PA Data Updates, New DataTool Charting Functionality

Several oil and gas datasets from the Pennsylvania Department of Environmental Protection (DEP) have been updated on the FracTracker DataTool, including:

Additionally, a Pennsylvania zip code dataset from the US Census has been added, but it appears to have some errors, with some zip codes inside Pennsylvania missing, and some outside of the border included.

PA zip codes. Please click the “i” tool then any map feature for more information.

Also, Rhiza Labs, the software developer of our DataTool, has been working hard to add new charting functionality to their Upshot platform. Any data that is classified as numeric upon upload can be charted. Play around with it, and let us know what you think.

DEP = Department of…Economic Promotion?

In today’s Post-Gazette, Laura Olson quotes the DEP Deputy Secretary of Oil and Gas Management Scott Perry refuting the notion that hydraulic fracturing is an unregulated process, saying:

“It’s important to point this out, because I think if the public loses confidence in the department’s ability to manage this industry, it’s going to have some consequences and perhaps some unfortunate policy decisions will be made. It ultimately will result in less opportunities for everyone.”

In times like these, isn’t it nice to know that even the Department of Environmental Protection has the economy foremost on their minds?

“I feel like I’m trying to convince the public that Sasquatch doesn’t exist.”

Hasn’t anyone told him? There have been 951 confirmed Sasquatch sightings in the Marcellus Shale portion of the Commonwealth so far this year.

Even if I’m taking this quote of Perry slightly out of context, the point remains valid: The DEP stands for the Department of Environmental Protection. That’s what they should talk about, and denying that there are problems doesn’t make it seem like they are paying any attention to their own data.

Report: Economic Consequences of Marcellus Shale Gas Extraction

By Susan Christopherson, PhD – Cornell University

Gas Pipeline Construction

Gas Pipeline Construction

The Economic Consequences of Marcellus Shale Gas Extraction report outlines some of the key issues explored by a team of researchers centered at Cornell University during the period of New York’s moratorium on high volume hydraulic fracturing (HVHF) for natural gas.  Our research focused on Pennsylvania, where Marcellus HVHF drilling has already begun, and on New York, which is still considering how to regulate HVHF, but we also made use of the experience of other states that have shale gas plays where HVHF has been in use far longer than in Pennsylvania.

At 17 pages, this report is a series of snapshots about what we found.  For a more fulsome account of our analysis and findings on most of these issues, we encourage you to read the complete working papers and policy briefs we have made available for download.

We launched this research project because it had become evident that the public and policy discussion over the consequences of Marcellus shale gas extraction had devolved to a polarized debate contrasting potential effects on water supplies with potential economic benefits – such as job creation.  The consequences for water resources were (and are) receiving a great deal of attention; the economic consequences were not.  We did not begin with a disposition for or against shale gas extraction, but we wanted to develop a realistic picture about what to expect, and about the economic consequences both in the short term and in the longer term.

As you will see in the report, the consequences that should concern us all go well beyond environmental concerns, and their economic implications include costs as well as benefits.  On balance, is shale gas extraction likely to be an economic winner? Not necessarily.  We conclude that while there are real economic benefits for some parties, if shale gas extraction is to be at all a positive force for economic development broadly and long term, it will require intensive planning and a new structure of regulation, monitoring and enforcement – along with the means to pay for it – that are not currently in place.

Susan Christopherson, PhD
Professor, Department of City and Regional Planning, Cornell University
Principal Investigator

Update from US EPA on Hydraulic Fracturing Study

US EPA Proceedings of the Technical Workshops for the Hydraulic Fracturing Study

In its Fiscal Year 2010 Appropriations Report, the U.S. House of Representatives Appropriation Conference Committee identified the need for a focused study on the relationship between hydraulic fracturing and drinking water resources. EPA scientists, under this Administration and at the direction of Congress, are undertaking a study to better understand any potential impacts of hydraulic fracturing (HF) on drinking water resources.

The scope of the proposed research includes the full lifespan of water in HF, from acquisition of the water, through the mixing of chemicals and actual fracturing, to the post-fracturing stage, including the management of flowback and produced water and its ultimate treatment and disposal.


EPA held four technical workshops from February through March 2011 to explore the following focus areas:

The goal of the technical workshops was three-fold:

  1. Inform EPA of the current technology and practices being used in hydraulic fracturing,
  2. Identify research related to the potential impacts of hydraulic fracturing on drinking water resources, and
  3. Provide an opportunity for EPA scientists to interact with technical experts. EPA invited technical experts from the oil and natural gas industry, consulting firms, laboratories, state and federal agencies, and environmental organizations to participate in the workshops.

EPA will use the information presented in these abstracts and presentations to inform research that effectively evaluates the relationship between HF and drinking water.  Learn more»

Flood Control and Shale Gas Wells

Flooding from Hurricane Irene in Wilkes-Barre PA

Photo Credit: Salvation Army, Randall Thomas, Wilkes-Barre, PA

Pennsylvania is no stranger to water and flooding, as we receive between 38 and 45 inches of rain per year on average. Unfortunately, the storms that hit the region starting on August 27th were more than we could handle – to say the least. During this time Hurricane Irene and the remnants of Tropical Storm Lee burdened the eastern portion of the state with flooding at water levels that rivaled Hurricane Agnes (1972).

While most residents hit hardest by flooding focused on protecting their families, homes, and livelihoods, others throughout the Commonwealth were also concerned about the impact that rising water levels could have on natural gas well pads. This is especially an issue for those sites operating in floodplains with open frac ponds. According to the reports we have been able to gather no shale gas well sites were compromised or sustained environmental damage in PA.  Apparently, Marcellus Shale drillers were advised to prevent overflows from wastewater/’frac’ ponds by the governor, although due to a communication loophole it is unclear as to whether all of the relevant sites temporarily shut down during the inclement weather. Regardless, with the number of wells being drilled in PA especially in the northeast, being able to prevent any incidents during these storms is quite a feat on the part of the drillers and should be recognized as such. Industry reports also indicate that drilling companies provided financial contributions, expertise, equipment, work hours, and supplies to aid in the flood relief efforts. Learn more about these contributions here.

We ask that if you have any knowledge that contradicts this information, please let us know and contact your local representative to report the incident.

January to August Marcellus Shale Violations by Operator

The Pennsylvania Department of Environmental Protection’s Bureau of Oil and Gas maintains violation data on their website (download the Excel file). The following is a summary of Marcellus Shale violations issued in the first eight months of this year, including the number of wells that were flagged for violations.

Marcellus Shale violations and offending wells in Pennsylvania: January – August, 2011

Severance Tax vs. Impact Fee, Revisited

It may not seem like it when you head to the pump, but the price of oil has plummeted in recent months. After peaking near $114 in April, the price has fallen all the way to $77.27, as of today. Natural gas, which was $4.27 last month, has fallen 15 percent since then to $3.62. Surely with all of this uncertainty, the Corbett’s proposed impact fee makes more sense than the traditional severance tax which most states use? Perhaps it would be better to take the predictable lump-sum amount than basing that portion of the state’s coffers on the vagaries of the market?

No, not really.

Corbett’s plan allows the counties to charge up to $40,000 per well per year, for a period of up to 10 years per well. According to the Post-Gazette, his administrations figures it could bring in $120 million in the first year, and up to $200 million per year by the sixth year.

Or, as I pointed out in June, we could tax like Texas. Texas imposes a 7.5% severance tax on natural gas and 4.6% tax on oil and condensate. Using yearlong production data for non Marcellus Shale wells in Pennsylvania and the average wellhead price of gas and price per barrel of liquid hydrocarbons for 2010, I estimated that non-Marcellus wells would have brought in $72.5 million if we taxed our resources just like Texas does. What’s more, based on six month production data, I showed that the wells in the Marcellus Shale formation would produce at least $173 million, for a statewide total of $246 million through all formations.

But that was before the bottom fell out of the price of oil and gas. What if we used today’s low prices as a guide?

Estimated six month severance tax from the Marcellus Shale formation in Pennsylvania.

Even with the low energy prices, that six month total is almost as much as Corbett’s administration figures to raise in a year, and it doesn’t even include the tens of thousands of wells that aren’t drilled into the Marcellus Shale.

While the proposed impact fee does more for Pennsylvania than the current nothing-at-all policy, in the scheme of things, it is a great deal for the drilling industry.

And one final aside: does it seem strange to anyone else to let the counties set the impact fee? Is this some sort of attempt to have them compete with each other to keep the prices low? If so, it seems unlikely to work in my opinion. If a county charges the maximum $40,000, that represents only about 0.8 percent of cost of a well that costs $5 million to drill, and that figure is on the low end of the spectrum. The drilling companies will want to drill where the resources are, and whatever fees or taxes are charged will not change that fact.

Governor Unveils County Drilling Fee, Other Marcellus Shale Proposals

Reposted from PA Environment Digest

Proposal calls for 75% of fee revenues to remain local, 25% to the state

Gov. Tom Corbett today said he agrees with 94 of the 94 recommendations made by his Marcellus Shale Advisory Commission and will be recommending legislation authorizing counties to adopt a drilling fee whose revenue would be split between the state (25 percent) and local governments (75 percent) to offset costs imposed by natural gas development. The recommendations not adopted by the Governor include: forced pooling, re-writing the authority of local governments to regulate drilling linked to a drilling fee and adding natural gas to Tier II of the Alternative Energy Portfolio Standards. The Governor’s Office did not release legislative language or mention which recommendations would be adopted by legislation, regulation or policy. However, he said about one-third require legislative changes; more than 50 are policy-oriented and can be accomplished within the state agencies. The legislative priorities outlined today will be submitted to the legislative leadership in the near future. The governor has instructed the relevant Cabinet Secretaries to create implementation plans for the policy-oriented recommendations and to submit them to his office within 30 days. “This natural resource will fuel our generating plants, heat our homes and power our state’s economic engine for generations to come,” Corbett said. “This growing industry will also provide new career opportunities that will give our children a reason to stay here in Pennsylvania. We are going to do this safely and we’re going to do it right, because energy equals jobs.”

County Drilling Fee

Under the Governor’s drilling fee proposal, counties with Marcellus or Utica natural gas shales are authorized to adopt a per well drilling fee starting at $40,000 per sell and decreasing to $10,000 per well in four years. A county may provide for a fee credit of up to 30 percent if the driller makes approved investments in natural gas infrastructure, which include setting up natural gas fueling stations or natural gas public transit vehicles. “Estimates show that this impact fee will bring in about $120 million in the first year, climbing to nearly $200 million within six years,” Corbett said. “As the number of wells grows, so will the revenue. Almost all of the money it brings in will go to benefit the places experiencing the impact.” A quarter of the fee revenues would be sent to state government for several specific uses:

  • 4.5 percent– up to $2 million– to the PA Emergency Management Agency for emergency response planning, training and coordination;
  • 3.75 percent– up to $2 million– to the Office of State Fire Commissioner to develop and support first responder activities;
  • 3.75 percent– up to $2 million– to the Department of Health for collecting and disseminating information and supporting outreach activities for investigating health complaints related to shale gas development;
  • 7.5 percent– up to $2 million– to the Public Utility Commission for inspection and enforcement of pipelines;
  • 10.5 percent– up to $10 million– to plug abandoned oil and gas wells and provide for the enforcement of oil and gas programs requirements; and
  • 70 percent and an balance remaining to PennDOT for road and bridge maintenance and repair and transportation infrastructure improvements in counties hosting shale gas development.

Seventy-five percent of the revenues would be retained at the local level and allocated to counties (36 percent), host municipalities (37 percent) and 27 percent to municipalities in shale counties distributed by population and highway miles. Local governments could use the funding for road and bridge repair, water, stormwater and drinking water systems, reclaiming surface and subsurface water supplies, GIS and other information technology, project to increase the availability of housing to low income residents, delivery of social services including domestic relations, drug and alcohol treatment, job training and counseling, court system costs and conservation districts inspection and oversight of natural gas development.

Other Recommendations

As a part of this proposal, Corbett announced a series of prudent standards related to unconventional drilling, including:

  • Increasing the well setback distance from private water wells from the current 200 feet to 500 feet, and to 1,000 feet from public water systems;
  • Increasing the setback distance for wells near streams, rivers, ponds and other bodies of water from 100 feet to 300 feet;
  • Increasing well bonding from $2,000 up to $10,000;
  • Increasing blanket well bonds from $25,000 up to $250,000;
  • Expanding an unconventional gas operator’s “presumed liability” for impairing water quality from 1,000 feet to 2,500 feet from a gas well, and extending the duration of presumed liability from 6 months after well completion to 12 months;
  • Enabling DEP to take quicker action to revoke or withhold permits for operators who consistently violate rules;
  • Doubling penalties for civil violations from $25,000 to $50,000; and
  • Doubling daily penalties from $1,000 a day to $2,000 a day.

Corbett’s proposal also seeks to help secure energy independence and reduce reliance on foreign oil by developing “Green Corridors” for natural gas vehicles with refueling stations at least every 50 miles and within two miles of key highways; by amending the PA Clean Vehicles Program to include “bi-fuel” vehicles (diesel and natural gas); by helping schools and mass transit systems to convert fleets to natural gas vehicles; by stabilizing electric prices by using natural gas for generating electricity; and by encouraging the development of markets for natural gas and natural gas byproducts, such as within the plastics and petrochemical industries.

A summary of the Governor’s proposal is available online. Visit the Marcellus Shale Advisory Commission webpage for a complete copy of the July report.