In Pa’s fracklands, local economies feel pinch of a gas bust


















In today’s Philadelphia Inquirer, business writer Andrew Maykuth reports on how the plunge in natural gas prices has affected drillers
and businesses in Jones Township, Pa.


Gus Trejo, a career oil-and-gas driller from South Texas, moved his family to Pennsylvania in 2010, betting that the emerging Marcellus Shale gas industry would provide long-term security.
“Retirement is what I was thinking,” he said.

Trejo supervised three drill rigs in this remote corner of Elk County for Seneca Resources Corp. until the industry crashed last year. He now manages one site, Seneca’s sole remaining rig in the entire state. He’s glad just to still be employed.
“Now, I’m sitting on the edge of my seat,” said Trejo, 50, whose two brothers also resettled near his Tioga County livestock farm, though one has since returned to Texas. “I hope things get better and we stick around a lot longer. I like this part of the country.”

Natural gas boom and bust in Pa chart
Five years ago, the Marcellus Shale bonanza attracted 115 drilling rigs to the state, each requiring a battalion of suppliers, trucks, earth movers, equipment manufacturers, and support services.
This month, the rig count fell to 16, a number not experienced since 2007, before hydraulic fracturing entered the public debate and when Marcellus was just a gangster in Pulp Fiction.
Last year’s energy-price plunge undercut the business across the nation. Gas producers that borrowed heavily to acquire acreage and to drill struggled to cover their debt. They cut operations and sold assets to stay solvent. Some went bankrupt. Those financially strong enough to survive are hunkered down.
“We’re going through a historic downturn,” said David J. Spigelmyer, president of the Marcellus Shale Coalition, an industry trade group.

“We lost maybe $10 billion in capital spending in 2015, and are heading the same way in 2016 with the rig count.

“Despite the slowdown in drilling, Pennsylvania is not likely to relinquish its new status as a natural gas giant. In 2008, it produced 198 million cubic feet of gas, about a quarter of the state’s needs. Last year, Pennsylvania produced 4.6 trillion cubic feet, a fifth of the nation’s gas demand.
The volume of gas production remains stable because of the large inventory of wells awaiting pipeline connections. As soon as the price rises, a producer brings a waiting gas well online. Producers expect the drilling slowdown to last at least 18 months.

Still, the downturn has depressed local economies. The traffic that energized and disrupted rural life has subsided. Sales of clothing, food, and vehicles are down. Skilled welders have taken jobs at Walmart. Unemployed workers stay home and don’t spend.
“Just the sheer volume of people in restaurants, hotels, even at some charity events, they’re definitely not there anymore,” said Stan Foster, chief operating officer of Superior Energy Resources L.L.C., a Brockway, Pa., gas field-services company.
Three years ago, competition for skilled help was so fierce that Superior struggled to fill job vacancies. “During the peak we had up over 130 employees,” Foster said. “Now, we’re at 20. Of course, sales are also right in line parallel with that curve.”
At midday recently, it was practically empty at the Mountain Inn in Clermont, McKean County, a bar and restaurant where once it was not uncommon for rig crews to order takeout of 30 hamburgers at a time. A game warden had come by that morning to install a trap for the most demanding patron, a black bear that raided the inn’s dumpster. It left a lot of debris and, like a growing number of customers, no tip.
“Usually, we’d have a full bar now,” said Brenda Walker, the inn’s owner. She has cut hours and reduced her staff from nine full-time employees to four part-timers.
“The past year has been horrible,” Walker said. “The best thing that can be said is we had a few good years.”

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Exxon, allies invoke 1st Amendment to fight climate probe

Massachusetts Attorney General Maura Healey (C) speaks at a news conference with New York Attorney General Eric Schneiderman (R) and other U.S. State Attorney's General to announce a state-based effort to combat climate change in the Manhattan borough of New York City, March 29, 2016. REUTERS/Mike Segar
Massachusetts Attorney General Maura Healey, center, joined a coalition of her colleagues seeking climate action and considering investigations of Exxon.
Credit: Reuters

Exxon, the Competitive Enterprise Institute, and their allies are invoking free speech protections in a pugnacious pushback against subpoenas from attorneys general seeking decades of documents on climate change. Their argument is that the state-level investigations violate the First Amendment rights of those who question climate science. Neela Banerjee reports for the Pulitzer-Prize-winning blog insight Climate News: Exxon has sued to block a subpoena issued by the attorney general of the U.S. Virgin Islands, and in an unusual step, named as a defendant the Washington, D.C. law firm and attorney representing the territory in the inquiry. In its complaint against the Virgin Islands subpoena, Exxon wrote, “The chilling effect of this inquiry…strikes at protected speech at the core of the First Amendment.” In a pointed letter to Virgin Islands Attorney General Claude Walker on April 20, CEI’s attorney called the subpoena “offensive” and “un-American,” and warned to “expect a fight.” Andrew Grossman, outside counsel for CEI, wrote, “You have no right to wield your power as a prosecutor to advance a policy agenda by persecuting those who disagree with you.” The conservative non-profit Energy & Environment Legal Institute, an ally of CEI, recently released emails that show that the attorneys general considering investigating Exxon were briefed by two environmentalists. E&E got the emails through a Freedom of Information Act request to the Vermont attorney general’s office. Though such meetings with environmental and industry advocates are widely considered routine, E&E described the meetings as secretive collusion, an idea that has been echoed on conservative websites and among some mainstream media outlets. The AGs have not changed course amid the counterattack. But Exxon and its allies appear to be aiming as much at public opinion as at state law enforcement. After Inside Climate News and later the Los Angeles Times published stories last year detailing Exxon’s cutting edge climate research in the 1970s and its subsequent efforts to disparage climate science, the company initially argued it has conducted climate science without interruption for 40 years. It also answered a subpoena by New York Attorney General Eric Schneiderman and produced 10,000 pages of records by the end of 2015. Now, its emphasis appears to have shifted. As the company tries to defend its climate contrarian stance, Exxon argues that it has voiced honest dissent on the science that a conspiracy of environmentalists and attorneys general wants to silence. “Our critics, on the other hand, want no part of that discussion. Rather, they seek to stifle free speech and limit scientific inquiry while painting a false picture of ExxonMobil,” spokeswoman Suzanne McCarron wrote in a post on the company’s blog on April 20 titled “The Coordinated Attack on ExxonMobil.” Exxon and CEI’s lawyers have experience waging long battles with government attorneys on controversial cases. Exxon’s law firm Paul, Weiss, Rifkind, Wharton & Garrison and CEI’s attorneys, Baker Hostetler, represented the tobacco industry for years. Exxon’s firm also represents the National Football League as it deals with the scandal over its concussion research. Read the full story here Recent blog posts:
Christie looks to divert $20M in NJ conservation funding 
How Google’s celebrating Earth Day. How about you? 
Task force recommends changes to NJ beach-access law 
Should fracking states put something away for a rainy day? 
Former pesticide plant site in NJ added to Superfund list

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Christie looks to divert $20M in NJ conservation funding

                                                                                  Photo credit: Newsworks
The Christie administration’s diversion of $20 million from an open-space fund to pay salaries at state parks was condemned yesterday at a legislative hearing in what is emerging as an acrimonious side battle over next year’s budget.
Tom Johnson reports today in NJ Spotlight:

In a hearing before the Senate Environment and Energy Committee, open-space advocates argued such diversions were never contemplated by voters in the fall of 2014 when they easily approved a new constitutional amendment setting aside corporate business taxes to fund acquisition of undeveloped land and farmland preservation.

The diversion, which first took place in last year’s budget, would be repeated in this year’s fiscal spending plan for the state under a proposal submitted by Gov. Chris Christie. Sen. Bob Smith (D-Middlesex), the committee chairman and sponsor of the ballot question, called the rerouting of the funds “unconstitutional,’’ and possibly criminal.

RELATED LINKS
SENATE BILL S-969

Last month, the Office of Legislative Services issued a legal opinion that concluded the use of the funds to pay state employees’ salaries at parks is not authorized under language in the current budget, a position disputed by the Christie administration. It said the diversion is a permissible use of the funds consistent with the constitutional amendment.
Meanwhile, the Legislature has given final approval to a bill (S-969), now on the Governor’s desk, that would allocate $146 million over the next two years to fund open space, farmland, and historic preservation, but it includes no money for park salaries. Those operations traditionally have come out of the general fund.
“My belief is we probably will get a veto, maybe a conditional veto, but a veto,’’ Smith said of the bill. An identical bill won approval early in January in the lame-duck session, but was pocket vetoed by the governor without any explanation of why he objected to the measure.
Smith’s priority now is to begin allocating money from the new, approved open-space fund, none of which has been spent yet on its intended purposes. “How do we get to the finish line? You would think a constitutional amendment would have been enough,’’ he said.
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How Google’s celebrating Earth Day. How about you?

If you use any of the plethora of Google tools, like Chrome, Search, Google +, Blogger, etc., you likely were met today with a graphic reminding you that today is Earth Day. 


We like the four we’ve seen so far.

   
Are you, your business, or organization doing anything special this year to mark the event?
Click the ‘comment’ link below and share it with your fellow EnviroPolitics Blog readers.

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Task force recommends changes to NJ beach-access law

New Jersey’s shore communities could use some of the money they collect in beach badge fees to fund additional public access points to the shoreline under a proposal from a task force studying ways to improve the state’s beach access law.
Wayne Parry reports for The Associated Press:
The panel recommends increasing the overall amount of access points by returning to previous standards that mandated them every quarter-mile, instead of the current standard of every half mile.
The task force was comprised of business interests and some of the state’s leading public access advocates, and it became necessary after a court last December struck down New Jersey’s beach access regulations. A hastily passed bill restored the state Department of Environmental Protection’s authority to impose access regulations, but did not get into ways to improve public access.
Recommendations made by the business side of the panel include exempting utilities and some industry that bar public access on safety grounds from having to fund access points elsewhere, and eliminating or reducing fees for compliance with public access mandates.
Not surprisingly, most of the recommendations were supported by one half of the panel and opposed by the other. It will fall to the state senate and Environment Committee to craft a bill setting forth new beach access standards, something its chairman Sen. Bob Smith, a Middlesex County Democrat, predicted would happen in the fall. The bill would apply not only to beaches and bays, but to urban waterways throughout the state.

Read the full story here

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Should fracking states put something away for a rainy day?

Natural gas drilling rig -WHYY photo by Lindsay Lazarski

States at the center of the recent oil and gas boom should prepare for the inevitable bust and put drilling revenues into permanent trust funds, says a new report from the Metropolitan Policy Program at Brookings.
Marie Cusick reports in StateImpact:

The researchers singled out Pennsylvania and argue it should enact a severance tax on gas production. Drillers currently pay a per-well impact fee, which has generated more than $860 million over the past four years. This year the fees are expected to bring in $185.5 million– the lowest amount ever.

“Pennsylvania would be wise to levy a severance tax on its oil and gas industry and deposit a portion of that in a permanent trust fund,” the authors write.
They note taxes from oil and gas development are affected by global energy markets and become a volatile revenue source if they are not in a well-managed fund. They also cite what’s known as the “resource curse,” in which economies based on natural resources grow more slowly than diverse economies.



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