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House Environmental Resources and Energy Committee holds public hearing

On Tuesday the House Environmental Resources and Energy Committee held a public hearing on Marcellus Shale Issues. The first to testify was Howard Neukrug, P.E., Director of Watersheds for the Philadelphia Water Department. Noting that half of Philadelphia’s drinking water comes from the Marcellus Shale areas. He advocated for more comprehensive regulations by the Department of Environmental Protection.

Next to testify was Jan Jarrett of PennFuture. She noted that “the development of the Marcellus Shale’s gas reserves creates not only unprecedented economic opportunities, but also unprecedented environmental challenges.” She focused her testimony on the environmental challenges and made 9 recommendations. To read the testimony, click here.

Representative Greg Vitali (Delaware) asked if disposal of water through deep well injection is legal. Jarrett responded that it is. Representative Vitali then asked if there are any treatment facilities under construction to which Jarret answered that there were. Representative Vitali asked Jarrett about the adequacy of staffing at the Department. Jarrett responded that even with the latest increase she feels it is inadequate. Representative Vitali’s final question was if there has been any evidence of polluted streams as a result of Marcellus activity. Jarrett responded by citing the Monongahela example and also said she’s heard anecdotal reports as well. Representative Bryan Barbin (Cambria) asked Jarrett if she believed drilling can move forward if a solution to the treatment of the brine in the water is reached. Her response was that yes it can because the gas is a clean resource that should be accessed.

Representative Dave Reed (Indiana) noted Jarrett’s suggestion for "cumulative impact studies" and argued that the same approach should be taken when considering whether to implement new taxes or environmental regulations. Jarrett answered that it is difficult to get an entire picture, but it makes sense to look at overall impact. Her suggestion was that when examining costs to business, including the costs that are being externalized and taxpayers are paying the costs instead such as the cost of remediation is important. Representative Reed pointed out that the justification by PennFuture for the severance tax is that drilling companies should "not get off free." He went on to ask if PennFuture recognizes these companies pay other taxes. Jarrett responded a lot of states have multiple taxes. Representative Reed again emphasized that Jarrett’s previous comments about looking at the whole picture also should apply when looking at the entire tax and regulatory structure.

The last person to testify, Ray Walker, Vice President of Range Resources’ Marcellus Shale Division, gave some background on his company and the deep well drilling process. He noted that the industry’s investment in the Marcellus Shale has exceeded $4 billion in the past two years. Walker highlighted the advantages of horizontal drilling, noting that it permits a smaller footprint because fewer wells need to be drilled to access a larger area. He noted that current Pennsylvania regulations are referred to by national experts as "protections with teeth" and that further regulation is not needed. He argued that a severance tax would hinder further development because PA already is a high cost environment. On water usage Walker noted that the Marcellus industry uses less water than the amount that is used for golf courses in the Commonwealth. He said that only 0.05% of the fluid used to drill is made up of chemicals and that the chemicals are used to get the water down the well. Regarding the composition of the water he noted that 90% is water and the remainder is sand. He said the amount of salt deposited on the roads by PennDOT each year is equivalent to the amount of brine from 3,100 wells noting that the use of brine on roads is being explored. To view his presentation, click here. To read his testimony, click here.

Representative Vitali said that his "knee jerk" reaction on deep well injection is to oppose such methods. Walker said that there are currently 8 wells in PA permitted for injection and that the process is guided by the EPA and supported by Acting Secretary John Hanger of DEP.

Representative Vitali asked what factors into the choice between treatment and deep well injection of the water. Walker indicated the decision is largely based on cost and availability of resources.
Representative Reed noted that many businesses coming to the Commonwealth request and receive economic development subsidies and he asked if the natural gas industry is looking for such benefits. Walker said the industry is not. He said that if he took a current well from Washington County, PA and moved it to Texas with all things being equal regarding the well depth etc. it would cost $1 million dollars less to operate.

Representative Barbin asked for a cost estimate of mobile treatment units. Walker said that estimating that cost would be difficult but noted that the cost would be high. He said they are not used at every site due to cost and explained that the more mobile a facility is the more expensive it is, so in most cases the industry uses centralized treatment. Rep. Barbin explained he is trying to get a range of the costs of onsite treatment. Walker said it varies with size, but would be at least $5-10 million.

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