Pipelines a Must for Marcellus Drilling to Take Place

Gas must be able to flow for projects to be a go

Binghanton, NY Press
7 November 2009
By Tom Wilber
twilber@gannett.com

Drilling rigs and tanker trucks won't roll into the Southern Tier to extract wealth from the Marcellus Shale until pipelines have been laid to keep it flowing.

That will be no small task.

According to information from the state Department of Public Service, pipeline permitting applications could quadruple from current levels as multi-national energy companies lay the infrastructure to tap the Marcellus.

State regulators anticipate a network of them crisscrossing the Southern Tier to be built before Marcellus wells are developed.

That's far different from the process for conventional gas wells and it's another issue a limited number of state regulators will face with the Marcellus.

For now, permitting is on hold, while state regulators update a plan to deal with the unconventional drilling methods to tap the Marcellus, a massive gas field running under the Southern Tier and throughout the Appalachian Basin. That plan is expected to be completed early next year.

In Pennsylvania, the surge in Marcellus prospecting has been so strong the Department of Environmental Protection created a new office in Williamsport and 37 new positions to oversee permitting and production. The positions were added -- despite a statewide hiring freeze -- to Pennsylvania's Office of Mineral Resources Management, which oversees nearly 600 employees handling natural gas regulation and other issues.

Pennsylvania has the advantage of an infrastructure that allows gas to move quickly from drilling sites to the Tennessee Pipeline. New York, however, not only lacks the infrastructure, it also must deal with less regulators.

Officials in New York have few answers as to how only 17 inspectors in the Bureau of Oil & Gas Regulation -- part of the state's Department of Environmental Conservation -- will be able to handle a rush of permits and intensive drilling activity expected on this side of the border. The Department of Public Service has about 15 people dedicated to pipeline issues.

Permits are necessary to ensure construction of pipelines serve the public interest and minimize environmental damage.

"I'll do efficiency planning until I am blue in the face, and we will work the hours to get it done," said Jim Austin, a deputy director with the Department of Public Service. "If I get a tidal wave (of permits) within the first sixth months, I will say I need more staff."

Assemblywoman Donna Lupardo, D-Endwell, met with Austin and other staff from the Department of Public Service -- an arm of the Public Service Commission -- last week in Binghamton to assess issues related to Marcellus pipeline development.

Oversight was a main concern.

"My takeaway was they will need more staff," Lupardo said. "We'll have to find a mechanism for that."

That's been tricky. The industry has supported increased permitting fees if the money is reinvested in the regulatory process to keep things moving and prevent backlogs. Lawmakers, however, instead unsuccessfully proposed taxing the gas industry to boost the general fund.

In the meantime, according to Department of Public Service spokesman Jim Denn, the agency's pipeline permitting staff has "the expertise and experience" to handle a rush of applications, and they will recruit help from other departments if necessary.

It might take quite a bit of help. The staff typically processes between 25 and 30 permits a year for the Trenton Black River formation -- mostly in western New York but all over the Northeast -- although it is yet to deal with a single Marcellus permit. Once the DEC finalizes regulations, Marcellus permits alone could reach between 100 and 150 a year, Austin said.

In all likelihood, they will be rush orders, due to the nature of the Marcellus and the process used to tap it.

Austin's staff is used to dealing with Trenton wells, which can be capped after they're drilled, effectively storing the gas in the ground until market conditions are optimal.

Marcellus gas, however, doesn't wait.

To extract gas from the non-porous Marcellus shale, crews drill horizontally through the bedrock and break it apart with millions of gallons of water, sand and chemical additives jetted into the hole under high pressure -- a process called hydraulic fracturing.

The well regurgitates the waste water, immediately followed by vast volumes of gas. When the gas comes, it has to keep flowing or the wells tend to clog with clay.

Additionally, Marcellus wells normally produce a surge of clean marketable gas right after they are tapped, so it's not profitable for companies to burn it off, or flare it, the way they do with Trenton wells. Pipelines have to be built and ready to go.

Included in last week's meeting with Lupardo and the PSC were dozens of stakeholders, among them elected officials, professionals, advocates and landowners.

Despite reassurances from Austin and others, the agency's ability to oversee the industry remains a point of concern, said Stan Scobie, a Binghamton resident and industry observer who attended the meeting.

"I find it hard to believe when these suckers start going in the ground at the rate that has been suggested that they or DEC will be able to keep up," he said.