April 2014 • Issue 48

The

PIOGA pressThe monthly newsletter of the Pennsylvania Independent Oil & Gas Association

(Continues on page 2)

(Continues on page 40)

®

Why should you attend PIOGA’s 2014 Eastern Oil &Gas Conference, May 13-14 at Pittsburgh’s HeinzField? Let’s count the ways.

1. The unique venueOpened in 2001, the 65,000-seat stadium is home to the

Pittsburgh Steelers and truly a football icon. If you’ve never beento Heinz Field, this is a unique opportunity to visit the facility.And even if you’re a diehard, season-ticket-holding fan whobleeds black and gold, you’ve likely never experienced some-thing like our event at Heinz Field.

The hallowed turf is off-limits, but we’ll be making good useof the East and West Club Lounge areas with their floor-to-ceil-ing vistas of the downtown Pittsburgh cityscape and surrounding

EOGCTS 2014: It’s here!views. And ourTuesday eveningWelcomeReception takesplace in the Great Hall,which showcases greatmoments in Steelers history with aton of memorabilia and an open-air design. Conference attendeescan enjoy lunch on Tuesday in the North Club Lounge overlook-ing the playing field.

2. The conference programWe have a solid day-and-a-half program put together for you,

vened an ad-hoc subcommittee to compile the association’s 116-page comment document.

The revisions to the Chapter 78 regulations have been underdevelopment since early in 2012. The passage of Act 13 of 2012mandated a number of changes related to unconventional opera-tions, but not all of the revisions sprang from Act 13.

PIOGA participated in numerous meetings with DEP since itfirst proposed a concept paper recommending changes to Chapter78 in February 2012. We also participated in the Oil & GasTechnical Advisory Board (TAB) work group process establishedlast summer to enable all stakeholders to discuss four critical butincomplete components of the proposed regulations. In the end,the department initiated the rulemaking publication processbefore the concerns of TAB and others were addressed.

“PIOGA appreciates DEP’s efforts to engage in public discus-sion with industry and other stakehold-ers, but continues to have serious con-cerns about the legal basis upon whichmuch of the proposed regulationsdepend, as well as the enormous nega-tive impacts on oil and gas operations—especially conventional—that would beimposed without clear environmentalbenefits,” the association’s formal com-ments state. “The proposed regulationswould impose costs and burdens onconventional operations that would like-

Why you should support PIOGA events . . . . . 6Royalty owner unrest . . . . . . . . . . . . . . . . . . . 8Remaining issues in Act 13 case . . . . . . . . . 13Impact fee generates $224.5 million. . . . . . . 14Leaseholder bills approved in Senate. . . . . . 16FERC wants change from gas industry . . . . 18Fueling with CNG and LNG . . . . . . . . . . . . . 20Committee tours gas processing plant . . . . . 22March Spud Report. . . . . . . . . . . . . . . . . . . . 24Industry comments on PSM inquiry . . . . . . . 30Pennsylvania emissions decline . . . . . . . . . . 31Judge dismisses national forest suit . . . . . . . 32

DEP awards 25 NGV grants . . . . . . . . . . . . . 33EPA claims more wetlands authority. . . . . . . 34Support for Allegheny park development . . . 35Member Profile: RJR Safety Inc.. . . . . . . . . . 36Seeking an internship . . . . . . . . . . . . . . . . . . 37PIOGA member news . . . . . . . . . . . . . . . . . . 38Teamwork on Chapter 78 comments . . . . . . 41Oil & Gas Stats . . . . . . . . . . . . . . . . . . . . . . . 44Calendar of Events . . . . . . . . . . . . . . . . . . . . 46New PIOGA members . . . . . . . . . . . . . . . . . 47PIOGA contacts . . . . . . . . . . . . . . . . . . . . . . 47

Proposed changes to Department of EnvironmentalProtection (DEP) oil and gas regulations would have sub-stantial negative impacts on Pennsylvania’s oil and gas

producers, especially conventional operators, PIOGA said in for-mal comments last month to the Environmental Quality Board(EQB).

Published in the December 14 Pennsylvania Bulletin, theamendments to 25 Pa. Code Chapter 78, Subchapter C, alterexisting requirements governing surface activities associated withoil and gas well development and establish new requirements forpermitting, wastewater processing and storage, as well as wellsite containment and more (January PIOGA Press, page 1).

To gather public input, nine hearings were held across thestate and an initial 60-day comment period was extended to 90days, ending March 14. PIOGA’s Environmental Committee con-

PIOGA comments on Chapter 78 rulemaking

Page 2 The PIOGA Press

PIOGA conference & show: Continued from page 1

with Governor Tom Corbett kicking things off Tuesday morning.The governor has been a strong supporter of the many benefits ofnatural gas development in the Commonwealth, and we’re excit-ed to hear what he has to say.

You can see the complete agen-da accompanying this article. Wehave put together an excellent mixof up-to-the-minute topics affectingPennsylvania’s oil and gas industryin one way or another—somegood, some not so good, someinnovative and some thought-pro-voking. Feel free to pick the ses-sions that hold interest for you; youcan spend the rest of the timechecking out the trade show.

3. The exhibitsShow hours at 8:30 a.m. to 5 p.m. on Tuesday, May 13, and

8:30 a.m.-1 p.m. on Wednesday the 14th. We have more than 260exhibit spaces spread across the West Club (where you will enterthe building), the East Club (near to the conference sessions) andthe Promenade connecting the other two areas. As in years past,a wide variety of companies will showcase the latest in productsand services of interest to our region’s oil and gas industry—bothconventional and unconventional.

By the way, if you don’t care to participate in the conference,

February 2014 Page 3April 2014 Page 3

RLA Premier Conference Center 28 Meeting Rooms

Full Service – One Price

Expectations Exceeded

� Customized Meeting Packages

� Retreat-like Setting � Ergonomic Furniture Design � State-of-the-art Technology � Executive Style Food

Service

For inquires or a personal tour, call

724-741-1024 info@theRLA.org

Regional Learning Alliance at Cranberry Woods 850 Cranberry Woods Drive Cranberry Township, PA 16066

www.theRLA.org

Page 4 The PIOGA Press

you can still come just for the trade show. There’s a $40 fee(cash or credit card) at the door, good for access to the showboth days.

4. Networking Our events typically are great occasions for making new con-

tacts and catching up with others, and the Eastern Oil & GasConference and Trade Show is no exception. Of particular inter-est is Tuesday evening’s Welcome Reception, which runs from 5to 8:30 in the Great Hall. Part museum and part Hall of Fame,the Great Hall not only pays tribute to the great men and eventsthat shaped Steelers history , but it also features lockers andbleachers from Three Rivers Stadium, replicas of the Steelers’six Super Bowl trophies, banners, murals and much more. It’sthe ideal setting for networking.

From 5-6 p.m. a section of the Great Hall will be set aside fora special PIOGA Political Action Committee reception to raise

Exhibit space?There may still be some exhibit space left as your read

this. Visit www.pioga.org/exhibitors for information. If spaceis sold out, you can contact Debbie Oyler at debbie@pioga.org or 724-933-7306 ext. 22 to be placed on a waitinglist.

funds for the association’s legislative work. There’s a minimum$100 donation (personal checks or cash only), and we hopeyou’ll help this worthy cause.

Then from 6-7 p.m. you can help us welcome former SteelerTunch Ilkin. Ilkin played offensive tackle for the Steelers from1980 to 1992, earning two Pro Bowl appearance honors. He alsoserved as vice president with the NFL Players Association from1989 to 1994. After his retirement from the NFL, Ilkin beganappearing as a commentator and sports reporter on sports broad-casts in Pittsburgh. Since 1998, he has been an official part of theSteelers radio broadcast team, providing color commentary.

5. Plenty of other things to see and doFrom visiting the Carnegie Science Center to riding the

Duquesne Incline to trying your luck at Rivers Casino, theirs isplenty to see and do close by to Heinz Field. And you’re alsoright across the river from downtown Pittsburgh and its manyattractions. Check out www.visitpittsburgh.com for inspiration.

More informationFor registration, any agenda updates, exhibitor listings, lodg-

ing, directions, parking and more, pay a visit to the event page atwww.pioga.org.

We are very excited about this event and look forward to see-ing you there! ■

February 2014 Page 5April 2014 Page 5

Eastern Oil & Gas Conference and Trade Show Agenda“First and Goal: Scoring Energy Independence”

Tuesday, May 137:30 a.m. Conference Registration Opens

8:30 a.m.-5 p.m. Trade Show Open

8:30-9 a.m. Opening RemarksLou D’Amico, PIOGA President & Executive Director

9-9:30 a.m. Governor Tom Corbett

9:30-10 a.m. Legal UpdateKevin Moody, PIOGA Vice President & General Counsel

10-10:30 a.m. Chapter 78 Panel DiscussionModerator: Gary Slagel, Gov. Affairs Specialist, Steptoe & Johnson, PLLCScott Perry, PA DEP Deputy SecretaryKen Fleeman, Mgr. of Engineering, ABARTA Oil & Gas Co., Inc.Jeff Walentosky, Sr. Geologist, Moody & Associates, Inc.Jean Mosites, Attorney, Babst Calland

10:30-11 a.m. Break

11-11:45 a.m. Chapter 78 Panel continues

11:45 a.m.-12:05 p.m. Penn State’s Energy and Land Management ProgramSusan Powell, Director of Major Gifts, Penn State-College of Earth and Mineral

12:05-1:30 p.m. Lunch & Visit Exhibits

1:30-2:15 p.m. Harrisburg Update and ChallengesLou D’Amico, PIOGA President & Executive DirectorKevin Moody, PIOGA VP & General CounselRichard Gmerek, Esq., President & CEO, Gmerek Gov. Relations

2:15-3 p.m. Federal UpdateSamantha McDonald, Gov. Relations, Independent Petroleum Association of America

3-3:30 p.m. Break

3:30-4:30 p.m. Weather, Climate and EnergyRia Persad, President, StatWeather, Inc.

4:30-5 p.m. Act 13 UpdateDavid Overstreet, Partner, K&L Gates

5-8:30 p.m. Welcome Reception — Great HallSpecial PIOGA PAC Reception Area (5-6 p.m.)Special Guest: Former Pittsburgh Steeler Tunch Ilkin (6-7 p.m.)Reception open to registered exhibitors and conference attendees only

Wednesday, May 147:30 a.m. Conference Registration Opens

8:30 a.m.-1 p.m. Trade Show Open

8:30-9:15 a.m. Ethane CaptureEd Woods, Turbine Sales Manager, Keystone Drill Services, LLC

9:15-10:30 a.m. Gas-Electric Panel Discussion & RoundtableModerator: Robert Eckle, President, Appalachian Producer Services, LLCGreg Muse, President & COO, PennEnergy Resources, LLCRichard Kruse, VP Regulatory, Spectra EnergyKenneth Magyar, VP Project Development, Superior Appalachian Pipeline Co., LLCAnn Scott, Director Development, Tenaska Resources, LLCFrank Koza, Exec. Dir. Infrastructure, PJM Interconnection

10:30-11 a.m. Break

11 a.m.-12 p.m. Gas-Electric Panel Discussion & Roundtable continues

Conference adjourns—please visit the exhibitors until the trade show closes at 1 p.m.

Ria Persad of StatWeather will

talk about weather and risk

management

Page 6 The PIOGA Press

Why you should support PIOGA eventsWith our 2014 Eastern Oil & Gas Conference and Trade Show rapidly approaching—May 13-14 at Pittsburgh’s Heinz Field, by the way—I wanted to share a few thoughtsabout the importance of supporting PIOGA’s events.

Participating in PIOGA events is crucial for two reasons. First, we believe our program-ming is unique from what others offer.

Along with the skyrocketing prominence of the Marcellus Shale and other unconventional resources has come acrowded calendar of conferences, expos, roundtables and the like. Many of these programs are organized by com-mercial entities who business is putting on business conferences on a multitude of topics. They simply want tomake money off your thirst for information about developments in the region’s shale plays, and their program-ming will disappear if interest in unconventional resources wanes.

By contrast, PIOGA is an organization whose sole purpose is to serve Pennsylvania’s upstream oil and gas industry.We rely on our members to let us know what topics are of importance to them—whether burdensome regula-tions, new markets for natural gas or technical developments that can improve an operator’s bottom line. As welike to say, our programs are put together by the exploration and production industry for the E&P industry.

And we’ve been doing it for close to 100 years now. PIOGA’s roots go back to 1918. As far as we can tell, no otherstate oil and gas trade association has been around longer. We plan to remain in existence and relevant fordecades and decades to come.

The second and equally important reason to participate is that the revenue from our events is essential in sup-porting the mission of PIOGA—your trade association.

Dues income is, of course, the lifeblood of our organization. Yet at the same time, revenue from our major eventsallows us to go beyond the basics and truly excel as an advocate for your interests. It provides funding for ourinvolvement in major court cases, fighting for your interests in Harrisburg and Washington, taking the message ofthe importance of Pennsylvania-produced crude oil and natural gas to the public, and helping develop new andexpanded markets for our product.

I don’t mean to knock the programming put on by a wide variety of entities. We ourselves participate in many ofthese events, where we are often speakers, exhibitors or sponsors. Still, we know that your time is valuable andthere are only so many programs you take part in. In choosing which events you and others in your company willparticipate in, please keep in mind the benefits of “buying locally” with PIOGA.

I hope to see you at the Eastern Oil & Gas Conference and Trade Show next month, our Pig Roast, EquipmentShow and Conference in July at beautiful Seven Springs Mountain Resort and at our other events throughout theyear. You can always find the schedule by going to the News/Events menu from www.pioga.org.

Oh, and did I mention that even though revenue from events is essential to PIOGA, your membership ensures thatyou receive a significant discount in registration fees? That’s a benefit of PIOGA membership that other eventorganizers don’t give you!

Lou D’AmicoPresident & Executive Director

Messageto theMembership

February 2014 Page 7April 2014 Page 7

Page 8 The PIOGA Press

Landowner unrestover royalty paymentsleads to litigationand new legislation

Pennsylvania law guarantees oil and gas lessors a minimumroyalty of 12.5 percent.1 However, the manner in whichthe royalty is calculated and whether it can be reduced by

post-production costs has been a source of controversy.Landowners are increasingly scrutinizing their lease royalties,questioning the accounting methods and arguing that their pay-ments are too low. As a result, Pennsylvania has seen a surge inlawsuits challenging the method by which leasehold royalties arecalculated.

In recent years, more than 70 lawsuits were filed in state andfederal courts in Pennsylvania concerning hundreds of oil andgas leases.2 In response, in 2010, the Pennsylvania SupremeCourt set the precedent in the case of Kilmer v. Elexco LandServs., Inc., holding that producers may deduct post-productioncosts in calculating landowners’ royalties, as is common in theindustry throughout the country, and that those deductions didnot violate Pennsylvania’s Guaranteed Minimum Royalty Act of1979.3 In the aftermath of the Kilmer decision, landowners arenow looking to the legislature for change. Proposed House Bill1684 seeks to further define the calculation of royalties and theguarantee of a minimum royalty.

The progression of Pennsylvania lawregarding minimum royalties

Historically, it was common for leases toprovide for a flat-rate royalty for gas in theform of a certain dollar amount per produc-ing well, per year. In 1979, the PennsylvaniaGeneral Assembly passed, what has beenreferred to as, the Guaranteed MinimumRoyalty Act (the 1979 act) 58 Pa. Stat. Ann.§ 33, which states that an oil and gas leaseis not valid unless it guarantees the lessor atleast one-eighth royalty.4 Further, any leasesthat do not provide a one-eighth royalty aresubject to an escalation when their originalstate is altered by new drilling, deeperdrilling, redrilling, artificial well stimula-tion, hydraulic fracturing or any other pro-cedure for increased production.5

Although the 1979 act guaranteed lessorsa minimum royalty, the act did not specifyhow and at what point in the productionprocess royalties should be calculated. Itwas unclear from the act whethercertain costs incurred in the courseof production—such as gathering,processing, transportation andmarketing costs—may be deduct-ed from the landowner’s royalties. However, the 1979 act wasseldom the subject of litigation until 2008, when the scale of pro-duction and the negotiation of new leases highlighted the value

Elena L.Rorabaugh, Esq.

Ashley M.Lypson, Esq.

Authors:

February 2014 Page 9April 2014 Page 9

Erosion & Sedimentation Controls Stream Crossing &

Encroachment Permitting Wetland Identi� cation &

Delineation Subsurface & Historical

Investigations Geotechnical Support Water Supply PNDI Evaluations

Wastewater Management Compliance Audits SPCC Plan Preparation NPDES Permitting &

Monitoring Slope Stability & Land

Development Release (Seep/Spill)

Assessments & Remediation Closures at Release Sites

Innovative Solutions and Outstanding Support

22 S. Linden StreetDuquesne, PA 15110

412.469.9331www.kuresources.comwww.fmctechnologies.com

Frac Flowback

Cased HoleWireline

Fiber OpticLogging

FMC Technologies Completion Services, Inc.2170 Washington Road, Canonsburg, Pennsylvania 15317 Phone: 724.916.4852

Completionswithout Compromise

of oil and gas in our region.

Pennsylvania case law—Kilmer v. Elexco Land Servs., Inc.and Pollock v. Energy Corp. of America

In exercising its extraordinary jurisdiction, the PennsylvaniaSupreme Court agreed to hear the Kilmer case on the landown-ers’ appeal. The issue certified for appeal was “whether theGuaranteed Minimum Royalty Act precludes parties from con-tracting to use the net-back method to determine the royaltiespayable under an oil or natural gas lease.”6 Essentially, theunderlying question was how the Pennsylvania GeneralAssembly intended to define the term royalty when it constructedand passed the 1979 act.

In Kilmer, the landowners executed a lease with Elexco LandServices in 2007 that provided for a royalty payment of one-eighth the value of the natural gas removed or recovered, as wellas a signing bonus of $100 per acre. The lease described a royal-ty payment as being calculated using the net-back method, whichsubtracts an operator’s post-production costs from the sale ofrevenue when calculating the payments. The landowners arguedthat Pennsylvania should adopt the “First Marketable ProductDoctrine,” believing that gas royalties should be calculated as apercentage of the total proceeds from the market sale of the gas.The landowners built their argument around the idea thatPennsylvania law includes an implied duty to market gas in gasleases, thereby obligating the producers to sell the gas in order toensure the landowners receive just compensation.

The producers argued that the net-back method used to calcu-late the royalties in the Kilmer lease complied with the terms ofthe 1979 act. Accordingly, the producers believed that a plain

reading of the 1979 act indicates that Pennsylvania legislatureimplicitly contemplated that the calculation of royalties is basedon the value of the gas removed or recovered from the real prop-erty in question. The producers also argued that the term “royal-ty” has a technical and widely understood meaning in the naturalgas industry, upon which they rely when calculating royalties,and which is inclusive of the net-back method.

The Kilmer court ultimately decided in favor of the producers,holding that the act “should be read to permit the calculation ofroyalties at the wellhead, as provided by the net-backmethod…”7 The court rejected the landowners’ argument that theproducers would inflate their costs to reduce the royalties giventhat producers have a strong incentive to keep costs down.Accordingly, the Kilmer court adopted the technical term “royal-ty,” which allows for the deduction of post-production costs asprovided in the net-back method.

The Pollock case followed Kilmer and included an extensivediscussion of Kilmer.8 In Pollock, the producer asked for anexpansive reading of Kilmer, thereby applying the net-backmethod to all oil and gas leases, “regardless of whether a leasedescribes the particulars of the post-production costs that can bededucted from the gross sales price.”9 The landowners asked fora more narrow reading of Kilmer, arguing that “because the leas-es at issue, unlike those dissected in Kilmer, do not specificallyprovide for a deduction for lost gas from the royalty, [producer]breached the leases when it did not pay royalties on that categoryof gas.”10 The Pollock court agreed with the producer, furtherstating that because all the leases utilized the net-back method,“gas that does not make it to its destination…cannot be consid-ered in the calculation.”11

Page 10 The PIOGA Press

below 12.5 percent. In addition, the bill states: For the purpose of royalty calculations for production fromunconventional gas wells, the royalty calculation shall bebased on the price received by the lessee at the point atwhich the production enters the commercial market andownership transfers to a business entity nonrelated to the les-see in an arm’s-length transaction.15

The Pennsylvania Supreme Court’s ruling in Kilmer clearly per-mitted the deduction of post-production costs from royalty pay-ments. However, landowners persisted in seeking a change in thelaw in light of the recent increase in the value of natural gas. HB1684 points to the Kilmer court’s dicta that the “GeneralAssembly is the branch of government best suited to weigh thepublic policies underlying the determination of the proper pointof royalty valuation.”16 The law regarding royalty calculationsand the deduction of post-production costs may soon be changedby HB 1684. Nevertheless, if the bill passes, it is possible thatconstitutional challenges to the bill could be made, which wouldthrow the issue back into the realm of the courts. ■

1 58 Pa. Stat. Ann. § 332 See Kilmer v. Elexco Land Servs., Inc., 990 A.2d 1147, 1151 (Pa. 2010).3 Id.4 58 Pa. Stat. Ann. § 33 5 Id.6 Kilmer, 990 A. 2d. at 1158.7 Id. 8 Pollock v. Energy Corp. of America, No. 10-1553, 2011 WL 3667289 at 1 (June27, 2011 W.D. Pa.)9 Id. at 4.10 Id.11 Id. at 4, 5.12 Cusick, Marie. “Senate Panel Examines Complaints of Underpaid GasRoyalties.” StateImpact Pennsylvania, June 27, 2013. 13 58 Pa. Stat. § 33, et seq.14 Quinn Sanders, Jacob. “Energy committee votes to send gas royalty bill to fullPa. House.” Pittsburgh Post-Gazette, March 17, 2014.15 House Bill 1684 (Session of 2013), An Act amending the act of July 20, 1979(P.L.183, No.60), known as the Oil and Gas Lease Act, prohibiting certain deduc-tions from royalties (text of the bill can be found at www.legis.state.pa.us).16 Kilmer, 990 A. 2d. at 1157.

New legislationAfter Kilmer and Pollock, landowners sought a different

avenue for their arguments, and in June 2013 the state SenateEnvironmental Resources and Energy Committee held a hearingin which representatives from the National Association ofRoyalty Owners testified that, among other things, their con-stituents were desperately seeking transparency from produc-ers.12 On July 9, Governor Tom Corbett signed Act 66 of 2013(the Oil and Gas Lease Act).13 The Oil and Gas Lease Actretained the minimum royalty of 12.5 percent and did not furtherdefine the method of calculation; however, it added the require-ment that certain information regarding production be includedin royalty statements that are sent to landowners.

Because the Oil and Gas Lease Act did not address thelandowners’ demands for further standards regarding royalty cal-culations and post-production deductions, discussion and debateof the issue continued. As a result, several legislators from coun-ties in which Marcellus Shale development is prevalent led thecall for a more detailed royalty statute geared specifically towardunconventional wells. On September 16, RepublicanRepresentative Garth Everett from Lycoming County introducedHB 1684 with 23 cosponsors. The push to pass companion billsin the Senate was led by Senator Gene Yaw. On March 17, HB1684 passed the House Environmental Resources and EnergyCommittee and will be sent to the House floor for a vote.14

(Editor’s note: See update on page 16.)HB 1684 seeks to require that royalty payments from uncon-

ventional wells will not be less than 12.5 percent. Specifically,the bill provides that producers can deduct post-production coststo reduce the royalty below the rate provided in the lease, but not

February 2014 Page 11April 2014 Page 11

Page 12 The PIOGA Press

www.steptoe-johnson.com/summit

T I I AN V R E E T

EVENTDETAILS

When: Thursday, May 15, 20148:30 a.m. - 5:15 p.m.

Where: The Oxford Hotel1600 17th StreetDenver, CO 80202

This Summit will provide energy executives and decision makers with a comprehensive overview of recent shale oil and gas developments as well as legal and transactional issues in major U.S. shale plays.

Sharon O. FlaneryENERGY AND NATURAL RESOURCES

DEPARTMENT CHAIR

media sponsor: denver business journal

may 15 denver

the oxford hotel

th

February 2014 Page 13April 2014 Page 13

When the Pennsylvania Supreme Court ruled 4-2 lastDecember that the uniform-zoning provisions and sev-eral additional sections of Act 13 of 2012 were uncon-

stitutional, the justices also remanded other parts of the caseback to Commonwealth Court for further consideration (MarchPIOGA Press, page 5). Following a status conference in March,Commonwealth Court Judge Dan Pellegrini issued a memoran-dum listing the four issues that will be argued when the courtconvenes in Philadelphia next month.

Pellegrini’s memorandum indicated the four issues to beargued May 14 include:

• Whether the owners of private water wells have the sameright as public water-supply operators under Act 13 to be notifiedof pollution incidents from drilling operations.

• If the Pennsylvania Public Utility Commission (PUC) stillhas any authority to review the zoning ordinances of municipali-ties.

• Whether eminent domain can be invoked to take privateproperty for natural gas storage.

• Whether the Act 13 provision that limits what doctors andother health professionals can reveal about the chemicals used inthe drilling process is constitutional.

Briefs on these issues were filed April 1 by the PUC, theDepartment of Environmental Protection and the municipalities.Industry (PIOGA, the Marcellus Shale Coalition and theAmerican Petroleum Institute) also filed a brief as “PendingIntervenors and Amici Curiae” because the court has not yetruled on our request to intervene (see below).

Both sides in Robinson Township v. Commonwealth agreedthat the other remaining parts of Act 13, including the natural gasimpact fee, will not be up for consideration. The impact fee onunconventional gas wells is a central part of Act 13, generatingmore than $200 million per year. Sixty percent of the revenuestays at the local level, going to counties and municipalities host-ing wells. The rest is divided among various state agencies andprograms, along with the Marcellus Legacy Fund, which goes toenvironmental and infrastructure projects.

PIOGA President and Executive Director told the PittsburghTribune-Review that the association is not looking to contest theimpact fee.

“That’s not an area we’re interested in challenging at all,” hesaid. “We kind of agree with the concept of the impact fee.”

PIOGA joined with the Marcellus Coalition and the AmericanPetroleum institute in requesting to be a party in the case. WhenAct 13 was originally challenged, Commonwealth Court refusedindustry’s request for party status, ruling that industry’s interestswere adequately represented by the Commonwealth. However,we now believe that industry’s interests have diverged fromCommonwealth’s on the issues remaining in the remand; forexample, concerning eminent domain, protection of trade secretsand how the severability analysis is conducted.

The court scheduled a hearing for April 9 on industry’srequest to intervene, so at press time industry’s “party” status onremand was undecided. A “party” participates in all aspects ofthe proceeding and may raise issues and appeal, whereas partici-pation of an amicus is limited to filing briefs. ■

What’s left to decide in the Act 13 litigation?

Page 14 The PIOGA Press

Impact fees top $630 millionamid calls for a severance tax

Data released by the Pennsylvania Public UtilityCommission (PUC) in early April show the state expectsto collect $224.5 million in 2014 through Act 13’s

impact fee assessed on unconventional wells. Coupled with the$406 million total collected in 2012 and 2013, Act 13 so far willhave generated more than $630 million since it was signed intolaw in 2012.

The majority of Act 13 funds are distributed directly to coun-ties and municipalities across the Commonwealth, to be used fora variety of environmental, public safety, infrastructure, emer-gency response and other authorized uses. Impact fee funds arealso directed to state agencies including the PUC, Department ofEnvironmental Protection, Pennsylvania EmergencyManagement Agency, Office of the State Fire Commissioner, andthe Pennsylvania Fish and Boat Commission. County conserva-tion districts also receive significant funding.

Additionally, the impact fee helps fund other conservationprograms such as Growing Greener and the Marcellus LegacyFund. Growing Greener, established in 1999, is receiving its firstinfusion of new funding from the impact fee in over a decade.The Marcellus Legacy Fund is a newly created program adminis-tered by the Commonwealth Financing Authority that providesfunding for a variety of uses, including watershed restoration,abandoned mine reclamation, open space, greenway, trail andrecreation projects, flood control, and other environmental pur-poses. Funds are also allocated for water and sewer infrastructure

projects through both PENNVEST and the H2O program. The $224.5 million represents impact fees paid by producers

for 2013 and is an increase of 10 percent over 2012. Horizontalunconventional wells spud in 2013 pay a $50,000 fee, whilewells drilled in 2012 are assessed $40,000 and those drilledbefore 2012 pay $30,000. Producing vertical unconventionalwells are assessed at 20 percent of the horizontal well fees. Theimpact fee, which is determined by the PUC, can change fromyear to year based on the annual average price of natural gas andthe consumer price index.

The fees due for 2013 were to be paid by producers this April1. The PUC expects to distribute the funds July 1 to local gov-ernments and state agencies and programs.

A severance tax too?Calls for a severance tax on unconventional gas production

were a persistent theme, particularly among Democrats, at thetime the impact fee was enacted in early 2012. Despite the indus-try’s contribution of more than $630 million since Act 13 wasput into place, the demands for a severance tax are as loud asever.

All of the Democratic candidates lining up to challenge TomCorbett in the election for governor in November want a tax ongas production, and some Republicans are seeking a severancetax as well. Proposals for such a levy range as high as 10 per-cent, although 4 percent seems to be the most common number.Those advocating a severance tax would use the funds for every-thing from education to bolstering the state’s general fund.

In the state Senate, there has been no recent discussion amongthe GOP caucus for advancing a severance tax, and none is

3300 Conshohocken State Road, Suite 405, West Conshohocken, PA 19428

Adrianne Vigueras

Vice President Energy Division

avigueras@ecbm.com

888-313-3226 ext. 1335

Side by Side Side by Side Side by Side

With YouWith YouWith You

Into the FutureInto the FutureInto the Future

Insurance Brokers & Consultants

Digging Out Potential SavingsDigging Out Potential SavingsDigging Out Potential Savings

February 2014 Page 15April 2014 Page 15

DIRECTIONAL SURVEY PLUS

Page 16 The PIOGA Press

planned, Senate Majority Leader Dominic Pileggi told theAssociated Press. Governor Corbett too reiterated his oppositionto a new tax.

“What I hear is, ‘We need to spend more so we need to taxmore,’” Corbett said. “We need to grow the industries, all theindustries of Pennsylvania.”

He also touted the destination of the money fromPennsylvania’s fee as being better than that of states with a sev-erance tax, noting more than 60 percent goes back to drillingcommunities.

“They don’t have that in those other states,” Corbett told theAP.

The Pennsylvania Independent Fiscal Office released a reportin late March which it said attempts to provide an “apples toapples” comparison of taxes imposed on natural gas drillers byvarious states. The report developed an “effective tax rate” calcu-lation that includes the severance taxes imposed by states on theextraction of natural gas (the report treats Pennsylvania’s impactfee as a severance tax for the analysis) and the local taxes on nat-ural gas reserves or the market value of natural gas sales.

And, as most would expect, just comparing those things,Pennsylvania comes out at the bottom, of the 11 states compared,for taxes imposed on natural gas extraction.

The IFO’s effective tax rates are based on the lifetime of awell that comes on line in 2014. According to the report,Pennsylvania’s effective lifetime tax rate ranges from 1.6 percentfor a low-production well when gas prices are low, to 0.6 percentfor a high-production well when prices are high.

In Texas, the only state that produces more natural gas thanPennsylvania, the effective severance tax is 3.7 percent. In West

Virginia, where the Marcellus is attracting much drilling activity,the effective severance tax rate is about 5.8 percent.

However, the report does not incorporate any of the otherstate-imposed taxes that operators doing business within the 11states might pay.

The report discusses and identifies other taxes that are leviedon or paid by firms that extract natural gas—such as corporatenet income, personal income, sales and use, and tangible person-al property taxes—however, the study cites a lack of publiclyavailable data as the reason it doesn’t quantify those amounts.

While it’s surely a difficult proposition to determine every-thing a company pays and where it pay it, the “apples to apples”claim would appear to be a bit lacking, given the disparity oftaxes imposed and paid by companies from state to state.

The Independent Fiscal Office, created by the state legislaturein 2010 and modeled on the nonpartisan Congressional BudgetOffice, conducted its analysis at the request of state SenatorDavid Argall (R-Schuylkill). The 72-page report contains no pol-icy recommendations.

PIOGA will continue to vigorously oppose any serious sever-ance tax proposals in the General Assembly.

ResourcesFor information about the Act 13 impact fee and its distribu-

tion, go to www.puc.state.pa.us and click on Act 13 (Impact Fee)under the Natural Gas heading.

To find the Independent Fiscal Office tax report, visitwww.ifo.state.pa.us and click on Releases. ■

Leaseholder bills approved by Senate

Three Senate bills aiming to help leaseholders in royaltydisputes with oil and gas companies passed the Senateon April 7 and are on their way to the House.

Senate Bill 1236, which passed unanimously, would giveleaseholders the ability to inspect documents relating to thegas extraction in order to verify royalty calculations. SB1237, which passed 45-4, gives leaseholders protections fromproducers that may retaliate if the leaseholder questions roy-alty payment calculations. SB 1238, also approved unani-mously, requires a producer to file a surrender document witha county records office to mark the company's release inter-ests in the oil and gas—similar to what a mortgage companyhas to do when a mortgage is paid off in full, according toSenate Environmental Resources and Energy Committeechairman Gene Yaw (R-Lycoming), the bills' sponsor.

The bills were drafted in response to complaints fromleaseholders about royalty payment practices by an operatorthat reportedly was deducting huge post-production costsfrom royalty payments. Another bill, House Bill 1684 isawaiting House floor action and also would address concernsof leaseholders.

February 2014 Page 17April 2014 Page 17

Page 18 The PIOGA Press

FERC asking gas industry to change By Joyce TurkalyDirector of Natural Gas Market Development

On March 20, the Federal Energy Regulatory Commission(FERC) came out with a couple of orders pertaining togas and electric coordination. Natural-gas-fired electric

generation is the market segment identified to be the largest-growing sector due to natural gas being viewed as a reliablereplacement fuel for coal-fired generation retirements. Thisgrowth for natural gas supply used in the electric demand marketwill allow producers more potential for summer demand sales togenerators or marketers of generation.

In North America, an ISO, or an independent system opera-tor, and an RTO (regional transmission organization) coordinate,controls and monitors electrical grid reliability.

While the nationwide natural gas nomination timeline hasproven resilient over the last 17 years, recent developmentsin electricity markets signal that changes to the gas nomina-tion schedule may be needed. Reliance on natural gas as afuel for electric generation has steadily increased in recentyears.This trend is expected to continue, resulting in greater inter-

dependence between the natural gas and electric industries.Comments contained in the NOPR Docket No. RM14-2-000

Referencing a report that the commission completed inNovember 2012, industry participants at that time called for bet-ter alignment of gas and electric scheduling practices(elibrary.ferc.gov/idmws/common/opennat.asp?fileID=12893828).

Since that time, a series of FERC technical conferences wereheld in April 2013, the Natural Gas Council worked on a “strawman” proposal and PIOGA was invited to participate as part ofthe natural gas sector on the EIPC project in October, 2013.

To address issues involving operations, inter- and intrastategas pipelines, rates, and, ultimately, reliability of the electricgrid, the FERC notice of proposed rulemaking (NOPR) seeks toaddress three things: moving the start of the gas day up from 10a.m. EST to 5 a.m. EST to ensure gas-fired generators can getgas prior to and during the morning ramp; having the ISOs/RTOscorrelate day-ahead markets with gas by moving back the timelynomination cycle from 12:30 p.m. to 2 p.m. EST; proposing toprovide four standard intraday nomination cycles to occur at 9a.m. EST (bump), 11:30 a.m. EST (bump), 5 p.m. EST (bump)and 8 p.m. (no bump).

FERC believes the gas day should be changed to allow for the

Keep the twotimely nomina-tions, however,increase theintra-day oppor-tunity to a mini-mum of four (4)times – set upFour nominationschedules where-by increasing theflexibility of thegenerators to getgas.

Black line repre-sents winterpeaks, blue linesrepresent PJMschedule, orange-dash line whengas would flowfor the FERCNOPR last intra-day would flowat 10 p.m. to 5a.m.

All times shown areEastern Standard

Gas-Electric Schedule (FERC NOPR)

Winter Peaks and Gas Flows (FERC NOPR)

February 2014 Page 19April 2014 Page 19

morning ramp for the ISOs and included it in the NOPR.Scheduling changes also are addressed to accommodate bothtimely nominations and the day-ahead scheduling so that itallows the ability for more natural gas units’ participation. Thefirst timely nomination, where the market is most liquid and nat-ural gas scheduling occurs, is proposed to be pushed back; theNOPR seeks to push it back so it will better sync with the post-ing of bids or clearing prices. Concern around this seeks toaddress transparency and liquidity of the market. The cost ofsecuring firm transportation (FT) is a topic that has been heavilydebated by generation owners. The NOPR provides for a multi-party service agreement allowing multiple companies to aggre-gate purchasing power to acquire FT.

What is contained within the NOPR is not necessarily theopinion of all of the stakeholders. The order addresses issues thatare critical for New England, and the rest of the territory mayargue whether or not there is a benefit. The gas industry has sixmonths to come up with alternatives through the NorthAmerican Energy Standards Board (NAESB) process, withthe final rule coming in early 2015. Considering changes to theday-ahead market, what will we need to be thinking about?There are many considerations for gas to perform as a reliablefuel for electric generation. If you would like to participate,please reach out to Ron McGlade, assistant chair for the Gas-Electric Subcommittee of PIOGA’s Pipeline and Gas MarketDevelopment Committee, or to me at PIOGA.

Synching the gas and electric day nomination cycle is one ofthe ongoing operational issues that the Gas-ElectricSubcommittee (previously, End Use Subcommittee) has beendiscussing with PJM, our region’s ISO, as well as at variouscommittee meetings. ■

Page 20 The PIOGA Press

Fueling with CNG and LNGBy Joyce TurkalyDirector of Natural Gas Market Development

Irecently visited the “O” Ring Fuel Systems LP compressednatural gas (CNG) station and training center in Brookville tospeak with Robert Beatty, owner. Bob speaks to his “first in”

strategy at this location, where he taps into a National Fuel 4-inch line that runs down the boulevard with a maximum allow-able operating pressure of 42 pounds.

Prior to breaking ground for the project, a gas applicationand engineering study was performed to ensure that the CNGstation is not detrimental to any other end users, meaning ade-quate compression and dispensing units were sized appropriatelyso that the facility would not negatively affect neighboring busi-nesses along the same distribution line.

So where are we withliquefied (LNG) infra-structure within the statecompared to CNG? LNGis a federally regulatedcommodity and currentlythe permitting infrastruc-ture does not exist withthe state Department ofLabor and Industry tobuild a LNG productionfacility in Pennsylvania.

LNG is cryogenic (-260 degrees F). To com-pare project expenses, itcosts roughly $2 millionto build a refueling sta-tion like the one picturedabove that takes gasright out of a pipeline,while it costs upward of$5 million to build an

LNG refueling facility that takes the gas, liquefies it and movesthe product by a truck to end users.

A Potter County business is looking to capitalize on the grow-ing demand for LNG. David Kailbourne, CEO of REV LNG,LLC, will discuss his company’s ability to expand mobile fuelingstations for fleets as well as drilling pads at PIOGA’s upcomingPig Roast, Equipment Show and Conference in July. For a per-manent station, you can build an LNG dispensing facility thatutilizes a big “thermos” bottle to store LNG similar to the T.Boone Pickens model (cleanenergyfuels.com/pdf/CE-OS.ANGH.111912.pdf).

LNG must be maintained a minus-260 because it will turnback into natural gas and the boil-off becomes a waste productunless you are actually producing enough and using it fastenough (typically in under three days). Since LNG has a higherstorage density, the ideal LNG market are the high-horsepowerusers such as trains and shipping because you can take a largequantity of a cryogenic liquid and put it in the hull of a tanker

Beatty states, “For a local hauler and smaller, LNG does notmake sense from the standpoint of logistics and economics andthe simple fact that the hauling, storing and handling similar tothat of any liquid fuels suits the shipping terminals, or oceangoing vessels or rail.”

To learn more, please stop by and visit with one of the expertsat the Alternative Fueling booth at PIOGA’s May 13-14 EasternOil & Gas Conference and Trade Show at Heinz Field. ■

Superior Environmental and Geotechnical Services at a Manageable Price

PA Office 412.722.1970

Amy Veltri, P.E., BCEE Jim Daley, PMP

WV Office 304.201.5180

John Nottingham, P.E.

�Environmental Compliance �Environmental Permits & Audits �Environmental Site Assessments �Environmental Sampling �Geotechnical Engineering �Subsurface Investigations & Drilling �Foundation & Earthwork Design �Construction Monitoring

www.NGEconsulting.com

NGE is a certified Woman-Owned Small Business

Purchasers of Penn Grade & Utica Crude Oil

77 N. Kendall Ave.Bradford, PA 16701

814-368-1200

www.amref.com

Dan PalmerCrude Relationship Mgr PA / NY

814-368-1263dpalmer@amref.com

ISO 9001:2008 Certified

Supplying Quality Lubricants Refined UsingPenn Grade Crude Oil

Support the companies that support yourassociation with their advertising

February 2014 Page 21April 2014 Page 21

• FOCUSED ON IMPROVED TECHNOLOGIES

• DEDICATED TO AN EXPERIENCED WORKFORCE

• PLEDGED TO ENVIRONMENTAL RESPONSIBILITY

• LEADING THE INDUSTRY IN CNG EQUIPMENT

• COMMITTED TO SAFETY AND TRAINING

The Cementing Professionals

O-Tex Pumping provides unrivaled primary and secondary cementing and specialty pumping services to America’s Energy Industry. In doing so, we strive to promote all qualities that are uniquely American. From new technologies to an experienced work force, we are proud to be “Running on America’s Fuel”.

INVESTING IN ENERGY INDEPENDENCE

724.256.9280

To learn more about our commitment to energy independence, visit our website today! www.otexpumping.com

Page 22 The PIOGA Press

In a low gas price environment, recov-ery of natural gas liquids (NGLs) is akey component of cash flow for natural

gas producers. Unlike the pipeline qualityof gas in the northeastern part of the state,the northwest and southwest portions ofPennsylvania, into northern West Virginiaas well, require natural gas processingplants to separate the liquids or heavyhydrocarbons.

PIOGA’s Pipeline and Gas MarketDevelopment Committee recently was ableto learn firsthand how NGL molecules areseparated from the gas stream atMarkWest Energy Partners, L.P. naturalgas processing plant in Houston,Pennsylvania.

Unwanted components must beremoved and the heavier hydrocarbonsseparated using cryogenic process prior toliquefying and then storing or transportingto market. The gas stream that comes intothe MarkWest facility is considered raw—it is a combination of methane all the wayto natural gasoline or C5+ mixed togetherin vapor form.

As explained by Bill Uhl, area manager, the facility processesupward of 2.2 Bcf/day and fractionates over 170,000 Bbl/day of

ethane and heavier NGLs. NGLs in the gas stream comprisealmost half of what is then transported by pipeline, truck or rail.

Laboratory personnel analyze the gas stream using chro-

It’s time to try

MAXIMATOR ®

s time to tryService is our

# 1 Priority!

Stocking location in

Fairview PA

Maxpro Technologies814-474-9191

fraciron

www.MaxProTech.com

Hydrostatic Testing

From gas to liquidsPIOGA’s PGMD Committee visits MarkWest gas processing plant

Members of the Pipeline and Gas Market Development committee at the MarkWestEnergy Partners gas processing plant.

April 2014 Page 23

matography. Everything coming into the plant is crystal clear,without water or debris. After being collected in select hedgers,liquids run through a stabilizer column and undergo a quick sep-aration—then through a series of cryogenic and fractionationphases and finally measured and recovered and marketed for theproducers.

The dehydration process ensures that the gas is completelydry between -150 to -160 degrees Fahrenheit prior to entering thecryo process. Dry gas will vaporize at -126 degrees Fahrenheit.It’s due to the difference in pressure and temperature at the topof the stack (-120 degrees Fahrenheit) or column versus the bot-tom measured at 35 degrees Fahrenheit that yields the capture ofthe carbon molecules.

The order in which the NGLs are extracted is in direct corre-lation to their chemical composition. First, the C1, or methane, iscut from within the de-methanizer column as it rejects methaneoverhead as a vapor. The methane is then piped out to the trans-mission line using residue compression. Second, a de-ethanizeris fed with ethane, butane, propane, and gasoline—the ethane, orC2, overhead is condensed back into a liquid and shippedthrough either the Sonoco Logistics or Enterprise Atex line.

Every pound of pressure drop you take yields “x” amount ofcooling; the heavier the product the less cooling you are going toget. Third, the dirty propane then moves to a third tower called ade-propanizer.

The de-propanizer rejects propane; gets re-condensed into liq-uid and put back in storage on site. On-site NGL storage capaci-ty includes approximately 90,000 Bbls of propane storage.

Bill reminded us that “whatever the name of the tower is whatit’s rejecting overhead as a vapor and lighter and the heavier liq-uids are what comes out of the bottom.”

Fourth, butane and gasoline (C4 and C5+) now enter the de-butanizer, where butanes rejects overhead and natural gasoline(C+5 liquid) comes out the bottom. The gasoline then goes intostorage.

Butanes are re-condensed into a liquid put it into an iso-debu-tanizer ; currently MarkWest’s smallest product stream, however,is marked as the biggest tower on site.

They call it a fractionation plant, but what is happening issimple distillation column control—controlling temperature andpressure by which product you wish to come out the top as avapor or the bottom as a liquid. Simple distillation is generallyused when the boiling points are significantly different and whenpure components are being separated. ■

Natural-gas-fired electricity accountedfor 27,697 MMcf in January 2014, adecline of 12 percent from January 2013.Gas-fired electricity set a record high of42,507 MMcf in July 2012. Summerweather predictions combined with ener-gy efficiency measures have an impacton demand for natural-gas-fired genera-tion on the electric grid. Learn moreabout these topics at PIOGA’s EasternOil & Gas Conference and Trade Show,May 13-14 at Heinz Field, Pittsburgh.Details are at www.pioga.org.

(Chart: U.S. Energy Information Administration)

Propane is stored on-site.

Page 24 The PIOGA Press

Airdale Oil & Gas LLC 8 3/3/14 121-45244 Venango Cornplanter Twp3/6/14 121-45245 Venango Cornplanter Twp3/11/14 121-45248 Venango Cornplanter Twp3/12/14 121-45249 Venango Cornplanter Twp3/15/14 121-45251 Venango Cornplanter Twp3/19/14 121-45252 Venango Cornplanter Twp3/24/14 121-45246 Venango Cornplanter Twp3/26/14 121-45247 Venango Cornplanter Twp

Cabot Oil & Gas Corp 20 3/5/14 115-21632* Susquehanna Auburn Twp3/5/14 115-21641* Susquehanna Auburn Twp3/5/14 115-21633* Susquehanna Auburn Twp3/5/14 115-21634* Susquehanna Auburn Twp3/5/14 115-21635* Susquehanna Auburn Twp3/5/14 115-21636* Susquehanna Auburn Twp3/5/14 115-21637* Susquehanna Auburn Twp3/5/14 115-21638* Susquehanna Auburn Twp3/5/14 115-21639* Susquehanna Auburn Twp3/5/14 115-21640* Susquehanna Auburn Twp3/20/14 115-21586* Susquehanna Dimock Twp3/20/14 115-21587* Susquehanna Dimock Twp3/20/14 115-21588* Susquehanna Dimock Twp3/20/14 115-21589* Susquehanna Dimock Twp3/20/14 115-21590* Susquehanna Dimock Twp3/20/14 115-21591* Susquehanna Dimock Twp3/20/14 115-21592* Susquehanna Dimock Twp3/20/14 115-21593* Susquehanna Dimock Twp3/27/14 115-21686* Susquehanna Jessup Twp3/27/14 115-21689* Susquehanna Jessup Twp

Cameron Energy Co 5 3/10/14 123-47329 Warren Sheffield Twp3/12/14 123-47330 Warren Sheffield Twp3/19/14 123-47331 Warren Sheffield Twp3/26/14 123-47328 Warren Sheffield Twp

3/28/14 123-47327 Warren Sheffield TwpCatalyst Energy Inc 2 3/6/14 121-45538 Venango Cranberry Twp

3/11/14 121-45537 Venango Cranberry TwpChesapeake Appalachia LLC 7 3/6/14 131-20278* Wyoming Windham Twp

3/6/14 131-20406* Wyoming Windham Twp3/6/14 131-20407* Wyoming Windham Twp3/17/14 131-20288* Wyoming Windham Twp3/19/14 131-20405* Wyoming Windham Twp3/19/14 131-20426* Wyoming Windham Twp3/25/14 131-20403* Wyoming Windham Twp

Chief Oil & Gas LLC 8 3/24/14 113-20253* Sullivan Fox Twp3/5/14 115-21450* Susquehanna Springville Twp3/5/14 115-21451* Susquehanna Springville Twp3/5/14 115-21452* Susquehanna Springville Twp3/5/14 115-21453* Susquehanna Springville Twp3/7/14 115-21403* Susquehanna Springville Twp3/7/14 115-21404* Susquehanna Springville Twp3/7/14 115-21405* Susquehanna Springville Twp

Coastal Petroleum Corp 3 3/6/14 121-45440 Venango Sugarcreek Boro3/11/14 121-45442 Venango Sugarcreek Boro3/17/14 121-45441 Venango Sugarcreek Boro

D&S Energy Corp 7 3/5/14 083-56220 McKean Hamilton Twp3/11/14 083-56221 McKean Hamilton Twp3/18/14 083-56244 McKean Hamilton Twp3/20/14 083-56196 McKean Hamilton Twp3/25/14 083-56241 McKean Hamilton Twp3/26/14 083-56239 McKean Hamilton Twp3/31/14 083-56238 McKean Hamilton Twp

Devonian Resources Inc 2 3/12/14 053-30233 Forest Harmony Twp3/20/14 053-30232 Forest Harmony Twp

DRI Opr Co 1 3/6/14 111-20317 Somerset Stonycreek TwpEnergy Corp Of Amer 8 3/11/14 059-26219* Greene Jefferson Twp

Spud Report:March

The data show below comes from the Department ofEnvironmental Protection. A variety of interactive reports are

OPERATOR WELLS SPUD API # COUNTY MUNICIPALITY OPERATOR WELLS SPUD API # COUNTY MUNICIPALITY

available at www.portal.state.pa.us/portal/server.pt/community/oil_and_gas_reports/20297.

The table is sorted by operator and lists the total wells report-ed as drilled last month. Spud is the date drilling began at a wellsite. The API number is the drilling permit number issued to thewell operator. An asterisk (*) after the API number indicates anunconventional well.

Largest

HDPE PipeStocking Distributor

in the EasternUnited States

Your HDPE Specialists: Fabrication • Fusion • Pipe I1-800-353-3747 • www.leesupply.com

QualityPEOPLE • PRODUCTS • SERVICE

Since 1954

SoilStabilization

February 2014 Page 25April 2014 Page 25

Pre-Drilling Water Supply Inventory and Sampling

Post-Drilling Complaint Resolution and Investigations

Gas Well Permitting for Conventional and

Unconventional Plays

Development of High Capacity Groundwater Supply Wells

Soil & Groundwater Contamination Investigations

Assistance with Water Sourcing

Water Management Plan Preparation

SPCC/Control & Disposal Plans

Pre-Drilling Water Supply Inventory and Sampling

Post-Drilling Complaint Resolution and Investigations

Gas Well Permitting for Conventional and

Unconventional Plays

Development of High Capacity Groundwater Supply Wells

Soil & Groundwater Contamination Investigations

Assistance with Water Sourcing

Water Management Plan Preparation

SPCC/Control & Disposal Plans

Disposal Well Permitting

Erosion & Sedimentation Control Planning

Fresh Water Determination Studies

Soil and Groundwater Remediation

Stray Gas Migration Investigations

Hydrogeologic Studies

Expert Witness Testimony

Wetland Delineation and Aquatic Surveys

Disposal Well Permitting

Erosion & Sedimentation Control Planning

Fresh Water Determination Studies

Soil and Groundwater Remediation

Stray Gas Migration Investigations

Hydrogeologic Studies

Expert Witness Testimony

Wetland Delineation and Aquatic Surveys

Oil and Natural Gas Development ServicesOil and Natural Gas

Development Services

Meadville PAHouston PAWaverly NY

Visit us online at: www.moody-s.com

Groundwater & Environmental Professionals Since 1891Groundwater & Environmental Professionals Since 1891

Page 26 The PIOGA Press

DO IT ONCE. DO IT RIGHT.

MULTI-STAGE COMPLETIONS

www.packersplus.com

“Imitation is the sincerest form of flattery… or is it?”

Only Packers Plus delivers proven, reliable

and repeatable results. We have extensive

experience to run your jobs efficiently and

effectively. Contact us today and let us

help you maximize your assets.

February 2014 Page 27April 2014 Page 27

3/11/14 059-26314* Greene Jefferson Twp3/12/14 059-26315* Greene Jefferson Twp3/12/14 059-26316* Greene Jefferson Twp3/13/14 059-26402* Greene Jefferson Twp3/13/14 059-26403* Greene Jefferson Twp3/14/14 059-26404* Greene Jefferson Twp3/14/14 059-26405* Greene Jefferson Twp

EQT Production Co 9 3/12/14 003-22276* Allegheny Forward Twp3/12/14 003-22277* Allegheny Forward Twp3/22/14 059-26186* Greene Washington Twp3/22/14 059-26130* Greene Washington Twp3/7/14 065-27053* Jefferson Washington Twp3/19/14 125-27190* Washington E Bethlehem Twp3/19/14 125-27185* Washington E Bethlehem Twp3/19/14 125-27187** Washington E Bethlehem Twp3/6/14 125-27259* Washington W Bethlehem Twp

Gas & Oil Mgmt Assoc Inc 2 3/24/14 123-47539 Warren Mead Twp3/31/14 123-47534 Warren Mead Twp

Hilcorp Energy Co 3 3/6/14 073-20403* Lawrence Mahoning Twp3/7/14 073-20428* Lawrence Pulaski Twp3/22/14 073-20432* Lawrence Pulaski Twp

Howard Drilling Inc 4 3/4/14 083-56029 McKean Wetmore Twp3/11/14 083-56021 McKean Wetmore Twp3/19/14 083-56022 McKean Wetmore Twp3/27/14 083-56028 McKean Wetmore Twp

KCS Energy Inc 3 3/7/14 123-47136 Warren Pleasant Twp3/12/14 123-47135 Warren Pleasant Twp3/18/14 123-47172 Warren Pleasant Twp

Lendrum Energy LLC 2 3/4/14 053-30411 Forest Harmony Twp3/10/14 053-30409 Forest Harmony Twp

MDS Energy Dev LLC 8 3/26/14 005-31196* Armstrong Bethel Twp3/27/14 005-31184* Armstrong Manor Twp3/24/14 005-31192* Armstrong North Buffalo Twp3/28/14 005-31167* Armstrong North Buffalo Twp3/24/14 005-31194* Armstrong South Buffalo Twp3/25/14 005-31193* Armstrong South Buffalo Twp3/10/14 005-31127* Armstrong Washington Twp3/20/14 005-31178* Armstrong Washington Twp

Minard Run Oil Co 2 3/6/14 083-56438 McKean Corydon Twp3/7/14 083-56326 McKean Hamilton Twp

Noble Energy Inc 1 3/24/14 125-27068* Washington West Finley TwpNTS Energy LLC 7 3/11/14 121-45604 Venango Cranberry Twp

3/17/14 121-45605 Venango Cranberry Twp3/18/14 121-45608 Venango Cranberry Twp3/19/14 121-45618 Venango Cranberry Twp3/24/14 121-45619 Venango Cranberry Twp3/26/14 121-45621 Venango Cranberry Twp3/31/14 121-45622 Venango Cranberry Twp

Penneco Oil Co Inc 2 3/18/14 059-26222 Greene Center Twp3/11/14 129-28783 Westmoreland Upper Burrell Twp

PennEnergy Resources LLC 6 3/4/14 019-22154* Butler Clinton Twp3/4/14 019-22155* Butler Clinton Twp

4 3/5/14 019-22156* Butler Clinton Twp3/25/14 019-22151* Butler Clinton Twp3/25/14 019-22152* Butler Clinton Twp3/26/14 019-22153* Butler Clinton Twp

Range Resources Appalachia 16 3/27/14 081-21370* Lycoming Cogan House Twp3/15/14 081-21408* Lycoming Cummings Twp3/15/14 081-21409* Lycoming Cummings Twp3/15/14 081-21360* Lycoming Cummings Twp3/13/14 081-21197* Lycoming Lewis Twp3/13/14 081-21198* Lycoming Lewis Twp3/13/14 081-21199* Lycoming Lewis Twp3/13/14 081-21200* Lycoming Lewis Twp3/11/14 125-27193* Washington Donegal Twp3/11/14 125-27300* Washington Donegal Twp3/11/14 125-27195* Washington Donegal Twp3/12/14 125-27194* Washington Donegal Twp3/12/14 125-27299* Washington Donegal Twp3/18/14 125-27331* Washington Somerset Twp3/18/14 125-27329* Washington Somerset Twp3/19/14 125-27330* Washington Somerset Twp

RE Gas Dev LLC 1 3/1/14 019-22197* Butler Middlesex TwpRemington Capital Holdings Inc 3 3/1/14 083-56246 McKean Eldred Twp

3/3/14 083-56247 McKean Eldred Twp3/4/14 083-56249 McKean Eldred Twp

Seneca Resources Corp 11 3/21/14 023-20160* Cameron Shippen Twp3/21/14 023-20163* Cameron Shippen Twp3/23/14 023-20162* Cameron Shippen Twp3/23/14 023-20164* Cameron Shippen Twp3/25/14 023-20161* Cameron Shippen Twp3/28/14 023-20165* Cameron Shippen Twp3/17/14 065-27046* Jefferson Heath Twp3/26/14 117-21684* Tioga Blossburg Boro

OPERATOR WELLS SPUD API # COUNTY MUNICIPALITY OPERATOR WELLS SPUD API # COUNTY MUNICIPALITY

ernstseed.comsales@ernstseed.com800-873-3321814-336-5191 (fax)

ResponsibleReclamationAn opportunity to restore diversity

Page 28 The PIOGA Press

3/29/14 117-21691* Tioga Blossburg Boro3/29/14 117-21692* Tioga Blossburg Boro3/31/14 117-21690* Tioga Blossburg Boro

SLT Production LLC 1 3/6/14 123-47440 Warren Sheffield TwpSouthwestern Energy Prod Co 17 3/31/14 015-22890* Bradford Stevens Twp

3/31/14 015-22891* Bradford Stevens Twp3/31/14 015-22769* Bradford Stevens Twp3/31/14 015-22770* Bradford Stevens Twp3/31/14 015-22889* Bradford Stevens Twp3/3/14 115-21646* Susquehanna New Milford Twp3/4/14 115-21645* Susquehanna New Milford Twp3/5/14 115-21644* Susquehanna New Milford Twp3/13/14 115-21287* Susquehanna New Milford Twp3/17/14 115-21598* Susquehanna New Milford Twp3/18/14 115-21599* Susquehanna New Milford Twp3/21/14 115-21499* Susquehanna New Milford Twp3/22/14 115-21497* Susquehanna New Milford Twp3/24/14 115-21500* Susquehanna New Milford Twp3/25/14 115-21498* Susquehanna New Milford Twp3/27/14 115-21501* Susquehanna New Milford Twp3/10/14 131-20369* Wyoming Tunkhannock Twp

Stateside Energy Group LLC 4 3/14/14 083-56455 McKean Lafayette Twp3/17/14 083-56459 McKean Lafayette Twp

3/21/14 083-56456 McKean Lafayette Twp3/27/14 083-56460 McKean Lafayette Twp

Susquehanna Expl & Prod LLC 1 3/5/14 021-21203 Cambria Elder TwpSylvan Energy LLC 1 3/1/14 121-45510 Venango Allegheny TwpTalisman Energy USA Inc 4 3/24/14 115-21558* Susquehanna Apolacon Twp

3/25/14 115-21485* Susquehanna Apolacon Twp3/26/14 115-21493* Susquehanna Apolacon Twp3/27/14 115-21492* Susquehanna Apolacon Twp

Titusville Oil & Gas Assoc Inc 1 3/28/14 053-30642 Forest Harmony TwpTrimont Energy LLC 5 3/6/14 121-45381 Venango Cranberry Twp

3/10/14 121-45378 Venango Cranberry Twp3/14/14 121-45379 Venango Cranberry Twp3/19/14 121-45380 Venango Cranberry Twp3/31/14 121-45577 Venango Cranberry Twp

US Energy Exploration Corp 1 3/31/14 019-22189 Butler Concord TwpVantage Energy Appalachia Ii 7 3/20/14 059-26303* Greene Center Twp

3/20/14 059-26310* Greene Center Twp3/20/14 059-26311* Greene Center Twp3/20/14 059-26312* Greene Center Twp3/6/14 059-26263* Greene Jefferson Twp3/15/14 059-26262* Greene Jefferson Twp3/15/14 059-26264* Greene Jefferson Twp

Vista Opr Inc 14 3/10/14 031-25641 Clarion Ashland Twp3/3/14 053-30571 Forest Harmony Twp3/5/14 121-45496 Venango Allegheny Twp3/6/14 121-45498 Venango Cranberry Twp3/8/14 121-45497 Venango Cranberry Twp3/10/14 121-45552 Venango Cranberry Twp3/11/14 121-45547 Venango Cranberry Twp3/12/14 121-45551 Venango Cranberry Twp3/13/14 121-45543 Venango Cranberry Twp3/14/14 121-45511 Venango Cranberry Twp3/17/14 121-45548 Venango Cranberry Twp3/18/14 121-45549 Venango Cranberry Twp3/19/14 121-45544 Venango Cranberry Twp3/3/14 121-45374 Venango President Twp

XTO Energy Inc 4 3/2/14 019-22205* Butler Butler Twp3/28/14 019-22221* Butler Jefferson Twp3/28/14 019-22222* Butler Jefferson Twp3/28/14 019-22149* Butler Oakland Twp

OPERATOR WELLS SPUD API # COUNTY MUNICIPALITY OPERATOR WELLS SPUD API # COUNTY MUNICIPALITY

CM HALL ASSOCIATES, INC.Manufacturer’s Representatives

Engineered Products for the Marcellus & Utica

Craig M. Hall

326 W. Pike Street PBV – Trunnion Ball Valves Canonsburg, PA 15317 USA CompressionOfc. 724.916.3070 Horizontal & Submersible PumpsCell: 724.747.6633 Kirk Key Interlockscraig@cmhallass.com GEA Heat Exchangers

www.cmhallass.com

www.safety-law.com

The Law Office of Adele L. Abrams PC focuses its practiceon defending employers in MSHA, OSHA and EPA litigationnationwide. Our 10 attorneys include Certified Mine SafetyProfessionals and Certified Industrial Hygienists who canevaluate citations, represent your company in settlementconferences, and be strong advocates for you in litigation.We provide safety training (MSHA Part 46 and 48), safetyand health audits, and program development and reviewservices. Our attorneys are admitted in PA, OH, MD, MI, DC,MT and SC, and many federal courts.

DDon’t go it alone …. call the pros!

301-595-3520

MSHA, OSHA orEPA Woes?

February 2014 Page 29April 2014 Page 29

Page 30 The PIOGA Press

Safety Committee CornerSafety Committee CornerIndustry comments onOSHA Process SafetyManagement inquiry

Last issue, Melissa Heike wrote about the OccupationalHealth and Safety Administration’s Process SafetyManagement (PSM) standard and the agency’s inquiry

into whether the chemical-safety program should be updated toinclude the areas of oil and gas well drilling and servicing andoil and gas production facilities. We now want to provide someresponse to the OSHA call for comments from two nationalindustry groups—the Independent Petroleum Association ofAmerica (IPAA) and the American Exploration and ProductionCouncil (AXPC).

Here is what the two organizations had to say in their March31 comments to OSHA:

The Associations’ member companies fully share OSHA’scommitment to workplace safety and support its’ efforts toidentify revisions to its standards which are “necessary tomeet the goal of preventing major chemical accidents”.Their facilities, well sites and other US land work locationsare subject to the Occupational Safety and Health Act andcould be affected by potential revisions/updates to the PSMstandard.

The Associations’ member companies do not believe that(1) revising the PSM standard to eliminate the exemption forflammable liquids in atmospheric storage tanks; (2) revisingthe PSM standard to eliminate the exemption for oil and gas

well drilling and servicing operations; and/or (3) a resump-tion of enforcement of the PSM standard at oil and gas pro-duction facilities are an appropriate method to prevent majorchemical accidents.

Flammable liquids in atmospheric storage tanks associat-ed with E&P facilities (such as crude oil tank batteries) donot have the potential for catastrophic release due to theirlimited volume. These tanks are already regulated underOSHA’s flammable liquids and other standards. As such,further regulations are unnecessary. This position is support-ed by OSHA, which stated the exemption for flammable liq-uids in atmospheric storage tanks “is reasonable and appro-priate” (refer to OSHA’s “Summary and Explanation of theFinal Rule”).

The PSM standard was never intended to be applied to oiland gas well drilling and servicing operations. These opera-tions are and should remain exempt from the PSM standard.The rationale for this exemption being “OSHA continues tobelieve that oil and gas well drilling and servicing opera-tions should be covered in a standard designed to addressthe uniqueness of that industry” (refer to OSHA’s “Summaryand Explanation of the Final Rule”). No changes have beenmade—or proposed—to the PSM standard to address theunique nature of oil and gas well drilling and servicing oper-ations. Without such changes, the Associations believe appli-cation of the PSM standard (which was written for processfacilities) is not an effective or efficient way to manage theunique risks associated with oil and gas well drilling andservicing operations. Instead, any additional regulationsshould be determined through a separate rulemaking effortinvolving appropriate stakeholders.

In the RFI OSHA states that “In a March 7, 2000, letterto [the American Petroleum Institute], OSHA conceded thatthe original economic analysis for the PSM standard did notinclude oil- and gas-production operations, and stated fur-ther that the Agency would suspend enforcement of the PSMstandard for oil- and gas-production operations until it per-formed the analysis. OSHA is considering completing thisanalysis so that it can resume enforcement of the PSM stan-

dard for oil- and gas-production facilities”. An over-whelming majority of oil and gas production facilitiesassociated with the Associations’ member companieswould be considered “normally unoccupied remote facili-ties” (NURF) as defined in the PSM standard. OSHA pre-viously stated that it believes that the present OSHA stan-dards adequately address the chemical hazards presented inthese work operations (refer to OSHA’s “Summary andExplanation of the Final Rule”). The results of the pro-posed economic analysis are dependent on the definition of“normally unoccupied remote facilities”. Prior to initiatingsuch an analysis, the Associations request that OSHA workwith industry to develop an appropriate definition forNURF (specifically as it applies to oil and gas productionfacilities) to be used in such an analysis. ■

February 2014 Page 31April 2014 Page 31

Leader in Pit Liners, Frac Tank Liners & Pads

Stock readily availableFrac Tank Liners

• Large prefabricated one-piece liners • Durable, economic, and proven • No on-site seaming required • Superior resistance to brine, frac fluids, and chemicals

Other Products • Frac Tank Pads • Well Pad Liners • Pit Liners • Secondary Containment

ONE-DAY SHIPPING TO MARCELLUS AND UTICA

OH PANew distribution center in

Weirton, WVWV

LayfieldGroup.com/OilandGas

Call Layfield 304.975.2507

MARCELLUS / UTICA SHALE FORMATIONS

Emissions drop for unconventional operations

The Department of Environmental Protection early thismonth released annual emissions data for the natural gasdrilling industry, and the results showed a decline in many

of the categories measured. The inventory represents 2012 emis-sions levels from Marcellus Shale natural gas production andprocessing operations as well as compressor stations that receivegas from traditional oil and gas well sites.

For the 2012 inventory, data reported to DEP came from 56Marcellus Shale operators covering 8,800 natural gas wells and70 operators of 400 compressor stations, which received gasfrom Marcellus Shale and traditional oil and gas well sites. Newto this round of reporting were 250 additional compressor sta-tions that process gas from traditional well sites. These compres-sor stations were not required to report in 2011.

The totals reported for the 2012 natural gas emissions inven-tory include:

• 16,361 tons of nitrogen oxides, a 1.09 percent decrease from2011.

• 101 tons of sulfur dioxide, a 17.21 percent decrease from2011.

• 7,350 tons of carbon monoxide, a 7.27 percent increase from2011.

• 548 tons of particulate matter (PM) 2.5, an 8.51 percentincrease from 2011.

• 600 tons of PM10, a 3.99 percent increase from 2011.• 4,024 tons of volatile organic compounds, a 42.70 percent

increase from 2011.

Significantly, since 2008, when unconventional drilling acrossthe state began quickly increasing, cumulative air contaminantemissions across the state have continued to decline. In particu-lar, sulfur dioxide emissions from electric generating units havebeen reduced by approximately 73 percent. The emissions ofnitrogen oxides and particulate matter have also been reduced byapproximately 23 percent and 46 percent, respectively, from thissector.

PIOGA President & Executive Director Lou D’Amico issuedthe following statement on behalf of the association in responseto the emissions report:

“The results of comprehensive air emissions data fromPennsylvania’s natural gas industry continue to tell a remarkablestory of improvements in the environment and public health inthe state in just five years of increased production and utilizationof natural gas. The facts are that the industry’s operations con-tribute very little to ambient air pollution, and the product beingextracted through those operations is at the core of the improve-ments we have seen in the national ambient air quality standardssince 2008. The coupling of these significant strides in air qualitywith the production of a clean energy source is unprecedented inPennsylvania’s history, and will continue as more natural gas isused to meet our energy needs.”

To view the emissions inventory, visit www.dep.state.pa.usand click “Air” and then “Bureau of Air Quality.” ■

Page 32 The PIOGA Press

Agency addressed industry concerns

Judge dismisses PIOGAsuit against Forest Service

Afederal judge has declared that a PIOGA challenge of theAllegheny National Forest (ANF) management plan ismoot since the U.S. Forest Service has taken steps to

address the industry’s concerns.The lawsuit, Pennsylvania Oil & Gas Association v. U.S.

Forest Service, was filed after the Forest Service in 2007 issuedrevisions to the ANF land and resource management plan thatcontained a new section imposing numerous conditions anddesign standards on oil and gas operations in the half-million-acre national forest. Because 93 percent of the ANF’s subsurfaceis privately owned, industry challenged the new oil and gas pro-visions, arguing that the Forest Service did not have the right toplace conditions on operators’ access to their mineral holdings.PIOGA’s predecessor organization also objected to the fact thatthe oil and gas section, not present in the draft version, wasinserted into the final plan without opportunity for public com-ment.

The revisions to the forest plan—along with the notorious2009 legal settlement with environmental organizations that ledto the moratorium on drilling in the ANF that was successfullychallenged in Minard Run Oil Co. and POGA v. U.S. ForestService, et al.—signaled a change in the cooperative relationship

between producers and ANF mangers that stretched back nearly30 years. Under the terms of the 1980 agreement in UnitedStates v. Minard Run, a process was established in which theForest Service would review an operator’s plans for develop-ment, cooperatively negotiate over any changes forest mangersbelieved were needed to protect surface resources and then for-malize any agreements in a document known as a notice to pro-ceed.

In February 2008, the chief of the Forest Service issued anappellate decision in which he agreed that the oil and gas provi-sions of the 2007 forest plan had been adopted with proceduralviolations, and he directed the ANF management to:

• Reopen the oil and gas section of the plan for public com-ment.

• Clarify the national forest’s authority to manage oil and gasactivity; identify the roles and responsibility of the ForestService, state officials, and oil and gas operators in protectingsurface resources; distinguish how management of reserved andoutstanding rights may vary depending on the language of indi-vidual deeds; and make any necessary changes to the forest plan.

• Document the cumulative effects of oil and gas developmenton ANF air quality.

ANF managers solicited public comments on the issues raisedby the chief and in July 2009 issued a draft supplemental envi-ronmental impact statement. However, before taking any furtheraction, then-U.S. District Chief Judge Sean McLaughlin issuedthe first in a series of rulings favorable to PIOGA’s position inthe other case, Minard and PIOGA v. U.S. Forest Service, order-ing the Forest Service to return to processing drilling proposals“in the same form and manner in which they had been prior tothe inception of the drilling ban and consistent with the proce-dures set forth in [the 1980 Minard Run case].”

Subsequent rulings by McLaughlin in federal district court inErie, as well as the U.S. Court of Appeals for the Third Circuitin Philadelphia, have come down on the side of oil and gas oper-ators. Essentially, the courts have declared that the Forest Servicedoes not have the authority impose National EnvironmentalPlanning Act (NEPA) requirements on oil and gas developmentoccurring on privately held subsurface properties (JanuaryPIOGA Press, page 17).

In his February 21, 2014, decision in Pennsylvania Oil & GasAssociation v. U.S. Forest Service, federal District Judge MarkHornak noted that as a result of the rulings in PIOGA’s othercase, “defense counsel suggested at a recent status conferencethat the Forest Service has now abandoned any intent to modifythose long-standing oil and gas protocols.”

Judge Hornak wrote that because the Forest Service had vol-untarily ceased its illegal activity and asserted that it had noplans of making changes to oil and gas policy, the case was ren-dered moot. However, the judge dismissed the case “withoutprejudice,” stating that industry could challenge any new ForestService attempts to impose new criteria on oil and gas opera-tions. ■

Lies Distort.Facts Matter.

April 2014 Page 33

Well Pad Site DesignPipeline Route Design

Compressor & Metering Station SitesWater Withdrawal & Impoundment Permitting

Land Surveying Roadway & Bridge Engineering

Environmental ServicesConstruction Management & Inspection

1500 Sycamore Rd., Suite 320Montoursville, PA 17754570-368-3040www.mctish.com

Additional OfficesAllentown, PAPittsburgh, PA

The Department of Environmental Protection has awarded$7.7 million in Act 13 funding to 25 companies andorganizations making the switch to natural gas for their

heavy-duty fleet vehicles.Among other things, Act 13 authorized DEP to develop and

implement the Natural Gas Energy Development program, fund-ed by impact fees paid by natural gas operators. The programwill distribute up to $20 million in grants over three years to helppay for the incremental purchase and conversion costs of heavy-duty natural gas fleet vehicles.

For this second round of the program, announced March 21,DEP received requests from 37 applicants seeking more than $10million in grants. A portion of funding was reserved for localtransportation organizations, as required by the act. The firstround awarded $6.3 million to 19 companies and organizations.The third and final round is slated to open in late summer.

Eligible vehicles for all three rounds of the Natural GasEnergy Development program include those fueled with com-pressed natural gas (CNG), liquefied natural gas (LNG) or bi-fuel vehicles weighing 14,000 pounds or more. Grant requestscannot exceed 50 percent of the incremental purchase or retrofitcost per vehicle or a maximum total of $25,000 per vehicle.

DEP recently announced the March 1 opening of theAlternative Fuel Incentive Grant (AFIG) program, providing anestimated $8 million to help companies and organizations pur-chase or convert CNG, LNG or bi-fuel vehicles weighing 26,000pounds or less, as well as electric, propane or other alternativefuel vehicles of any size. Applications are also being acceptedfor innovation technology projects that include research, training,development and demonstration of new applications or nextphase technology related to alternative transportation fuels andalternative fuel vehicles.

To learn more about AFIG and Act 13 grant programs, visitwww.dep.state.pa.us and click on the “Natural Gas Vehicle GrantProgram” button on the homepage.

Here’s a county-by-county list of the grant recipients:Allegheny—Giant Eagle, purchase 20 CNG vehicles,

$300,000; Freight Equipment Leasing LLC, purchase six CNGtractor trailers, $150,000.

Beaver—Beemac Trucking LLC, purchase 20 CNG tractortrailer trucks, $500,000.

Blair—Burgmeiers Hauling, purchase six CNG refuse trucks,$138,955.

Bucks—Constructural Dynamics, purchase 20 CNG concretemixer trucks, $500,000.

Butler—Butler Area School District, purchase 30 CNG schoolbuses, $300,000.

Centre—Centre County Commissioners, Centre AreaTransportation Authority, State College Borough and Penn StateUniversity, purchase 10 CNG vehicles, $165,872.

Clearfield—“O” Ring CNG Fuel Systems LP, Paris Companiesand Advanced Disposal, convert five trucks to dual fuel and pur-chase 20 CNG waste hauling trucks, $498,220.

Clinton—Clinton County Solid Waste Authority and WayneTownship, convert 14 CNG vehicles for use at the WayneTownship Landfill, $299,974.

Delaware—PreFlight LLC, purchase 10 CNG shuttle buses,$122,500; Rose Tree Media School District, purchase 12 CNGschool buses, $300,000; Aqua Pennsylvania, purchase nine CNGdump trucks, $225,000.

Cumberland—Giant Food Stores LLC, purchase five LNGtrucks, $125,000.

Lackawanna—L.T. Verrastro, purchase 20 CNG trucks,$416,110.

Lancaster—Lancaster County Solid Waste ManagementAuthority, City of Lancaster and Goods Disposal Service, convertfive trucks to CNG and purchase five CNG vehicles, $213,995.

Luzerne—Schneider Resources, purchase six CNG trucks,$150,000.

Montgomery—Advanced Disposal Services Solid Waste ofPA, convert 20 waste hauling vehicles to CNG, $472,115.

Philadelphia—Greater Philadelphia Clean Cities and UnitedParcel Service, convert 20 long haul trucks to LNG, $500,000;Greater Philadelphia Clean Cities, Pennsylvania American Waterand Pennsylvania Turnpike, convert 23 vehicles to CNG,$418,650; Neapolitan Express Operating LLC, purchase 20 CNGmobile food trucks, $250,000.

Schuylkill—Penske Truck Leasing, purchase 23 CNG vehi-cles, $499,997.

Washington—Mid Mon Valley Transit Authority, purchase fiveCNG commuter buses, $125,000.

Wyoming—Kane Freight Lines, purchase 10 CNG trucks,$250,000.

York—Hogan Transports, purchase 20 CNG transport trucks,$500,000.

Multiple locations—Waste Management of Pennsylvania,purchase seven CNG solid waste collection vehicles for its ErieCounty location, with an additional 13 CNG solid waste collectionvehicles for its Washington County location, $300,000. ■

DEP awards 25 grants for natural gas vehicle conversion

Page 34 The PIOGA Press

EPA land grab? Agency claims authority over more streams, wetlandsThe following was published March 25 by FoxNews.com. Tolearn more about the proposed regulations, go to www.epa.gov/uswaters.

In what critics are describing as a government land grab, theEnvironmental Protection Agency proposed a change March25 to the Clean Water Act that would give it regulatory

authority over temporary wetlands and waterways. The proposal immediately sparked concerns that the regulato-

ry power could extend into seasonal ponds, streams and ditches,including those on private property.

“The ... rule may be one of the most significant private prop-erty grabs in U.S. history,” said Louisiana Senator David Vitter,the top Republican on the Senate Environment and Public WorksCommittee.

The EPA proposal would apply pollution regulations to thecountry’s so-called “intermittent and ephemeral streams and wet-lands”—which are created during wet seasons, or simply after itrains, but are temporary.

At issue is whether the smaller streams and wetlands areindeed part of the “waters of the United States.”

The Supreme Court ruled on the issue in 2001 and 2006. Thesecond ruling restricted the federal government’s authority bystating such waters must be “relatively” permanent or continu-ously flowing and sizeable, like “oceans, rivers, streams andlakes.”

In defending the proposed change, the EPA and the ArmyCorps of Engineers said on March 25 that determining CleanWater Act protection for streams and wetlands became “confus-

ing and complex” following the high court decisions. “For nearly a decade, members of Congress, state and local

officials, industry, agriculture, environmental groups, and thepublic asked for a rulemaking to provide clarity,” the agenciessaid in a joint statement.

They also argued such waters “form the foundation of thenation’s water resources” and the changes would not extend thefederal government’s reach. “To be clear, our proposal does notadd to or expand the scope of the waters historically protectedunder the Clean Water Act,” EPA Administrator Gina McCarthysaid in a video accompanying the announcement.

The EPA also said roughly 60 percent of “stream miles” inthe country only flow seasonally or after rain but have a “consid-erable impact” on downstream waters—and that about 117 mil-lion Americans, or one in three, get their drinking water frompublic systems that rely in part on such streams.

The proposal is now subject to a 90-day comment period inwhich federal officials vowed to conduct a “robust” public out-reach effort that will include discussions across the country togather the input needed “to shape a final rule.” The agencies saidthe proposed change is supported by the latest peer-reviewed sci-ence.

However, Vitter accused the EPA of “picking and choosing”its science while trying to “take another step toward outright per-mitting authority over virtually any wet area in the country.”

He also warned the proposed change, if approved, would openthe door for more environmental groups suing private propertyowners.

Senator Lisa Murkowski (R-Alaska) echoed those concerns,saying the change “could result in serious collateral damage toour economy.”

“[I]t appears that the EPA is seeking to dramatically expandits jurisdictional reach under the Clean Water Act,” she said in astatement. The senator added that the change could have a hugeimpact on Alaska.

“If EPA is not careful, this rule could effectively give the fed-eral government control of nearly all of our state—and prove tobe a showstopper for both traditional access and new develop-ment,” she said. ■

New DRBC executive director

Anew executive director will assume the helm of theDelaware River Basin Commission in August, and manyare wondering whether the change in leadership will lead

to the end of the long-standing moratorium on natural gas devel-opment in the four-state area under the DRBC’s purview.

Steven Tambini is vice president for operations withPennsylvania American Water and has had a long career withAmerican Water, a major water and sewer utility, working previ-ously in Missouri and New Jersey. He is a registered professionalengineer who also serves as a board member of the WaterResources Association of the Delaware River Basin, a nonprofitgroup of businesses and utilities with water management inter-ests in the basin.

Tambini takes over August 1, following the recent retirementof Carol Collier. ■

February 2014 Page 35April 2014 Page 35

Meeting shows big supportfor Deer Lakes Parkshale developmentBy Joe MassaroEnergy In Depth

Aplan to develop the Marcellus Shale beneath Deer LakesPark has been a heated topic of discussion in Pittsburghover the last few months. Why it’s a heated discussion is

unclear, though – especially since, according to the lease summa-ry, “no drilling activity to extract oil, natural gas and otherhydrocarbons shall be conducted anywhere on the surface ofDeer Lakes Park.”

Yes, you read that correctly. The only disturbance to the parkwill be a horizontal lateral that will run under the 1,180 acres ofDeer Lakes Park—7,000 feet below the surface. Any wells need-ed to be developed in the area will be on private property, whichhas already been leased and ready to move forward with devel-opment.

At a recent public meeting, Range Resources provided anoverview of the company’s plans to develop near Deer LakesPark including a step by step time frame of the developmentprocess:

• Getting the wells permitted and developed takes about twoyears.

• Before any dirt is moved there will be pre-drilling watertests done in the area.

• Once all permits are in place a well pad will be built• A drilling rig will move in to drill the wells (2-4 weeks per

well).• Hydro-fracturing crew will come on site and stimulate the

well (2-3 days per well).After the overview of the project, the floor was opened up to

public comments from many of those involved in the process.The comments provided were positive overall. For example:

Nancy Mills, Democratic State Committee / Moon TownshipPlanning Commission:

“Subsurface drilling has not been an issue in MoonTownship and I am surprised to see that it is here.Marcellus Shale is a reality and we as residents of ourlocal townships, our county, and our state have an obliga-tion to make sure that the drilling is safe, supervised andregulated. This is best achieved by having the Countyinvolved in the process.”

Gerry Vaerewyck, West Deer Supervisor:“When we look this lease the county has been able to setmany standards and goes well above and beyond whatwe expected to see from the state. We also need repairs tothis park, many of the structures in the park at this timeshould be condemned and demolished. This is a pointwhere we have an opportunity to really improve ourpark for the citizens in the community.”

Ken Gulick, Landowner where proposed Deer Lakes Parkwells will be developed:

“As a landowner I can tell you that the decision to leasewas not an easy one. We talked to industry representa-tives, landowners who currently have wells and did exten-

sive investigation on our own regarding industry practicesand environmental impacts. After all the research we feelthat this development is safe.”

Out of everyone who spoke at informational meeting one per-son stuck out the most: Jeanne K. Clark. Clark is an environmen-tal professional and activist. She is the co-founder of Women fora Healthy Environment, and founded the EnvironmentalCommunications Center of Western Pennsylvania, and lastly, for13 years Clark was the director of communications atPennFuture. After reading through the litany of green projectsshe has worked on over the years, Clark told the crowd why sheis supportive of the Deer Lakes Park Lease:

“It is with this professional and personal background, as adyed in the wool environmentalist, I am here to supportthe lease and development of Deer Lake Park. I believethe lease agreements for this project provide full protec-tions for the park, the people and the communities aroundthe park, this will protect the park. In my analysis I haverelied on science, the law and primary criteria of decisionmaking….. This agreement is a win-win-win-win, it pro-vides advanced environmental protections, major finan-cial benefits and good paying jobs all the while, protect-ing the park.”

The proposed lease would bring in a $4.7 million bonus to thecounty, along with $3 million for park improvements and 18 per-cent royalties once the wells begin to produce. This influx ofmoney will go right into the local municipalities and be spent asneeded, which means an upgrade to park infrastructure, all with-out a single well being developed on park property.

In addition, Marcellus Shale development is helping toimprove our region’s air quality. A recent report by theDepartment of Environmental Protection credited Marcellusshale development for declining air emissions in the region.County Executive Rich Fitzgerald even stated,

“For the first time every single air monitor in AlleghenyCounty came under the PM 2.5 since the industrial revo-lution.”

(PM 2.5 is a form of particulate matter that has been linked torespiratory health problems.)

Leasing Deer Lakes Park will benefit the environment, makeus less reliant on energy imports and give us more access tocleaner burning natural gas right here in southwest Pennsylvania.Like Jeanne Clark said, this is a win-win-win-win for the countyand its residents. ■

Powelson confirmedAs a follow-up to an article from last issue, the state

Senate has unanimously confirmed Robert F. Powelson to hissecond five-year term on the Pennsylvania Public UtilityCommission. Powelson has served as PUC chairman sinceFebruary 2011. He was first nominated by former GovernorEd Rendell in 2008 and was re-nominated for a five-year termin 2009. A Delaware County native, Powelson previouslyserved as the president of the Chester County Chamber ofBusiness & Industry.

RJR Safety Inc.

RJR Safety Inc. was founded in its current location ofClaysville by Wayne Vanderhoof, CSP, beginning operations inFebruary 2008 to serve the small- to medium-sized manufac-turing industry in southwestern Pennsylvania. In December2008, RJR Safety began working with the oil and gas industryand by January 2009 was a member of PIOGA (IOGA of PAat the time) and began actively serving on the association’sSafety Committee.

RJR Safety, with its two full-time consultants and numeroussub-consultants, provides occupational safety services rangingfrom being the contracted safety professional for small- tomedium-sized operators and contractors to providing safetytraining as required by OSHA regulations, API RecommendedPractices, operator requirements and industry best practices.

RJR Safety partners with companies to assist in their effortsto improve worker safety, to reduce injuries and protect com-pany profits by providing services such as:

Consultations on specific safety and health issues/chal-lenges.

• Development and maintenance of ISNetWorld/PECSSQ/PICS/other similar databases.

• Safety staff/safety professional on an as-needed basis on-site during operations or specific operations.

• Audits and third-party audits.• DOT-related services including D&A programs, fleet man-

agement and DOT compliance assistance.• Incident investigations and root cause analysis.• Safety program/procedures/management system develop-

ment and implantation.

• Development of injury prevention programs.• OSHA compliance assistance.RJR Safety Inc. provides safety training such as:• OSHA-required compliance training• SafeLand USA (PEC & IADC Rig Pass & WVU

AWARE).• Hydrogen sulfide safety (ANSI).• NGL/condensate safety.• OSHA outreach training 10 & 30 hour courses for general

industry and construction industry.• American Red Cross standard first-aid/CPR with AED.• Customized safety and health training.RJR Safety has been positively impacted by the oil and gas

industry in the Appalachian Basin, as about 90 percent of ourpartners and clients are related to the oil and gas industry inPennsylvania, West Virginia and Ohio. We have built our repu-tation and company around providing the industry operatorsand service companies/contractors with services that they wantand need such as customized workable safety procedures andsystems that are usable and applicable to their operations, reg-ularly scheduled training classes, and customized trainingoptions according to their specific operations.

The website for RJR Safety Inc. is www.rjrsafety.com. Youcan contact Wayne Vanderhoof at wayne@rjrsafety.com or724-809-4234, or Jackie Kuntz at jackie@rjrsafety.com or 412-780-5597.

Page 36 The PIOGA Press

Physical and Hedging Expertise for the O&G Industry

Art Cipriani Frank Kronz Phill Sabol

www.asset-risk.com Phone: 412-886-1800

Houston Pittsburgh Chicago Denver

Upstream | Midstream | DownstreamSurveying | Engineering | Environmental | GIS

Steve Boddecker Vice President

Oil & Gas Services814-450-9316

Southpointe | canonsburg, PA

www.fisherassoc.com

OIL & GA S

www.hdrinc.com

Facilities and Infrastructure Services

Environmental Services

Construction Services

Support Services

Forward Thinking

Pittsburgh 412.497.6000

PIOGA Member Profile

April 2014 Page 37

PIOGA Member Profiles

Introduce your company and tell other members what youoffer to Pennsylvania’s oil and gas industry. The guidelinesfor making a PIOGA Member Profile submission are as fol-

lows:• Include a brief history of your company. When and where

was it founded, and by whom? Is the company new to the oil andgas industry in general or to Pennsylvania?

•Describe the products and services you offer specifically forthe oil and gas industry. Do you have a product in particular thatsets your company apart from the competition, or a new productyou would like to make the industry aware of?

•If applicable, tell how the business been positively impactedby Pennsylvania’s oil and gas industry? Have you expanded,added employees or opened new locations?

•Include a website address and/or phone for readers to use.

•Your submission may be a maximum of 400-450 words andshould be provided as a Word document. Use minimal format-ting—bold and italic fonts are OK, as are bulleted or numberedlists. Your submission is subject to editing for length, clarity andappropriateness.

• Include your company logo or a photo. Images must behigh-resolution (300 dots/pixels per inch or higher) and in anycommon graphics format. Please include identifications for anypeople or products in a photo. Send image files separately, notembedded in your document.

Email material to Matt Benson at matt@pioga.org. Your sub-mission will be confirmed on receipt, and we will use submis-sions in the order in which they are received. This is a free serv-ice to our member companies and publishing dates are at the dis-cretion of PIOGA. If you have questions or want to follow up ona submission, email Matt or call 814-778-2291. ■

Need an intern or a temporary employee?

PIOGA was contacted recently by a member on behalf of ayoung man—we’ll just refer to him as Josh, his firstname—graduating in May with a degree in petroleum and

natural gas engineering from Penn State. What sets Josh apartfrom his peer group, the member told us, is that six monthsafter graduation he will be entering the U.S. Marine Corps andheading to The Basic School (TBS). The program is for newlyminted second lieutenants to continue their officer training.

What Josh is pursuing is a “temporary” job or a longer-terminternship to acquire some industry experience with an oil andgas operator, supplier, service company, etc., from the time hegraduates on May 19 to when he has to report to TBS, whichwill be on November 28. If you can help, contact Matt Benson(matt@pioga.org) or Danielle Boston (danielle@pioga.org), andwe will forward Josh’s resume and contact information.

PIOGA Career CenterWhich brings us to the Careers section of our website. If you

weren’t aware of it, this area of the site both allows companiesto post open positions (at no charge) or to view resumes submit-ted by job seekers. To have a look, go to www.pioga.org anduse the Careers drop-down menu at the top of the page.

We hope you will take advantage of these resources whenseeking qualified applicants to fill open positions.

Page 38 The PIOGA Press

PIOGA member news

Members earn accolades atOil & Gas Awards’ Northeast gala

Aslew of PIOGA member companies earned recognitionfor their work in the Northeast at the Oil & Gas Awardsdinner on March 20 in Pittsburgh. The Northeast awards

are a platform for the oil and gas industry to demonstrate andcelebrate the advances made in the key areas of environmentalstewardship, efficiency, innovation, corporate social responsibili-ty, health and safety.

Congratulations to these PIOGA members who received acco-lades as 2013 Northeast Oil & Gas Awards winners:❐ Award for Drilling Excellence – Baker Hughes❐ Recruitment Agency of the Year – Drill Baby Drill Staffing❐ Award for Excellence in Corporate Social Responsibility –

Range Resources Corporation❐ The Preferred Technology Award for Excellence in Well

Completion – FTS International❐ Consultancy of the Year – McTish, Kunkel & Associates❐ Award for Excellence in Environmental Stewardship by

an E&P Company – Anadarko Petroleum Corporation❐ General Industry Service Award – Resource Environmental

Solutions❐ Water Management Company of the Year – Hydro

Recovery LP

❐ Engineering Company of the Year – Civil & EnvironmentalConsultants, Inc.

❐ Award for Excellence in Health and Safety – Operational– Range Resources Corporation

❐ New Technology of the Year – Software Application –TEEMCO

❐ The IPS Engineering / EPC midstream Company of theYear – NiSource Midstream Services

❐ Oilfield Service Company of the Year – Halliburton❐ Industry Supplier of the Year – Total Equipment Company❐ The TEEMCO E&P Company of the Year – Range

Resources Corporation

Goodspeed, Mahlon Kirk

Our condolences go out to the family of Mahlon Kirk, 82, ofIndiana, who died April 2 at his home in Indiana. Mahlon had along career in the oil and gas industry. He had worked for SandSuveys in Indiana, Gearhart Industries in Texas, HalliburtonServices and Kriebel Gas in Indiana. He is survived by a daugh-ter, two grandchildren and a daughter. He was preceded in deathby his wife, Ressie, in 2012.

Former FERC chairman joins Steptoe & Johnson

Bradley A. Smith, who served on the Federal EnergyRegulatory Commission from 2000-2005 and was chairman in200, has joined Steptoe & JohnsonPLLC in the firm’s Columbus,Ohio, office. Smith will focus hispractice in the areas of PoliticalLaw and Government Relationsfrom the firm’s Columbus office.

Smith is currently a law profes-sor for Capital University, and is avisiting professor for the WestVirginia University College ofLaw. In addition to his professor-ship, Smith maintains an activeappellate legal practice in Columbus as well as Washington, D.C.He is best known for his knowledge of politics, particularly inthe campaign finance, lobbying, and election law areas. TheNew York Times has described Smith as the “intellectual power-house” behind the changing campaign finance legal landscape,including the creation of Super PACs. He is a frequent guest ontelevision and radio discussing campaign finance. He hasappeared on television networks including NBC, ABC, MSNBC,

Pictured from left: Daniel Creasy, CEO of the Oil & GasAwards; Terri Rodgers, partner and general manager of DrillBaby Drill Staffing; and Dawn Griffith, DBD recruiter.

February 2014 Page 39April 2014 Page 39

R.L. Laughlin & Co., Inc.“Providing Gas Measurement Services Since 1970”

t Site Automation t Electronic Chart Integration

t Meter Sales t Meter Installations

t Gas Analysis t Calibrations & Repairs

NOW SERVING YOU IN 3 LOCATIONS:

125 State Rt. 43 5012 Washington St., W.

Hartville, OH 44632 Charleston, WV 25313

330-587-1230 304-776-7740

2895 Maysville Pike

Zanesville, OH 43701

740-297-8061

Fox News, C-Span, and others. His writings have been featuredin some of the widest circulated newspapers in the U.S. includ-ing The Los Angeles Times, The New York Post, The Wall StreetJournal, and The Washington Post. He has testified beforeCongressional committees on issues including lobbying, elec-tions, and regulation of political action committees.

Curry Supply Company and Reading Truck Bodyannounce partnership

Curry Supply Company and Reading Truck Body, LLCrecently announced a strategic partnership that will allow CurrySupply to extend its commercial vehicle line-up into the light-and medium-duty service truck category, providing moreresources, expanded product portfolios and market reach for cus-tomers.

Extending an already-successful product line with a comple-mentary offering was top-of-mind, when Curry Supply consid-ered the advantages of a partnership. “Curry Supply Companyand Reading Truck Body both have solid reputations of provid-ing top quality products in their respective segments,” said JasonRitchey, President of Curry Supply Company. “Joining forceswith Reading Truck Body in this category will extend our portfo-lio of vocational bodies. We are excited about the opportunitiesthis partnership presents for both companies.”

For Reading Truck Body, a leading manufacturer of vocation-al truck bodies, the decision to partner with Curry Supplyaligned with goals to strengthen the company’s distribution chan-nel.

LDG surveyors on the road to environmentalstewardship

Larson Design Group’s surveying department has demonstrat-ed its commitment to sustainability with the purchase of a CNG-powered truck to be used for the department’s field work. Thetruck, a 2014 Dodge Ram 2500, has dual fuel capability and willfurther the company’s aim to capitalize on the economy, efficien-cy, and environmental advantages of Natural Gas Vehicles(NGVs).

Christopher Iachini, Director of Surveying for Larson DesignGroup, explained the benefits of the purchase. “We’ve beenfocused on environmental sustainability for a while now. Oursurvey crews conduct field work across the state, and this truckwill allow them to operate in a cleaner, more environmentallyfriendly manner,” he said. “It’s an added benefit that natural gasis cheaper than conventional gas,” he noted.

“LDG has joined the wave of early adapters of NGVs—anational movement that is changing America,” said Matt Nealis,LDG CNG Engineer. “We’ve been a part of the movement asengineers designing CNG stations and garage modifications; nowwe’re joining it as users of NGVs.”

Three-peat for Avision Young

After competing against a wide range of companies nation-wide to win the Canada’s Best Managed Companies award in2011 and 2012, Toronto-based commercial real estate servicesfirm Avison Young requalified in 2013 to maintain its status as aBest Managed company. The prestigious national award is spon-sored by Deloitte, CIBC, National Post, Queen’s School ofBusiness and MacKay CEO forums.

Avison Young is the world’s fastest-growing commercial realestate services firm. Over the past five years, the company hasgrown from 11 to 54 offices and from 300 to more than 1,500real estate professionals across Canada and the U.S. ■

Matt Nealis (left) and Doug Marquardt stand with LDG’s newCNG-fueled survey truck.

“PA Independent Oil and Gas Association”

Page 40 The PIOGA Press

ly put many of these small businesses out of business. Thiswould clearly harm a long-standing core of Pennsylvania’s econ-omy without justification and is unacceptable by any measure.”

PIOGA’s primary concerns with the regulations include thefollowing:

1. The regulations were not complete when they were sub-mitted to EQB for publication. In May 2013, TAB asked DEPnot to submit the package to the EQB as a proposed regulationbecause it was incomplete, with significant portions of the pro-posal unresolved.

Additionally, DEP had just formed four working groups underTAB to address unresolved issues related to public resource pro-tection and special concern species, waste management at wellsites, pre-hydraulic fracturing assessment (abandoned and orphanwells), and water supply restoration standards. The DEP-createdgroups did not complete their work before the department sub-mitted the package to EQB in August 2013 as a proposed regula-tion. The department made no changes to the package basedwork the TAB subcommittees had accomplished.

2. The recent Pennsylvania Supreme Court decision inRobinson Twp. et al. v. Commonwealth et al. raises substantialquestions about the EQB’s authority to promulgate any newrules pursuant to Act 13 Section 3215 (public resources). Thecourt struck down provisions in Section 3215 giving DEP theauthority to grant waivers from well setback requirements fromsurface waters and wetlands, ruling that the law gave the depart-ment insufficient guidance on when waivers would be appropri-ate (January PIOGA Press, page 1).

The court also held that Section 3215(d), allowing DEP toconsider comments from municipalities in its permit decision-making process, is unconstitutional, and that Sections 3215(c),listing public resources to be considered, and 3215(e), requiringthe EQB to develop criteria for DEP to use in conditioning wellpermits based on public resources, were enjoined from enforce-ment to the extent that they apply to sections that were declaredunconstitutional.

In its application for reconsideration, DEP questioned the sta-tus of its authority to impose permit conditions regarding publicresources as a result of the Supreme Court ruling, but Sections78.15(b) through (g) of the proposed Chapter 78 regulations con-tain such provisions.

3. The proposed well permit application requirementsrelated to public resources create unauthorized and unneces-sary burdens on permit applicants. PIOGA argues that in theproposed Section 78.15, DEP has no scientific or factual basis toimpose obligations on operators to protect “special concernspecies,” which are neither defined nor listed in accordance withany federal or state law or regulation.

The department has drafted a proposed rule that wouldimpose unknown and unlimited obligations to mitigate impactsto “special concern species” even though DEP had no informa-tion about the meaning of the term when the regulation was sub-mitted to EQB in August 2013—and still has none. Further,PIOGA wrote, neither DEP nor EQB has the statutory authorityto impose regulations with respect to species.

4. DEP failed to review, assess, or inform the EQB andthe public about the true impacts of the rulemaking on theoil and gas industry, especially conventional operations. The

Chapter 78 comments: Continued from page 1

Serving the Oil & Gas Industry for over 90 years.

MRC CORPORATE OFFICE

Austintown, OH 330-799-1100 Bradford, PA 814-368-8145 Buckhannon, WV 304-472-3565 Carrollton, OH 330-627-0259 Columbus, OH 614-475-4033 Corbin, KY 606-523-9640 Horseheads, NY 607-739-8575 Hurricane, WV 304-562-5724 Indiana, PA 724-349-6823 Williamsport, PA 570-748-5276 Norton, VA 276-679-6452 Wooster, OH 330-264-0077

February 2014 Page 41April 2014 Page 41

dsteffy@newprospect.comCell: (412) 667-9817

www.newprospect.com

NEW PROSPECT COMPANY

Office: (724) 742-1122Fax: (724) 742-4703

NEW PROSPECT COMPANY120 MARGUERITE DRIVE, SUITE 201 • CRANBERRY TOWNSHIP, PA 16066

DANIEL R. STEFFYNE Business Development ManagerEngineering, Completions and Drilling Consultants

tal need for the new requirements.Among examples that PIOGA cited of new requirements

where costs exceed benefits were these:• Section 78.52a proposes an obligation to identify the loca-

tion of orphaned or abandoned wells, regardless of well depth ortarget formation, within 1,000 feet of the well bore and along theentire length of a horizontal well bore.

• Section 78.73 proposes an obligation to monitor orphan orabandoned wells and to notify DEP of “any change,” take “actionto prevent pollution of waters of the Commonwealth” and plugany orphan or abandoned well “altered” by hydraulic fracturing.In addition to obvious problems surrounding access to propertynot owned by the well operator, these ambiguous and sweepingobligations are not clearly delineated.

• Section 78.57 proposes removal within three years of allunderground or partially buried storage tanks used to store brineor other production fluids. This requirement fails to recognizethe significant operational and cost impact on conventional oper-ators and small businesses with dozens of such tanks.

• Section 78.59a-c would create requirements for freshwaterand flowback impoundments that are more stringent thanrequirements for hazardous waste impoundments.

• Section 78.66 would require small spills of less than 42 gal-lons of brine to be cleaned up and documented through a processoutlined under the Land Recycling and EnvironmentalRemediation Standards Act (known as Act 2, the Pennsylvaniabrownfields statute). This proposal substantially increases thetime and costs for addressing such small spills, especially onsmall operators.

“While each of these provisions will not affect every operator

True teamwork

Never before have so many PIOGA members beeninvolved in a single issue, and never has PIOGAdeveloped a set of comments as comprehensive as the

116-page document submitted in response to DEP’s Chapter78 rulemaking. That was the message delivered byEnvironmental Committee Co-chair Paul Hart when the groupmet for its regular monthly meeting during the final hecticdays leading up to the March 14 comment deadline.

In a letter send to the members of the ad-hoc group assem-bled to draft PIOGA’s comments, Board Chairman GarySlagel and President and Executive Director Lou D’Amicooffered “our sincere gratitude for the tremendous effort andexcellent work you and the Chapter 78 subcommittee did.”Over the course of the 90-day comment period, the group hadgathered input from a large and diverse cross section of themembership and assembled the information into a cohesiveand comprehensive document.

“The Chapter 78 subcommittee showed leadership and truecollaboration and we truly appreciate that teamwork,” the let-ter stated. “The results were impressive, to say the least.”

Spearheading the effort were Jeff Walentosky of Moodyand Associates, Jean Mosites of Babst Calland and TeresaMcCurdy of Hydro Recovery. Thanks also go out to the manymembers who submitted comments to the EnvironmentalQuality Board on their own and took the time to comment—or simply attend to show support—at one of the nine publichearings held across the state.

“It is our hope that our comprehensive and thoughtfulcomments will impact the decision by the EQB and we cancontinue our efforts of producing American energy and con-tributing to the economic viability of our communities, notonly for our companies, but for the thousands of employeesand families that depend on this industry,” the PIOGA leaderswrote.

department’s proposed revisions include numerous new obliga-tions that would significantly increase operating costs and com-plexity for the industry, particularly for conventional operations,without clear justification or environmental necessity, PIOGAstated. DEP has not fully considered the type or magnitude ofcosts associated with these requirements and has not providedany factual data or analysis to provide a compelling environmen-

Page 42 The PIOGA Press

equally, the cumulative effect of the significant costs of this regu-latory package will create substantial impacts to the oil and gasindustry generally—and conventional (small business) operatorsparticularly— and Pennsylvania’s economy,” PIOGA’s commentsargued. “None of these new provisions has been justified by afactual analysis demonstrating that environmental impacts arenot being addressed by existing regulations.”

Further, PIOGA pointed out that most of the propose require-ments apparently would become effective immediately, and theassociation advocated phased implementation of many of thenew operational and design criteria. The rules also should pro-vide for grandfathering of existing well sites and related opera-tions, as well as to permits that have already been granted.

The lack of a grandfathering provision, PIOGA wrote, willplace “unreasonable financial and practical burdens” on theindustry, hitting the smallest operators the hardest. “Any require-ment to retrofit or update existing operations would putPennsylvania at a competitive disadvantage with respect to otherstates,” the association asserted.

5. DEP failed to comply with the requirements of theRegulatory Review Act to provide for reasonable accommo-dation and exceptions for small businesses, which constitutethe majority of conventional operators. As amended by Act 76of 2012, the law expressly recognizes that small businesses arecritical to Pennsylvania’s economy and that uniform regulatoryand reporting requirements can impose unnecessary and dispro-portionately burdensome demands, including legal, accounting,and consulting costs, upon small businesses with limitedresources.

Act 76 requires DEP to establish less stringent compliance

requirements for small business; establish less stringent sched-ules or deadlines for compliance or reporting requirements; con-solidate or simplify compliance or reporting obligations; use per-formance standards to replace design or operational standards;and exempt small business from all or any part of the require-ments contained in the proposed regulation.

PIOGA observed that the regulatory analysis form submittedalong with the rulemaking shows that the package “simply doesnot comply” with the 2012 amendments to the RegulatoryReview Act and that DEP did not conduct the analysis requiredby Act 76 or provide flexible regulatory approaches for smallbusiness as mandated by the law.

ConclusionPIOGA also specifically endorsed the Pennsylvania Grade

Crude Oil Coalition’s recommendation to place into a separatesubchapter the regulations exclusively directed toward unconven-tional wells.

The association urged the EQB to disapprove the Chapter 78regulatory package and direct DEP to redraft the regulations.

“The EQB must ensure that the final regulations provide abalanced protection of property rights and the environment, andprovide for the optimal development of oil and gas resources,”PIOGA’s comments said.

The PIOGA detailed comments go section by section throughthe DEP rulemaking, comprehensively commenting on specificpassages and making suggestions for improving the package ofrules. The full comments can be downloaded at www.pioga.org/publication_files/PIOGA-Ch-78-comment-summary.pdf. ■

f rom explorat ion to marketReliable Resources...SM

CEC is a reliable resource in the expanding energy industry, delivering integrated engineering, ecological and environmental

and Midstream markets.

Civil & Environmental Consultants, Inc.

w w w. c e c i n c . c o m | 8 0 0 - 3 6 5 - 2 3 2 4

E x p e r i e n c eWell sites and impoundments, dams

Gathering and transmission pipeline projects

Compression, fractionation and other infrastructure facilities

February 2014 Page 43April 2014 Page 43

Page 44 The PIOGA Press

$80.00

$85.00

$90.00

$95.00

$100.00

$105.00

$110.00

$115.00

$120.00

Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14

Penn Grade Crude Oil PricesAmerican Refining GroupErgon Oil Purchasing

Natural Gas Futures Closing PricesAs of April 9

Month PriceMay 2014 $4.566June 4.574July 4.606August 4.604September 4.582October 4.604November 4.634December 4.753January 2015 4.821February 4.782March 4.658April 4.175

SourcesAmerican Refining Group: www.amref.com/Crude-Prices-New.aspxErgon Oil Purchasing: www.ergon.com/prices.phpGas futures: http://quotes.ino.com/exchanges/?r=NYMEX_NGBaker Hughes rig count: http://gis.bakerhughesdirect.com/ReportsNYMEX strip chart courtesy of Mid American Natural Resources,

manrenergy.com

Oil & Gas Stats

0

20

40

60

80

100

120

Mon

th Apr

May

May

May Jun

Jun Jul

Jul

Aug

Aug

Sep

Sep

Oct

Oct

Nov

Nov

Nov Dec

Dec

Jan

Jan

Feb

Feb

Mar

Mar Apr

Previous Year Currrent Year

Pennsylvania Rig Count

February 2014 Page 45April 2014 Page 45

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

$5.50

$6.00

$6.50

1/1 1/15 1/29 2/12 2/26 3/11 3/25 4/8 4/22 5/6 5/20 6/3 6/17 7/1 7/15 7/29 8/12 8/26 9/9 9/23 10/7 10/21 11/4 11/18 12/2 12/1612/30

Per M

MB

tu

NYMEX Annual Strip Price

2010

2011

2012

2013

2014

Well Site Service ProsFISHING SERVICES & TOOLSRENTAL EQUIPMENT COMPLETION & SLICKLINE SERVICESAPI CERTIFIED MACHINE SHOPS ACCOMMODATIONS PIPE RECOVERY & WIRELINEPRESSURE CONTROL SERVICES

www.BlueDotInc.com | 304.842.3829

Page 46 The PIOGA Press

PIOGA EventsEastern Oil & Gas Conference and Trade Show

May 13-14, Heinz Field, PittsburghInfo: www.pioga.org/events/category/pioga-events

PIOGA Summer PicnicJune 16, Wanango Golf Club, RenoInfo: www.pioga.org/events/category/pioga-events

PIOGA Pig Roast, Equipment Show and ConferenceJuly 22-23, Seven Springs Mountain Resort, ChampionInfo: www.pioga.org/events/category/pioga-events

17th Annual Divot Diggers Golf OutingAugust 15, Tam O'Shanter Golf Club, HermitageInfo: www.ipaa.org/meetings-events/upcoming-meetings

Industry EventsDUG East

June 3-5, David L. Lawrence Convention Center, PittsburghInfo: www.dugeast.com

IPAA Midyear MeetingJune 18-20, The Broadmoor, Colorado Springs, COInfo: www.ipaa.org/meetings-events/upcoming-meetings

IOGAWV Annual Oil & Gas Equipment ShowJuly 9-11, Buckhannon, WVInfo: events.iogawv.com

Calendar of Events

➤ More events: www.pioga.org

IOGANY Summer MeetingJuly 16-17, Peek'n Peak Resort,Findley Lake, NYInfo: www.iogany.org

IOGAWV Summer MeetingAugust 3-5, The Greenbrier, White Sulphur Springs, WVInfo: events.iogawv.com

OOGA Summer MeetingAugust 4-5, Zanesville Country Club, Zanesville, OHInfo: ooga.org/events

Shale Insight 2014September 24-25, David Lawrence Conv. Center, PittsburghInfo: www.shaleinsight.com

WV Oil & Gas ExpoOctober 1, Morgantown, WVInfo: www.wvoilandgasexpo.com

IOGANY Annual MeetingNovember 11-13, Hyatt Regency, Buffalo, NYInfo: www.iogany.org

IPAA Annual MeetingNovember 12-14, The Breakers, Palm Springs, FLInfo: www.ipaa.org/meetings-events/upcoming-meetings

OOGA Oilfield ExpoDecember 2-4, IX Center, Cleveland, OHInfo: ooga.org/events

PIOGA Board of DirectorsGary Slagel (Chairman), Steptoe & Johnson PLLC (representing

CONSOL Energy)Sam Fragale (Vice Chairman), Chief Oil & Gas, LLCFrank J. Ross (2nd Vice Chairman), T&F Exploration, LPJames Kriebel (Treasurer), Kriebel CompaniesCraig Mayer (Secretary), Pennsylvania General Energy Co., LLCTerrence S. Jacobs (Past President), Penneco Oil Company, Inc.Thomas M. Bartos, ABARTA Oil & Gas Company, Inc.Stanley J. Berdell, BLX, Inc.Rob Boulware, Seneca Resources CorporationMike Cochran, Energy Corporation of AmericaDon A. Connor, Open Flow EnergyTed Cranmer, TBC ConsultingJack Crook, Atlas Resource Partners, LPRobert Esch, American Refining Group, Inc.Michael Hillebrand, Huntley & Huntley, Inc.Ron McGlade, Tenaska Resources, LLCJim McKinney, EnerVest Operating, LLCSteve Millis, Vineyard Oil & Gas CompanyGregory Muse, PennEnergy Resources, LLCStephen Rupert, Texas Keystone, Inc.Jake Stilley, Patriot Exploration CorporationGary M. Violi, Appalachian Well Services Inc.Burt A. Waite, Moody and Associates, Inc.Roger B. Willis, Universal Well Services, Inc.Thomas Yarnick, XTO Energy

Committee ChairsEnvironmental Committee

Paul Hart, Fluid Recovery Services, LLCKen Fleeman, ABARTA Oil and Gas Company, Inc.

Pipeline & Gas Market Development CommitteeBob Eckle, Appalachian Producer Services, LLCRon McGlade, Tenaska Resources, LLC

Health & Safety CommitteePat Carfagna, CONSOL Energy

Meetings CommitteeLou D’Amico, PIOGA

Tax CommitteeDonald B. Nestor, Arnett Foster Toothman, PLLC

Communications CommitteeTerry Jacobs, Penneco Oil Company, Inc.

Membership CommitteeVacant

StaffLou D'Amico (lou@pioga.org), President & Executive DirectorKevin Moody (kevin@pioga.org), Vice President & General Counsel Debbie Oyler (debbie@pioga.org), Director of Member ServicesMatt Benson (matt@pioga.org), Director of Internal Communications

(also newsletter advertising & editorial)Joyce Turkaly (joyce@pioga.org), Director of Natural Gas Market

DevelopmentDan Weaver (dan@pioga.org), Public Outreach DirectorDanielle Boston (danielle@pioga.org), Director of AdministrationChris Lisle (chris@pioga.org), Manager of Finance Tracy Koval (tracy@pioga.org), Administrative Assistant

Pennsylvania Independent Oil & Gas Association115 VIP Drive, Suite 210 • Wexford, PA 15090-7906724-933-7306 • fax 724-933-7310 • www.pioga.org

Northern Tier Office (Matt Benson)Mail: P.O. Box L, Mount Jewett, PA 16740-0554

Physical address: 167 Wolf Farm Road, Kane, PA 16735Phone/fax 814-778-2291

© 2014, Pennsylvania Independent Oil & Gas Association

February 2014 Page 47April 2014 Page 47

New PIOGA members — welcome!

Bergad Specialty Foams747 Eljer Way, Ford City, PA 16226724-763-2883www.bergad.comService Provider

cfacts650 Smithfield Street, Suite 1850, Pittsburgh, PA 15222-3923412-232-3232www.cfacts.comService Provider

Environmental Energy Solutions10027 Route 403 Highway South, Seward, PA 15954412-289-0180www.eesolutionsllc.comService Provider

Eurofins Lancaster Laboratories Environmental, LLC2425 New Holland Pike, Lancaster, PA 17605717-327-7726www.lancasterlabsenv.comProfessional Firm

Mentors Community Wealth Building Initiative700 River Ave., Pittsburgh, PA 15212412-322-1907mcwbi.orgAssociate

Redmill Drilling233 North Park Drive, Kittanning, PA 16201724-543-5743Producer

Rettew Associates, Inc.3020 Columbia Avenue, Lancaster, PA 17603717-394-3721www.rettew.comProfessional Firm

Signature Systems Group, LLC50 East 42nd Street, Floor 14, New York, NY 10017212-953-1116www.megadeckmats.comService Provider

UniqueCoat Technologies2071 ValPark Drive, Oilville, VA 23129804-784-0997www.uniquecoat.comService Provider

Western Global290 Quarry Road, Milford, CT 06460516-987-5964www.westre-global.us.comService Provider

115 VIP Drive, Suite 210Wexford, PA 15090-7906

Address Service Requested