PA Marcellus News Digest 5/7/12

PA Marcellus News Digest

May 7, 2012

Articles

NW Pa. fracking firm lays off 40 over low prices
Patriot-News
The Bradford Era, AP
BRADFORD, Pa. (AP) — A northwestern Pennsylvania fracking operation has laid off 40 workers because low natural gas prices are slowing down drilling efforts.
Link: http://www.pennlive.com/newsflash/index.ssf/story/nw-pa-fracking-firm-lays-off-40/3b82e4557e3e4510ab1d5a3ced58dc46

Allegheny National Forest unaffected by new drilling rules
Pitt Trib
Tim Puko
May 4
New rules announced on Friday for shale drilling on federal lands won't apply to the Allegheny National Forest, the federal government's biggest chunk of land in Pennsylvania.
Link: http://triblive.com/state/1400889-74/forest-federal-drilling-rules-allegheny-association-gas-national-according-drillers

Pennsylvania’s Premier Frackcident™ Injury Law Firm
Ostroff Injury Law has helped victims of fracking accidents throughout the Marcellus Shale region. We are the only Frackcident Injury Law Firm in America.
May 5
Link: http://frackinginjurylaw.com/fracking-lawyer/

Philadelphia firm Saul Ewing opens in Pittsburgh, drawn by natural gas work
Post-Gazette
Gina Passarella
May 7
Philadelphia-based Saul Ewing has opened an office in Pittsburgh, a market that has been sought out by out-of-town firms clamoring not just for Marcellus Shale work, but everything the shale play brings with it.
Link: http://www.post-gazette.com/stories/business/legal/philadelphia-firm-saul-ewing-opens-in-pittsburgh-drawn-by-natural-gas-work-634688/

Department of Energy Takes Orphan Well Search to New Heights
Allegheny Front
Kate Malongowski
April 24
(includes audio)
The U.S. Department of Energy is pushing new efforts to deal with an old problem in Pennsylvania -- abandoned oil and gas wells. If they're not sealed properly, they can be explosive. Finding where old, so-called orphan wells are located could save lives, which is why the government is taking their search to new heights: by testing out a helicopter. The Allegheny Front's Kate Malongowski has more.
Link: http://www.alleghenyfront.org/story.html?storyid=201204261347150.513401

Bethlehem council opposes zoning provision in fracking law
Morning Call
Valley 610
Blog
Nicole Radzievich
May 3
Bethlehem City Council has joined a growing number of municipalities opposing to a provision in the Marcellus Shale law, which regulates the gas industry that’s boomed with the use so-called fracking.
Link: http://blogs.mcall.com/valley610/2012/05/bethlehem-council-opposes-zoning-provision-in-fracking-law.html

CHESAPEAKE: Do blowouts in the oil field predict blowups in the boardroom?
E&E News
Mike Soraghan
May 4
(full text below)
As Chesapeake Energy Corp. tried to contain the blowout caused by its CEO's perks last week, workers labored to contain a blown-out Chesapeake oil well in Wyoming.

Workers have now plugged the well, and founder and CEO Aubrey McClendon has agreed to give up his chairman post.

But such safety and environmental incidents have dogged Chesapeake all over the country. And investors in the "socially responsible investing," or SRI, community see a tie between the problems on the ground and the disconnect in the executive suite.

"Management is management," said Julie Gorte, the senior vice president for sustainable investing at PaxWorld Management, a leading SRI firm. "A company that plays fast and loose in one area is likely to play fast and loose in another area."

Gorte said she wasn't surprised by the recent McClendon revelations, both because Chesapeake's governance had been criticized in the past and because "they have an unusually high number of environmental problems."

Pax and fellow SRI firm Domini Social Investments have decided against investing with Chesapeake because of water contamination, fatalities at work sites and executive compensation concerns. But both invest in other drillers. Domini invests in a variety of drillers, including Anadarko Petroleum Corp., which it pressed last year for a report on how hydraulic fracturing affects surrounding communities.

The environmental problems contradict the nature-friendly image McClendon and Chesapeake have sought to create.

Chesapeake has stated a commitment to the environment as part of its "core values." The company even put a streak of green in its logo. McClendon said it "suggests the Earth and visibly communicates the company's commitment to the environment."

It has been among the most aggressive in marketing natural gas as a clean alternative to coal. And McClendon was among the first drilling executives to call for disclosure of chemicals used in hydraulic fracturing. The company has a "Green Frac" program to reduce the use of toxic chemicals and a well-regarded water reuse program called "Aqua Renew."

Those are some of the reasons Calvert Investments, another SRI firm, does invest in Chesapeake, said Paul Bugala, Calvert's senior sustainability analyst for extractive industries.

"Chesapeake has been among the leaders in some areas," he said. "But there are also problems."

'The question is how they're managing risk'

Regulatory and enforcement reports highlight some of those problems.

In Pennsylvania, the heart of the burgeoning Marcellus Shale, environmental regulators hit Chesapeake last year with an attention-getting $1 million fine for contaminating the water of 16 households in northern Pennsylvania. According to a report by PennEnvironment earlier this year, Chesapeake had the second highest number of violations of any company in Pennsylvania from 2008 to 2011.

In West Virginia, the Justice Department has undertaken a criminal investigation of alleged Clean Water Act violations by Chesapeake in the northern part of the state. The administrative actions from U.S. EPA that preceded that investigation were addressed, uncharacteristically, directly to McClendon himself.

And after McClendon shook up the industry with his call for fracturing disclosure, it was other companies that took the lead in publicly disclosing ingredients well by well (Greenwire, July 15, 2010). Chesapeake spokesman Jim Gipson rejected the idea that the company has a poor environmental record.

"Despite drilling more than twice as many wells as the next most active operator in America, we have an excellent safety record, and one of the lowest environmental incident rates in the industry," Gipson said.

The investors with a keen interest in social responsibility say a company's environmental compliance can say a lot about how well a company is managed.

"The question is how they're managing risk. On an array of risks, financial, environmental, there's a lot of overlap there," said Sanford Lewis, a lawyer in Amherst, Mass., who advises investors on social responsibility.

The classic example is BP PLC and the Deepwater Horizon spill.

BP had sought to build a green reputation. Former CEO John Browne made BP one of the world's first oil giants to deem climate change a problem. It adopted a green logo, literally, and marketed itself as "Beyond Petroleum."

But social investors said the facts on the ground belied that image.

"They do have a solar component, but their safety record was atrocious," said Tessie Petion, vice president for responsible investment research at Domini, which had decided against investing in BP far ahead of the spill.

With Chesapeake, the problems have manifested themselves much less tragically than the BP spill, but still, a large company is foundering.

Calvert's Bugala says much of the problem is that the drilling boom has meant rapid growth for the drilling companies. Their newfound size, he said, means more scrutiny and more responsibility.

"This new era will mean a lot more accountability for guys who were boot-strapping wildcatters just a little while ago," he said. "The companies that don't improve governance will get a rude awakening."