy, Damacus Citizens for Sustainability. (I’m sure I am leaving some out.)

Now, moving on to an altogether different thread of the story, Chip Northrup, the drilling-investor-turned-fractivist, offers another critical aspect of the story’s history: economics.

Northrup writes:

We can summarize why fracking was prohibited in New York with a simple construct – the cost/ benefit ratio – what the environmental risks and economic costs would be to the state and it citizens versus the benefits of shale gas industrialization. Initially, this ratio appeared to tilt very much in favor of fracking – at least in the popular press and in the corridors of power – because the gas industry had grossly overstated the benefits of shale gas development while categorically denying the risks and collateral damage associated with it.

You can read Northrup’s full post here.

I am currently finishing an updated version of Under the Surface, Fracking Fortunes and the Fate of the Marcellus Shale, to be published in paperback by for Cornell University Press next year. This will probably be close to 110,000 words. I would like to think, as the subtitle suggests, it covers a lot of ground and offers a pretty good idea of events that distinguish New York from Pennsylvania and the rest of the nation with the unfolding of the on-shore drilling boom. But there will always be more to report. In that spirit, I encourage readers to pass along any of their own stories or recollections.

Pa. Auditor General finds state’s fracking oversight a fiasco Probe finds lack of inspections, enforcement, transparency

Pennsylvania’s regulation of the shale gas boom has been underfunded, inconsistent and ineffective, according to an investigation by the state’s auditor general released today.

Auditor General Eugene DePasquale likened the Pennsylvania Department of Environmental Protection’s efforts to oversee the industry to “firefighters trying to put out a five-alarm fire with a 20-foot garden hose.” He added: “There is no question that DEP needs help and soon to protect clean water.”

The audit, covering a period of 2009 through 2012, was launched by DePasquale immediately after he was sworn in as auditor general in January 2013. It came in the wake of a controversy over whether state investigators obscure or alter the outcome of investigations into drilling’s impact on water supplies by disclosing an incomplete suite of chemical tests. The intention of the probe, according to a letter from DePasquale at the time, is to determine the "adequacy and effectiveness of DEP's monitoring of water quality as potentially impacted by shale gas development activities, including but not limited to systems and procedures for testing, screening, reporting and response to adverse impact such as contamination."

The report was blunt in its findings: the problems related to shale gas development are much deeper and broader than the DEP can presently handle, and they often go unaddressed or left up to industry without adequate follow-up by the agency. The problem is rooted to a wholesale lack of inspections, enforcement and transparency.

Often, according to the report, the agency does nothing about confirmed cases of water pollution tied to drilling problems.  After reviewing a selection of 15 files of water degradation tied to nearby shale gas operations, auditors found the agency issued only one order for the driller to restore or replace the water supply. Instead, the DEP relied on voluntary action by companies to resolve complaints and violations.

“When DEP does not take a formal, documented action against a well operator who has contaminated a water supply, the agency loses credibility as a regulator and is not fully accountable to the public,” DePasquale said. “When DEP has enforcement authority under the law it must exercise that authority routinely, consistently, and transparently. Those gas well operators whose actions cause harm to water supplies should not get an enforcement ‘pass’ just because they have convinced DEP that they will come into compliance with the law or that they negotiated a settlement with the property owner.”

Among other findings:

• The DEP does not post required inspection information on its website. Auditors found errors of more than 25 percent in key data fields, and 76 percent of inspectors’ comments were omitted from the online inspection reporting.  “It is unfathomable to us that for a basic responsibility of DEP -- inspecting oil and gas facilities – little criteria exists for when those inspections should occur,” DePasquale said. “Until DEP updates its out-of-date inspection policies, to include mandated inspections at specific critical drilling stages and during the life of the well, it will be nearly impossible to measure DEP’s performance in conducting this very basic responsibility to protect the environment.”

• The DEP does not use an official and independent system to track shale gas well waste from the well site to disposal.  Instead, the agency relies upon a “disjointed process that includes self-reporting by well operators with no assurances that waste is disposed of properly.”

• With respect to transparency, auditors discovered that accessing DEP data is “a myriad of confusing web links and jargon” that was often incomplete. “We could not determine whether all complaints received by DEP actually were entered into the system. What’s more … it is difficult to figure out exactly how many complaints were received, investigated, and resolved by DEP,” DePasquale said.

Although reports critical of the gas industry and regulators are nothing new, the inspector general’s report is noteworthy because it comes from within an independent arm of state government.

The DEP disagreed with all of eight findings of the audit critical of the agency, but agreed with a majority of the 29 recommendations for improvement.

Auditors encouraged DEP to:

• Issue orders to a well operators who pollute water supplies —even if DEP used the cooperative approach in bringing the operator into compliance or if the operator and the complainant have reached a private agreement;

•· Develop better controls for how complaints are received, tracked, investigated, and resolved;

• Hire additional inspectors to meet the demands placed upon the agency;

• Create and follow policy requirements for timely and frequent inspections;

• Create a functional system to track shale gas waste and be more aggressive in ensuring that the waste data it collects is verified and reliable;

·• Reconfigure the agency website and provide complete and pertinent information in a clear and easily understandable manner.

NY shale prospects dim six years after leasing frenzy Industry faces mounting legal, economic hurdles

New York’s Marcellus Shale gas reserves, once thought to be world class, continue to lose their luster along with the gumption to develop them.

Shale gas proponents, once giddy with anticipation during the leasing boom of 2008, know now what they didn’t know then: legal hurdles to overcome state and local roadblocks look more formidable if not insurmountable with each passing court case and hearing, and the resource looks less and less worth the effort under today’s economics.

Given the inherent uncertainty in mineral exploration, much of the impetus behind it boils down to a mindset. While even some of the most ambitious extraction endeavors go bust, it’s a given that resources buried 5,000 feet deep will not be found where nobody chooses to look. And nobody is going to look if they are not allowed to, or if the effort of looking is deemed greater than the rewards anticipated under any scenario.

Two recent indicators of future prospects in New York have, for the most part, slipped under the radar of the mainstream press, but it’s a reasonable bet they have not escaped notice of prospectors and the people who finance them. The first indicator is the status of a lawsuit by industry and a group of landowners to legally force open the Marcellus frontier in New York. I’ll get to that in a minute. The other indicator is the latest assessment of economically recoverable reserves under current market conditions, if the moratorium were lifted or bypassed.

First the economics. Although it may be a fading memory for many, stakeholders will remember a time when New York was expected to join Pennsylvania as a global energy producer with gas from the Marcellus Shale. Many will recall the summer of 2008, when the leasing frenzy – whipped up by a $110 million deal between XTO Energy and landowners in Deposit, New York – sent lease prices soaring along the relatively unexplored fringes of the Marcellus in the Southern Tier of New York.

Since then, the price of natural gas has fallen by more than two thirds. Moreover, New York state’s moratorium on shale gas development, pending a review originally expected to last a year, is about to begin year seven, with no end in sight. In the meantime prospectors have moved on to other ventures, leaving many to wonder when and if they will return to the Empire State. The answer is simple: They will return when and if a) it’s allowed and b) it’s profitable.

The League of Women voters became interested in the profitability issue when the state released its 2014 Energy Plan, which includes vague references to shale gas development within New York’s borders. To help bring things into focus, the league  commissioned petroleum geologist Arthur Berman and petroleum engineer Lyndon Pittinger to assess the potential of the shale gas under New York state in the context of market viability.

The result, a report titled Resource Assessment of Potentially Producible Natural Gas Volumes from the Marcellus Shale, State of New York, was released last month. It begins with varying projections of the Marcellus Shale potential from credible sources that show, if anything, just how uncertain the starting point of that calculation is and always has been. Estimates of the recoverable reserve range from those posed by Penn State geologist Terry Engelder in 2008 -- 489 trillion cubic feet (tcf), with about 71 tcf under New York stat – to those offered by The United States Geological Society in 2011: 84.2 tcf for the entire Marcellus play extending through Pennsylvania and four other states.

To clear up a point of common confusion, these numbers represent “technically recoverable” gas. As Berman and Pittinger point out, the “economically recoverable” figure, which is more relevant, is bound to be lower. Both figures are moving targets. That which is technically recoverable changes with technological advances; economically recoverable resources change with economy, and specifically with the value of the resource. The  value, in turn, is influenced by supply, demand, and infrastructure to get it to market. All of these things are influenced by regulation, which in New York remains unknown.

In a nut, the League of Women Voters report found that the business of fracking in New York, moratorium aside, would not be viable at today’s price -- between $4 and $4.50 per MMBtu, or Million British Thermal Units. The price would have to rise to $6 per MMBtu to encourage exploration and even then production would be modest -- between the 0.8 and 2.5 Tfc. A price of $8 MMBtu would encourage production between 2 to 9.1 tcf -- more than marginal but hardly the bonanza that people were expecting in 2008. For gas to reach $6 MMBtu, Berman notes, “Substantial unforeseen changes in the natural gas supply/demand balance would need to occur.”

(You can hear Berman discuss his report with Capitol Press Room Host Susan Arbetter here.)

It’s fair to note that Berman has long been a critic of shale gas development, and his projections tend to reflect a broader notion that its economic sustainability falls well short of expectations promoted within the field. But he is respected, and even shale gas proponents such as Engelder, given the chance, show no eagerness to flatly dismiss his assessment of New York. “Art may not be that far off the mark although he is usually low relative to other analyses,” Engelder said in a recent email, asking his take on Berman’s work.  “Maybe some of Broome County works at $4 gas,” Engelder added.

It’s also worth noting that Berman’s analysis draws on and expands the same school of thought developed last year by a team comprised of a cross-section of professionals, led by investor Chip Northrup, who happen to be upstate New York residents and who have been conspicuous in the battle to keep fracking out of their state. The team also includes Lou Allstadt, a retired Mobil vice president, Brian Brock, a geologist, and Jerry Acton, a retired systems engineer for Lockheed Martin. (Here's link to Northrup's blog, No Fracking Way.)

Within days of the release of the report by the League of Women Voters, shale gas proponents suffered another discouragement on the legal front. First, some background: Undaunted by a string of defeats in state court that have consistently ruled in favor of municipalities’ rights to ban drilling, a legal team representing landowners and industry filed a suit against New York that claims the indefinite moratorium on shale gas development violates the state’s own policy under the State Environmental Quality Review Act. The state filed a motion for dismissal on the grounds that the plaintiffs had suffered no damages and the moratorium fell well within the state’s right in establishing policy on shale gas, regardless of how long it took to review all the factors.

The complaint was filed by the Joint Landowners Coalition of New York, represented by Scott Kurkowski and funded by the Mountain States Legal Foundation, a group founded by the Koch brothers to fund conservative legal causes. A companion suit was filed by industry lawyer Tom West on behalf of Mark Wallach, a trustee of Norse Energy, a bankrupt drilling company with interests in upstate New York. Morgan Costello of the attorney general’s office provided council for the state.

On April 24, both sides appeared in a hearing before state Supreme Court Judge Roger McDonough. It’s often tough to tell the outcome of a case based on a hearing and prior to a ruling, but by all counts, the judge seemed to lack sympathy for the landowners, and pressed them on the merits of their complaint against the state. Here’s an excerpt from an account posted April 26 on the Joint Landowners website:

Judge McDonough asked if the executive branch can delay forever. Ms. Costello’s answer was that it can take extended time. Judge McDonough seemed to agree with Ms. Costello on the executives role, calling it “separation of powers 101.”

Attorney Tom West for Norse spoke next. The Judge focused on time limits in SEQRA. There are none. He suggested that this should be remedied in the legislature or in the executive branch. As Attorney West kept hammering at the history of delay and the ongoing wrong, the Judge said that he can only take the executive on its word at this stage of the process. (Editor’s note: Motive will emerge in discovery, but we have to get past the motion to dismiss in order to get to discovery.) The Judge sympathized with the frustration but kept returning to time limits in the law.

The blog concluded optimistically that the “judge reserved decision” and though he did not recognize the fracking moratorium as an “illegal delay” under the state’s SEQR policy, there may be an opening for an argument of “unreasonable delay.”

That optimism was not shared by West. In a recent email in response to my query about the status of the case, West was blunt:  “We are not expecting a positive decision based upon the way that oral argument went.” The West Law firm took down the links to the complaints once posted on its website.

While the jury is still out, so to speak, there is little good news based on these recent events for those counting on a near-term future in shale exploration and development in New York, and plenty of good news for those hoping to see New York lay the groundwork to establish itself as an alternative energy trend-setter.

But the story is not that simple, of course, with plot lines extending well beyond New York, and woven deeply into the national and global circumstances that will determine the future of fracking. Those plots are quickly evolving.

One example: The U.S. Energy Information Administration has just cut its estimates of recoverable reserves in the Monterey Shale in California by 96 percent. California, like New York, is politically influential, and it’s hard to ignore other similarities regarding their roles in the fracking saga. In California, the notion that the geology cannot support the hype has enlivened the argument that the fracking bonanza was a bust from start, and has encouraged legislation for a moratorium similar to New York’s.

But while shale gas prospects are dimming in New York and California, they are getting a big push from places inbetween as well as other parts of the world. Global forces are encouraging development of gas reserves in dozens of other U.S. states to capitalize on growing international demand for cheap and readily available fuel sources, with the economic and political equation favoring expediency over externalized costs. Those demands, already substantial and growing in Asia, have spiked in Europe. The age-old call for energy independence is again taking on a new urgency in the Free World, with the Ukraine crises vividly illustrating the danger of energy dependence on unpredictable and unfriendly governments – in this case, Russia.

Many think more gas from the U.S. and a global spread of the fracking gospel is the answer. Michael Lindenberger of the Dallas Morning News, recently reporting on the significance of a deal for Russia to strengthen it’s economic status with a $400 billion deal to export gas to China, cited Texas Senator John Cornyn as characterizing the broad political push for policy to encourage more U.S. exports. More exports, according to Cornyn, make economic sense but, moreover, are justified “because of the competition it would provide for Putin and the Russian monopoly.”

Of course, we are talking about shale gas and fracking, so it comes as no surprise that there is little consensus and much division on the topic. Seamus McGraw, author of End of County, Dispatches from the Frack Zone, has been following the fracking issue since he began writing his book as the shale gas boom first developed in Pennsylvania. He points out that the global economics of shale gas cannot be isolated from the economics of other energy sources, including coal. The political urgency provoked by international threats in areas involving key American interests must account for the practicalities of various solutions. And a primary practicality  of shale gas exports involves infrastructure in place to get energy where it needs to go today, not years from now. And here I will give McGraw the last word. In a recent discussion on my Facebook page, he posted:

You're not going to break Russia's stranglehold (on natural gas exports) because a) they've got pipelines which beat LNG (liquid natural gas) every time, and b) because they can set the price as low as they want to drive us out of market and then jack it back up at will. All this is going to do is drive up prices here to the point that gas may no longer be reliably competitive with coal, choke off any ancillary economic benefits to manufacturing, and concentrate what advantages there are entirely in the industry itself. And even that, as the Russia/China deal demonstrates, isn't going to be nearly as lucrative as the industry imagines. It's a bad deal all around.

Ultimately, global markets along with political considerations will shape the deal, good or bad, and determine whether the value of gas in places like New York ever justifies the costs of extracting it.

Paper trail for Pa. shale waste leads to ex-IBM site in NY Official dismisses DEP record of cuttings shipped upstate

A delivery arrives in the village of Endicott, NY last summer
Photo: NY Friends of Clean Air and Water

ENDICOTT, NY -- An issue over what – exactly -- is arriving in tanker trucks for disposal at a manufacturing plant in Endicott, New York is a recent and vivid example of the fear and uncertainty over the endpoint of waste produced by the shale gas industry, and the lack of regulatory wherewithal to track it.

It’s a matter of record with the New York State Department of Environmental Conservation that the tanker trucks in question are importing more than 80,000 gallons of waste a day to the plant in the heart of the village. That sum includes 30,000 gallons of leachate from the Seneca Meadow’s landfill, and 50,000 gallons from the Broome County landfill. But there is much that is not on the record, and I will get to that in a moment. First, some background.

Leachate is the soluable and suspended matter that percolates through landfills with (in this area) 30 inches of rain each year, plus whatever moisture is in the landfill itself. This drainage includes essentially anything that goes into the landfill that can be flushed out with water. Put another way, Leachate consists of landfill dregs.

Municipal sewage treatment plants are generally not equipped to handle landfill leachate, so it’s shipped to commercial plants designed to treat industrial waste. The sprawling manufacturing campus in Endicott, in the middle of a heavily populated retail and residential area of the village, was once home to IBM Corp’s micro electronic division .The industrial park, now owned by Huron Real Estate, includes a plant that has been treating waste produced from onsite operations for decades.

The most recent imports are a new source of income for the current operators, i3 Electronics. They began arriving conspicuously last year from Seneca Meadows landfill in 18-wheel tanker trucks rolling through the village. At that time, the business was owned by EIT, which eventually fell to bankruptcy. Along with the tanker trucks came suspicion and fear that former and current operators of the business are trying to offset steady manufacturing losses and job declines over the years with revenue from waste imports.

The suspicion is not without justification. As far as state regulators are concerned, the plant is processing this new source of landfill waste, without a permit, as part of a pilot study. But no time frame has been allocated, and no public comment period or public notification has been declared. According to Mary Jane Peachey, a regulator with the state Department of Environmental Conservation, the DEC has not monitored the input or output of the plant in at least five years.

And here is another critical piece of background: The i3 Electronics site and the surrounding residential and retail district is a Class 2 state Super Fund site, meaning existing pollution there poses a “significant threat to public health or the environment.” Since 1979, IBM Corp. has been pumping toxic solvents from the ground that have seeped from the micro-electronics plant into the community, affecting more than 470 homes. There have been multiple spills since.

It is no surprise that Endicott residents are generally concerned about becoming a waste destination, and specifically concerned about waste from shale gas development, which have been banned in New York pending a health review.

Much of the controversy over fracking waste involves the chemical solution that goes into shale gas wells to stimulate production, and the liquid mix of brine, chemicals and metals that comes out. But liquid waste – called flowback – is just one part of a broader metric. Shale gas development also involves a viscous solution called drilling mud, and solid waste, including drill cuttings tinged with varying degrees of metals, solvents, and naturally occurring radio active material (NORM) from deep in the ground. It’s a matter for record that drilling cuttings from the Marcellus Shale tend to be radioactive, and the New York State Department of Health has advised officials from the DEC to devise a testing protocol to ensure hot drilling waste is handled and disposed of properly .

Drill cuttings, like flowback, are also exempt from federal hazardous waste handling laws, and they often end up in landfills, like Seneca Meadows.

And that’s how shale gas dregs can end up Endicott, or countless other places where landfill leachate is treated. The shipping of leachate to private plants is not, in itself, sinister, or even especially newsworthy. It’s the exemptions, loopholes, and lack of disclosure about its contents that makes it a problem and rightly invites the attention of activists and media watchdogs.

According to records filed with the state Department of Environmental Protection, the Seneca Lake Meadows landfill was the final destination for Marcellus Shale drill cuttings from 196 wells drilled in Pennsylvania during 2010 and 2011. After tracking this bit of information down on their own, some Endicott residents and area activists wanted to know if this potentially radio active drilling waste stream ended in Endicott via the importation of Seneca Meadows leachaete. If so, were state regulators aware of it?

And that brings us to the part of the story where the record gets muddy.

A citizens group called the Western Broome Environmental Stakeholders Coalition met with the DEC’s Peachey in February to get to the heart of the matter. (A video of the meeting, filmed by activist Bill Huston, is available here.) Early in the meeting, the question came up as to whether the Seneca Meadows leachate arriving in Endicott was tested for radioactivity – a simple question that apparently invited a very confusing answer.

Peachey said that step is unnecessary, unless agency personal “are aware” that the waste comes from a suspected radioactive source. “When we are aware that someone is taking a waste stream that would have those elements we would require them to do appropriate sampling and monitoring for that,” she explained.

When a resident pointed out that Seneca Meadows takes Marcellus drill cuttings, Peachey challenged the source of that information. “If they were taking fracking waste now I think we would know it,” she said. When told that the information came directly from the Pennsylvania DEP database, Peachy replied: “I would question that ... I would like to substantiate that more with what’s currently going on there.”

DEP records show that Peachey is technically correct. Seneca Meadows is not currently taking waste from shale gas wells. But she failed to tell the group – in a meeting that was purportedly intended to inform the public and set the record straight – that the Pennsylvania record also shows the landfill did accept cuttings from nearly 200 wells over a two-year period. In bureaucratic form, Peachey fixated on timing and semantics while ignoring the essence of the matter.

While Peachey’s response could be explained as an attempt to disarm a source of PR headaches for the agency, it did nothing to address the issue at hand: drill cuttings in the Seneca Meadows landfill and their influence on the leachate. And it circumvented the original question – is the leachate from that landfill being checked for radioactivity as it rolls into Endicott?

The answer (as eventually revealed – sort of) is no, and perhaps there is a good reason that it is not. (Addressing a later question from the audience, Peachey explained that it is up to landfill operators to check for radio-activity.) But Peachey’s failure to acknowledge, much less explain, the record of shipments of cuttings from Pennsylvania gas wells to Seneca Meadows does not inspire trust. The error of omission could be a misguided attempt for damage control. Or it might be evidence that the department is out of the loop in what she pointed out was a “transaction between one private company to another private company.”

Another possibility, no more reassuring, is that the Pennsylvania records are untrustworthy. Before gaining access to the DEP website, visitors must agree to this disclaimer that notes that the data is self-reported, unchecked, unverified, and possibly incomplete:

DEP makes no claims, promises or guarantees regarding the accuracy, completeness or timeliness of the operators’ data that DEP is required to post. DEP expressly disclaims any liability for errors or omissions related to the production data contained within these reports. No warranty of any kind is given by DEP with respect to the production data contained within these reports posted on its website.

All of this uncertainty points to an overarching problem: the industry’s exemption from federal laws that mandate a clear tracking and specific kind of handling of hazardous waste. States are left with that job, and more often than not, state officials – citing a lack of resources -- defer to the industry to get the job done.

The issue of where the waste goes, which I have written about in several posts, is especially pressing these days, as tens of thousands of shale gas wells come on line in Pennsylvania and Ohio, and tens of thousands more elsewhere in the country.In the absence of federal hazardous waste laws and lack of regional planning, placing the waste becomes a process of default as various states consider legislation to ban it. (New Jersey legislators are crafting a second attempt at a ban after the first was vetoed by Gov. Chris Christie, and the issue is also being considered in New York and Connecticut.) Hence, rather than guided by a master plan, the waste is following the path of least social and political resistance. Much of what comes from the Marcellus, as far as we can tell from industry’s self policing records, goes to injection wells in Ohio, and various landfills and private treatment plants in Pennsylvania and New York.

In addition to Seneca Meadows, DEP records show that New York destinations for waste from the Marcellus Shale include Hyland in Angelica, the Hakes Landfill in Painted Post, the Chemung Landfill near Elmira, Seneca Meadows Landfill in Waterloo and the Allied/BFI Waste Systems landfill in Niagara Falls.

Communities like Niagara Falls (and notably Love Canal) tied to a history of toxic waste disposal are especially sensitive to the possibility of a future tied to more of the same. Even though the Buffalo area does not sit over a viable shale reserve, I have found during book signings there that community members are keenly attuned to the issues of shale gas development and, specifically, the lack of assurances about its waste stream.

Endicott is also one of those places. People in the village are angry that they were not notified about waste imports to the i3 Electronics plant. Matters were made worse last year when a corroded tank holding the contents of a Seneca Meadows shipment failed and at least 6,000 gallons of leachate spilled out, much if it soaking into the ground. Residents were not informed of the shipments or the spill. They were left piecing together information until a year later, when John Okesson, Peachey’s colleague at the DEC, explained details at the February meeting after sustained community pressure for the agency to account for it.

Rick White, a community member and labor advocate, summed up feelings at the end of the meeting. He referred to decades of spills, a pattern of secrecy, and a resulting legacy of environmental problems that, in his words, “stack up.” He continued:

This whole community is very sensitive to the idea that if there is additional toxic fluid, whether it is fracking waste or landfill waste or whatever it might be, and it’s coming into the village of Endicott for whatever the reason, whether it’s to make money or to enrich somebody’s pockets or it its simply to do a good service to the community, the negatives outweigh the positives. And this is why we are asking these questions.

His comments were met with applause from the 50 or so people in attendance.

NY nat' gas projection exemplifies doublespeak on fracking Cuomo plan bases outlook on conflicting scenarios

Will Fracking be part of New York’s energy picture for the next 20 years, or not? The state’s draft 2014 Energy Plan is supposed to answer this kind of question, and the fact that it appears to but doesn’t represents the politically unwieldy position Governor Andrew Cuomo finds himself in with the fracking debate.

In a recent post, I wrote that the plan “makes no mention of developing New York’s shale reserves through fracking, a discussion that remains the elephant in the room. But the plan gives a nod to the role of natural gas and more infrastructure as part and parcel to some very ambitious, of very broad, goals.”

An astute reader, Keith Schue, flagged this. He pointed out Cuomo's plan does in fact mention fracking, albeit in a convoluted and (in my view) meaningless way. Schue directed me to “Volume 2 – Sources,” and a subsection on p. 88 titled "New York Production Forecast." (Embedded below)

My own review of this section found several things worth noting.  First, the forecast, accompanied by a chart, extends through 2035. During that time, the state’s natural gas production is “expected to decrease significantly,” according to the text, due to a “decline in existing formations” and “lack of new wells being drilled.”

Yet, oddly, the line plotted in the accompanying “figure 32” gas production climbs impressively through that period.

The text attempts to explain this, ignoring the inconsistency in the original analysis that gas production was expected to decline. The graph illustrates “a conservative Marcellus Shale natural gas production level.” This “conservative” level accounts for “potential (my emphasis) permitting and production difficulties related to horizontal drilling and hydraulic fracturing.” It offers this elaboration. “If these difficulties are minimized, Marcellus production levels could potentially be higher.”

Finally, it explains that the graph “would show a forecasted overall decline in production continuing through 2035 if the current prohibition on shale development continues.” It concludes that “Regardless of actions within New York boundaries,” ample supplies of gas exist elsewhere “as long as the interstate pipeline capacity exists.”

In a nut, the plan says that Marcellus gas will make production go up, contingent on unknowable factors if it happens, and go down if it doesn’t; and New York can get gas elsewhere anyway, if their are enough pipelines.

To my eye, the analysis appears at first blush to be vague to the point of meaninglessness. But I will grant that it provides a baseline for discussion and many will find that the very dance around the Marcellus question along with the excruciating qualifications and parsing of language are emblematic of the ambiguous state of our energy future.

Shue, who is working with various environmental and anti-frcking groups, explained in an email that he and others were in the process of “writing an exhaustive critique of the energy plan and will be shining a spotlight on this sly mention of fracking at the hearings too.” I am happy that others are looking carefully at this, and I welcome their assessments.

2014 Draft Nysep Vol2 Sources (Page88) 1

Solutions to H20 pollution elude officials in Cabot gas field Five years after blast, Pa officials continue tests in Dimock

Five years after the explosion of Norma Fiorentino’s water well signaled all was not well in Cabot’s Marcellus shale gas operation in northeast Pennsylvania, state environmental officials are still trying to gauge the impacts of drilling on the water supplies of local residents.

The agency is scheduling another round of tests to see whether methane levels in Dimock water wells are safe, Colleen Connolly, a spokeswoman for the Department of Environmental Protection, confirmed this week. It's the latest step in an investigation that literally began with a bang on New Year's Day, 2009. The explosion of the Fiorentino well prompted an investigation by the DEP that concluded water wells serving at least 19 homes contained explosive levels of natural gas that had migrated underground from Cabot’s nearby drilling operations.  Since then, dozens of water wells in Susquehanna County have been taken off line due to methane contamination.

Some of the Dimock residents agreed to a settlement with Cabot, negotiated by the DEP, that compensated the parties with payments worth twice the assessed value of their properties, and systems to filter their water. Others have held out. They believe the systems, which require maintenance, are not an effective answer to the problem and do not filter other harmful chemicals associated with drilling. The settlement was finalized in 2010 under DEP Secretary John Hanger (now a gubernatorial candidate).  Hanger, who headed Governor Ed Rendell’s DEP, had originally pushed for an $11 million infrastructure project, to be paid for by Cabot, to restore fresh water to the residents. Cabot opposed the plan for a water line, and the administration withdrew it soon after Tom Corbett, an industry supporter, was elected governor.

Although Cabot continues to develop the Marcellus Shale throughout Susquehanna County, the DEP has banned the company from drilling within a 9-square mile area around Carter Road until it fixes an unremitting methane problem there.

Working with the settlement as a blueprint, Cabot has restored water to some but not all homes through special filtration systems or bottled water. But problem areas persist. Several polluted homes have been abandoned, including two on Carter Road bought by Cabot. The company bought 1101 Carter Road, once home to outspoken fracking activists Craig and Julie Sautner, and demolished the ranch house last year. It then sold the vacant parcel to a neighbor for a fraction of the purchase price, with a condition written in the deed that no residence could ever be built there. Late last year, Cabot bought the home of Mike Ely, on the south end of Carter Road, although the company has not answered questions about its plans for the contaminated property.

Several other homes in the area remain vacant after having been sold to other parties, reportedly for interest in mineral rights. Three vacant homes happen to be near Cabot’s failed Costello gas well, which officials have indentified as a possible source of methane pollution.  This week, Connolly reiterated that the Costello well, near the intersection of the south end of Carter Road and State Route 3023, was “unviable” and “”remedial work is continuing at the gas well, and Cabot and DEP continue to evaluate results at the water wells.”  In addition to fluctuating methane levels, previous tests have shown levels of iron and manganese that were elevated but within standards in some water samples. Elevated levels of these elements are “not uncommon during gas migration,” she reported.

Before Cabot can resume drilling in the banned zone, Connolly said, the company must “demonstrate compliance” with the 2010 Consent order. “We have scheduled another round of testing to determine whether the gas migration event has ceased,” she added. Connolly could not immediately say how many homes will be included in the sampling collection. Sources in the field told me that the DEP plans to test all 19 homes listed in the consent agreement, but that the agency has not been granted access to all the homes.

As I have found with many stories about shale gas, a central problem is a lack of information. Some of this is because state regulators, dependent on updates from companies that are exempt from many disclosure laws, are still trying to figure out exactly what is going on. And some of it is due to the fact that companies are reluctant to share certain information that casts operations in a negative light. This is all complicated by some residents who feel what is happening on their property is their business, others who want to show the world what they want the world to see, and still others working in good faith to expose and understand problems with the intention of making things better. In short the problem is cast in a muddle of projections from stakeholders with widely divergent interests and ideological footing. Chief among these is Cabot, which possesses the facts about what is happening at its restricted sites and underground, test results, along with rights to the land under question.

In addition to speaking with Connolly and people in the field, I have called and emailed Cabot spokesman George Stark over a period of months for an update. Here is one of my email queries from Dec. 10. 2013:

Hi George,

I’m following up on Cabot’s recent purchase of Mike Ely’s property on Carter Road and have some questions related to that:

Why did Cabot buy the property? 

What plans does the company have for it?  

What is the status of the nearby Costello well? Is it all fixed?

Does the company expect to be able to resume development in the 9-square mile “no drill zone”?

Also, a question related to the former Sautner property now owned by the Mayes: Why did Cabot forever prohibit building a home on the property as part of the land covenant?

 Here is Stark’s response, which came a month later, on Jan. 9, after I left several phone messages:

Tom,

Got your message yesterday about the former Ely property. 

Cabot entered into a private business transaction with the prior owner of the property. The sale was agreed to by both parties and we are now the current owners. 

George

Trying to apply his answer to the questions at hand in any meaningful way was fruitless, so I emailed Stark again:

Hi George 

Thanks for responding. But your statement does not answer any of my questions. Here they are again: 

Why did Cabot buy the property? 

What plans does the company have for it? 

What is the status of the nearby Costello well? Is it all fixed? 

Does the company expect to be able to resume development in the 9-square mile “no drill zone”? 

Also, a question related to the former Sautner property now owned by the Mayes: Why did Cabot forever prohibit building a home on the property as part of the land covenant?

That was January 9. Since then I have also left voicemails. I am still waiting for a reply. If Stark’s response, or lack of a response, has any journalistic value in the meantime, it illustrates how some companies deal with these kinds of unpleasant questions. They ignore them, or offer a statement of fact that appears to be authoritative but is actually irrelevant.

There are people on all sides of the debate over the merits and risks of shale gas development who share a sense or frustration over lack of information. A group of drilling proponents called Dimock Proud has been especially critical of the DEP for implementing the no-drilling zone in Dimock without engaging all the people who live there, including those eager to see shale gas development proceed. In their view, the DEP has been operating too much out of the public eye. The group represents people who are in position to make money when Cabot drills on their property. The Dimock Proud web site features letters to the DEP complaining that the agency has ignored their requests for information -- specicially, explanations of the no drill zone around the problem wells and why the ban applies to people in the 9-square mile area who want to see their shale gas developed. The group stresses this compaint:

Dimock landowners have written you countless letters, signed petitions that we sent to you, and absolutely begged you to let us out of that arbitrary 9-square miles. You did nothing! You didn’t even acknowledge receipt of the petitions.

The controversy over drilling and fracking in Dimock is one of many in countless communities in dozens of developing shale gas basins across the country. Some problems are unique and some universal. But Dimock, just across the border of New York State, was one of the first where the media spotlight focused intensely on the gas boom that is transforming the country. And given the persistence of problems there, it's where it might also shine the longest.

Pa. regulators seek public comment on shale development Seven years into the play, hearings intended to shape regs

We will soon know how passion and reason of stakeholders and the general public might shape regulations of shale gas development in Pennsylvania.

The state Department of Environmental Protection is holding a series of public meetings on provisions of Act 13, a bill intended to upgrade the state’s Oil & Gas law to accommodate unconventional gas extraction. The DEP is charged with taking into account public sentiment as it draws up specifics to implement the bill, which Governor Tom Corbett signed into law last year. Issues range from impacts on parks and wildlife areas to managing waste disposal and spills. The draft rulemaking also includes standards affecting the construction of pits, gathering lines, and temporary pipelines, provisions for identifying and monitoring abandoned wells (and related hazards of drilling through them) and the industry practice of spreading brine, which can include radio-active material and other well waste, on roads.

These and other highlights are summarized on the DEP website. But the overview does not mention key elements of Act 13 that have spawned controversy and law suits, and which are bound to also come up at the hearings. One is a provision regulating physicians who treat patients suffering from exposure to drilling and fracking chemicals. Commonly known as “the gag rule,” the regulation prohibits doctors’ access to information about chemicals in exposure cases. To get this information, physicians must sign a legal contract that prevents them from sharing it with anybody, including other health care providers.  In October, a U.S. District Court threw out a doctor's claim that the rule violates First Amendment rights. The ruling was made only because the doctor, Alfonso Rodriguez, brought the case before the court as a hypothetical situation, and therefore did not have standing. It did, however, leave the door open for claims based on actual events. (More on that here.)

Another touchy provision of Act 13 limits the power of municipalities to influence or ban development within their borders, while allowing drill rigs, waste pits, and pipelines in residential districts. The matter is now before Pennsylvania’s high court after municipalities -- including South Fayette in Allegheny County; and Peters, Cecil, Mt. Pleasant and Robinson in Washington County – successfully argued before the Commonwealth Court that the law was unconstitutional.

UPDATE: On Dec. 19th, the Pennsylvania Supreme Court ruled that part of Act 13 restricting local jurisdiction over gas wells was unconstitutional.

The Oil and Gas industry is exempt from both local and national regulations that apply to other business, ranging from zoning to the handling and disposal of hazardous waste. The justification for this (as I discuss in previous posts): cheap fossil fuel cannot be pulled from the earth with an overabundance of nit–picking inspectors and onerous regulatory burdens.

The degree to which shale gas operations should be regulated, and under which jurisdiction, is one thing. Banning them altogether is something different. The Environmental Quality Board, chaired by the Secretary of DEP, is responsible for adopting regulations and considering petitions to change them, and it will be interesting to see how much of a platform the hearings will become for stakeholders who want no regulation, some regulation, or an outright ban.

A 60-day comment period on the rule-making process began Sunday. The first of seven public hearings across the state is scheduled for Jan. 7 in Wyoming County. Officials have also scheduled informational webinars on Dec. 19, from 2:30 p.m. to 3:30 p.m., and Friday, Jan. 3, from 9:30 to 10:30 a.m. For information about schedules and how to submit testimony, click here.

Since the Marcellus drilling boom began in 2006, more than 6,500 shale wells have been drilled in Pennsylvania – making the Marcellus the number one natural gas play in the country. With the encouragement of pro-drilling governors, first Ed Rendell and now Tom Corbett, the DEP approach has been regulate-as-you-go. That’s a striking contrast to New York state, where officials suspended permitting for high volume hydraulic fracturing in 2008 pending an environmental review and policy overhaul, now in its sixth year and still absent resolution to questions about health impacts. As I have written in Under the Surface, contrasting political cultures and histories in New York and Pennsylvania have shaped the states’ respective approaches to shale gas development. The delay in New York has encouraged anti-fracking activists – bolstered by governor Andrew Cuomo’s liberal base advocating renewable energy - to organize campaigns against the industry, and use public meetings to showcase their opposition.

Will the forthcoming hearings in Pennsylvania also become a showcase for anti-frackers? Perhaps, but it is unlikely they will follow the pattern in New York. The organizational challenge to tip the balance away from the status quo is daunting, especially in this late stage of the game. For anti-frackers to simply show up is part of it, but influencing the process requires comments that are on point and informed. This is a strong suit for industry professionals, who make a living out of mastering policy and related practical, legal, economic, and regulatory intricacies.  And there are thousands of these details with far-reaching consequences encompassing a spectrum of issues, ranging from exemptions to burden of proof to liability to enforcement to bonding to well construction standards to impact fees and taxes… Etc, etc.

Doug Shields, an outspoken industry critic who was instrumental in passing a fracking ban when he was a Pittsburgh councilman in 2010, was later featured in Josh Fox’s Gasland II as a person on the front line of the anti-fracking movement in Pennsylvania. He told me that he expects activists to attend the DEP hearings to exert political pressure, but it will take more than that to significantly alter the course of fracking in Pennsylvania. “A big turnout sends a message to the elected,” he said. “But the meat and potatoes on regulations will be on the technical points.”  He added that he also expected some of the large environmental NGOs to take the lead in assessing and critiquing chapter and verse of the state’s proposal. ‘We will need to get some technical expertise to look at the proposed regulations and determine where the weaknesses are.”

In New York, the anti-fracking movement was able to draw on active chapters of groups such as the Sierra Club and the National Resources Defense Council, combined with  decisive technical help from figures such as Sandra Steingraber and Walter Hang, who each led sophisticated and ultimately effective critiques of New York’s draft guidelines and regulations. Advancing grass roots opposition early in the process on technical rather than ideological grounds, Hang marshaled letter writing campaigns and list serves to educate followers on the nuts and bolts of proposed permitting guidelines – called the Supplemental Generic Environmental Impact Statement -- and to guide responses that favored the movement. Steingraber adopted a similar approach – an online guide called the 30-Days of Fracking Regs – to encourage technically relevant comments first on fracking regulations and later on infrastructure projects. The efforts of both Hang and Steingraber have encouraged a flood comments that stalled the process.

Hang and Steingraber are among activists intent on blocking, rather than regulating the industry. Compared to Pennsylvania, the political ethos and history of New York has favored land preservation more than mineral extraction. Geology is also undoubtedly a factor. Pennsylvania’s extemporaneous approach to establishing rules for the shale gas industry (more than five years into the play) reflects a political tolerance tied to a storied history of extraction, including coal, oil and natural gas, in the state for better and worse. The forthcoming hearings and public comment period on Act 13 will be a grass roots test of how moved the electorate is to change the status quo of carbon dependency. A small response will reflect a willingness to defer to regulators and the state, while the opposite will provide critics with potentially potent raw material for change.

Cabot buys second polluted residential property in Dimock 12-acre parcel on Carter Road flanked by faulty gas wells

The former Mike Ely propety, now owned by Cabot

Cabot Oil & Gas has closed a deal for a second residential property affected by chronic methane pollution in the heart of its prolific gas operations in Susquehanna County, Pennsylvania.

The Texas-based company paid Michael Ely $140,000 for the 12-acre property that includes a doublewide modular home, according to records filed in Susquehanna County Courthouse Wednesday.  The property – now vacant -- borders the intersection of the south end of Carter Road with State Route 3023 in Dimock Township.

The state Department of Environmental Protection has identified at least two malfunctioning gas wells operated by Cabot bordering the property, including the Gesford 3 well, several hundred yards to the north off Carter Road, and the Costello 1 well, just to the south off Route 3023.

Cabot demolished the former Sautner in September 

The agency has forbidden Cabot to drill more wells in a nine-square mile area around the intersection until the company resolves problems with these and other shale gas wells that – according to the DEP inspectors – are causing methane pollution.

The former Ely property sits less than a mile south from another polluted residential property on Carter Road that Cabot bought for $140,000 from Craig and Julie Sautner last year. Cabot demolished the three-bedroom ranch in September and sold the empty lot to a neighbor for $4,000. The new deed includes a clause – called a land covenant -- that forbids residential dwellings on the property.

Cabot bought both the Sautner and Ely properties through a subsidiary called Susquehanna Real Estate 1 Corp.

Ely ancestral home across from Cabot's newly acquired lot

The former property of Mike Ely is part of a larger swath owned by generations of the Ely family since 1858. Bill Ely, Mike’s father, lives in the family’s large ancestral colonial home near the banks of Burdick Creek, which runs under a bridge connecting Carter Road with Route 3023. Bill Ely and his wife, Sheila, are among families in the area that depend on bottled water. Bill told me he has no intention of selling his 19th century house to the company, even though his water is not drinkable.

“I’m not leaving” Ely said Thursday. “My family’s been in this home for generations.”

Susquehanna County and operations centered in Dimock have been the source of both boon and bane for Cabot, which in 2013 was the second largest natural gas producer in Pennsylvania behind Chesapeake Energy. In the first half of the year, Cabot had 15 of the top producing wells in the state concentrated in its leasehold in Susquehanna County – an area experts call a “sweet spot” for Marcellus Shale production. But production has been beset by problems. Both Mike and Bill Ely were among more than 30 families in the area that settled a law suit with Cabot for damages related to water pollution for an undisclosed amount in 2012. The controversy continues, as Cabot, under the watch of the DEP, attempts to fix problems that have prevented it from drilling any new wells in a 9-square-mile region around the Carter Road area. Some of the gas wells have been plugged or shut down, so residents living over them have seen royalty payments dwindle.

Hazards found in some residential water wells include methane, arsenic, bacteria, and various heavy metals that occur naturally. Methane can make water flammable and pose risks of explosion in wellheads and enclosed spaces. Arsenic, heavy metals, and bacteria can cause illness. Drilling can open pathways that allow contaminants to move through the ground, but the extent to which this happens is open to scientific and legal interpretation. Cabot continues to challenge the DEP findings publically with claims the contaminates are a result of naturally-occurring phenomenon.

The DEP began investigating problems in the region after a residential water well on the north end of Carter Road exploded at the home of Norma Fiorentino on January 1, 2009, shortly after Cabot began ramping up operations to produce gas from the Marcellus Shale with the controversial practice of horizontal drilling and high volume hydraulic fracturing. Since then, the area has been the focus of a national controversy over the impacts of shale gas development on residential communities.

During my visit to the area this week, I noticed that a service rig at the Costello gas well had been removed. George Stark, a spokesman for Cabot, was not immediately available for comment about recent developments. Stark told me in September that the rig, which has been at the site for months, allowed crews to “monitor” the casing of the gas well, which appeared sound.

DEP officials explained it differently. They had not pinpointed a source for the problems affecting three homes near the well, including the Ely properties. But they had determined that the suspect Costello gas well was "unviable" and would have to be plugged. In an email response to my query earlier this fall, DEP spokeswoman Colleen Connolly reported that Cabot was ”continuing remedial efforts” at the Costello gas well and “evaluating the effectiveness” of the work.  Methane levels were fluctuating, she said. Additionally, tests had shown levels of iron and manganese that were elevated but within standards in some water samples. Elevated levels of these elements are “not uncommon during gas migration,” she reported.

Update 5:25 p.m. EST. In response to my request for an update this week, Connolly said in an email this afternoon that “remediation work” is continuing on the Costello 1 well.  But the department’s characterization of the status of the well remains vague. In Connolly’s words, the well is "essentially unviable," but DEP officials are "not aware of the gas well having been officially plugged.”

Fracking critics gain leverage with social media mastery Why PR matters in the war over shale gas

Richard Levick, an influential public relations advisor, wrote a piece for Forbes last week about how the Oil and Gas industry’s PR machine is losing the battle for hearts and minds of mainstream America “despite industry advertising budgets that dwarf the activist war chest.” Why? In Levick’s view, it’s all about anti-fracking activists’ mastery of social media to galvanize and amplify grass roots movements. Or in his words:

Social media outreach, online content development, and Search Engine Optimization (SEO) and Marketing (SEM) are all dominated by activist voices. As a result, they are not only rallying significant grassroots opposition; they are doing it in ways that neutralize any advantage that industry money once provided.

Anti-fracking campaigns, both at institutional levels and from the ground up, were quick to catch the crest of the social media wave that has largely displaced community newspapers and town halls as popular incubators and catalysts for free speech, political action, and self-governance. Levick uses an empirical analysis, including a count of tweets about fracking over a given period, to illustrate how “the most influential conversation around this topic is highly negative.” He laments that the industry supporters do little or nothing to engage this on-line discussion, and urges them to get in the program.

Activists understand that the marketplace of ideas has evolved – and they are evolving – and leading — right along with it. If fracking is to become an accepted practice in the U.S., the energy industry must do so as well.

I found Levick’s points relevant enough to merit posting on my own Facebook Page, with this comment: “PR & the fracking war. Big Oil & Gas $ versus anti-fracking organization. Media expert Richard Levick explains natgas industry’s failure in Forbes.”

A reader, perhaps interpreting my post as an endorsement of Levick’s industry coaching, responded that the article was misguided, as the anti-fracking battle transcends a PR contest. She left this query. “He thinks it just comes down to a pr battle. What do you think?” Fair question, and one that – given it was posted on facebook and I am now responding on Blogger -- illustrates the influence of the new media that Levick writes about.

So here’s my answer: As a journalist, I’m always interested in how a message is conveyed, the degree to which it piques public interest, people’s perceptions, and what influences them. I welcome analysis from informed observers, and in this regard I think Levick’s piece rings true… mostly. The industry has done a lousy job from the start explaining itself with a patronizing “Trust-Us-It’s-Safe” message. This assessment is not just from Levkick, but is shared by notable industry supporters as well as skeptics, and it applies to both the industry’s traditional advertising campaigns in print and broadcast, as well as its social media efforts. Tom Ridge, former Pennsylvania-governor-turned-public-relations-figurehead for the industry, told an Associated Press reporter that the industry had to do a better job conveying a positive public image and “they know they have some work to do.” That was in 2010.

Last week, Sarah Murphy wrote an article for Motley Fool, the popular investor guide, titled “Fracking is Losing the PR battle.” She cited a recent report called Disclosing the Facts: Transparency and Risk in Hydraulic Fracturing Operations,  released last week. The report assesses investors’ needs for risk disclosure and mitigation against company practices and found “a systematic, industry-wide failure to adequately disclose fracking-related information that is material to investors.” Murphy explains what this means in her view:

The thing is, fracking may really not be as awful as the campaigns make it appear, but the industry is going to have to rethink its strategy or risk condemnation in the court of public opinion… 

Seriously, these guys have got to step up their game if they want to survive. At last week's SRI Conference on Sustainable, Responsible, Impact Investing, I talked with countless fund managers, investors, financial advisors, and academics, all of whom agreed that while fracking is controversial from a sustainability perspective, the industry's ham-fisted approach to public engagement has been so feeble as to be pathetic.

In this day and age, much of that engagement is on line. And, as Levick points out, it’s a place where the industry is out of its element of old-fashioned Madison Avenue advertising strategies aimed at conventional media.

While industry money went into advertising and traditional “outreach” campaigns that net diminishing returns in the digital age of public affairs…  activists stretched every dollar with online efforts that prove far more effective.

The trend is also important in politics. Levick links to another assessment that recaps the advantage Obama had over Romney by understanding and applying the power of Social Media in an “era where familiarity, credibility, and the ability to forge personal connections trump traditional advertising at every turn.”

The accounts of Levick, Murphy, and Ridge are but a few assessments of how the industry has failed with the traditional media with patronizing and heavy handed messaging, and failed with the new media with its inability to engage savvy and influential audiences on line. But there is a critical third frontier that they don’t address: Big-money politics.

Popular opinion is only one gauge of a campaign’s success. The other is special interest – the megaphone through which public opinion is conveyed to Washington. The size of the megaphone is related to lobbying wherewithal of a given interest, and the lobbying wherewithal is largely a function of the money behind it. Here the industry is winning, at least in Washington. The Obama administration has identified shale gas development as a “priority” in meeting the nation’s future energy needs. That may be related to lobbying, or not. But certainly lobbying has everything to do with the policy framework that heavily favors the industry over others.  Specifically, Obama’s administration and Congress have preserved drilling and fracking industry exemptions from the Safe Drinking Water Act and hazardous waste disposal laws – passes that allow industry to operate with one foot in the pre-regulatory era. Without these exemptions, the industry would have to reveal what hazardous substances that it puts into the ground, and characterize the waste that comes out – revelations that would open the door to a host of other laws, and cast fracking in an altogether different public light.

The lobbying battle at regional and local levels is not going as well for the industry, or conversely, is going much better for the activists. New York state remains off limits to the industry pending a moratorium now in its sixth year. And this month local municipalities in California and Colorado have advanced the Home Rule movement -- which settles drilling issues with local town boards and referendums -- that is gaining traction in New York and Pennsylvania. As Levick notes about the recent vote in Colorado: Boulder, Fort Collins and Lafayette overwhelmingly voted for drilling bans. The industry had only one victory in Broomfield, an area that traditionally trends Republican, where voters rejected the environmentalist agenda by the slimmest of margins.

In the long run, operators and investors continue to push forward with shale gas development that has flooded the market with cheap natural gas. The industry’s success or failure over the longer term hinges on its ability to address issues of sustainability -- not just ecologically, but economically and politically -- in the Market Place of Ideas, where voters and investors judge the good from the bad.

What are the prospects for New York’s shale reserves? Sociology, ideology weigh heavy in debate over geology

The value of a given shale gas reserve depends on the physical characteristics of the rock. How deep? How thick? How much wet gas? How much dry gas? But as with many aspects of the shale gas debate, there’s more to it. Community attitudes, politics, special interests, markets, and ideological conviction all influence the social and monetary push to get things moving.

Things are not moving in New York, where for years shale gas has been pitched as an economic gift – a windfall for the taking -- by industry public relations campaigns, lobbiest, and landowners seeking lucrative contracts with drillers. Now, fracking critics are drawing on industry’s own data to build a case that the New York’s shale prospects amount to a stillborn promise.

Chip Northrup, a former oil and gas investor from Texas, led a team of professionals who made this case Wednesday night at Cornell University. Presenters also included Lou Allstadt, a retired Mobil vice president, Brian Brock, a geologist, and Jerry Acton, a retired systems engineer for Lockheed Martin. The team, moderated by Cornell engineering professor Tony Ingraffea, spoke at a 200-seat lecture hall brimming   with a supportive anti-fracking crowd that laughed and applauded in response to occasional quips and deadpans by Northrup. (Example: “In Texas, they know better than to spread radio-active flowback on roads…. They use it to induce earthquakes by injecting underground.”)

In a presentation that lasted close to two and a half hours, Northrup and his colleagues drew on data from a handful of exploratory wells in New York and extrapolations from thousands of production wells in Pennsylvania, along with prevailing social factors. Their conclusion: Viable shale reserves in New York are too limited and social resistance too great to produce major development at current prices. Rather than blossoming into the mega-billion dollar industry, as promised, the play is more likely to attract highly speculative exploration around the fringes by wildcatters, storage facilities and pipelines to get Pennsylvania gas to market, and geology that is uniquely suited for the injection of fracking waste from out-of-state operations – factors that Northup likens to “a hangover without the benefit of the night on the town.”

For years, the anti-frackers have waged their war against shale gas development predominantly on environmental grounds with arguments that it’s unsustainable and acutely and chronically damaging to the ecosystem. Wednesday’s presentation shifted the fight to economic grounds, at a time when the industry is sensitive to talk that can discourage investors. Natural gas prices are expected to remain at historic lows for the foreseeable future, cooling enthusiasm to sink capital into exploration and production efforts in new and unproven areas.  (In many ways, the industry is victim to it’s own prolific success in Pennsylvania. Landowners are anticipating the market glut will soon exceed storage capacity, portending even further suppression of prices or a scale back in production. For a recent assessment of the market glut from the view of landowner's forum, click here.)

Economic prospects in New York, meanwhile, are further weakened by regulatory uncertainty. After more than five years of an environmental review, state officials are yet to finalize permitting policy pending questions about public health, and Governor Andrew Cuomo’s lack of commitment is grounded in coordinated opposition from both grass roots and institutional campaigns that represent a significant part of his political base.  (Significantly, Northup and Allstadt are among leaders of their own political action campaign to ban fracking near their homes in Cooperstown. Their fight to put shale gas development in the hands of local town leaders rather than state officials boils down to the outcome of a landmark case now before the Court of Appeals.)

Just as gas proponents were using the promise of wealth to urge state government to begin permitting gas wells when prices were high and interest was booming, critics are now presenting evidence of a flat-out bust as all the more reason to hold back.

Acton's analysis shows colored dots representing viable shale zones 

At Wednesday’s presentation, Brock provided a geological assessment that explained what is widely known about the Marcellus: Production is most viable in the thickest, richest sections at a certain depth, which tapper exponentially from an area just south of New York’s border with Pennsylvania. Acton supported Brock’s characterization with a separate analysis, now circulating on the Internet. Acton used production figures from Pennsylvania wells to assess yields corresponding with certain physical parameters of Marcellus geology, including depth, thickness, and thermal maturity, and then extrapolated the Pennsylvania data to model New York’s production. His conclusion: Reserves under the Empire State remain mostly unviable, with the exception of an area extending slightly into the Southern Tier, just north of the most lucrative part of the reserve in Susquehanna County Pennsylvania.

As with many arguments over shale gas, this one is not so much about the data, but how the data is framed in a broader campaign for or against development. Much of Thursday’s presentation amounted to casting old information in the context of current market conditions. Acton’s map, in fact, was similar to a map created by Terry Engelder, a Penn State geologist and shale authority who has prominently argued in favor of the economic benefits of drilling. Allstadt later used Engelder’s map to support the theme of the Cornell presentation: The New York shale gas cup is far more empty than full.

A map by Engelder used by Allstadt shows conflicting interpretations

Northrup pointed out that while the shale gas footprint in New York is vast, it’s functionally limited by geology, market restrictions, myriad moving parts of corporate portfolios and lease holds, complications and uncertainties posed by unresolved state policy, no drill zones proposed by the state, and bans by municipalities. I’ve heard both shale gas critics and proponents refer to this set of factors as strangulation by regulation. It’s a point that industry lawyer and lobbiest Tom West frequently makes at public talks: given the social resistance it faces in New York, the shale gas industry will simply move on to less restrictive and more productive territory.

Allstadt presented evidence that major companies have tested both the Utica and Marcellus shales in New York and found them unworthy. He cited a handful of test wells with underwhelming results drilled by companies such as Chevron, Gulf, Anschutz, Chesapeake and others prior to the shale gas boom. His point is worth noting, but also in need of context. These test wells were small in number and scattered over a large area. They were vertical wells that used low volumes of fracking solutions, prior to refinements and breakthroughs to adapt the process to Devonian shale. And they don’t correspond with leasing trends that took shape with a better geological understanding of the play that came after 2008. (XTO Energy, later bought by Exxon Mobil, paid $110 million dollars for leases on 50,000 acres spanning parts of Broome and Delaware County in the spring of 2008 after wells were proven in northeastern Pennsylvania.)

By the account presented by Northrup and his group, New York is missing or has already missed the shale gas party. As for what Northrup characterizes as the hangover: New York remains an attractive disposal option for Pennsylvania producers because New York regulations, which haven’t been updated since the late 20th century, allow flow-back to be spread on roads and drill cuttings to be disposed of as conventional waste. Additionally, conventional wells in New York that were drilled and depleted decades ago make, by industry standards, suitable repositories for shale gas waste. From a geographical standpoint, New York is a strategic spot for infrastructure projects to store and transport gas to major northeast markets, and some of these projects are already well underway, including various pipelines and a controversial project to convert old salt mines on the shores of Seneca Lake to natural gas and propane vaults.

Given all these factors, what does New York’s future look like? Allstadt, who has both ample industry experience and a stake in development as an Upsate resident, said a drilling boom is unlikely, but expect some intensive drilling by maverick   companies in communities bordering Pennsylvania.  “There’s always somebody who has to take a shot somewhere, and instead of going to a casino they will drill,” he said. “These are the least reliable outfits. They will drill the wells as cheaply as possible.”

Predictably, the presentation drew admiration from anti-fracking activists and criticism from industry supporters. And while it was an academic exercise that will not alter the geology and arguably has little baring on markets or regulations, it represents a piece to a much larger rhetorical tug-of-war for the hearts and minds of policy makers and politicians. Science can be found on both ends of the rope. Bruce Selleck is a geologist at Colgate University who has identified the prospective area for shale gas development – or “fairway” -- in New York to extend well into upstate New York, west to Chemung County, east to Sullivan County and north to Oneida County. The Marcellus shale alone is capable of producing 5 trillion to 10 trillion cubic feet of gas in New York, by Selleck’s estimate. His take on the presentation at Cornell? “All the blah-blah-blah rhetoric in this 'finding' makes it clear that the folks involved don't want to see gas development in New York - not surprising given the 'experts' involved.” He offered his assessment in a recent email, along with this elaboration:

That companies are dropping leases simply means they are not planning to drill the properties anytime soon, indicating their estimation of the value of the recoverable gas at current prices makes development in these frontier areas non-economic, in the near term.  The dry gas market is flush right now, and will likely remain that way for 3-5 years. The lack of permitting of HVHF in NY is of course an additional factor.

Even if the Marcellus reserve is in the 5 TCF range in NY, development could prove attractively economic down the road when gas prices are higher.  Five TCF of gas would require 2500-4000 wells to ultimately recover that resource. That scale of development would still bring significant royalties to landowners, along with other economic benefits, and all the negative impacts, as well. 

The Utica is even more of an unknown in NY, so any statements made about its potential are based on very little data.  I expect a few of the companies in NE PA will try the Utica at some point soon. 

Policy is made at the crossroads of science and politics. The argument that Upstate New York’s celebrated shale reserves have already been passed over by major players challenges proponents painting the industry as economic salvation for upstate New York, and their corresponding push for legislators and the governor to create a policy infrastructure that enables it. But it’s hard to know exactly where it will lead. The assessment by critics that reserves are economically viable only in a small part of the Southern Tier may give Cuomo political cover to proceed with a plan he has already proposed: Begin issuing permits for wells in areas along the Southern Tier where local officials feel their communities stand to benefit, and see what happens.

Will Utica, Marcellus remain non-starters in Empire State? New theory holds geology, not politics, thwarts NY fracking

Cabot Oil & Gas Map showing thickness of Marcellus shale, one measure

of it's viability. Other factors include depth, organic content,

thermal maturity, and myriad political and market factors    

A collection of factors stalled the Pennsylvania shale gas rush at the New York state border, including grass roots opposition, a market glut, the threat of local bans and --  above all -- the state’s reluctance to complete permitting guidelines without more information about health impacts. That, at least, is the familiar version of the story recounted through the popular press. But a group of activists – some uniquely qualified – are building an argument that something more profound and fundamental is at work: A lack of gas.

“Simply put, we now know that the Marcellus is likely only marginally productive in a few townships by the border - and may not be economic there until after 2020,” said Chip Northrup. “The Utica may not be here at all - or in a few pockets.”

Next week, Northrup, a former oil and gas investor from Texas, will publically make this case along with a select group of anti-fracking activists, some with industry resumes. The event is scheduled for 7 p.m. at Cornell University’s Hollister Hall Auditorium. In addition to Northup, presenters will include Lou Allstadt, a retired senior vice president for Mobil Oil, Jerry Acton, a systems analyst for Lockheed Martin, and Brian Brock, a retired geologist. The event will be moderated by Tony Ingraffea, a Cornell engineering professor specializing in fracturing mechanics that are integral to shale gas production.

The argument isn’t really about whether there is gas under New York – geologists agree that multiple gas-bearing formations, conventional and otherwise, lie beneath upstate’s countryside from the Catskills to the Allegany region. It’s a question of whether the broad mantels of Devonian shale, which hold prospects of drilling, fracking, and infrastructure development on an unprecedented scale, are economically viable under current or future market conditions.

Interest in New York’s unconventional reserves peaked in 2008, when the price of natural gas was three to four times higher than it is now. Since then, production of Marcellus wells coming on line in Pennsylvania and West Virginia has soared, contributing to a price collapse that is not forecast to change anytime soon. While this is a contributing factor, Northrup argues that the much-hyped future for shale gas as an economic engine for New York was a bust from the start. The team of presenters next week at Cornell will base this outlook both on analysis of available geological records and the status of leasing and development trends by major oil and gas companies. So far, only one major, Exxon Mobil, holds significant leases in New York – 50,000 acres in Broome and Delaware counties, near the Pennsylvania border. Moreover, Northrup said, analysis of well data filed with the DEC shows a range of major companies including Chevron, Gulf and others, tested upstate reserves prior to the “the fury” of the gas rush unfolded in 2008. “They kicked the tires and left well before the moratorium was in place,” he said.

Since the moratorium preventing high volume hydraulic fracturing began in the summer of 2008, midsize companies have faired poorly in their shale gas quest in New York. Norse Energy, a Norwegian company, was planning to tap Marcellus reserves in Oneida and Chenango counties. But officials recently announced they will close operations that remain insolvent after the company’s failure to sell pipeline rights of way and gas leases on 130,000 acres to pay debts. Chesapeake Energy, meanwhile, is letting its leases in New York expire after losing a legal battle to extend them indefinitely (through a process called force majeure) while waiting out the resolution to the state’s moratorium. Prior to that, Talisman, a Canadian company that was a big player in New York’s Trenton Black River boom, began shifting it’s operations from conventional resources in New York to Pennsylvania’s shale gas.

Interest from major oil companies is one of multiple measures of shale gas prospects, and it is not always a defining one. As Russell Gold recently reported for the Wall Street Journal, majors have not typically thrived in the natural gas business, and Shell Oil is selling off some assets in Texas after suffering from a market glut that has held prices down to below $4 per thousand cubic feet for several years. The industry moves in cycles, however, along with prices and demand, and independents play an important if not critical role in exploring resources that might otherwise go undiscovered as business cycles ebb and flow. Gold explains:

Smaller producers have tended to be more successful in shale than major oil companies, in part because they can move more quickly to lease up acreage before land prices rise and are more nimble at experimenting with different well designs to maximize output and drive down unit costs.

In short, smaller independents commonly venture where majors don’t. There is a lower barrier of entry to leasing, exploring, and experimenting in unproven areas, and rewards of discovery are greater. So are the risks.

This is a concern for Allstadt, who has led the push for a precedent-setting municipal ban (now being tested before the state’s high court) on drilling in Cooperstown. He has told me he does not generally fear the work of major oil companies, but he is wary of wildcatters – independents with limited capital who live or die in the world of speculative ventures. “They (Independents) play on the fringes,” Allstadt said. “They are the ones most likely to screw things up.” (Drillers have already left a legacy in upstate New York. Regulators estimate there are 57,000 abandoned and orphan oil and gas wells statewide, many of them left by firms that went broke or walked away from them.  Of these, the state has listed 4,722 as a priority due to health and safety risks, but lacks funding to plug them.  More on that here.)

In addition to a market evaluation, Northup said the presenters at Cornell will offer geological data that shows underwhelming results for shale gas samples collected from wells drilled in the 1990s and the early part of this century targeting conventional formations – mostly the Trenton Black River. Operators had to drill through the Utica and Marcellus to get to the Trenton Black River, which provided a small boom of its own when natural gas prices began rising several decades ago. The Marcellus is generally thought to be too thin and too close to the surface to be effectively developed in western New York, where most of the Trenton wells are drilled. But some geologists have argued that the prime drilling fairway of the Utica shale, which is providing productive wet gas and oil wells in eastern Ohio, may overlap the Trenton fields in western New York. Northup argues the opposite. “If those had shown Utica potential, all the majors would be here - and they never were,” he said. Take into account these factors, plus limitations imposed by natural barriers, topography, and regional no-drilling zones the state has imposed for ecological reasons, the much-touted drilling fairway for shale gas extending into New York’s Southern Tier “looks more like a putting green,” Northrup quipped on a recent appearance on Liz Benjamin’s Capital Tonight.

Terry Engelder is a geologist from Penn State whose career has been defined by his knowledge of Devonian shale. In a series of calculations in 2008 and 2009, he estimated that the Marcellus contained enough recoverable gas – nearly 500 trillion cubic feet -- to last decades, and his very public encouragement to investors and the media served as a catalyst to the gas rush in Pennsylvania. Now, with prices a fraction of what they were, Engelder is cautious about assessing the economic breakeven point of New York’s shale reserves, which, he said, “need careful evaluation.” In an email this week, he responded to my requests to assess the validity of claims by Northrup’s team that New York’s reserves are too small and problematic to be worthwhile.

Now it may turn out that shale gas in New York will not work for less than, say, $5.00/MMcf, BUT the the state should thoroughly evaluate this possibility and not have a bunch of born-again anti-frackers shout the industry down before sensible geologists and engineers really understand what the possibilities are.  

His dismissal with the anti-fracking movement aside, Engelder’s cautionary theme is a contrast to brimming enthusiasm he expressed along with lawyers, elected officials, landowners, and landmen that reflected a sense of giddiness over prospects of the shale gas boom in 2008. Interest in New York peaked in the summer of 2008, after a coalition of landowners near the Pennsylvania border landed a deal with XTO Energy (later bought by Exxon Mobil) to open 50,000 acres for development for $110 million plus royalties. Although that acreage remains undeveloped due to the moratorium, Engelder’s estimates were supported by production figures as the shale gas rush took shape in Pennsylvania over the next few years. By early 2009 drilling proponents in Pennsylvania and New York began looking for political leverage to encourage government support of the industry. As the economy sunk into recession, the case for jobs seemed to be the hot button. Stakeholder-funded studies purported to show economic potential that, in retrospect, stretch the limits of good sense in some cases.  An enthusiastic Broome County legislature paid University of North Texas scholars for a study that concluded Broome County was “fortunately located in the epicenter of the play” and shale gas development would produce 4,000 wells that would bring $15 billion to the economy, create 16,000 jobs, generate $792 million is salaries and $85 million in tax revenue.  The study encouraged county officials – before a single well was drilled or land leased -- to budget $5 million of expected lease payments on county-owned land near the landfill. Five years later, the county is yet to collect a dime from its shale gas assets, whatever they may be.

Engelder’s predictions remain controversial. And while early production numbers in Pennsylvania have met and in some cases exceeded them, questions about production have given way to questions about sustainability. (Will Bunch, of the Philadelphia Daily news, explores unmet expectations in Pennsylvania’s gas rush here, and Kevin Begos, of the Associated Press, looks at the concern of pension fund managers over the long-term profitability of the industry here.)

Chris Denton, an attorney who represents landowner coalitions, has seen the rise and fall of gas prices and corresponding interest in shale gas leases in New York. He pointed out that geological assessments are unique, piecemeal, and often proprietary, so it’s hard to usefully extrapolate figures from conventional wells, many which are in western New York, to the parts of the Marcellus shale thought to have the greatest potential, which are more toward the east. “I don’t really pay much attention unless it’s hard data from wells,” said Denton, who added that there is no mystery to why shale gas has not taken off in New York while it’s flourishing just across the boarder in Pennsylvania. “We’ve spoken with a lot of interested parties, and as it stands, it’s really too easy for them to go someplace else. They tell us, ‘call us after the moratorium’s been lifted.’”

For every argument against shale gas, it’s easy to find a countervailing argument. Theories about the geology in New York bring a chicken-or-egg quality to the discussion. Denton says the geology has not been proven because of the moratorium. Northup says the lack of interest – based on available geological data -- makes it politically comfortable for Governor Andrew Cuomo to extend the moratorium indefinitely.

The argument for or against the geology aside, there are new signs that Northrup has correctly pegged the political atmosphere. In an interview earlier this week in the Syracuse Post Standard, DEC Commissioner Joe Martens told reporter David Figura the health review needed to complete the state’s permitting policy is “going to take some time… We really don’t feel that there is any great urgency. People really want to be satisfied that this can be done safely and that's what [Department of Health Commissioner] Dr. Shah is trying to get to the bottom of.”

Will the geology of New York support a full-scale gas development by major energy companies or even speculative exploration by wildcatters? For now, a number of influences – including markets, political pressures, and unproven geology -- have created a feedback loop that favors the status quo.