WV $hale Development Le$$ Than Economic Promi$e

by Duane Nichols on February 23, 2019

West Virginia Shale Development Falls Short of Economic Promise

By Sean O’Leary, WV Center on Budget & Policy, February 7, 2019

The nearly six-fold increase in West Virginia’s natural gas production in the last decade, due largely to shale development, or fracking, has fallen short of expectations for economic growth, job creation, and tax revenue generation, according to a new report released by the Institute for Energy Economics and Financial Analysis (IEEFA) and the West Virginia Center on Budget and Policy. Read report.

The report, Falling Short: Shale Development in West Virginia fails to deliver on economic promises, finds that the shale industry has underperformed economically due to the falling price of natural gas, which has cut into the industry’s profits and under-delivered state tax revenues. It has also missed expectations of creating jobs, reducing poverty, and spurring wider economic growth.

The paradox of a region rich in natural resources that fails to develop economically is known as the “resource curse.” The report asks how West Virginia, which historically exhibits signs of a “resource curse” in the coal industry, can avoid a similar fate with natural gas.

The report recommends increasing the severance tax rate from 5 to 10 percent on all minerals, or at least natural gas, natural gas liquids, and oil that are mostly coming from shale development. Proceeds would finance a Future Fund to diversify economic development and promote state initiatives that rely less on resource extraction and the vagaries of energy markets.

Key findings include:

>> The economic development gains of the shale industry have underperformed initial projections partly due to exaggerated early claims made by the industry and industry-funded studies.

>> Planners failed to anticipate the significant and sustained collapse in natural gas prices resulting from large increases in production.

>> Severance tax revenues grew through Fiscal Year 2015 and then fell off. Fiscal Year 2018 natural gas severance tax revenues were only 15% higher than FY 2008 revenues, adjusted for inflation.

The growth in employment from 2008 to 2017 has been in natural gas pipeline construction, largely temporary jobs while jobs in drilling and related activities have actually declined—about 40% of pipeline construction jobs are held by out-of-state workers.

Natural gas production is concentrated in six of the state’s 55 counties which produce 80% of West Virginia’s natural gas.

Early studies failed to anticipate the collapse of coal mining, driven in large part by the glut of inexpensive shale gas.

“Today, the natural gas industry is again promising significant economic benefits from what it sees as the next big opportunity: Appalachian petrochemical development,” said IEEFA energy analyst Cathy Kunkel, adding, “We find that such claims are likely to be overstated.”

West Virginia has a long history of economic boom-and-bust tied to coal extraction. Despite its vast natural resource wealth, the state has consistently ranked among the poorest in the nation.

“We are looking at how West Virginia can avoid repeating the same mistakes it has with the coal industry and use its natural gas and other resources to contribute to lasting in-state wealth,” said Ted Boettner, Executive Director of the West Virginia Center on Budget & Policy.

See the report here:
http://ieefa.org/wp-content/uploads/2019/02/West-Virginia-Shale-Development-Falls-Short_February-2019.pdf

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Fines plus restorations become more expensive

Regulation and Enforcement of Good Practice for Marcellus Shale Drilling, Fracking and Pipelining are Challenging

Information Compiled by FrackCheckWV, Primarily From SkyTruth, Shepherdstown, WV

>>> PA Permit Violation Issued to Cnx Gas Co Llc in South Franklin Twp, Washington County
Description: Administrative violation issued on 2019-01-30 to Cnx Gas Co Llc in South Franklin Twp, Washington county. 78.55(a) – CONTROL AND DISPOSAL PLANNING – Operator failed to prepare and implement a plan under 25 Pa. Code Section 91.34 for the control and disposal of fluids, residual waste and drill cuttings, including tophole water, brines, drilling fluids, additives, drilling muds, stimulation fluids, well servicing fluids, oil, and production fluids from the drilling, alteration, production, plugging or other activity associated with oil and gas wells.

>>> PA Permit Violation Issued to Cnx Gas Co Llc in South Franklin Twp, Washington County
Description: Environmental Health & Safety violation issued on 2019-01-30 to Cnx Gas Co Llc in South Franklin Twp, Washington county. 78.57(a) – CONTROL, STORAGE AND DISPOSAL OF PRODUCTION FLUIDS – Operator failed to collect the brine and other fluids produced during operation, service and plugging of the well in a tank, pit or a series of pits or tanks, or other device approved by the Department or Operator discharged brine or other fluids on or into the ground or into waters of the Commonwealth.

>>> PA Permit Violation Issued to Cnx Gas Co Llc in South Franklin Twp, Washington County
Description: Environmental Health & Safety violation issued on 2019-01-30 to Cnx Gas Co Llc in South Franklin Twp, Washington county. 78.54 – GENERAL REQUIREMENTS – Operator failed to control and dispose of fluids, residual waste and drill cuttings, including tophole water, brines, drilling fluids, drilling muds, stimulation fluids, well servicing fluids, oil, and production fluids in a manner that prevents pollution of the waters of the Commonwealth.

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>>> PA Permit Violation Issued to Rice Drilling B Llc in Franklin Twp, Greene County
Description: Administrative violation issued on 2019-01-22 to Rice Drilling B Llc in Franklin Twp, Greene county. OGA3211(H) – WELL PERMITS – LABELING – Failure to install, in a permanent manner, the permit number on a completed well.

>>> PA Permit Violation Issued to Rice Drilling B Llc in Franklin Twp, Greene County
Description: Environmental Health & Safety violation issued on 2019-01-22 to Rice Drilling B Llc in Franklin Twp, Greene county. CSL 401 – PROHIBITION AGAINST OTHER POLLUTIONS – Discharged substance of any kind or character resulting in pollution of Waters of the Commonwealth.

>>> PA Permit Violation Issued to Rice Drilling B Llc in Franklin Twp, Greene County
Description: Environmental Health & Safety violation issued on 2019-01-22 to Rice Drilling B Llc in Franklin Twp, Greene county. CSL 402(b) – POTENTIAL POLLUTION – Conducting an activity regulated by a permit issued pursuant to Section 402 of The Clean Streams Law to prevent the potential of pollution to waters of the Commonwealth without a permit or contrary to a permit issued under that authority by the Department.

>>> PA Permit Violation Issued to Rice Drilling B Llc in Franklin Twp, Greene County
Description: Environmental Health & Safety violation issued on 2019-01-22 to Rice Drilling B Llc in Franklin Twp, Greene county. 78.54 – GENERAL REQUIREMENTS – Operator failed to control and dispose of fluids, residual waste and drill cuttings, including tophole water, brines, drilling fluids, drilling muds, stimulation fluids, well servicing fluids, oil, and production fluids in a manner that prevents pollution of the waters of the Commonwealth.

>>> PA Permit Violation Issued to Rice Drilling B Llc in Franklin Twp, Greene County
Description: Environmental Health & Safety violation issued on 2019-01-22 to Rice Drilling B Llc in Franklin Twp, Greene county. 78.57(a) – CONTROL, STORAGE AND DISPOSAL OF PRODUCTION FLUIDS – Operator failed to collect the brine and other fluids produced during operation, service and plugging of the well in a tank, pit or a series of pits or tanks, or other device approved by the Department or Operator discharged brine or other fluids on or into the ground or into waters of the Commonwealth.

SkyTruth, P.O. Box 3283, Shepherdstown, WV 25443
(304) 885-4581, info@skytruth.org

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US Department of Justice, Office of Public Affairs

Note the Ohio River (at risk) at upper left

FOR IMMEDIATE RELEASE: Press Release 19-101, February 11, 2019

U. S. and West Virginia Reach Settlement With Antero Resources Corporation for Clean Water Act Violations at 32 West Virginia Sites

The Department of Justice, the United States Environmental Protection Agency (EPA), and the West Virginia Department of Environmental Protection (WVDEP) announced that they have reached a settlement with Antero Resources Corporation resolving alleged violations of Section 404 of the Clean Water Act (CWA) at 32 sites in Harrison, Doddridge, and Tyler Counties in West Virginia.

The settlement filed in U.S. District Court for the Northern District of West Virginia requires Antero to pay a civil penalty of $3.15 million and to conduct restoration, stabilization, and mitigation work at impacted sites. Antero will also provide mitigation for aquatic resource impacts.

“The Department of Justice is pleased to join with the EPA and the West Virginia Department of Environmental Protection in reaching this settlement and will continue to work with its law enforcement partners to hold corporations accountable for violating the nation’s environmental laws,” said Assistant Attorney General Jeffrey Bossert Clark of the Environment and Natural Resources Division.

“This settlement seeks to rectify harm done to U.S. waters from unauthorized activities undertaken by Antero, and demonstrates that federal and state regulators are committed to pursuing violations that threaten human health and the environment,” said EPA Regional Administrator Cosmo Servidio.

Impacts to aquatic resources will be partially offset at a 51.5-acre permittee-responsible mitigation site that will restore, enhance, create, and preserve over 11,500 linear feet of streams and more than 3 acres of wetlands. The EPA-estimated value of the proposed mitigation and restoration is $8 million.

The violations involved the unauthorized disposal of dredged and fill materials into waters of the United States at or near sites where Antero had constructed well pads, compressor stations, impoundments, pipeline crossings, access roads, and other structures associated with Marcellus Shale natural gas extraction by means of hydraulic fracturing, also known as fracking.

While each of the 32 sites varied regarding the extent of the impact to wetlands and streams, the unauthorized activities impacted more than 19,000 linear feet of streams and over four acres of wetlands and included:

>> Stream impoundments;
>> Filling wetlands and streams for compressor station pads;
>> Realigning and culverting stream segments; and
>> Failing to fully restore “temporary” impacts.
>> Approximately half of the sites were identified by Antero through a self-audit. Several of the sites were associated with construction failures or “slips” from access roads and pads.

The proposed settlement which is subject to a 30-day public comment period is available at: https://www.justice.gov/enrd/consent-decrees

For more information about Clean Water Act Section 404 protection of wetlands and waterways, visit: https://www.epa.gov/cwa-404

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