News from Morgantown. Pay particular attention to what Governor Tomblin and Randy Huffman are saying. The pressure on the Governor must continue.

JBK

...

...

"Donald C. Strimbeck" dcsoinks@comcast.net 6/22/2011 4:47 AM >>>

DOMINION POST headline Wednesday 22 June 2011:

Council OKs ban

Gas company plans to sue city The Dominion Post

The Morgantown City Council voted 6-1 to pass the Marcellus shale drilling ban in the city and within a 1-mile radius beyond the city’s boundaries. Dozens of people showed up to both support and speak against the drilling ban. The meeting began at 7:30 p.m., and people were still commenting after 11 p.m. Enrout Properties LLC, which owns the surface and mineral rights to the gas pad at the Morgantown Industrial Park, is already planning a lawsuit. The company hired Jackson Kelly to represent them in a lawsuit against the city. Work began last month, and $7 million has been invested in the well site so far.

Drilling supporters rally at Courthouse

http://ee.dominionpost.com/Repository/ml.asp?Ref=RFBvc3QvMjAxMS8wNi8yMiNBcjA...

Energy independence touted as benefit

BY ALEX LANG The Dominion Post

To show their support for the gas drilling industry and its employees, about 100 people gathered on Courthouse Square on Tuesday. “Economic growth through energy independence” and “Local energy=local jobs” were two of the signs on display in the crowd. “We’re responsible, we do things right,” Independent Oil and Gas Association of West Virginia President Michael McCown told the crowd. “Our industry is responsible for 35,000 jobs.” That number represents both the direct and indirect jobs tied to the drilling industry. He also said the workers are going to fight for their jobs and their honor. McCown was one of four speakers at a rally at the courthouse. Those involved in the gas drilling industry, most notably Marcellus shale, attended the rally before heading to the Morgantown City Council meeting. The council voted to ban Marcellus shale drilling in the city and within a 1-mile radius of city limits. One of those employees in attendance was Zach Toothman. He recently graduated from WVU with a degree in petroleum engineering. He said he is a field engineer for Chesapeake Energy and spends most of his time around Marcellus shale drilling. He said he was happy the rally was organized. “We need to do more like this,” Toothman said. Delegate Doug Skaff, DKanawha, told those at the rally that students like Toothman will have a chance to stay in West Virginia and raise a family thanks to the drilling industry. He said the state is at a crossroads and production of natural gas can be a game-changer for the state. The drilling industry must work with the various government environmental protection agencies, Skaff said. He added “we’re not going to this half-heartedly.” Chesapeake Energy Vice President of Corporate Development and State Government Regulations Scott Rotruck said safety is the number one priority. Not only in terms of worker safety, but environmental safety as well. “That is extremely important to us,” Rotruck said. Matt Sutton, who helped organize the rally, said it wasn’t in reaction to the several recent Marcellus shale protests. He added it was an idea that was talked about in the past. “They want to get out and show support for workers in the area,” Sutton said.

MORGANTOWN COUNCIL City Marcellus drilling ban officially in place Byrer only one on council to vote no

BY TRACY EDDY The Dominion Post

Marcellus shale drilling is illegal in Morgantown and areas within a mile of the city limits. During its Tuesday meeting, Morgantown City Council voted, 6-1, to approve a law to ban horizontal drilling and fracturing — or fracking — in Morgantown and up to one mile beyond its borders. Mayor Bill Byrne and council members Ron Bane, John Gaddis, Jenny Selin, Marti Shamberger and Don Spencer voted for the law. Councilman Charlie Byrer voted against it. The vote didn’t take place until after midnight. Council spent nearly the first three hours of the meeting taking public comment on the issue and the smoking ban law. Spencer questioned the length of the public hearing at about 10:30 p.m. City Council has an 11 p.m. curfew when making decisions. Council unanimously voted to suspend the rules and work past curfew. Byrer said he voted against the ban because he supports the negotiations between the Morgantown Utility Board (MUB) and Northeast Natural Energy — the company drilling at the Morgantown Industrial Park. The drilling company agreed to implement extra safeguards at MUB’s request. He said it’s up to the governor to call a special session so the state legislature can address Marcellus shale drilling and permitting regulations. Council members also approved minor amendments to the ordinance. Byrer was the lone vote against them. The law now includes a definition of horizontal drilling and the phrase “horizontal drilling with fracturing” instead of “horizontal drilling and/or fracturing.” Council chambers overflowed with people and a crowd gathered in the lobby of City Hall to watch the meeting on TV. Several residents voiced their concerns for Morgantown’s water, air and general quality of life. Wetzel County residents also attended the meeting to talk about their experience with Marcellus shale drilling. Industry representatives spoke about how the industry could do its work responsibly. Mike John, president of Northeast Natural Energy, said the company wouldn’t be drilling at the industrial park if it didn’t think it could do it safely. He also cited the company’s agreement with MUB and said about $7 million was invested in the two wells, so far. “We believe it is impossible for an incident to occur that would impact Morgantown’s drinking water,” he said. Mike McCown, president of the Independent Oil and Gas Association of West Virginia, read City Council a letter from acting Gov. Earl Ray Tomblin, in which the governor requested Morgantown keep its authority within its city limits. Tomblin’s letter said the Marcellus wells at the Morgantown Industrial Park would be good for the city’s economy. “It sends a negative signal to a business to change the rules after permitting has already been completed,” McCown read. Larry Schwab, Collins Ferry Road, said the state and federal government don’t have regulations in place to protect residents. “We are looking to you, our elected officials, to protect us.”

May seek injunction to stop the law from taking effect

BY DAVID BEARD The Dominion Post The wheels are already in motion to sue Morgantown over its horizontal gas drilling and fracking ban, a Jackson Kelly attorney said Tuesday. Al Sebok said Enrout Properties LLC, which owns the surface and mineral rights to the Morgantown Industrial Park Marcellus gas pad, has retained him to represent Enrout in litigation against the city. Sebok was one of the scheduled speakers at Jackson Kelly’s seminar, “Marcellus Shale in WV: Emerging Issues,” held at the Waterfront Place Hotel. Morgantown based its ban on state code 8-12-19, which allows cities to extend their jurisdiction one mile beyond their boundaries when required to reasonably exercise their powers and authority. Sebok listed several reasons why the city may be wrong. One, 8-12-19 was written in 1969. When the Legislature updated the zoning law in 2004, it didn’t include the same extraterritorial provision; while Morgantown is changing its business and taxation code, the ban is really more of a zoning issue. Two, code 8-12-2, regarding home rule powers, forbids city laws that conflict with the state constitution or other general law. The ban does conflict. Three, cities have the power to legislate against public nuisances, but the law clearly defines public nuisance, and the city can’t “arbitrarily and capriciously” declare a legally permitted activity a public nuisance. Sebok said Northeast Natural Energy, the natural gas firm at the site, worked closely with the Morgantown Utility Board, a city agency, even before the permit was approved, and agreed to extra provisions — containment, berms, casings and testing — after the permit was issued. “This is what I view as a win-win situation for everyone. This is how the permitting [process] should work,” he said. He called the city’s action a regulatory taking of property without just compensation. He later told The Dominion Post that he didn’t know how soon Enrout would file suit — they’re evaluating options — but it likely will be quickly. He also said the company may seek an injunction or restraining order to suspend the ordinance until litigation is completed. Northeast President Michael John said that litigation is under consideration, and the company has been working with attorneys to map out strategies. Bottom line, though, he said: “I do not want to sue the city of Morgantown.” Northeast is in the business of drilling, not taking cities to court, he said. Morgantown City Manager Terrence Moore said the city has anticipated legal action and is acting with due diligence to prepare for and support City Council’s action, and will respond accordingly. He believes state code supports the city’s position. Rob Alsop, chief of staff for acting Gov. Earl Ray Tomblin, also spoke at the Jackson Kelly seminar. He equated the city’s ban to what the Environmental Protection Agency did to Arch Coal’s Spruce Mine in Logan County: Retroactively revoked a water permit, effectively halting $250 million worth of planned operations. Alsop referred to Northeast’s $7 million-plus investment at the Morgantown site. “Now, after the fact, there’s the potential they could be told to stop.” That could have a chilling impact on business across the state, he said, when Tomblin wants to promote the industry and its ancillary businesses. “Marcellus shale is a great development for West Virginia,” Alsop said. “We are doing all we can to make it a phenomenal development for West Virginia.” Tomblin appointed a Marcellus and Manufacturing Task Force to explore the promise of ethane, a natural gas by-product that could spur all sorts of plasticsrelated manufacturing to replace the lost chemical industry in the Kanawha Valley and the lost steel works in the Northern Panhandle. “We want this type of investment here,” he said.

DEP: 1,600 Marcellus permits issued; 400 in works BY DAVID BEARD The Dominion Post

Department of Environmental Protection (DEP) Secretary Randy Huffman told a Morgantown audience Tuesday that the DEP is on pace to permit 400 more Marcellus wells this year; it needs more inspectors; and it needs the Legislature to take some action. Huffman was one of the featured speakers at Jackson Kelly’s seminar, “Marcellus Shale in WV: Emerging Issues,” held at the Waterfront Place Hotel. He said that in some ways, he is pleased Marcellus legislation failed last session. The DEP submitted a bill, SB 204, which the House ignored, and the Senate rewrote, scrapped and replaced with a different House bill. The only thing that survived was the bill number, Huffman said. “We bit off more than we could chew.” It was too much work for a part-time citizen legislature, and it’s better nothing passed than something deeply flawed and subject to many challenges, he said. The DEP expects to have a seat at the table for the Legislature’s Marcellus select committee drafting a new compromise bill, and its contribution will be different this time, based on new things it has learned — such as the aggregate effects on air quality and public notice provisions. While some have publicly said it’s already too late to keep the industry from running roughshod over the state, Huffman is more optimistic. “I strongly believe we are way in front of the Marcellus play from a regulatory standpoint. I’m really confident a lot of things are going to happen in the coming months.” Huffman said the DEP has issued 1,602 Marcellus permits, with 942 of those already completed. The remaining 660 have either not been drilled, are in process, or awaiting fracking to begin. The agency expects to approve another 400 permits this year, he said. It’s permitting at a greater capacity than the industry can drill. That’s understandable, he said, because gas fir ms have to take steps to secure and retain their leases. The expected legislation needs to have one thing: Money for inspectors, Huffman said. The DEP doesn’t have the power to raise fees without legislative action. Huffman did say, though, that without legislation, the DEP is doing what it can to adapt its growing knowledge of the state’s needs. Permit applications are different now from a year ago, and may be different again in two months. Acting Gov. Earl Ray Tomblin’s Chief of Staff Rob Alsop also spoke at the seminar, and told The Dominion Post that if the select committee could have something ready as early as August, Tomblin would be willing to consider putting it on the call with redistricting.

THE STATE JOURNAL: Morgantown City Council Bans Horizontal Drilling with Hydraulic Fracturing Posted Wednesday, June 22, 2011 ; 12:59 AM

President of company now developing two wells asked what the city is prepared to compensate him for his $7 million investment.

By Pam Kasey

Morgantown City Council voted 6-1 on June 21 to pass an ordinance prohibiting horizontal drilling with hydraulic fracturing within a mile outside city limits.

It’s been an issue of hot discussion in Morgantown since early May, when the city’s residents learned after the fact that Northeast Natural Energy of Charleston had been permitted to drill two Marcellus Shale natural gas wells just upriver from the area’s drinking water intake on the Monongahela River.

Residents expressed concerns about the possibility of an drilling or hydraulic fracturing accident that would contaminate drinking water, as well as air quality and other concerns, and they expressed frustration that there is no public notification and comment process for gas wells.

NNE’s well pad is located outside but within a mile outside city limits; the Morgantown council is following Wellsburg’s lead in relying on a provision of state code that allows cities to extend their authority for up to a mile beyond their boundaries when needed to carry out city functions.

Tuesday's second reading of the ordinance drew comments from dozens both for and against the ban.

Mike McCown, president of the Independent Oil and Gas Association, read a letter from acting Gov. Earl Ray Tomblin urging the city to keep its ban within city limits.

The industry won't take kindly to a ban, McCown said.

“If a city says there shouldn’t be drilling and doesn’t support the industry, it’s going t be hard for industry members to support that city, to do commerce in that city,” he said. “That’s a decision the city’s going to have to take seriously, in my opinion.”

Several who addressed council had traveled from adjacent Wetzel County, where Chesapeake Energy has a high concentration of Marcellus gas production activity.

“Coming with this Marcellus development you’re going to have tons of air pollution, water pollution — I’ve submitted copies of accidents, road issues, water contaminations,” said Wetzel County resident Ed Wade.

“In our area we’ve found crime rates have gone up, drug usage has gone up,” Wade said. “It’s going to put a strain on your volunteer fire departments, your EMS, your law enforcement. All of this is going to have to be doubled and tripled. … For the people of Morgantown and their best interest, I hope you guys make the right decision.”

NNE President Mike John addressed council for the first time.

John noted that his company’s wells have received permits from the state Department of Environmental Protection.

He added that his company met the additional assurances of the Morgantown Utility Board, the provider of drinking water for about 90,000 in the region — assurances that he viewed as having come from the city through MUB.

“Given this history, we were surprised that, despite our good faith effort to work with the city to their apparent satisfaction, we find ourselves before council tonight as you move forward to ban drilling and fracking within a mile of city limits,” John said.

“While there is risk associated with any industrial process, given the safeguards that we have implemented and the nature of the site, we believe it is impossible for an incident to occur that would impact Morgantown’s drinking water in any meaningful way,” he added.

He asked what the city is willing to compensate his company for the $7 million it has invested in its site based on good faith interactions with the city.

Councilman Charles Byrer alone voted against the ordinance.

He expressed a preference for regulation at the state level and cited concerns about the rights of mineral owners, including the city itself.

“I think we’re basically going to be regretting this down the road. We have opportunity here. We’re sitting on a treasure,” he said. “And I think we’re on a slippery slope from a legal perspective.”

Council takes this action, concluded Mayor William Byrne just before the vote was taken, in the absence of effective state regulation — mentioning in particular the need for public notification and comment on gas wells.

“We do not do this with a lot of gusto,” Byrne said.

FirstEnergy: Unconventional Gas an Additional Challenge to Coal-Fired Power Industry Posted Tuesday, June 21, 2011 ; 10:34 Updated Tuesday, June 21, 2011; 11:46 AM

Power sector could represent one-third of U.S. natural gas demand by 2020. By Pam Kasey

MORGANTOWN -- The boom in production of natural gas from formations like the Marcellus shale is presenting an additional challenge to an already challenged coal-fired power industry.

That was one observation from Lauren Quamm, manager of market analytics for FirstEnergy Solutions, when he spoke June 21 at the “Marcellus Shale in West Virginia: Emerging Issues” seminar hosted in Morgantown by Jackson Kelly.

FirstEnergy, Quamm said, operates from Illinois to Maryland and is the nation’s largest industrial utility based on customers served; FirstEnergy Solutions is the largest competitive retailer of electricity.

“Natural gas is poised to become (an even more) important part of the fuel mix for generating electricity in this country,” while coal as a fuel for the generation of electricity is getting squeezed, Quamm said.

That is based in part on the recent growth in supply of natural gas due to horizontal drilling and hydraulic fracturing, Quamm said. That growth has resulted in reduced prices.

Not long ago, natural gas was the most expensive generation fuel that represented a significant part of the market.

But the price of gas has halved since 2008, Quamm said, from $9 per million British thermal units in 2008 to $4.50 now; with that, the price of electricity has fallen approximately by half.

And because all power plants in a region earn what the most expensive plant is charging per megawatt-hour, all power plants are earning less, he said.

At the same time, planned and expected environmental regulations on air emissions and other aspects of power generation will affect coal-fired plants more than others.

Given that squeeze, moderate projections are that 30 to 70 megawatts or about 20 percent of coal-fired generation capacity could be shut down east of the Rocky Mountains.

“The replacement power plants will largely be fired by natural gas,” he said.

The combination of gas plants added to the grid and increased firing of existing plants “could be a significant source of demand for the industry,” he said.

If 50 to 70 gigawatts of coal-fired generation capacity is shuttered, he said, it could mean 8 to 9 trillion cubic feet per year of power sector gas demand by 2020: roughly one-third of U.S. natural gas demand.

Agencies Say They Are Now More Prepared

June 22, 2011 By J.W. JOHNSON JR. With AP Dispatches - Staff Writer , The Intelligencer / Wheeling News-Register

A year after a natural gas well burst into flames in Marshall County, the West Virginia Department of Environmental Protection is drafting legislation focused on well sites, water management and permit fees.

In the early hours of June 7, 2010, Marshall County 911 dispatchers began receiving calls reporting a loud explosion and flames shooting 75 feet into the air on Beam's Lane outside of Moundsville. As emergency management teams from Marshall and Belmont counties arrived at the site of a natural gas well operated by AB Resources Inc., they began to assess the situation: A fire was raging and appeared to be unextinguishable, and seven workers had been seriously injured.

After getting the fire under control and containing it for 12 hours until crews trained to handle well fires could arrive, emergency management officials remained at the site for nearly five days until the fire burned out.

Now the DEP is paring down legislation it presented for this year's regular session, spokeswoman Kathy Cosco said. Out is language addressing such topics as forced pooling, which involves drilling in areas with multiple mineral rights owners, and the rights of surface owners, she said.

The regular session bill died after substantial amendments in both chambers. Department Secretary Randy Huffman criticized lawmakers Tuesday for its fate. He told a Morgantown conference on Marcellus Shale issues that the changes disregarded provisions developed by his staff during the better part of the year.

The new draft will also propose hiking permit fees above their current rate, which is usually around $600 per well, but not likely as high as the $10,000 proposed in the regular session bill, Cosco said. DEP's goal is enough funding for eight to 10 more inspectors - the department now has 17 positions - along with additional office staff, she said.

Huffman said a serious fee hike would allow "more of a presence on the ground at these sites." Some companies have even offered to pay higher fees, but Huffman said he was forced to decline because his agency has no structure for accepting such sums.

Huffman agreed the fee amount could prove a sticking point as a new House-Senate select committee attempts to find a compromise that can pass in special session. The industry argues that fees higher than those charged in other Marcellus states would make West Virginia less competitive.

Rep. Shelley Moore Capito, R-W.Va., warned the Morgantown conference that if state legislators can't agree on Marcellus regulations, the federal government is likely to do the job for them. The federal Environmental Protection Agency is already cracking down on the coal industry and is "slathering" to get at the natural gas industry, too, Capito said.

Locally, a lot has changed since the Beams Lane fire regarding the way local emergency management crews and first responders react when faced with a well explosion. They cited equal parts planning practice for the adaptations.

"There was a steep learning curve when we arrived for that first fire," said Marshall County Emergency Management Director Tom Hart. "We found out that the best way to prepare for those situations and learn how to be able to respond was to actually deal with them."

The fire was the first of three separate gas-related incidents in a four-month period in the county, and Hart said each incident presented a new challenge from which to learn.

Hart said as a result of dealing with those incidents, local fire departments and law enforcement agencies now are more prepared and have a better idea of what to expect if a well fire is reported. He added his office has created a checklist and implemented other protocols in the emergency management comprehensive plan, which is shared not only with offices in Marshall County but around the state.

The biggest change, Hart said, is that the lines of communication between county officials and gas company representatives are open, allowing for information to be shared on a more frequent basis. First responders at the Beam's Lane fire said it was unclear who was supervising the site, and county officials said they had not been informed of any drilling activity in that area or been given information as to how many employees had been working there.

"Since that first incident, companies have been very forthwith in providing us with information on where their sites are and what is happening," he said, adding that information comes via weekly email updates and at monthly meetings of the Marshall County Energy Exploration Task Force, which was created last August.

Hart said having frequent communication and knowing who to contact in the event of an emergency is key to allowing first responders to get to a site and on task as quickly as possible. He added many companies have also been proactive in investing in their own emergency plans and training for their workers.

"They know that for public safety officials to assist them, they need to provide accurate information on their locations, and we need that information to protect the public and the people working at their sites," he said.

Marshall County fire departments have also been able to upgrade their equipment and seek further training using donations from Chief Oil and Gas and Chesapeake Energy, which donated $100,000 and $221,000, respectively, following well fires on their properties. Hart said those funds were used to purchase equipment and supplies that would be used in the event of a similar incident.

Hart said he has heard from representatives from counties around the state who have expressed concern over increased drilling activity in their areas. He said he will continue to share the information that Marshall County has gathered in the past year so they can be one step ahead in the event of an emergency.

"I hate to say it, but I am kind of glad we dealt with it when we did and were able to become better prepared," he said.