What A Natural Gas Agenda Report Looks Like – Part III

We laid the foundations for analyzing the natural gas report “The Costs of Fracking” in Part I of this series and started to further examine the paper in Part II.  For Part III w continue and conclude our in-depth look at this latest “study” from Environment America.

We began our venture through the meat of this report yesterday in Part II and gave background of the sponsoring organizations and authors in Part I.  Today we’ll wrap up our analysis of this agenda-driven study from Environment America.

Wrong on “Damage to Natural Resources”

The authors look at the creation of infrastructure for pipelines and make a jump to sedimentation and degradation issues:

Page 20: The clearing of land for well pads, roads and pipelines can increase sedimentation of nearby waterways and degrade the ability of natural landscapes to retain nutrients.

Page 21: On a broader scale, the clearance of forested land for well pads, roads and pipelines reduces the ability of the land to prevent pollution from running off into rivers and streams.

Page 22: Extensive natural gas development requires the construction of a vast infrastructure of roads, well pads and pipelines, often through remote and previously undisturbed wild lands.

The natural gas industry in Pennsylvania and soon in New York, follow very strict regulations for each phase of development. At the state level, the Department of Environmental Protection regulates the industry on sediment control, and waterway and floodplain management under PA Code, Title 25, Environmental Protection.
  • Chapter 102: Erosion and Sediment Control
  • Chapter 105: Dam Safety and Waterway Management
  • Chapter 106: Floodplain Management
Companies must have plans in place when they permit for a well to mitigate potential impacts to waterways with proper sediment control plans.
Sedimentation of waterways is something we are very familiar with, especially after last year’s flood, where projects are still ongoing to repair the damage to our creeks and streams left behind by Hurricane Lee . Companies are going above and beyond to work with local regulatory authorities and environmental groups to improve sediment conditions in Pennsylvania, even where their operations are not responsible for them.
  • Anadarko Petroleum Company recently paired up with the Department of Conservation and Natural Resources (DCNR), Pennsylvania Fish and Boat Commission (PFBC), and the Northcentral Pennsylvania Conservancy (NPC) to improve sediment issues caused to Wallis Run Creek from Hurricane Lee. You can view more information on this here and the pictures of the clean-up here.
  • Seneca Resources also recently went above and beyond to improve road access conditions near Hagerman Run in the Loyalsock State Forest, according to DCNR. Flooding and heavy rains were causing erosion problems that were undercutting the roadways and Seneca stepped up to stabilize the roads.
  • Over 120 people, including many Chesapeake Energy employees, spent time this summer cleaning debris out of the Susquehanna River.

“Wild lands” is an interesting term to use when describing development on hunting camps, farms, forest lands and in conservancies, where companies often will use and improve existing access roads to reach well site locations.  Thinning forests to make room for new tree growth is not new for Pennsylvania landowners and most work to identify ideal locations for this to occur on their properties. They also dictate what vegetation will be re-planted and how the location will be remediated.

Meanwhile, hunting camps we have spoken with are pleased with the open space pipelines create as they bring in new bird populations and offering new feeding grounds for the deer population.  This was recognized by officials at the Pennsylvania Fish and Game Commission last year when they stated that natural gas development often creates new openings in forested areas that can attract deer, turkeys and other wildlife

But that still leaves the question of negative impacts due to forest fragmentation, a topic Tom recently tackled by analyzing USGS data on the issue in the Commownwealth of.Pennsylvania.

The U.S. Forest Service gathers statistics on forestation patterns and that data suggests the areas most affected by natural gas development have either gained or held their own in terms of forest cover.  Their data indicates the following for Pennsylvania as a whole, for example:

There’s not much evidence of decline here, is there?  Forest land has stayed fairly even since 1965, trending down slightly from 1990 and back up since 2004 or so, but notice it is up substantially since 1955 or thereabouts, which is no coincidence.  That is when the nature of farming began to change as the tractor replaced the horse, farms got bigger, smaller farms began to go the way of the buggy whip and less productive crop and pasture land started reverting to forest.  We have, in other words, since seen forest land become a lot less fragmented over the years.  Don’t believe it?  Well, compare some aerial photos from years ago with those on Google Earth.  It’s easy and it’s revealing.

Page 20: Excessive water withdrawals also play havoc with the ecology of rivers and streams. In Pennsylvania, water has been illegally withdrawn for fracking numerous times, to the extent of streams being sucked dry. Two streams in southwestern Pennsylvania—Sugarcamp Run and Cross Creek—were reportedly drained for water withdrawals, triggering fish kills. Water withdrawals also concentrate pollutants, reducing water quality.

Water withdrawals are strictly regulated by the Susquehanna River Basin Commission (SRBC) in Pennsylvania and New York, and will be by the Delaware River Basin Commission (DRBC) when they pass their regulations. The natural gas industry is the only industry regulated by the SRBC where water withdrawal restrictions begin with one drop. They monitor low flows and drought conditions in the basin and have shut down withdrawals numerous times over the last several years when conditions were below those permitted for the withdrawals. This is despite the fact the natural gas industry uses less water than other industries withdrawing from the basin.

SRBC Water Usage

 

Further, natural gas companies are using holding ponds to store fresh water to reduce their need to withdrawal and to have water for their operations in the event of drought conditions.  They are also reducing the amount of water used by recycling flowback water and mixing it with fresh to complete additional wells.  Cabot’s mix at this time is about 30 percent flowback with 70 percent fresh water, and other companies have similar solutions.  Shell is even taking water from smaller companies that cannot afford to recycle and using it in their operations, thus pushing their recycling rate above 100 percent. Companies are also using acid mine drainage to  further reduce their impacts on streams and other water resources.

http://youtu.be/JIXAtk7hABA

Page 22: Hunting and other forms of outdoor recreation are economic mainstays in several states in which fracking is taking place. In Wyoming, for example, non-resident hunters and wildlife watchers pumped $340 million into the state’s economy in 2006. Fracking, however, is degrading the habitat of several species that are important attractions for hunters and wildlife viewers.

Page 22: The mule deer population in the area dropped by 56 percent between 2001 and 2010 as fracking in the area continued and accelerated.

Tourism has increased in Pennsylvania where natural gas development is taking place.  Here’s what we noted in a post called Bradford Rising last year, based on a Penn State study:

About 29 percent of these tourism-related businesses said that their sales have increased due to natural gas drilling activity, while the other 71 percent reported that their sales had not changed.  None of the tourism-related businesses reported a decrease in sales.  Sporting goods and bicycle shops were the most likely to report sales increases.  Of those tourism-related businesses experiencing increased annual sales, the majority reported that the gas industry sought out the goods/services their businesses offer.  None of the businesses reported difficulties in retaining or finding employees.

Also, another study by the Marcellus Shale Education & Training Center produced the following analysis of tourism employment in Bradford County, noting the county gained 138 jobs in the accommodations and food services sector in just one year after natural gas development took off:

Chart from Marcellus Shale Education & Training Center study entitled “Economic Impacts of Marcellus Shale in Bradford County: Employment and Income in 2010

The deer harvest doesn’t seem to have been affected by natural gas development either.  The Pennsylvania Game Commission’s statistics on deer harvests for the four regions that constitute the Northern Tier area where natural gas development is taking place saw an increase in antlered and anterless harvests from 50,900 deer during the 2008-09  season to 52,400 deer in 2011-12.

Wrong on “Impacts on Public Infrastructure and Services”

Page 25: Added up across dozens of well sites in a given area, these transportation demands are enough to lead to a noticeable increase in traffic—as well as strains on local roads. Between 2007 and 2010, for example, the amount of truck traffic on three major northern Pennsylvania highways increased by 125 percent, according to a regional transportation study. The study concluded that state and local governments will have to repave many roads every 7 to 8 years instead of every 15 years.

Page 25: Pennsylvania has negotiated bonding requirements with natural gas companies to cover the cost of repairs to local roads and some other states have done the same, but these requirements may not cover the full impact of fracking on roads, including impacts on major highways and the costs of traffic delays and vehicle repairs caused by congested or temporarily degraded roads.

Truck traffic has increased as a result of natural gas development in our region, that’s no secret. The increased use of rail cars and water pipelines to transport fresh water to hydraulic fracturing operations are some ways traffic is being reduced. Check out this post about a very innovative project by Seneca Resources to reduce traffic in Lycoming County.

Natural gas companies also work with local municipalities to limit traffic and avoid its presence during high congestion times.  They are spending hundreds of millions of dollars repairing roads in Pennsylvania. Here are  some statistics for Chesapeake Energy alone:

Chesapeake Energy Corporation (NYSE:CHK) announced today the following ongoing, upcoming and completed roadwork projects in Bradford, Wyoming, Susquehanna and Sullivan counties to improve regional transportation infrastructure.

These projects are part of Chesapeake’s ongoing commitment to responsible development of the Marcellus Shale in Pennsylvania. Chesapeake has invested more than $300 million since 2010 repairing and rebuilding more than 450 miles of road infrastructure in northern Pennsylvania and expects to invest $25 million this year upgrading approximately 56 miles of state roads and another $15 million on township roads (July 27, 2012)

Page 26: Unlike other uses, water used in fracking is lost to the water cycle forever, as it either remains in the well, is “recycled” (used in the fracking of new wells), or is disposed of in deep injection wells, where it is unavailable to recharge aquifers.

This statement is false.  Yes, the flowback water is typically recycled or disposed of.  It can also be treated at approved facilities, like Eureka Resources facility in Williamsport, PA.

  • Eureka Resources uses a gas well water treatment facility in Williamsport,  Pennsylvania where they treat incoming gas well water to meet in-place standards  for discharge and re-use in  gas well exploration & hydraulic fracturing. LEARN MORE►
  • Eureka Resources, strives to meet or exceed wastewater treatment standards adopted by the Pennsylvania Department of Environmental  Protection. They offer clients competitive, cost-effective waste water disposal solutions, while reducing the industry’s impact on our environment.  Read more about us.

In addition, when natural gas is burned the the bi-products are two water molecules and one carbon dioxide molecule.  Over the course of a natural gas well’s life, the gas produced from it will actually release more water back into the hydro-geological cycle than is taken out for its operations.

A simple combustion reaction is given for methane. The combustion of methane means that it is possible to burn it. Chemically, this combustion process consists of a reaction between methane and oxygen in the air. When this reaction takes place, the result is carbon dioxide (CO2), water (H2O), and a great deal of energy. The following reaction represents the combustion of methane:

CH4[g] + 2 O2[g] -> CO2[g] + 2 H2O[g] + energy

Natural Gas Combustion Reaction

Wrong on “Broader Economic Impacts”

Page 30: Fracking can reduce the value of nearby properties as a result of both actual pollution and the stigma that may come from proximity to industrial operations and the potential for future impacts.

Impacts on property sales values are not difficult to establish, they just don’t match the reports agenda because they are on the rise.  Tom’s recent post on this subject makes it clear:

Another study of the real estate market in Pennsylvania, just completed by my firm, found values in the Northern Tier region stretching from Lycoming to Susquehanna Counties, where most development is occurring in the Commonwealth, were up significantly in most cases.  Cropland averaged $6,200/acre in 2012 vs. $5,800/acre in 2011 and $4,500/acre in 2010.  Pasture averaged $6,700/acre in 2012 vs. $5,000/acre in 2011 vs. $3,700/acre in 2010.  Forest values averaged $4,500/acre in 2012, the same as 2011 but up significantly from the $3,500/acre in 2010.

Page 30: Properties on and near locations where fracking is taking place may also be more difficult to finance and insure, potentially affecting their value…In addition, in July 2012, Nationwide Insurance issued a statement clarifying that its policies do not cover damages related to fracking, noting that “the exposures presented by hydraulic fracturing are too great to ignore.” Nationwide’s announcement drew attention to the fact that standard homeowners’ insurance policies do not cover damage related to fracking.

Most insurance companies have continued to insure property owners with development on or near their properties.  Others like, Nationwide, have never insured businesses or homeowners with this form of industrial development.  In fact, Nationwide Insurance specifically indicated that the presence of oil and gas operations on a property would not disqualify that property from insurance coverage.

Nationwide’s underwriting guidelines do not disqualify homeowners or farm policy coverage for homes or farm operations based solely on the presence of a gas lease in force on the property, the presence of gas drilling, or plans for gas drilling in the future.

If an individual wants specific insurance coverage that will cover hydraulic fracturing it can be gained. Take a look at this clip and explanation from a question and answer session with Neil Guiles in Smithville, New York recently (12:40) where Neil Guiles mentions Travelers Insurance covers fracturing operations. In addition, specialized companies like LJ Stein, exist solely to provide insurance coverage for operations conducted by the oil and gas industry.

Page 31: Researchers at Penn State University have identified a link between increased drilling activity in the Marcellus Shale and decreased production at dairy farms in counties where drilling is taking place. The five counties in which drilling activity was the heaviest experienced an 18.5 percent reduction in milk production between 2007 and 2010. The researchers did not reach a conclusion as to the cause of the decline. (emphasis added)

Page 31: The demise of farming in a community threatens to also bring down stores and industries that were built to support farmers, eroding a community’s economic base.

Tioga County, Pennsylvania dairy farmer, Jackie Root, recently discussed this in an op-ed in the Binghamton Press and Sun where she analyzed NASS data on dairy production. Here is a portion of what she found from her observations of her community where nearly 700 Marcellus wells have been developed:

My husband and I are farmers, he operated a commercial dairy from 1976- 2009 which I joined in 1981, at present we farm 400 acres with Hereford cattle and Morgan horses.  Our decision to sell the dairy herd in 2009 was based on several factors 1) dairy prices that often do not meet the cost of production 2) cost and availability of labor 3) 35 years of milking 2 xs per day on the same set of knees 4) Children who are not interested in a dairy farming career.  Instead of milk we sell beef cattle and hay. We still buy feed, seed, fertilizer and machinery; in fact farmers have a long tradition of pouring the money they receive back into the local economies. Around us other “dairy” farms have expanded for the next generation, paid off debt, established retirement accounts, purchased newer/safer equipment, updated farm buildings and yes farm houses, went on vacation or maybe even took a chance on an off farm job to only farm part time. What I haven’t seen is a working farm subdivided into housing lots to save the farm. That was anecdotal.

Steingraber and Bamberger asserted that “fracking” (I think they meant hydraulic fracturing) is an obstacle to dairy farmers and has caused an 18.7% decline in cow numbers as well as an 18.5% decline in milk production per cow in the counties where 150 or more unconventional wells were hydraulically fractured in PA.  I compiled my own spread sheet using NASS data on dairy cow inventories and milk production from 2004 to 2012 for Bradford, Tioga, Susquehanna, Somerset, Lancaster, Franklin, Lebanon and Wayne Counties.  The most noticeable discrepancy, from 2004 to 2011 milk production per cow actually increased in every county including those in which more than 150 wells were completed. The reports do show that dairy cow numbers have declined in those same counties but the decline has been steady since at least 2004. The facts show what every dairy producer already knows, cow numbers are decreasing and production per cow continues to rise due to increases in efficiency.   Bradford County did show a 22.8% decline in dairy cows from 2009-2010; this one county spike inflates the average. Though this is likely linked to a spike in leasing and royalty income it should also be noted that a dairy buyout was also implemented at least twice in 2009 to reduce cow numbers.

The authors asked: Question-Why is milk production dropping? Answer, in PA is not dropping, it is increasing. Question-Are farmers who leased their land getting out of the dairy industry altogether? Answer, some are building bigger dairies, some are changing their agriculture enterprise, some will enable the next generation to farm and yes others may decide to stop farming (I think that is an option.) (emphasis added)

Walter Brooks, a farmer in Susquehanna County, also had a much different story to tell of how farmers are using the money they receive from the community. They’re spending it in the community! You can watch his account in the following video.

 

Wrong on “Who Pays the Costs of Fracking?”

Page 32-33: The oil and gas industry is unlikely ever to be held accountable for many of the costs of fracking documented in this report—at least under current law. Time and again in the history of the oil and gas industry, legal safeguards have proven inadequate to protect the environment and communities from exposure to long-term costs. As a result, many of the costs of fracking are often borne not by the companies that benefit, but by nearby residents, taxpayers, those whose enjoyment of clean air, clean water and abundant wildlife is impacted by fracking, and even by future generations.

Actually, the natural gas industry is very much held accountable for their actions in Pennsylvania and New York.  They receive penalties and fines for accidents at their facilities. Pennsylvania has a presumed liability clause for water wells within a 2,500 foot radius of any natural gas well site where they company is liable for any impacts in the private water supplies.  Further, with the recent introduction of the Pennsylvania Impact Fee and New York’s ad valorem tax, taxpayers are seeing, or will see in the case of New York, substantial increases in tax revenue.  Even in Philadelphia, where no development is occurring, the city received $1.3 million from Marcellus development.

Recommendations Already Being a Reality

Page 35: If fracking is to continue, the minimum that citizens should expect is the enforcement of tough rules to reduce fracking damage and up-front financial assurances that guarantee that the oil and gas industry cleans up the damage it does cause and compensates any victims. Federal, state and local governments should hold the oil and gas industry accountable for the costs of fracking using a variety of financial tools, including:

  1. Bonding
  2. Fees, taxes and other charges

The natural gas industry does face strict regulations and penalties for violating those as we’ve discussed previously in this series. The demands the authors end with are being met and will continue to improve as the development process evolves.

We’ll end with a video on site reclamation in Chesapeake that sums this conclusion up pretty nicely.

http://youtu.be/GiU5DwdIGQw

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