LOCK HAVEN - As drilling for natural gas in the Marcellus Shale in Clinton County expands, so do the fears and concerns of residents.
To learn more about the industry, 20 people from local government and business toured natural gas wells in the Barnett Shale region in north Texas.
The three-day trip earlier this month, organized by the Lock Haven University Small Business Development Center and the Clinton County Cooperative Extension, left those who attended with a better understanding of the enormous economic impact the industry can have in this region, not only for landowners, but those seeking more lucrative jobs.
"The SBDC was looking to get more involved in the Marcellus Shale industry... so we set up the trip (with Cooperative Extension) and invited local business owners to experience the Barnett and make some good contacts out there," said Matthew Henderson, SBDC business consultant.
The tours in Texas, which were centered in Wise County, were organized by Wise County Commissioner Kevin Burns. That county, businessman Bob Maguire said, has a population of 59,000 and consists of over 900 square miles, compared to Clinton County's population of 38,000 spread over 900 square miles.
"It's very similar in size and scope to Clinton County," Maguire said.
Wise County had 13,000 wells in 2008, double the number for the previous two years, with $6.6 billion in assessed property values in 2008, about $3 billion (or 40 percent) of which is from gas mineral assessments, said Mike Flanagan, president and CEO of the Clinton County Economic Partnership.
Maguire said Wise County's chief appraiser met first with the group and discussed how minerals are appraised and taxed.
Texas not only taxes the extraction of natural gas, but the appraised value of minerals, neither of which are taxed in Pennsylvania.
Revenue from the taxes "offset (Wise County's) school and county taxes by about 45 percent," Maguire said.
The group also met with Steve Bates of the Wise County Power Co., which operates a plant that that converts natural gas into electricity.
"We got a really good tour of a clean-burning, native use of materials," Maguire said.
Other stops, he said, were made at the headquarters of XTO and Devon gas companies, both major players in the Barnett Shale play in Texas, and at deep well injection sites and mud farms.
Mud farms are where the material from the drilling operations are re-used on ranch land to help grow grass. Locally, all drilling mud is currently hauled off to landfills.
"I'm hopeful in Clinton County, if the state Department of Environmental Protection allows us to do a mud farm, we could put one on one of our strip mines to help mitigate acid mine drainage," Maguire said.
Henderson noted a five-year study by the Texas Commission of Environmental Quality (that state's counterpart to DEP) showed the drilling mud has had no negative environmental impacts on farming.
Jim Ladlee, director of the Clinton County Cooperative Extension Office, noted Seneca Resources has recently started using water from acid-mine drainage to use as a fresh water supply for drilling operations.
One of the more eye-opening spots was in DISH, Texas, where Mayor Calvin Tillman has attacked the natural gas companies for supposed environmental damage done to his town with a population of 181. Interestingly, DISH was formerly Clark, Texas, before the city was renamed in 2005 in exchange for free basic television service for 10 years and a free DVR from DISH Network.
Tillman repeatedly complained to state regulators about the smell, noise and health problems his residents were reporting from the drilling industry, but nothing happened. Subsequently, DISH spent 15 percent of its $70,000 annual budget on a private environmental consultant.
Henderson said repeated tests by the U.S. Environmental Protection Agency and TCEQ has shown Tillman's claims are false.
"There's been an enormous amount of testing of the residents, air monitoring equipment that they continually check and the report I saw (Wednesday) showed Dallas, Texas, actually has a higher level of benzene than DISH," he said. "I think it just shows there are some groups out there who get ahold of somebody that is anti-drilling and they put some money behind them to drum up some support."
While the Barnett Shale is similar to the Marcellus Shale in Pennsylvania, it is different in several respects, with the Pennsylvania natural gas expected to vastly outproduce its counterpart in Texas.
Flanagan said that, while the Barnett Shale encompasses about 5,000 square miles over all or parts of 27 counties, the Marcellus Shale is 95,000 square miles over several states.
Meanwhile, the Barnett Shale in Wise County, Texas, has produced several "mailbox millionaires" through royalty checks and benefited the entire community, he said.
"They get up in the morning, eat their breakfast and go get their royalty check in the mailbox, which could be up to $300,000 a month," Flanagan said. "The money that's being talked about in that area is incredible."
Maguire said the money is also trickling down to a number of different foundations and service organizations, in addition to many different support businesses like hotels, motels and restaurants.
Flanagan also noted during their trip many gas company officials had heard of Chapman Township, Clinton County. That township's zoning appeals board last month unanimously turned down a request from Anadarko to draw up to 720,000 gallons of water daily from the West Branch of the Susquehanna River near the Gold Star Mothers Bridge to help support its drilling operations.
"These companies and their executives keep in touch with what's happening locally and what happened in Chapman Township," he said. "I think it would be a benefit to us to try to be more hospitable and to try to work with these people rather than work against them. That was basically the message we received from the gas company officials."
Regarding the theory the gas companies are going to come regardless, Flanagan said that's not necessarily true.
"When you're talking about an area that's 95,000 square miles, they certainly can skip a Clinton County or they skip this area or that area," he said.
Maguire, who owns the land Anadarko wanted to use to pump water in Chapman Township, said residents can look up north to New York State or down south in the Deleware River Basin, both places where there's a moratorium on natural gas drilling.
"There are 32 natural gas plays in the nation and this industry will migrate to places where it can cost-effectively produce energy," he said. "We can easily regulate and tax our way out of opportunity."
Henderson said officials with Devon "made it clear that, until we get things straightened up in Pennsylvania, they had little interest."
"I think it was pretty clear that energy companies were definately delaying operations until things were clearer in Clinton County," responded Ladlee.
Maguire noted the wells in Pennsylvania can produce up to 10 million cubic feet of natural gas a day, compared to only around 2 million cubic feet in Texas.
"That's why there's such a rush to the Marcellus," he said.
Regarding environmental concerns, all said they believe the state is overseeing the natural gas industry sufficiently.
"When we had the mining going on (100 years ago,) we didn't have the oversight we have now," Henderson said.
Maguire said he believes DEP Secretary John Hangar is doing "a more than adequate job."
"They have let the oil and gas producers know they will have their permits pulled if they do not put safety and the environment ahead of profits. Righfully so," Maguire said. "I think a lot of Pennsylvanians saw the history of the degredation of our forests and our streams. That is not the case here. Most companies that work in Clinton County, particularly Anadarko and Range, have gone over and above the current regulations required."
Some of those measures, he said, include Anadarko triple-casing its wells and putting all its flowback water into large containers to eliminate the possibility of a breech into a pond.
Those who toured the area insisted that, even though there are 13,000 active wells, it has not harmed the landscape in Wise County, Texas. However, the boom has produced a lot of "very nice houses" and a new civic center in the county's seat of Decatur, all coming from money from the natural gas industry, they said.
Ladlee said he understands the community's concerns, and urged residents to relay those concerns to the drilling companies.
"I think it's important for people to engage with the energy companies so they understand what's important locally and so they understand the acid mine drainage problem and they know the environment is important to the people here," Ladlee said. "There will be issues that come up that they can proactively address before it becomes a big probelem. Whether it is wood or coal, the thoughts of the area residents have been very, very important."
Realtor Thomas Brigandi, who also attended the trip, urged the legislators to make up their mind on if and how much the state will tax the natural gas drilling industry, and make sure the related state agencies sufficiently look after the companies.
Further, he said, he believes the industry can provide a plethora of jobs for local residents.
"This is not only going to benefit the landowners and the business people, even if half of the projected jobs come about it will be a real boom for Pennsylvania," Brigandi said.
While Wise County, Texas, has about 13,000 wells, Ladlee said technological advances - specifically the drilling of horizontal wells off one pad - will mean many less wells will be set up in Clinton County. His projections show as many as 4,000 wells over about 460 drill pads in just over half of Clinton County.
Further, the techological advances will mean more gas is taken out of each well. Currently, only about 20 percent of usable gas is secured from each well.
"Eighty percent of the natural gas is being left behind," Brigandi said. "If technology advances in the next 10 years like it has in the previous 10 years, this could really a long-term proposition. This could benefit our county for the next 50 to 60 years.
"It's hard to put our egos and our vested interests aside, but that has to happen from the township politicians the whole way to the state Legislature," he continued. "I don't believe in growth at any cost, but I think with level heads ... it's very promising in Pennsylvania."
Flanagan added: "When you go down there and see this and talk to the people involved, this has amazing potential for our region."
Officials said restaurants and caterers should see a strong impact from the industry, with many other jobs popping up to help support the drilling companies.
Ladlee, director of special issues for the Marcellus Shale Education and Training Center at the Pennsylvania College of Technology, said a study showed 410 jobs over 150 occupations come from the drilling of a single well. That equates to 11.5 full-time, direct jobs over the course of a year, with 17 long-term jobs per every 100 wells.
Initially, a majority of the jobs will be filled by those coming from other states, but as the drilling industry matures here, more permanent jobs will be available for local residents.
"They want to get to a point where they're employing 80 pecent of Pennsylvania people and the other 20 percent coming in from out of state for specialty jobs," he said. "They really want to get a local workforce. One of the reasons is the people from Texas want to work in Texas ... they want to go home."
The industry can also help the Partnership attract tenants to the new Lamar Township Business Park.
"Clinton County is ideally positioned if we want to take advantage of the opportunity because of our proximity to the Leidy gasfields and our proximity to the transportation corridors across the state," Ladlee said.
Officals urged those who want to learn more about the drilling industry to go to a natural gas expo at the Troy Fairgrounds, Tioga County, this Saturday.
