On April 9th the Senate Majority Policy Committee conducted a hearing on Marcellus Shale at the Pennsylvania College of Technology in Williamsport, PA. Three panels appeared before the Committee and included local government, industry and environmental. Individual testimony can be accessed by clicking on the names below.
The local government panel consisted of Commissioner Rebecca Burke, Lycoming County, Commissioner Mark Smith, Bradford County, Commissioner Mary Ann Warren, Susquehanna County, and Supervisor David Reese, Penn Township.
Senator Lisa Baker (Luzerne) asked the panel about the Department of Environmental Protection’s (DEP) actions taking away the Conservation Districts role in the permitting process.Baker asked what exactly was taken away and what the role of the Conservation Districts is. They responded that the Erosion and Sediment permitting process was taken away and they are not sure of their role. Senator Baker asked if they were aware of any delays because of the involvement of the Conservation District. The response was that there were some delays but it was attributed to information not being readily available from DEP. She asked if there was any prior notice given by DEP to which the response was no. Senator Baker then asked how notifications about locations of sites were being handled with regard to emergency services. Supervisor Reese responded that his township passed an ordinance requiring companies to notify the township.
Senator Pat Browne (Lehigh) asked if the panel would support an exception to the Clean &Green Law. The panel said that they would and noted that they are holding off on rollback assessments in the hopes that the general assembly makes changes to the law. Senator Browne noted that there have been substantial delays with Erosion and Sediment permitting and noted that we are the only state in the nation that requires the permits.
Senator Elder Vogel (Beaver) asked what weight limits the locals are imposing on roads.Supervisor Reese said that they imposed 10 tons on dirt roads and 20 tons on other roads. He noted that in his experience, Chief Oil & Gas has been very cooperative in keeping the roads maintained.
Representative Garth Everett (Lycoming) noted that the road bonding process needs to beupdated.
Senator John Gordner (Columbia) addressed the Governor’s proposed severance tax notingthat they still have not seen the language from the Administration. He asked the panel if they would support receiving a percentage of the tax. They said they would be supportive of a local percentage but asked for flexibility to address their issues. Senator Gordner noted that the Commonwealth has a high Corporate Net Income Tax and said “we don’t want to be noncompetitive.”
The next group to testify was the Industry panel. The participants included Mr. Ray Walker, VP of Appalachia Shale, Range Resources, Ms. Kristi Gittins, VP, Industry & Public Affairs, Chief Oil & Gas, Mr. Stephen Randolph, General Manager for Appalachian Basin Anadarko Petroleum Corporation and Mr. Stephen W. Rhoads, President, PA Oil & Gas Association.
Kristi Gittins referenced the need for the General Assembly to amend the Minimum Royalty Act and noted that litigation as a result of the Act could have a chilling effect on the industry. Senator Gordner referenced a hearing last November during which reference was made to a permitting application that was quite thick. He asked if that was still the case. Ray Walker noted that things today are considerably different and that he is grateful to the Governor and the Department for their efforts to streamline the process. He did note that there are still a lot of issues, both legislative and regulatory. Senator Gordner then asked about the Frac water. Ray Walker replied that dealing with it requires a multi-phased approach and noted a partnership with DEP and a two year goal to deal with it.
Senator Vogel asked if the state opens up more lands for leasing would that have an adverse impact on the interest in leasing privately owned land. Stephen Rhoads commented that it would not noting the size of the play. He said that the Barnett Shale play in Texas is 5,000 square miles and the portion of the Marcellus Shale play in the Commonwealth is 60,000 square miles.
Senator Kim Ward (Westmoreland) asked about the impact of the Minimum Royalty Act. Theresponse was that the Act was passed to help landowners who had leased land in the distant past. Senator Ward asked, what is the “number 1 thing” policymakers could do to promote the industry. Dave Spigelmyer said that the impression outside the Commonwealth is that it is not industry friendly and noted that they have identified 27 pieces of legislation that would impact the industry.
Senator Baker asked if the Conservation Districts were holding up the process. Stephen Rhoads said partly yes, because of inconsistency in interpretations. She followed up by asking if permitting in other states was handled at the local or state level. Rhoads responded that with limited exceptions it is handled at the state level and commented that although the addition of 37 inspectors is welcome more will be needed as things ramp-up.
Senator Browne noted that the proposed severance tax is being modeled after West Virginia and asked if any of the companies on the panel operate in that state. Ray Walker of Range Resources said that they do but noted that the “trade-off” is that they get permit approval within 15 days. Senator Browne asked if any companies pay the Pennsylvania Corporate Net Income Tax (CNI) to which Dave Spigelmyer responded yes. He said that Chesapeake paid in excess of $5 million dollars in 2008. Browne asked if there is a non-competitive price point. The panel cited $4.75 but despite being below that they were continuing their efforts because of the investment that has been made in PA.
Senator Gene Yaw (Bradford) asked if there are issues to consider with regard to the gatheringlines. The panel noted that interstate lines are regulated by the Federal Energy Regulatory Commission and that intrastate guidelines follow all existing guidelines which are sufficiently stringent.
The last panel had representatives from regulatory agencies and included Mr. J. Scott Roberts, Deputy Secretary, Office of Mineral Resources, PA Department of Environmental Protection, Mr. Craig Lobins, Regional Oil and Gas Manager, Northwest Region Office, PA Department of Environmental Protection and Mr. Tom Beauduy, Deputy Executive Director, Susquehanna River Basin Commission (SRBC). Senator Baker restated her concern with the decision to remove the Conservation Districts from the process and asked if there was a “breakdown” in communications. Scott Roberts said that there was a meeting prior to the action. Senator Baker asked what role the Districts could play going forward and Roberts responded that they could be a set of eyes and report issues to the DEP. Baker asked if the situation in Dimock, PA is unique to that site. They responded that they usually have 6 to 10 incidents of methane in the water each year Commonwealth wide. Asked if 37 new inspectors are enough Roberts responded that as things evolve they may need more.
Senator Gordner asked about the content of the wastewater. The response was that the samples that have been gathered so far are mostly saltwater. Gordner also asked about the availability of water and was told that there is ample water available and the issue will be one of timing of the withdrawals. Senator Yaw asked for the status of the hiring of the 37 new inspectors. The response was that 10 have been hired so far and that Williamsport will have 17 new inspectors by June 1st. Tom Beauduy noted that the SRBC has hired 7 and their compliment has increased from 37 to 52.