Wells of Wealth -- or Woe? Questions waft from Marcellus Shale
drilling sites
Pittsburgh Post-Gazette
29 July 2010
By Janice Crompton,
Pam Panchak/Post-Gazette - Chris Hallowich, Nathan
Hallowich, 9, Stephanie Hallowich and Alyson Hallowich, 5, stand on a
hillside near their home to illustrate the proximity of several of the
gas wells that practically surround their home and property. The roof
of the Hallowich house can be seen in the upper left of the photo. One
of the wells, the control facility and a 3-acre reservior built to
support the drilling operations are visible in the background, between
the family and their home.
As Pittsburgh begins addressing concerns that the city could be
the next stop on the Marcellus Shale wagon train, and the state
wrestles with regulations and a possible new tax on the natural gas
drilling industry, many people are wondering: What is this 21st century
gold rush -- and how will it affect me?
The question was brought to the forefront last week when 1,200 people
turned out for a public hearing in Washington County held by the
federal Environmental Protection Agency to explain its new study of a
controversial method to extract natural gas from the shale and how it
may affect the environment, specifically water supplies.
The $1.9 million study comes on the heels of concerns expressed by
local land owners and environmental groups, who fear that the
extraction method -- called hydraulic fracturing and known as
"fracking" -- is environmentally unsafe and should be subject to
tighter regulations.
To reach the Marcellus Shale, a geologic formation that is dimpled with
enormous pockets of natural gas, drilling companies typically bore into
the ground at depths of 5,000 feet to 8,000 feet. Then they drill
horizontally for up to two miles.
After the drilling is completed, a cocktail of water and other
ingredients, some of which are toxic chemicals, is blasted through
high-pressure water lines into the drill hole, fracturing the shale and
releasing the natural gas.
The fracking process, and the toxic ingredients in the fracking fluid,
are the primary concerns cited by property owners, who are worried
about the environment, their property values and their families' health.
The history
The Marcellus Shale got its name from a village near Syracuse, N.Y.,
where outcroppings of the organic-rich black rock were found in 1839.
The bulk of the 450-million-year-old formation, however, is thousands
of feet underground in a large swath that spans 60 million acres of the
Appalachian basin from its southernmost point in Tennessee, north
through large portions of West Virginia, eastern Ohio, Pennsylvania and
southern New York.
Drilling in the Marcellus Shale began in earnest in 2004 and 2005, when
Range Resources, based in Fort Worth, Texas, drilled three exploratory
wells in Washington County.
With advances in horizontal drilling technology and climbing gas
prices, the industry has exploded in Pennsylvania, with 2,500 drilling
permits issued by the state from 2007 to 2009 and another 5,000
expected this year. So far, 1,600 wells have been drilled, with the
hope of tapping some of the estimated 363 trillion cubic feet of
natural gas in the Marcellus Shale.
In the next 20 years, experts believe up to 50,000 additional wells
could be drilled -- enough to supply the nation's energy needs for 15
years.
The economics
With as much as $2 trillion worth of natural gas trapped in the
Marcellus Shale, it's no wonder gas and oil companies from Texas,
Colorado and Oklahoma have been flocking to southwestern Pennsylvania,
where a perfect storm of sorts exists for drilling companies.
Unlike West Virginia, which is slipping behind Pennsylvania in the
number of wells drilled, Pennsylvania has no severance tax yet on
natural gas extraction, but one is expected to be approved by the state
Legislature later this year. New York recently placed a one-year
moratorium on new drilling while the environmental impacts are assessed.
Then there's the infrastructure.
A national gas pipeline originating in the gas fields of Texas and
Oklahoma slices through Pennsylvania, with additional miles of pipe
being laid by the week in places such as Washington County, making the
state a major transmission hub to the energy-strapped East Coast.
In addition, Pennsylvania has more miles of freshwater streams than any
other state except Alaska, which is important because the average
Marcellus Shale gas well uses 3.5 million gallons of water for drilling
and fracking.
"Pennsylvania is rapidly becoming the energy center of the East," said
Lou D'Amico, executive director and president of the Pennsylvania Oil
& Gas Association, a nonprofit industry group. "Geologists say
[Marcellus Shale] contains the same or more Btu's than the Saudi
Arabian oil fields, so this is huge."
A Btu, or British thermal unit, is the unit typically used to measure
energy.
Because natural gas burns cleaner than oil or coal -- it produces fewer
greenhouse gas emissions -- it has been touted by the industry and
supporters as the ideal "transition" fuel, bridging the gap between
fossil fuels and renewable energy sources.
An industry-funded study by Pennsylvania State University in August
2009 found that the Marcellus gas industry in Pennsylvania generated
$2.3 billion in 2008, with $240 million in state and local tax revenue
and more than 29,000 jobs created.
"With a substantially higher pace of development during 2009, economic
output will top $3.8 billion, state and local tax revenues will be more
than $400 million and total job creation will exceed 48,000," according
to the study.
Within the next 10 years, the study estimated, the industry could be
generating $13.5 billion and nearly 175,000 jobs.
More and more of the impact of the drilling is being felt locally, from
property owners who are realizing thousands of dollars in royalties and
lease agreements to local workers who are being trained through new
education programs at local colleges.
The industry is pumping millions into local businesses, from hotels to
restaurants to car dealers, and it's being credited for revitalizing
other industries, such as trucking and railroads.
But the outlook isn't all rosy.
The downside
State Sen. Jim Ferlo, D-Highland Park, has introduced a bill proposing
a one-year moratorium on new drilling, similar to the measure in New
York, and Pittsburgh City Council passed a resolution July 20 that
supports such a ban until tighter regulations are in place for the
industry.
Although no drilling has been proposed within Pittsburgh's boundaries,
leasing agents have approached residents in the city neighborhood of
Lawrenceville, prompting Councilman Bill Peduto to characterize the
issue as "a battle between the industry and the community."
Such battle lines have been drawn elsewhere, including at the Hallowich
home in Mount Pleasant, Washington County.
Homeowners Stephanie and Chris Hallowich have traveled the state,
talking to land owners and offering advice to those who are considering
leasing their property for drilling.
Believing they were purchasing their dream property of 10 acres in the
countryside, the couple in 2005 inadvertently inherited a gas lease
signed by the previous owner.
"We had not a clue that anything was going on," said Mr. Hallowich, a
Fort Cherry High School history teacher. "We tried to do our homework."
Shortly after they built a two-story home, four gas wells popped up
just outside of their property, along with access roads, a gas
processing facility and several compressing stations.
The family is now in litigation with the state, drilling operators and
processing companies over what they claim is contamination of their
water well caused by the drilling and because of noxious fumes that
prevent their children from playing outside most days.
They said they can't sell their home because real estate agents aren't
interested and many loan companies won't approve mortgages for homes
close to gas wells. That includes the U.S. Department of Housing and
Urban Development, which won't approve loans for homes within 300 feet
from an active or planned drilling site because the drilling poses
"potential hazards to housing, including potential fire, explosion,
spray and other pollution," according to the agency's website.
Other homeowners have lodged concerns about the disposal of fracking
fluids, which contain cancer-causing chemicals; runoff from retention
ponds used to hold wastewater from the drilling process; and gas well
blowouts, including one that caused an explosion last month in
Clearfield County.
Lawmakers heard more concerns Monday during a U.S. Senate hearing on
emergency response procedures in the gas well industry that was held in
Downtown Pittsburgh.
June Chappel of Hopewell, Washington County, told those at the hearing
that she feared for her life when the liner of a wastewater pit caught
fire near her home.
Concerns also have been raised about the safety of the food chain,
after a herd of 28 cattle was quarantined recently in Tioga County when
its drinking water was contaminated from a leaking wastewater pond
reportedly full of fracking fluid.
The Hallowichs do not oppose drilling but want to tell other property
owners about the lessons they're learning the hard way.
"We just want people to be aware of what's going on," Mr. Hallowich
said.
Janice Crompton: jcrompton@post-gazette.com; 724-223-0156.