Jul 17, 2011 6 min read

HARRISBURG, Pa. (AP) — Gov. Tom Corbett will receive a report approved Friday by his commission on Pennsylvania’s booming natural gas industry that recommends a range of ways the state can help the industry find new customers, as well as a requirement that the industry help government pay for the cost to regulate it and fix the damage it causes to the environment.

The 30-member Marcellus Shale Advisory Commission also on Friday approved a recommendation that state law be changed to subject the gas reservoir to “pooling.”

That’s a provision on the books in some states that can be used to force holdout landowners to lease their below-ground gas rights under certain conditions.

The commission members, mostly Corbett officials and industry advocates, spent a five-hour meeting debating and approving 96 recommendations that will go to Corbett, a pro-business Republican who has welcomed the industry as rescuing the state’s economy while it is trying to bounce back from the recession.

The final report was approved unanimously, although votes on some individual recommendations were not, and the panel’s environmental advocates lost a bid to end the leasing of public forest land for drilling.

The meeting capped four months of work after Corbett picked the commission members and asked them to develop recommendations on how the state can stoke the economic potential of the rapidly growing industry while modernizing its laws to contain damage to the environment and impact on drilling communities.

“Make no mistake, just as Rome wasn’t built in a day, Marcellus can’t be tackled in 120,” Lt. Gov. Jim Cawley, who chaired the commission, told members before they took their final vote.

“This is something that is going to be ever evolving.”

Terry Bossert, vice president of government and regulatory affairs for Dallas-based Chief Oil & Gas LLC, told fellow commission members that the recommendations would strengthen environmental protection and allow companies to operate efficiently.

“There will be people in the industry who will find things that are not satisfactory, there are people in local government or in the environmental community who may find things that they don’t find satisfactory,” Bossert said. “I would just hope that as we all go forward, we would focus more on what we’ve accomplished and what we did agree on.”

It’s not clear what kind of impact on public policy the commission’s recommendations will have, since they are non-binding and the Legislature has its own ideas.

Also, Democrats and some environmental groups say the commission’s work is suspect since the members were hand-picked by Corbett, who accepted nearly $1 million in campaign contributions from the industry and has pledged to oppose any effort to tax it.

The report with the full list of recommendations is to be submitted no later than next Friday to Corbett, after which it will become public. Text of the dozens of recommendations brought up for votes at Friday’s fifth and final meeting of the panel were not released publicly, although participants read each aloud and discussed some at the meeting, which was public.

Friction at the meeting arose several times.

For instance, the panel’s handful of environmental advocates protested the pooling provision, as well as recommendations to encourage the construction of intrastate pipelines and to add natural gas to a required portfolio of alternative power sources, as lacking any real study of the value or impact.

“I wish we would have had more of an opportunity in this process to get into this issue and really look at this subject, when I think we would all agree that we really haven’t,” the Nature Conservancy’s Ronald Ramsey told other panelists before they voted on the pooling provision.

Advocates of pooling say it can minimize drilling-related damage and help siphon gas more efficiently. In addition to being used against holdout landowners, it can also be used to force greater cooperation among companies.

Lawmakers, for several years now, have debated the merits of imposing a tax on the industry. But Corbett barred the panel from recommending a tax, which he opposes and views as being different than a fee, although every other major natural-gas producing state imposes a tax on the activity.

So instead, the panelists embraced the idea of a fee, only debating what the fee might pay for. Environmental advocates won out in a bid to expand the list to include restoring public lands and resources.

The recommendation does not suggest how much companies should pay, or who would impose the fee. Advocates for counties and municipalities had tried initially to limit the extent of the recommendation to addressing the industry’s proven impact in drilling areas.

“What else are we going to throw in here, all-day kindergarten?” asked Jeff Wheeland, a Lycoming County commissioner.

Industry panelists remained quiet during the debate over the fee.

The commission endorsed a recommendation for a public health study on drilling communities, as well as recommendations that would require more distance between drilling sites and public water sources. It also endorsed the creation of strategies to expand natural gas use, such as building fueling stations for natural gas-powered vehicles along interstates, and academic inquiry to develop other uses.

The Marcellus Shale is the nation’s largest-known natural gas reservoir, and the industry’s pursuit of it during the last three years has transformed wide swaths of western and northern Pennsylvania.

It has provided an economic boost to a wide range of businesses in drilling communities, but techniques used in harvesting the gas and the disposal of massive quantities of often-toxic drilling wastewater have stirred up concern about environmental damage.

Drillers blend huge volumes of water with chemical additives and inject it under high pressure into horizontal shafts deep underground to help shatter the thick rock – a process called hydraulic fracturing. Some of that water returns to the surface, in addition to the gas, as brine potentially tainted with metals like barium and strontium and trace radioactivity.

Meanwhile, state regulators have found that drilling has contaminated some nearby residential water wells, and the heavy truck traffic necessary to serve each new well site is damaging rural roads that weren’t designed for such use.

The shale formation lies primarily beneath Pennsylvania, New York, West Virginia and Ohio. However, Pennsylvania is the center of activity, with more than 3,000 wells drilled in the past three years and thousands more planned in the coming years as the companies increasingly tout it as an affordable, plentiful and profitable source of natural gas.

AP

07/15/11 18:42