May 2016 • Issue 73The monthly newsletter of the Pennsylvania Independent Oil & Gas Association

(Continues on page 3)

ing flaws, which closely track industry’s objections:• Violations of the Regulatory Review Act. The department

circumvented various requirements of this law, including not pro-viding a complete regulatory analysis form, a lack of acceptablefinancial data to support the department’s findings, a failure todemonstrate a compelling need for the regulations, failure toaddress alternatives for small businesses, and a failure to providethe forms and guidance documents intended to be used to imple-ment the regulations.

• Violation of Act 126 of 2014. This Fiscal Code amendmentrequired the EQB to promulgate separate rulemakings for con-ventional and unconventional oil and gas operations.“Unfortunately,” the Senate committee wrote, “the departmentsimply copied and pasted the regulations into separate chaptersin the rulemaking [Chapter 78 for conventional operations andChapter 78a for unconventional]. The two industries are different

in size and scope, and should be treatedaccordingly through separate rulemak-ings.” The EQB promulgated andapproved the rulemaking as a singlepackage in a single vote in February.

• Violation of Supreme Courtorder enjoining parts of Act 13. In itsDecember 2013 Robinson Townshipdecision, the Pennsylvania SupremeCourt invalidated sections of Act 13 thatDEP is relying on to justify expandingprotections of public resources. PIOGA

Despite ample evidence showing that the Department ofEnvironmental Protection’s Chapter 78/78a rulemakinghas not been promulgated in accordance with law, the

Independent Regulatory Review Commission (IRRC) on April21 voted to approve the regulations. The 3-2 vote along partylines came after seven hours of mostly negative testimony beforea packed meeting room in Harrisburg.

In a busy week and a half leading up to the IRRC action, apair of House and Senate committees disapproved the regulationsin votes nonbinding on IRRC, while the Commonwealth Courtand Pennsylvania Supreme Court declined a request by thePennsylvania Independent Petroleum Producers (PIPP), support-ed by PIOGA, to block the commission from acting on the regu-lation package because the rules for conventional wells were notseparated from those for unconventional wells as required by a2014 amendment to the Fiscal Code.

Each time DEP, via the Environmental Quality Board, adoptsnew regulations, the House and Senate Environmental Resourcesand Energy committees have an opportunity to review the rules.It’s rare that the committees disapprove a set of regulations, butin this case both did in votes that occurred on April 12. A disap-proval vote from a standing committee does not stop the regula-tions from moving forward, but it does start the process of allow-ing the legislature to take the formal step of moving a disap-proval resolution if the IRRC approves a regulation (more on thatbelow).

“DEP and the EQB have promulgated regulations that arefatally flawed,” said Representative Martin Causer (R-McKean),who offered the disapproval motion in the House EnvironmentalResources and Energy Committee. “Both the Chapter 78 and 78aregulations are unlawful and should be disapproved.”

In letters to the IRRC detailing the reasons for their negativevotes, the House and Senate committees highlighted the follow-

Grants for natural gas expansion . . . . . . . . . . 4Wolf’s tax would be nation’s highest . . . . . . . . 6PIOGA air quality compliance training . . . . . . 7Register now for the Summer Picnic . . . . . . . 7New Safety Committee chair announced . . . . 7Robinson Township reverberations . . . . . . . . . 8In the name of clean . . . . . . . . . . . . . . . . . . . 12Four decades of unimaginable change. . . . . 14Safety during tank gauging and sampling . . 17Out and about with the outreach staff . . . . . 19Water use in the Susquehanna Basin . . . . . 20

DRBC announces review of PennEast . . . . . 20Science advisors affirm EPA finding . . . . . . . 22Wolf advisor nominated to PUC . . . . . . . . . . 23New PIOGA members . . . . . . . . . . . . . . . . . 23Oil & Gas Trends. . . . . . . . . . . . . . . . . . . . . . 24April Spud Report . . . . . . . . . . . . . . . . . . . . . 26Calendar of Events . . . . . . . . . . . . . . . . . . . . 27PIOGA contacts . . . . . . . . . . . . . . . . . . . . . . 27

IRRC votes to approve Chapter 78 regulations

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is currently challenging DEP’s use of these enjoined sections in alawsuit before Commonwealth Court (January PIOGA Press,page 1). In this lawsuit, DEP for the first time argues that it hasauthority separate and apart from the enjoined sections [primari-ly 3215(c) and (e)] to impose its public resource protection regu-lation requirements. Oral argument on the merits of PIOGA’sand DEP’s claims is scheduled for June 8 before theCommonwealth Court en banc (the full court).

• Technical deficiencies and drafting errors. The final ver-sion of the rulemaking contains numerous technical deficiencies,drafting errors, internal contradictions and other problems DEPhas chosen to ignore, despite being informed of them by manycommentators. The department also ignored requests by its ownadvisory committees and legislators to correct technical deficien-cies. DEP’s Oil and Gas Technical Advisory Board andConventional Oil and Gas Advisory Committee voted againstmoving the regulations forward.

• Acknowledged absence of statutory authority. There aresections of the regulations in which DEP acknowledges it has nostatutory authority whatsoever, including the area of review rulesand the mandate of voluntary Act 2 standards for cleaning spills.“Instead of drafting such rules to conform with statutory authori-ty,” the House committee asserted, “the deputy secretaryexplained that he and his staff used a ‘why shouldn’t we have?’standard for the rulemaking.” DEP also attempts to nullifyexemptions in statutes by using the regulations to apply provi-sions in those statutes to the oil and gas industry despite theexemptions the General Assembly included in those statutes.

IRRC voteIn the end, the IRRC was not swayed by the long list of defi-

ciencies with the regulations highlighted by lawmakers, DEP’sown advisory committees, organizations such as PIOGA, thePennsylvania Grade Crude Oil Coalition and the Marcellus ShaleCoalition and, perhaps most importantly, by many oil and gasoperators on behalf of their companies and families and theiremployees and their families.

David Sumner, the IRRC’s executive director, defended thecommission’s decision in comments to The Bradford Era, sayingthe IRRC has an obligation to determine whether a regulationmeets the requirements of the Regulatory Review act in terms ofthe agency’s statutory authority, the reasonableness of the ruleand the financial impact.

“After a thorough review, our commission determined thatregulation was lawful and in the public interest,” he said.PIOGA believes the commission’s determination was contrary tothe recommendation of IRRC staff.

PIPP lawsuitThe Pennsylvania Independent Petroleum Producers on March

24 filed suit charging that DEP and the EQB violated Act 126 byfailing to promulgate proposed regulations governing conven-tional oil and gas wells separately from proposed rules applyingto unconventional wells (April PIOGA Press, page 1). The suit,which was joined by PIOGA, asked the Commonwealth Court toblock IRRC from considering the Chapter 78/78a regulationpackage and to direct DEP to start over again with the rulemak-ing.

However, in an April 15 order the court refused the request to

Page 4 The PIOGA Press

bar the IRRC’s consideration of the rulemaking package. SeniorJudge James Gardner Colins wrote that “no relief can be grantedto PIPP...because its claims are not ripe. Where the governmentalact that would affect the petitioner has not occurred and it isuncertain whether it will occur, the requirement of an actual con-troversy is not satisfied.”

Colins argued that the IRRC could reject or change the regu-lations, saying, “It is uncertain whether the final form regulationswill become final regulations in their current form. “If the finalform regulations are promulgated as final regulations, PIPP andits members may seek declaratory and injunctive relief at thattime.

PIPP and PIOGA appealed the order to the Supreme Court onApril 18, but three days later the high court denied the requestfor a stay.

Kevin Moody, PIOGA general counsel and vice president forgovernment affairs, told The American Oil & Gas Reporter thatJudge Colins missed the point by focusing on the IRRC’s review.Moody explained that Act 126 “required DEP and EQB, notIRRC, to separately propose regulations for conventional andunconventional wells. The legal violation by DEP and EQB hasalready occurred and doesn’t depend on the conventional regula-tions becoming final, and nothing IRRC does can change thatbecause: first, IRRC doesn’t propose regulations; second,DEP/EQB can promulgate these regulations without change evenif IRRC disapproves and recommends changes; and third, IRRCcannot change the EQB rules, only DEP/EQB can do that, andthey’ve shown absolutely no inclination to do so despite theobvious legal and operational flaws that have been pointed out.”

What’s next?The state attorney general still must review the legality of the

regulations before they may be formally published in thePennsylvania Bulletin to become effective, which DEP antici-pates by June or July. PIOGA is working with others opposed tothe regulations to inform the attorney general’s review. In themeantime, two separate initiatives were under way in the GeneralAssembly.

One is Senate Bill 1011, sponsored by Senator ScottHutchinson (R-Venango), which again addresses the matter ofDEP developing separate regulations for conventional andunconventional operators. The bill would block or nullify thecurrent Chapter 78 rulemaking and would also apply to futureregulatory initiatives. As of this writing, the bill was before the

full Senate. Governor Wolf has twice v etoed Fiscal Code legisla-tion containing the same language, and that is probably whatwould occur if SB 1011 makes it to the governor’s desk.

At the same time, lawmakers have begun to consider a resolu-tion that would block the Chapter 78/78a rules from going intoeffect. This step is authorized as part of Pennsylvania’s rulemak-ing process and allows the House and Senate 30 calendar days or10 legislative days, whichever is longer, to adopt a concurrentresolution stopping the regulations.

On May 3, the House Environmental Resources and EnergyCommittee voted to approve such a resolution. The measure stillmust pass the full House and then the Senate before being sent tothe governor. It’s anticipated that Wolf would subsequently vetothe resolution. The legislature would need a two-thirds’ majorityvote to override such a veto.

That leaves the PIPP/PIOGA lawsuit as the last best hope offorcing the Chapter 78 regulations to be rewritten. In all likeli-hood, the case will ultimately be decided by the state SupremeCourt and probably not before the regulations take effect andcause substantial harm to the industry, our employees and fami-lies, and Pennsylvania’s economy. ■

Fiscal Code legislation helps fundnatural gas expansion

The last piece of Pennsylvania’s long-overdue 2015-16budget became law last month without GovernorWolf’s signature and allocates $12 million in grants for

projects that expand natural gas service.The Fiscal Code is the piece of the annual budget package

that directs how revenue is to be spent by the state. House Bill1589 was that portion of the FY2015-16 budget that Wolfallowed to become law without his signature on April 25,after he vetoed a previous Fiscal Code bill a month earlier.

While the final Fiscal Code does not include the industry-supported language directing the Department ofEnvironmental Protection to start over again with its Chapter78 rulemaking aimed at conventional oil and gas operations(see related article on page 1), HB 1589 does include provi-sions beneficial to the industry.

The new law creates the Natural Gas InfrastructureDevelopment Fund and gives the Commonwealth FinancingAuthority the power to provide grants for projects that bringnatural gas service to hospitals, businesses, economic devel-opment organizations, municipalities, counties and school dis-tricts. $12 million is allocated from funds generated under theAlternative Energy Investment Act to provide grants rangingfrom as little as $1,000 to as much as 50 percent of a gas-expansion project. Applications will be given priority that willresult in adjoining properties also obtaining natural gas serv-ice.

The 2008 Alternative Energy Investment Act created a fundto increase the development and use of alternative and renew-able energy, improve energy efficiency, and reduce energyconsumption.

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The natural gas severance tax included in Governor TomWolf’s budget proposal for the coming fiscal year wouldbe the nation’s highest, according to an analysis by the

state’s Independent Fiscal Office (IFO). Even though Wolf’s fis-cal year 2016-17 budget calls for a 6.5-percent severance tax, theIFO calculated the effective rate would be 8.5 percent, based onthe prices Pennsylvania producers actually receive for their gas.

The governor’s proposed tax would rely on prices paid atHenry Hub. The IFO analysis used pricing from the Leidy andDominion South trading hubs to determine the effective tax rate.Prices at these regional hubs are significantly less than the HenryHub pricing. The differential for 2015 was -$1.26 in 2015 and isexpected to be -$0.86 this year, gradually improving to -$0.70 by2021.

Under the Wolf proposal, producers would be allowed to

deduct their Act 13 impact fee payments, but would not be per-mitted to deduct post-production costs in calculating their sever-ance tax liability. The IFO’s effective tax rate calculation of 8.5percent includes 7.4 percent for the tax itself and 1.1 percent forthe impact fee.

Comparing the Wolf tax against the effective severance taxrates in six other producing states, the IFO found Pennsylvania’swould be the highest:

Pennsylvania 8.5 percentOklahoma 5.4West Virginia 5.0Arkansas 4.1Louisiana 3.9Texas 3.9Ohio 1.1

Net severance tax revenue for 2016-17 under the Wolf budgetproposal was estimated by the IFO at $217.8 million (assumingit would become effective halfway through the budget period),$517 million in 2017-18, $593.2 in 2018-19, $747.7 in 2019-20and $968.5 million for 2020-21.

The impact fee calculations were part of an analysis of therevenue proposals in the FY 2016-17 budget proposal and can befound on the IFO’s website, www.ifo.state.pa.us. ■

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Register nowfor PIOGA’sSummer Picnic

One of our mostlaid-back and enjoy-able events is comingup soon—the June 6Summer Picnic atWanango Golf Clubin Reno. The day fea-tures a golf tourna-ment on one of north-westernPennsylvania’s mostscenic courses, fol-lowed by a socialhour and a delicioussteak fry.

American Refining Group, Inc. is the title spon-sor of this year’s event. Additional sponsor opportu-nities are available.

For complete details and registration, visit thePIOGA Events section at www.pioga.org.

Other summer eventsDon’t forget to mark your calendars for PIOGA’s

other 2016 summer events, both of which arebeing held on new dates:

• PIOGA Pig Roast, Equipment Show andTechnical Conference – August 23-24, SevenSprings Mountain Resort, Champion

• Divot Diggers Golf Outing – September 22,Tam O’Shanter Golf Club, Hermitage

Coming up soon: PIOGA air qualitycompliance training

Only a handful of seats are left for the second event inPIOGA’s 2016 technical seminar series, this one focusingon air quality compliance. The May 25 training will pro-

vide a basic understanding of the factors that influence air emis-sions, an overview of regulations as they relate to oil and gasoperations, and testing methods.

Partnering with PIOGA are member companies CleanAirEngineering Inc. and All4 Inc. It takes place at CleanAirEngineering’s offices in Pittsburgh. The program runs from 9a.m. to 3 p.m. and covers these topics:

• Introduction to federal air quality regulations• Demonstrating compliance with 40 CFR Part 60, Subpart

OOOO• Subpart OOOO testing• “RICE” compliance requirements for owners and operators• “RICE” testing• 40 CFR Part 98, Subpart W reporting thresholds and emis-

sions estimating• LDAR tools of the trade and demonstration• Regulatory update (Subpart OOOOa, Pennsylvania methane

rules, control technique guideline documents, etc.)• Next generation complianceThe registration fee includes lunch and professional develop-

ment hours. Registration is available through PIOGA’s website,and the registration deadline is May 20. If the event is filled upor has passed by the time you read this, please email DanielleBoston at danielle@pioga.org to request to be placed on a wait-ing list in the event another session is scheduled. ■

New Safety Committee chair

We are pleased to announce that Wayne Vanderhoof, CSP isthe new chairman of PIOGA’s Health & Safety

Committee. President of RJR Safety, Inc., Wayne has more than25 years’ experience in the safety and health field. He is a long-

time, active member of the PIOGASafety Committee.

Our thanks go to the outgoingchair, Pat Carfagna of CONSOLEnergy, for his years of work withthe committee.

The committee typically meetsevery other month on the firstWednesday at the RegionalLearning Alliance in Cranberry

Township and welcomes PIOGA member involvement as theydiscuss regulatory issues, share best practices and work togetherto improve the industry in matters relating to safety. If you areinterested in participating, please email Tracy Zink attracy@pioga.org. ■

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Robinson Township argumentscontinue to reverberate

Three years after the Pennsylvania Supreme Court renderedits controversial decision in Robinson Township v.Commonwealth, the plurality opinion is still front and

center in battles over local regulation of oil and gas activities.The 2013 Robinson Township case, in which a three-justice plu-rality of the Supreme Court relied on a new and much moreextensive interpretation of the Pennsylvania EnvironmentalRights Amendment (ERA) to invalidate certain provisions of Act13, made its way back to the Supreme Court for consideration ofnew issues in 2016. In the intervening time, the CommonwealthCourt, county courts of common pleas and local zoning hearingboards grappled with the meaning of the 2013 decision and itsimpact on local zoning authority. These cases continue to worktheir way through the appeals process.

Robinson Township returns to the Pennsylvania SupremeCourt

In March 2016 the Supreme Court heard argument in theRobinson Township challenge to Act 13, the General Assembly’s2012 comprehensive update to the former Oil and Gas Act.When it first decided the case in 2013, a three-justice plurality ofthe Supreme Court relied on a novel and broad interpretation ofthe ERA (i.e. that the ERA imposes on the Commonwealth andits municipalities a fiduciary duty to “conserve and maintain”natural resources) to invalidate several sections of Act 13, includ-ing two key sections of Chapter 33 which placed limits on localgovernment authority to regulate the oil and gas industry.

The court remanded several undecided issues to theCommonwealth Court, including whether the remaining localgovernment provisions of Act 13 could stand alone as “sever-able” from the invalidated ones, or whether they must fail along-side them. The remanded sections address the conferral upon thePennsylvania Public Utility Commission (PUC) andCommonwealth Court of original jurisdiction to review localordinances regulating the industry (as opposed to having suchchallenges filed with local zoning hearing boards or governingbodies), the imposition of attorney’s fees to prevailing parties inordinance challenges in certain instances and a municipality’sloss of its Act 13 impact fees if its ordinance was invalidated.The Supreme Court also remanded the issues of: (1) whethernotice by the Pennsylvania Department of EnvironmentalProtection (DEP) only to owners of public drinking water sys-tems, but not of private water supplies, following a drilling-relat-ed spill was unconstitutional; (2) whether prohibiting disclosureof the identity and amount of hydraulic fracturing additivesclaimed to be proprietary information was unconstitutional; and(3) whether Act 13 unconstitutionally conferred the power ofeminent domain for gas storage or reservoir protective areas on aprivate party for a private purpose.

The Commonwealth Court rendered its decision in July 2014,invalidating the balance of the Chapter 33 local government pro-visions, with limited exceptions.1 The definitions in Section 3301and general preemption language in Section 3302, which essen-tially preserved the preemption language of Section 602 of theformer Oil and Gas Act, appear to remain in effect. The courtupheld the remaining non-local government provisions of Act 13.

The PUC and the participating municipali-ties appealed the decision to the SupremeCourt, where the case is currently pending.

Supreme Court considers argumentsbased on 2013 Robinson Townshipplurality opinion in PennsylvaniaEnvironmental Defense Foundation v.Commonwealth

Pennsylvania Environmental DefenseFoundation v. Commonwealth (PEDF) pres-ents the Supreme Court with its first oppor-tunity to interpret and apply the 2013Robinson Township decision. PEDF hadchallenged Fiscal Code amendments thatpermitted the transfer of monies from theOil and Gas Lease Fund, which is tradition-ally used to maintain and conserve publicnatural resources, to fund the PennsylvaniaDepartment of Conservation and NaturalResources’ operations, the Treasury, and theGeneral Appropriations Act of2014. After the RobinsonTownship decision, PEDF addedan argument that these amend-ments violated the ERA because they fail to fulfill the duty toconserve and maintain the public natural resources for the benefitof the people.

The Commonwealth Court rejected PEDF’s constitutionalchallenges and clarified the legal weight to be given to theRobinson Township plurality decision.2 In a critical footnote, theCommonwealth Court stated that the Robinson Township deci-sion is not binding precedent, but merely persuasive authority.The court also acknowledged the remaining legitimacy of thepre-existing test for constitutionality under the ERA establishedby the Commonwealth Court in Payne v. Kassab3. Payne empha-sized the need for the Commonwealth to balance its duties underthe ERA against other duties owed by the Commonwealth to itscitizens and acknowledged that the protections of the ERA arenot absolute. PEDF appealed the decision to the PennsylvaniaSupreme Court.

Commonwealth Court rejects Robinson Township-basedargument that oil and gas uses are incompatible withagriculture, upholds approval of compressor station inagricultural district

In January 2016, the Pennsylvania Commonwealth Court inKretschmann Farm, LLC v. Township of New Sewickley upheldthe conditional use approval of a Cardinal PA Midstream, LLCnatural gas compressor station located in New SewickleyTownship’s A-1 Agricultural District.4 Owners of an adjacentorganic farm objected to the application and appealed itsapproval to both the trial court and Commonwealth Court.

During the initial public hearing before the township board ofsupervisors, Cardinal presented evidence of compliance with allordinance requirements. The owners of the organic farm thenexpressed concern over potential impacts of the compressor sta-tion on their produce, water and air, and the compatibility of nat-ural gas drilling operations with agricultural uses. Township resi-dents also questioned the potential placement of pipelines in the

Krista-Ann M.Staley

Blaine A. Lucas

Authors:

February 2014 Page 9May 2016 Page 9

township, light pollution from flares, the compatibility of com-pressor stations with uses in residential/agricultural areas, andthe potential long-term effects of emissions generated by oil andgas operations.

The board found that Cardinal complied with all of the zoningordinance’s express standards and criteria. It approved the appli-cation subject to 33 conditions, several of which were inresponse to the farmers’ and others’ concerns. The adjacent farm-ers appealed the decision to the trial court, which affirmed theapproval, as did the Commonwealth Court.

The adjacent farmers’ arguments included one based on theRobinson Township plurality opinion, namely that the zoningordinance violated their constitutional rights by permitting acompressor station in the A-1 District. Specifically, the farmersargued that: (1) the zoning ordinance was not tailored to the localconditions within the community; and (2) the ordinance’s 750-foot setback provision was invalid because it is the same as theuniform setback invalidated in Act 13 by Robinson Township.

The Commonwealth Court rejected these arguments. Thecourt noted that the status of the cited Robinson Township opin-ion as a plurality rendered the opinion binding only on the par-ties to that case. The court also explained that the RobinsonTownship decision did not nullify the zoning ordinance’s 750-foot setback because the decision invalidated a state law; it didnot discuss whether a municipality could choose to adopt a 750-foot setback, as New Sewickley Township did. The court alsofound that the adjacent farmers did not follow the procedure nec-essary to challenge the validity of a zoning ordinance (which theadjacent farmers previously initiated, but later withdrew in a sep-arate action before the township zoning hearing board). Rather,

they incorrectly tried to raise validity arguments in the context ofa conditional use appeal. Accordingly, the Commonwealth Courtrejected the adjacent farmers’ constitutional argument.

The Commonwealth Court found that the applicant provedcompliance with the zoning ordinance and, therefore, “it estab-lished that its proposed use was presumptively consistent withthe public welfare.”5 Although there is no automatic right toappeal, the adjacent farmers have filed a petition for allowance ofappeal with the Pennsylvania Supreme Court.

The Commonwealth Court’s ruling in Kretschmann Farm isconsistent with its previous decision in Gorsline v. Board ofSupervisors6, upholding a local decision to permit oil and gaswells in a Residential Agriculture zoning district. The Gorslinecase is summarized in the October 2015 issue of the PIOGAPress.

Zoning ordinances continue to survive validity challengesMunicipal zoning hearing boards in three of the five

Pennsylvania municipalities facing Robinson Township-basedzoning ordinance substantive validity challenges have upheldthose ordinances. All of the cases generally rely on the theorythat the regulations in the challenged zoning ordinances areinsufficient to protect the environment to the extent required byRobinson Township and the ERA. Objectors commonly arguethat zoning ordinances cannot permit oil and gas uses in agricul-tural or residential districts and that the municipalities mustengage in extensive environmental assessments when enactingregulations.

• In Middlesex Township, Butler County four residents, theClean Air Council of Philadelphia and the Delaware Riverkeeper

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Network challenged the local zoning ordinance and issuance of awell permit. The Middlesex Township Zoning Hearing Boardrejected the challenge, and the Butler County Court of CommonPleas upheld that decision on appeal.7 This case is currently onappeal before the Commonwealth Court.

• Three residents challenged Allegheny Township,Westmoreland County’s zoning ordinance and the issuance of agas well pad approval. The Allegheny Township Zoning HearingBoard rejected the challenge and the Westmoreland CountyCourt of Common Pleas upheld that decision on appeal.8 Anappeal in this case is pending in the Commonwealth Court.

• Pulaski Township, Lawrence County, faced a zoning ordi-nance validity challenge from four residents, which the PulaskiTownship Zoning Hearin g Board rejected. An appeal from thatdecision is currently pending before the Lawrence County Courtof Common Pleas.9

The remaining two Robinson Township -based zoning ordi-nance validity challenges filed in Pennsylvania have not beendecided on the merits at the local level. As referenced withrespect to the Kretschmann Farms summary above, objectors inNew Sewickley Township, Beaver County, withdrew their caseafter presenting their witnesses, and before ordinance proponentspresented their cases. A validity challenge filed in RobinsonTownship, Washington County, is pending in the Court ofCommon Pleas, on appeal from the Robinson Township ZoningHearing Board’s dismissal of the case on standing and ripenessgrounds. ■

If you would like additional information about developments in this arti-cle, please contact Krista Staley (412-394-5406 or kstaley@babst-

calland.com) or Blaine Lucas (412-394-5657 or blucas@babst-calland.com).

1 Robinson Township v. Commonwealth, 96 A.3d 1104 (Pa. Commw. Ct. 2014).2 108 A.3d 140 (Pa. Commw. Ct. 2015).3 312 A.2d 86, 94 (Pa. Commw. Ct. 1973) (en banc), aff’d, 361 A.2d 263 (Pa.1976).4 131 A.3d 1044 (Pa. Commw. Ct. 2016).5 2016 Pa. Commw. LEXIS 33 at *28.6 123 A.3d 1142 (Pa. Commw. Ct. 2015).7 Delaware Riverkeeper Network v. Middlesex Township Zoning Hearing Board,A.D. No. 15-10429 (Butler County Ct. Comm. Pls., November 19, 2015).8 Frederick v. Allegheny Township Zoning Hearing Board, Civil Division No. 1898of 2015 (C.P. Westmoreland Cnty., October 21, 2015).9 Chito v. Pulaski Township Zoning Hearing Board, Civil Division No 10467 of2015 (Lawrence County Ct. Comm. Pls.).

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Page 12 The PIOGA Press

In the name of cleanBy Joyce TurkalyDirector, Natural Gas Market Development

The Clean Power Plan focuses solely on one sector—thepower sector. Other sectors that are also greenhouse gasemitters include activities associated with agriculture,

forestry, energy production and energy consumption, transporta-tion, industrial processes, and waste disposal. When having con-versations at work or otherwise around the Clean Power Plan, itdoes not take long for one person to speak up and highlightpotential unintended consequences of this federal policy in oneform or another. Most of us don’t have to look too far to see theimpact that this policy has had on the coal industry. PennsylvaniaPUC Commissioner Robert Powelson shared his thoughts aboutthe economic impacts of the U.S. Environmental ProtectionAgency’s Clean Power Plan and Phase III of Act 129 at theAllegheny Conference’s Energy Alliance recent annual meetingin Pittsburgh.

Given that the majority of the attendees wish to remain com-petitive on energy rates in order to attract more business andincrease job opportunities and growth for Pennsylvania, theycame to hear if the Public Utility Commission stands with themin this mission. Powelson commented that Pennsylvania rankssecond for electric generation, nuclear generation and natural gasproduction and first for electricity exports. Instead of a policy, hereferred to the Clean Power Plan as an overlay, given thatPennsylvania was already implementing energy efficiency andrenewable goals via Act 129. The State Wide Evaluator (SWE)

year six report summarizes findings from the seven electric dis-tribution companies and can be found at www.puc.state.pa.us/Electric/pdf/Act129/SWE_PY6-Final_Annual_Report.pdf.

As most of us are already aware, the EPA’s final rule wasissued on October 23, 2015; by 2030, CO2 emissions frompower plants must be reduced by 32 percent when compared to2005 as the baseline year. By 2030 electric demand is anticipatedto decline by 4 percent; however, as a state we will continue ourstatus as power exporter; the Energy Information Administration(EIA) estimates that amount to be 98 TWh. The Clean PowerPlan established a target emissions rate for each state; this is theamount of CO2 that can be emitted per megawatt hour of power

Pennsylvania Public Utility Commissioner Robert Powelson.

May 2016 Page 13

produced; Pennsylvania’s metric goal is set at 1,052. To arrive atthis metric using EIA data, as a state our business as usual(BAU) is 158 TWh compared to demand of 139.6 TWh with EEand DR improvement of 18.4 TWh.

Within the plan, source pollutants were identified by energysource in new (111b) and in existing (111d) guidelines or targets.Newer combined cycle natural gas plants are proven to reduceSOx, NOx and mercury emissions are indeed noteworthy andputting Pennsylvania on a far more aggressive compliance time-line than even the federal mandates would suggest; given thenature of the economic dispatch of the market or clearing prices,natural gas units are clearing the market more frequently. A doc-ument that lists all new generation, entitled “PJM Queues underconstruction,” has been added to the PIOGA portal page underthe Pipeline and Gas Market Development Committee for use asa resource document by any member wishing to know whereconstruction is occurring within the PJM footprint.

Given that electricity is traded throughout the day and cannotcurrently be stored, it must be scheduled and dispatched givenhourly and even five-minute interval demand. Think about a nat-ural gas pipeline and various meters connected to the city gate: Ifthe demand side of the city gate fluctuated and could not be con-trolled or balanced without any additional pipeline capacity orstorage reserves, the gas market would look different than weknow it today.

If natural gas had a “neutral overseer“ operating all the trans-mission pipelines within a given footprint, clearing the marketcould mean that as the last producer (power generator) who bidits production into the market would set the price for that partic-ular hour in the day. So for illustrative purposes, if producer A,B, and C were considered individual wells (or units) producing(or generating) energy in the same geographic area (or zone),and all of their combined production equaled the hourly demand,the wholesale market would clear at that point and settle at thehighest or last price bid in that equaled the demand. In the elec-tric market, it works something like this: If producer B was

called on or needed to produce (demand was outpacing forecastin this hypothetical example), his bid in being the last amount ofenergy to fulfill or satisfy the needed demand or operatingrequirement, in addition to producer A and C’s gas would bringboth producer A and producer C the same price. This price stack-ing method is obviously different from the wholesale markets ofnatural gas and is actually run by an algorithm based on a fewfactors one which takes into consideration congestion.

Generation gets built in anticipation of the future clearingprice signals. Reliability, planning, compliance and investmentgo hand in hand. So, if you take a step back and observe thatpolicy is driving the market, a couple of things happen, some ofwhich have unintended consequences. Recall that I saidPennsylvania was second in the nation for nuclear? Well, giventhe economic dispatch, fewer and fewer nuclear units are clear-ing the market. Here is a zero-emitting resource that is beingbacked off as a result of lower natural gas clearing prices. Thereis concern here by way of the nuclear industry as well as variousstate commissions not knowing exactly how to address the treat-ment of nuclear when it comes to CPP, and, likewise, how tonavigate policy when there is confusion around picking winnersand losers. Department of Environmental Protection SecretaryQuigley was noted as saying that the administration is complyingwith the Clean Power Plan September 2016 compliance planningdeadline. Commissioner Powelson appeared to indicate that thePUC position is somewhat different from that of the administra-tion; the PUC appears to wish to encourage DEP to maintainPennsylvania’s diverse electric generation fuel mix and protectthe state’s position as a net energy exporter—both of whichrequire natural gas production. ■

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Page 14 The PIOGA Press

The unimaginable changes in domestic oil and gas industry four decadesafter the 1975 oil export ban and the 1977 Emergency Natural Gas Act

Perspectives of an in-house energy counsel40 years later

By Lawrence Nydes

The state of extreme oversupply andextremely low prices for oil and natu-ral gas that currently exist in our

country would have seemed unimaginable tomost citizens 40 years ago, especially to thisthen-young in-house counsel for a majorPennsylvania integrated oil and gas produc-tion company, interstate pipeline company, and multi-state publicutility company.

The 1970s were plagued by a series of energy crises in whichmany countries, including the United States, faced oil shortagesand high energy costs. For those of us who are old enough toremember, some of the more unfortunate resulting occurrenceswere ever- rising prices at the pump and odd-even rationingbased on a vehicle’s license plate number, with resulting longlines at gas stations across the country. This occurred primarilyfrom the 1973 OPEC oil embargo due to our country’s support ofIsrael in the 1973 Arab-Israeli war and also from diminishingdomestic production due to insufficient financial incentives fordomestic production.

In response to this growing crisis, Congress enacted theEnergy Policy and Conservation Act, which President Fordsigned it into law on December 22, 1975. The effect of this lawwas to place a ban on crude oil exports at a time in which oilsupply was low and costs were high. The political rationale wasthat domestic producers should not be exporting crude oil forprofits while U.S citizens were having difficulties affording highenergy prices and experiencing shortages at home.

The subsequent actions of the Carter administration providefurther evidence of the severe energy crisis that existed approxi-mately 40 years ago. After the change in administrations inJanuary 1977, and just over a year after the oil export ban hadbeen put into effect, issues with oil and natural gas supplyremained so serious that Congress enacted the EmergencyNatural Gas Act, which President Carter signed it into law onFebruary 2, 1977. This was the FIRST key piece of legislationsigned by Carter as president, which shows the importance ofthis act and the pressing nature of the ever-tightening energyshortage encumbering the nation at the beginning of his presi-dency. The purpose of this act was to restrict the delivery andtransportation of natural gas by authorizing the president todeclare natural gas emergencies in situations where there was aneed to combat severe natural gas shortages coupled withincreased demand.

This legislation came in response to the extreme cold weatherduring the winter of 1976-1977, which threatened the supply ofnatural gas for high-priority essential human need users, i.e.,hospitals, schools, nursing homes, day care centers,police/fire/emergency government facilities, residences, etc. Thislegislation permitted the reallocation of natural gas to criticalareas of the country to meet threats to life, safety and property.In this regard, it permitted the emergency sales of interstate natu-

ral gas from pipelines which had a relatively healthy supply ofnatural gas (mostly pipelines and served utilities in theSouthwest and Gulf Coast regions) to be able to transfer some ofthose supplies to pipelines and served utilities (mostly in theheavily populated Northeast and industrial regions in the UpperMidwest) experiencing a severe shortage of natural gas. Thissevere natural gas shortage not only caused significant curtail-ment of commercial and industrial customers (with its negativelabor force effects causing shutdowns and reduced production atplants and businesses throughout the Northeast and UpperMidwest), but, as indicated above also threatened reductions tohigh-priority essential human needs customers. Implementationof this emergency legislation was under the jurisdiction of theFederal Energy Regulatory Commission (FERC).

The FIRST filing with FERC under this act was made by theauthor of this article on behalf of his major diversified oil andgas company employer. His employer’s western Pennsylvaniautility division was in desperate need of additional natural gassupply to serve its high-priority users at the expense of its cur-tailed commercial and industrial suppliers and the commercialand industrial customers of other pipelines and their served utili-ties in other regions of the country from where the natural gaswas diverted. This emergency filing was approved by the FERCwithin a few days of its receipt and meeting with utility divisionrepresentatives, which was the FIRST approval order issued byFERC under this act.

At approximately the same time of this historic filing, thecompany’s Pennsylvania utility operations’ gas dispatch depart-ment was the featured FIRST story on Walter Cronkite’s CBSEvening News one night in February 1977. The utility division atthat time was the major supplier of natural gas to the City ofPittsburgh and certain nearby municipalities, whose rivers werefrozen due to the severe weather, preventing barges from deliver-ing needed fuel oil.

In the first four decades following the 1975 oil export ban andthe 1977 Emergency Natural Gas Act, there have been variousfewer emergency and more long-term actions to increase domes-tic production of oil and gas and decrease the need for such gov-ernment emergency actions in the future. Most notable was thenatural gas production price incentives under the Natural GasPolicy Act (NGPA) of 1978, which Congress enacted to beginthe deregulation of natural gas producers’ sales prices at thewellhead and to reduce the barriers between the interstate andintrastate markets. The NGPA permitted the FERC to authorizecertain sales or transportation, in which case the predecessorNatural Gas Act’s lower established rates were inapplicable tothe NGPA’s higher authorized sales and transportation rates.These provisions did lead to increased natural gas productionnationwide.

Also, in 1989 Congress passed the Natural Gas WellheadDecontrol Act to completely deregulate the wellhead prices ofnatural gas. Under this act, the NGPA was also amended and allremaining NGPA price regulations were to be eliminated as ofJanuary 1, 1993, thereafter allowing the market to completelydetermine the price of natural gas at the wellhead.

However, it was not until the discovery and subsequent

May 2016 Page 15

drilling and production in Marcellus and Utica shales that began15 years later in 2006-07, along with renewable energy invest-ments, that significant changes began to evolve which have cur-rently transformed the United States into the foremost energyproducer in the world. As global oil supply rose significantly andprices fell to a previously unimaginable low point, it becameeconomically beneficial and politically acceptable to remove the40-year-old oil export ban.

As a result, on December 18, 2015, less than a week after thesigning of the climate accord in Paris on December 12, PresidentObama signed the abovementioned repeal of the 1975 ban oncrude oil exports in an omnibus spending bill. This repeal endeda 40-year period of restrictive regulation of the domestic energyproduction market. This action was in response to lobbyingefforts by various oil-producing companies and oil-producingstates such as Texas, Alaska and North Dakota, which haveample inventories available for export. Slowly but surely, thisshould lead to a stream of oil exports that will prove economical-ly beneficial for the industry as well as our nation, throughreduced consumer prices, positive balance of trade effects andincreased energy security for our allies. Recently, AmericanPetroleum Institute President and CEO Jack Gerard, in applaud-ing the repeal of the oil export ban, stated in the LandmanMarch/April 2016 magazine that “U.S. producers will now beable to compete in the global oil market and consumers will reapthe benefits.”

While the business of exporting oil and liquefied natural gas(LNG) will not boom immediately, a retrospective look on howthe oil and natural gas industry has expanded in the last 10 yearssince the beginning of major Marcellus and Utica shale drillingand prodigious production could prove a telling sign on howexporting could take off once industry players secure internation-al contracts.

Many countries, as a result of the recent Paris climate accord,are also taking steps to lower demand for fossil fuels and insteadare looking toward alternative means of energy production oncethe domestic and worldwide gluts dissipates. This could, howev-er, be very beneficial to the natural gas industry because burningclean natural gas has a smaller carbon footprint and therefore is amore favorable environmental option than burning coal.Furthermore, various foreign countries may increase theirdemand for natural gas in order to meet their self-imposed goalsdrawn up under the Paris accord. Although many still perceivewatershed concerns with hydraulic fracturing, there has beenlittle evidence that this has had anything but negligible impactson any water supplies that would or should create a disincentivefor switching from coal to natural gas.

Furthermore, the first order issued by the U.S. Department ofEnergy (DOE) as recently as February 5, 2016, approved theexporting of LNG to Canada, and after liquefaction in Canada,for re-export from Canada to other countries. Additionally, a lim-ited number of applications to export domestically producedLNG from the lower 48 states have recently been approved byDOE and numerous other similar applications have either beenrecently approved or are now pending for approval for exportingLNG directly from the domestic LNG facilities. Some of thesedomestic LNG facilities (including notably the Dominion LNGfacility at Cove Point, Maryland) were constructed during the1970s and used by many Pennsylvania pipelines and utilities toimport much-needed LNG from Algeria, Brunei, Indonesia, Abu

Dhabi and/or other Middle East countries during the natural gasshortages of the 1970s. These same facilities have been or are inthe process of being reconfigured to be utilized to export excessnatural gas as LNG.

Furthermore, as recently as March 9, 2016, the first of hope-fully many more ships bound for Europe carrying ethane fromMarcellus Shale wells left Sunoco Logistics’ Marcus Hook ter-minal in Philadelphia. In addition, it was very recentlyannounced that Rex Energy has joined fellow Marcellus produc-ers Range Resources and CONSOL Energy in entering into con-tracts to export natural gas liquids to Swiss petrochemical com-pany Ineos. Also, the first LNG export ship very recently leftSabine Pass, Louisiana. Hopefully all these recent developmentswill help contribute to an energy industry economic recovery inthe same regard as the recent lifting of the oil export ban.

The downside of this newfound economic potential is the real-ity of the existing glut of oil and natural gas in the internationalmarket, especially if other countries such as Saudi Arabia,Russia, Venezuela, Qatar, etc., do not curb their outputs to cur-rent levels. While there have been discussions by these and othersignificant producing countries to curb production to current lev-els, as recently as a scheduled April 17 meeting between certainof these countries, no action was taken. Furthermore, Iran, whichhas yet to take any specific action after many years of little or noproduction due to international economic sanctions, not onlyfailed to attend the meeting, but also declared its intention to

Page 16 The PIOGA Press

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ramp up its oil production. Nevertheless, we should also be cognizant of the fact that

unpredictable events can suddenly change the domestic andworld supply levels of oil and natural gas, as evidenced a littleover 10 years ago in the aftermath of Hurricane Katrina in 2005,where there was a 20 percent nationwide decrease in the amountof domestic oil supply, which resulted in a rapid escalation ofprice at the pump to $5/gallon.

So too for unpredictable events is the demise of the once thewidely recognized “peak oil” theory of the peak decline of U.S.oil production commencing in the 1970s. This theory has nowproved at the very least to be premature, if not presently moot,due to the previously unknown and unpredictable occurrence ofthe successful application of 21st century hydraulic fracturingand horizontal drilling technology to Marcellus and Utica shales,and extending such technology to commercial tight sands reser-voirs elsewhere in the country.

ConclusionUnless and until an oil production output freeze on increased

production is agreed upon by OPEC and other major oilproduction countries, there is a likelihood that there will be acontinuation for some time in the significant decrease in oilprices (down approximately 70 percent from about $105/barrel toas low as $26/ barrel—now back up to $40/barrel—in the last 18months) and natural gas prices (decreasing approximately 72percent from a high of approximately $6.20/MMBTU toapproximately $1.80/MMBTU—now back up to approximately$2.00 /MMBTU—in the last two years). The effect of thislikelihood is the continuing downward response in the prices and

values of energy company stocks included in the Dow Jones,S&P 500 and the NASDAQ indexes; additional obstacles forenergy companies in securing loans to support their near futureplanned drilling activities; and increased major energy companybankruptcy filings (approximately 50 in the last year as indicatedin recent findings in Reuters and other recognized sources).There of course is also the significant and continuing job lossesin the domestic and international energy industry as well as inrelated industries that directly or indirectly support the oil andgas industry and so are also affected by the current slowdown inthe energy production industry.

Unfortunately, unless a world freeze on any increasedmonthly production amounts by OPEC and other major oilproducing countries is put into place soon, we will have tocontinue to tread water indefinitely in a domestic oil and gasindustry unimaginable 40 years ago during the severe energyshortages of the 1970s, with the resulting 1975 oil export banand Emergency Natural Gas Act of 1977. A recent article in theWashington Post now refers to our domestic oil and gas industryas well as the global oil and gas industry as “A World Awash inOil”; and might I say “awash in natural gas” as well. ■

Lawrence Nydes is a part-time attorney at the Wexford based oiland gas law firm of Lawrence D. Brudy & Associates, Inc. Hewas formerly Vice President & General Counsel of Penneco OilCompany and Senior Corporate Attorney for EquitableResources, Inc.

February 2014 Page 17May 2016 Page 17

Safety Committee CornerSafety Committee CornerKeeping workers safe duringtank gauging and sampling

The National Institute for Occupational Safety and Health(NIOSH) and the Occupational Safety and healthAdministration (OSHA) have identified several potential

health and safety risks to workers who manually gauge or samplefluids on production and flowback tanks. The following comesfrom NIOSH-OSHA Hazard Alert published earlier this year.

Workers could beexposed to hydro-carbon gases andvapors, oxygen-defi-cient atmospheres,and fires and explo-sions when theyopen tank hatches tomanually gauge orcollect fluid sampleson production, flow-back, or other tanks(e.g., drip pots) thatcontain process fluids. Opening tank hatches, often referred to as“thief hatches,” can result in the release of high concentrations ofhydrocarbon gases and vapors. These exposures can have imme-diate health effects, including loss of consciousness and death.

Recent NIOSH and OSHA research showed that workerscould be exposed to hydrocarbon gases and vapors when theywork on or near production and flowback tanks. This meansworkers can face significant health and safety risks when theymanually gauge or sample tanks. These risks are in addition tothe risk of exposure to hydrogen sulfide (H2S). NIOSH andOSHA also identified nine worker fatalities that occurred whileworkers manually gauged or sampled production tanks from2010–2014. Exposures to hydrocarbon gases and vapors and/oroxygen-deficient atmospheres are believed to be primary or con-tributory factors to the workers’ deaths.

Working on or near oil and gas production tanks is of particu-lar concern because these tanks may contain concentrated hydro-carbon gases and vapors that are under pressure. When the thiefhatch is opened, the release of these pressurized gases andvapors can expose workers. Second, the gases and vapors candisplace oxygen, creating an oxygen-deficient environment.Third, the hydrocarbon gas and vapor concentrations can exceed10 percent of the lower explosive limit (LEL), creating a chancefor fires and explosions. Exposure to hazardous atmospheres andfire/explosion risks will vary depending on tank contents andoperating conditions, the presence of ignition sources, and otherfactors.

Hydrocarbon gas and vapor release from production andflowback tanks

Production liquids (e.g., crude oil and condensate) at oil andgas extraction sites can release dissolved hydrocarbon gases suchas methane, ethane, propane and butane. Production liquids alsoevaporate to produce vapors such as pentane, hexane, benzeneand xylene. Hydrocarbon gases and vapors are often referred toas volatile organic compounds, or VOCs. Hydrocarbon gasescontained in crude oil are readily released into the air at ambient

temperature and pressure. When a thief hatch is opened, substantial amounts of hydro-

carbon gas and vapor (>100,000 parts per million) can bereleased, and in some cases this release can continue even afterthe initial headspace pressure is released. Furthermore, the com-position of hydrocarbons in crude oil is complex, and the relativeconcentrations of specific gases and vapors are highly variable.When a worker opens a tank, the worker’s breathing zone canimmediately become an acutely toxic mix of concentrated hydro-carbon gases and vapors. Depending on weather conditions, theplume may disperse or engulf workers atop and around tank bat-teries.

Health hazards of hydrocarbon gases and vaporsAcute exposures to hydrocarbon gases and vapors can affect

the eyes, lungs and central nervous system. If present in suffi-cient concentrations to displace oxygen, this exposure can sensi-tize the heart to stress hormones, such as catecholamines, caus-ing abnormal rhythms and ventricular fibrillation that can lead tosudden death. Even a brief exposure (30 seconds or less) to highconcentrations of hydrocarbons and a low-oxygen atmospherecan result in the rapid onset of respiratory depression, hypoxia,and fatal cardiac arrhythmias. Pre-existing coronary artery dis-ease may exacerbate the risk. These exposures can also have nar-cotic effects, causing dizziness, rapid disorientation, and confu-sion that could lead to loss of judgment, narcosis and incapacita-tion. Some hydrocarbons are also known carcinogens (e.g., ben-zene).

Worker fatalities during manual tank gauging and fluidsample collection

NIOSH researchers, OSHA officials and academic occupa-tional health researchers investigated reports of worker deathsfrom 2010 through 2014 associated with manual tank gaugingand the collection of fluid samples. NIOSH researchers identifiednine fatalities involving these tasks. All fatalities occurred atcrude oil production tanks. Four took place during tank gauging,and five happened during fluid sample collection at an open thiefhatch by pumpers/truckers. For all fatalities, the employees wereworking alone or not being observed by a coworker. Unprotectedexposures to high concentrations of hydrocarbon gases andvapors and/or displacement of oxygen are believed to be primaryor contributory factors in each fatality. Exposure to H2S wasruled out as a cause in all nine cases.

Oxygen concentrations well below normal (oxygen concentra-tion in ambient air = 21 percent) were documented in two fatalincidents. While investigating the site of one death, OSHA’scompliance officer measured oxygen levels in the range of 11-12percent approximately one foot above the open hatch. A data-logging four-gas monitor worn by the worker at the time of deathin another case recorded that the oxygen level fell to as low as6.9 percent. The same worker had also worn the monitor duringa previous incident, during which the oxygen level fell to as lowas 9.1 percent and remained consistently below 15 percent for asix-minute interval. Exposure to atmospheres with these low con-centrations of oxygen can rapidly overcome workers and bring

Page 18 The PIOGA Press

about unconsciousness without warning. Also, in both incidents,the monitor worn by the worker documented that the worker’senvironment exceeded the LEL.

Appropriate respiratory protectionAlthough air-purifying respirators with organic vapor car-

tridges can protect against vapors (such as benzene, hexane,toluene and xylene), they are ineffective against light hydrocar-bon gases (such as methane, ethane, propane, butane and pen-tane) because these gases quickly pass through the activatedcharcoal sorbent in respirator cartridges. Air-purifying respiratorsalso have other important limitations. They do not protect againstoxygen-deficient atmospheres or concentrations of hydrocarbonsexceeding the maximum use concentration for the respirator/car-tridge ensemble.

Workers using half-face or full-face air-purifying respiratorswhile tank gauging will not be protected against exposures tolight hydrocarbon gases and vapors and oxygen-deficient atmos-pheres. At least one worker who died was wearing an air-purify-ing respirator. Supplied air respirators (e.g., air-line or self-con-tained breathing apparatus [SCBA]) can protect workers fromtoxic exposures and oxygen-deficient atmospheres—provided the

user is wearing the respirator correctly in accordance with theOSHA Respiratory Protection Standard (29 CFR 1910.134).

ConclusionsExposure assessment studies conducted by NIOSH and

OSHA have identified worker health and safety risks that occurwhen workers open thief hatches and manually gauge and sam-ple fluids from production and flowback tanks. Toxicologicaldata, inherent factors from the oil collection process and expo-sure assessments provide evidence that gauging and samplingtanks present significant hazards to workers, including risks forexposures to oxygen-deficient atmospheres, inhalation exposuresto concentrated petroleum hydrocarbon gases and vapors, andfires and explosions.

Moreover, nine fatalities identified over five years were asso-ciated with working close to open hatches of crude oil produc-tion tanks. Exposures to hydrocarbon gases and vapors and/oroxygen-deficient atmospheres are believed to be primary or con-tributory factors to these workers’ deaths. Hydrocarbon gas andvapor emissions from production and flowback tanks are wide-ranging. Consequently, it is difficult to predict the magnitude ofrisk from any specific gauging or sampling task. ■

1. Implement alternative tank gauging and sampling pro-cedures that enable workers to

monitor tank fluid levels and take samples without openingthe tank hatch.

2. Retrofit existing tanks with dedicated sampling ports(i.e., tank sampling taps) that minimize worker exposures tohydrocarbon gases and vapors, thereby eliminating the need toroutinely open thief hatches to sample. These sampling tapsshould minimize the magnitude of hydrocarbon plumes andshould limit the need for workers to access the top of tanks.

3. Install thief hatch pressure indicators to provide animmediate visual indicator of tank pressures and potential haz-ards. Pressure indicators can show workers the pressure in thetank and allow a trained worker to follow appropriate proce-dures, such as actuating a blowdown valve, venting gas to aflare or using appropriate respiratory protection, such as a self-contained breathing apparatus or an air-line respirator.

4. Conduct worker exposure assessments to determineexposure risks to volatile hydrocarbons and other contaminants.Employers may consult an occupational safety and health pro-fessional trained and certified in industrial hygiene and who hasknowledge and experience with combined flammable gas andvapor exposures to ensure that an appropriate air-samplingstrategy is used.

5. Provide hazard communication training to ensure thatgeneral site workers, tank gaugers and samplers, water haulers,drivers, and others who open tank hatches understand the haz-ards associated with opening tanks and the precautions neces-sary to conduct this work safely. These hazards include reducedoxygen environments, flammability hazards and possible ignitionsources, and the potential for concentrations of hydrocarbonsthat can approach or exceed IDLH concentrations. Post hazardsignage at access stairs, catwalks and/or tanks to alert workersabout the hazards associated with opening thief hatches andprecautions that must be taken.

6. Ensure that workers are trained on—and correctly and

consistently use—calibrated multi-gas and oxygen moni-tors that measure percent LEL and oxygen concentration.Workers should understand the limitations of these monitors aswell as appropriate actions to take whenever an alarm occurs orthey experience health symptoms (e.g., leave the hazard area,report symptoms to supervisors).

7. Do not permit employees to work alone when tankgauging or working around tanks, thief hatches, or other areaswhere they may encounter process fluids. Observers should betrained on proper rescue procedures and be stationed outsidepotentially hazardous areas.

8. As an interim measure, where remote gauging or samplingis not feasible or engineering controls are not implemented, (a)train workers in proper work practices, such as tank-openingprocedures, that can minimize risks for exposures, (b) ensureintrinsic safety by proper grounding and prohibiting the use ofspark-producing devices or equipment, (c) establish adminis-trative controls to reduce the number of times throughout ashift a worker is required to manually gauge tanks, (d) safelyreduce tank pressure prior to gauging, and (e) use appro-priate respiratory protection, including a supplied air respira-tor (SAR) and/or self-contained breathing apparatus (SCBA) inareas where IDLH VOC exposures may occur (i.e., during man-ual tank gauging/sampling). Employers should consult with atrained occupational safety and health professional to determinethe appropriate respirator to be used. NIOSH guidance forselecting respirators is at www.cdc.gov/nioshdocs/2005-100.

9. Wear flame-resistant clothing to protect against burnsfrom fires and explosions. Also, use appropriate impermeablegloves to limit risks for skin exposures to chemicals (e.g., ben-zene).

10. Establish and practice emergency procedures to pro-vide on-scene, immediate medical response in the event of anincident, such as a collapsed worker, or workers experiencingsymptoms of chemical overexposures or exposure to an oxy-gen-deficient atmosphere.

Recommendations for manual tank gauging and fluid sample collection

February 2014 Page 19May 2016 Page 19

Where in the World is the PIOGA Outreach Department?

By Joyce TurkalyDirector, Natural Gas MarketDevelopment

I attended Policy Day of CarnegieMellon’s recent Energy Week onPolicy Day. Below is a recap of someof the highlights.

Tri-State University Energy Allianceannounced

Case Western Reserve University,Carnegie Mellon University, theUniversity of Pittsburgh and WestVirginia University are joining forcesto address challenges and opportuni-ties facing the energy sector. The uni-versities have overlapping areas ofenergy research, such as grid modern-ization, energy storage, and oil andgas. Encouraging policy makers toincrease the U.S. budget dollars spenttoward energy research from $12.5billion, which equals 8.6 percent ofthe total research dollars (proposed inthe 2016 budget), is also one of theirgoals.

Pittsburgh Mayor Bill Peduto(pictured at right) addressed students, faculty, and representativesfrom business and industry, government and non-governmentalagencies and the public. When I asked about the status of thePittsburgh Express bus-way (originally announced to be CNG-specific), the mayor stated that the city would be more likely todeploy sensor technology for driverless options. If you did notknow, Pittsburgh is one of the cities competing for the “SmartCity Challenge,” which will award $40 million to build technolo-gy-based systems to address mass transit solutions.

What type of energy challenges are students addressing? CMU’s Energy Week hosted a number of student competi-

tions (cleantechprize.org). On the fossil fuel side of the competi-tion, the following students were awarded recognition and prizemoney: Erin Mayfield, a PhD student in engineering & publicpolicy, won the student research poster competition. Her study,“Policy Options for the Detection and Abatement of MethaneEmissions from the U.S. Natural Gas System,” found that mostmethane emissions are cost-effective to abate, resulting in netsocial benefits ranging from $320 million to $2.26 billion annu-ally. Other winners were Fan Tong for his poster, “SpatialAnalysis of Air Quality Impacts from using Natural Gas forRoad Transportation,” and Markus Droven for his study on“Optimization Models for Shale Gas Well RefractureTreatments.” ■

Page 20 The PIOGA Press

Report finds no red flags for gas industrywater use in the Susquehanna Basin

The Susquehanna River Basin Commission (SRBC)released a report last month that examines water use bythe natural gas industry in the basin and the multi-state

agency’s response in managing that use. The takeaway: Thebasin’s water resources are sufficient to accommodate thedemands of the natural gas industry, and the SRBC’s monitoringprograms haven’t detected “discernible impacts” on the basin’swater quality from natural gas development.

The SRBC manages consumptive water uses in a three-state,27,500-square-mile area. In Pennsylvania, the basin encompassesmost of the northeast part of the state, except for Monroe, Pikeand Wayne counties, along with small portions of Lackawannaand Luzerne counties.

The report looked at a period from 2008 through 2013 andfound the natural gas industry uses an average of 6.7 million gal-lons per day—comparable with amusement parks, golf courses,ski areas and other recreational uses. The average industry in thebasin uses 8.6 million gallons daily. The largest user is electricpower generation at 86 million gallons per day.

The SRBC approved almost 2,500 requests for water with-drawals related to natural gas development during the five-yearperiod. 80 percent of those approvals were in Bradford,Susquehanna, Tioga and Lycoming Counties.

The report came to these conclusions:• Generally, the basin’s water resources are sufficient in mag-

nitude to accommodate the demands of the industry concurrentlywith other water users currently operating within the basin.

• Concerns related to the impacts to water sources are focusedon the timing and location of the withdrawals and are ade-quately addressed bythe low-flow protectionmeasures and otherprotective operatingconditions.

• To date, the com-mission’s monitoringprograms have notdetected discernibleimpacts on the quality ofthe basin’s waterresources as a result ofnatural gas development,but continued vigilance iswarranted.

Based on the findingsof the report, the SRBCplans to encourage “more robust and sophisticated industrywidewater delivery systems anchored in larger, more sustainablewater features of the basin”; enhance water quality monitoringand assessment; expand the use of technology to work moreeffectively and be more responsive to the public; facilitate moreuse of lesser-quality waters within the basin to reduce the indus-try’s reliance on higher-quality streams and rivers; and continueto encourage the industry to recycle and reuse produced fluids toreduce the reliance on fresh water and reduce the need for dis-posal of these fluids. ■

DRBC will conduct review ofPennEast Pipeline project

Anew regulatory hurdle was placed in the path of the pro-posed PennEast Pipeline last month when the DelawareRiver Basin Commission announced it would conduct an

independent review of the project. The commission deals with water resource matters in the

13,500-square-mile Delaware basin and is made up of represen-tatives of the governors of Pennsylvania, New York, New Jerseyand Delaware, as well as the U.S. Army Corps of Engineers rep-resenting the federal government.

The DRBC last year requested a joint review of the proposed119-mile-long pipeline with the Federal Energy RegulatoryCommission (FERC), but on April 25 announced it would con-duct its own set of “multiple” public hearings in Pennsylvaniaand New Jersey, the states where the pipeline is to be located.The DRBC said it does not anticipate holding the hearings underafter the end of 2016.

“The DRBC is committed to a process that affords individualsthe opportunity to comment on issues of concern to them thatrelate to the basin’s water resources,” the commission said in anotice on its website.

Opponents of the pipeline lauded the DRBC for the move, butPennEast representatives said the project remains on scheduleeven with the extra regulatory review. The project’s completiondate was recently pushed back to 2018 after FERC said it wouldnot complete its review until early next year. ■

May 2016 Page 21

Page 22 The PIOGA Press

Science advisors affirm EPA finding of ‘no widespread, systemic impacts’ from fracking

By Katie Brown, PhDEnergy In Depth

After months of deliberation, the Hydraulic FracturingPanel of the Environmental Protection Agency’s (EPA)Science Advisory Board (SAB) released its “Review of

the EPA’s draft Assessment of the Potential Impacts of HydraulicFracturing for Oil and Gas on Drinking Water Resources” latelast month, quietly posting it to the website. Anti-frackingactivists hoping for a damning review of EPA’s draft frackingreport will be very disappointed: it does not ask EPA to modifyor eliminate its topline finding of “no widespread, systemicimpacts.”

Here’s what you need to know:Fact #1: SAB affirms EPA’s topline finding of “no wide-

spread, systemic impacts” to groundwater resources.The recommendations state:

Of particular concern in this regard is the high-level con-clusion statement on page ES-6 that “We did not find evi-dence that these mechanisms have led to widespread, sys-temic impacts on drinking water resources in the UnitedStates.” Most members of the SAB Panel find that thisstatement does not clearly describe the system(s) of inter-est (e.g., groundwater, surface water), the scale ofimpacts (i.e., local or regional), nor the definitions of‘systemic’ and ‘widespread’. The SAB observes that thestatement has been interpreted by readers and membersof the public in many different ways. Most members ofthe SAB Panel conclude that the statement requires clari-fication and additional explanation (e.g., discuss what ismeant by “any observed change” in the definition of“impact” in Appendix J, and consider including modify-ing adjectives before the words “widespread, systemicimpact” in the statement on page ES-6). Four of the 30members of the Panel have concluded that this statementis clear, concise and accurate. (emphasis added)

The important point here is that while the SAB panel makessome suggestions to EPA, it is not asking the agency to changethe phrase “no widespread, systemic impacts”—it is asking EPAto include modifying adjectives before the words “no wide-spread, systemic impacts.” In other words, EPA’s topline findingstands; the SAB panel is just asking EPA to provide furtherdetails.

The final recommendations are likely a reflection of com-ments made by panel member Dr. Abby Li at one of the telecon-ferences to discuss these recommendations. Dr. Li expressedconcern that the media and the public may misinterpret theSAB’s draft recommendations as they were then written, as stat-ing that EPA’s topline finding is unsubstantiated, which was notwhat the SAB is actually saying. By clarifying that the phrase“no widespread, systemic impact” stands, SAB is making thatdistinction.

Fact #2: Four SAB panel members say EPA’s topline find-ing is “accurate, unambiguous.”

As EID has noted before, the SAB recommendations includea dissenting opinion authored by panel member Walt Hufford,who is joined by three other panel colleagues: Dr. Stephen W.Almond, Dr. Shari Dunn-Norman, and John V. Fontana. The dis-senting opinion clearly states:

The statement by the EPA in the draft AssessmentReport issued in June, 2015 is clear, unambiguous,concise, and does not need to be changed or modified.The statement provides a “holistic” conclusion of the lifecycle process of water used by the industry. While thereport could have articulated the agency’s statisticalassessment more clearly, there has not been any facts orevidence demonstrating a systemic or widespread impactto existing drinking water resources or other waterresources that may not meet the current criteria of adrinking water resource. If a systemic or widespreadissue had been identified, the EPA and the state regulato-ry agencies would have quickly responded to such find-ings. In the absence of such documented events, the con-clusion is clear that no systemic, widespread impact todrinking water resources is occurring. To suggest other-wise, undercuts the work and dedication by the employ-ees of those federal and state agencies who are chargedwith environmental protection. The draft EPA report esti-mates approximately 30,000 wells are drilled each year inthe Unites States. Only a very small percentage of thosewells have had an operational issue that may haveimpacted drinking water resources. Even among thissmall percentage, the identified impacts to drinking waterresources have primarily been associated with surfacespills, well construction, and well cementing—nothydraulic fracturing.The SAB panel is correct in highlighting that localizedimpacts should not be discounted nor marginalized.Moreover, the SAB correctly identified that an aspect ofthe draft Assessment Report dealing with the actual“impact” of a spill requires further clarification. A casualreader of the draft report is left to question if impactsfrom all spills or releases are permanent or temporary.The agency should expand the discussion around theactual timing of “impacts” to the local environment. Inmany cases, including the ones referenced within thereport, it is clear there is no long term demonstratedimpact associated with a release. The major conclusionby EPA in their June 2015 draft Assessment Reportstating “no widespread, systemic impacts on drinkingwater resources in the Unites States” is accurate,unambiguous, and supportable with the facts EPA hasreviewed.

During one of the teleconferences to discuss the recommenda-tions, several members of the SAB voiced their support for thedissenting opinion and for EPA’s topline finding. As Dr. ShariDunn-Norman explained:

I’ve been giving this a lot of thought […] of Walt’s opin-ion and I would like to support his opinion completely.Looking up the definitions in Webster of “widespread” itmeans over a large area or a large number of people. AndI don’t think the actual data that’s in this report showsany large widespread effects […] The word systemicmeans of a whole system and I don’t think we saw anyreal data of the whole hydraulic fracturing water systemthat really supports a systematic failure. So I feel thatWalt is correct and I actually feel like the conclusion of

May 2016 Page 23

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the first report is correct. (emphasis added)Dr. Dunn-Norman later explained how her experience led to

this opinion:I just wanted to point out, like a number of committeemembers here I’ve had a large number of years-experi-ence in the industry and my opinions are formed by myexperience. And in my experience we did massivehydraulic fracturing back in the 1970s and 1980s andwe just didn’t see major problems. And if there werereally some very big issues with this, we would proba-bly have seen them by now. (emphasis added)

Dr. Stephen W. Almond agreed, noting:I want to just join in with Shari. I don’t want to soundlike we’re singing kumbaya but I’ve fractured all overthe world been on literally thousands of frack jobs andI have to agree that I don’t see any widespread risk ofany of the areas […]I’d just have to agree with that num-ber one statement that Shari gave just from experiencefracturing all over the world and not to say there’s notsome cases that may need to be investigated like Dimockand Pavillion, etc., but overall I don’t see a widespreadsystemic issue here.Fact #3: Several other SAB members expressed support

for the dissenting opinion even though they didn’t officiallyjoin.

During one of the teleconferences, Dr. Stephen Randtke andDean Malouta said that they were considering joining the dis-senting opinion. Although neither ended up doing so, Randtkesaid during the teleconference that he agrees with EPA’s toplinefinding as it stands in the draft groundwater report:

As I said back in October when you read this entire threeparagraph introduction on page ES-6 on the major find-ings I have really no trouble with it. And so I’m sym-pathetic to Walt’s statement […] I disagree with thestatement that we find that it does not clearly describe thesystem of interest or the definitions of systemic and wide-spread. Right up in the lines 11 through 16 we’re talkingabout above and below ground. It is talking about the sys-tems of interest and the context and the entire HFWC inrelation to hydraulic fracturing. And then all these quali-fiers we want to write in the next paragraph below thatstatement 22-27 they say could reflect that there’s rareimpacts or there’s some uncertainty here and they’ve laidall that out. So you know, I agree with kind of thewhole statement as EPA has stated it. I think it’s avery good one. (emphasis added)

Fact #4: SAB’s recommendations and the dissenting opin-ion come to pretty much the same conclusion: EPA’s toplinefinding is sound.

SAB’s final recommendations ask EPA to include modifyingadjectives before the words “widespread, systemic impacts”while the dissenting opinion states that the phrase “no wide-spread, systemic impacts” is “accurate, unambiguous” but thatthe agency “could have articulated the agency’s statistical assess-ment more clearly.”

At the end of the day, they’re essentially saying the samething: EPA’s topline finding could be more detailed but it isabsolutely sound.

If there were any evidence to suggest widespread, systemicimpacts to drinking water from hydraulic fracturing, the SAB

would certainly be able to cite it in its recommendations.Without that evidence, SAB has produced a document thataffirms EPA’s conclusion. ■

Senior Wolf advisor nominated to PUC

David Sweet, a senior advisor toGovernor Tom Wolf and formerstate representative, has been

nominated to serve on the PennsylvaniaPublic Utility Commission. Sweetreplaces Corbett appointee PamelaWitmer, whose five-year term expiredApril 1.

Sweet joined the Wolf administration in April 2015 as a senioradvisor to the governor, focusing on energy and economic devel-opment matters. Previously, he was a partner at the law firmsPepper Hamilton and Buchanan Ingersoll & Rooney. Sweetserved as a Democratic state representative for WashingtonCounty from 1977 to 1988 and was Ed Rendell’s campaign man-ager during his successful bid for governor in 2002.

“David’s expertise in finance law, his knowledge of state gov-ernment and economic development, and his depth of work onenergy issues make him an important fit for the PUC,” Wolf saidin announcing Sweet’s nomination on May 4. The choice mustbe approved by the state Senate.

Witmer has taken the position of vice president of governmentaffairs at UGI Energy Services. ■

Page 24 The PIOGA Press

$20

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reportsotherNYMEX strip chart: Emkey Energy LLC, emkeyenergy.com

Oil & Gas Trends

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Cabot Oil & Gas Corp 2 4/29/16 115-22181* Susquehanna Bridgewater Twp4/29/16 115-22178* Susquehanna Bridgewater Twp

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Spud Report:April

The data show below comes from the Department ofEnvironmental Protection. A variety of interactive reports are

OPERATOR WELLS SPUD API # COUNTY MUNICIPALITY OPERATOR WELLS SPUD API # COUNTY MUNICIPALITY

available at www.dep.pa.gov/DataandTools/Reports/Pages/Oil-and-Gas.aspx.

The table is sorted by operator and lists the total wells report-ed as drilled last month. Spud is the date drilling began at a wellsite. The API number is the drilling permit number issued to thewell operator. An asterisk (*) after the API number indicates anunconventional well.

April March FebruaryTotal wells 18 58 26Unconventional 14 55 23Conventional 4 3 3Gas 14 55 23Oil 3 3 3Combination oil/gas 1 0 0

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PIOGA Board of DirectorsGary Slagel (Chairman), Steptoe & Johnson PLLCSam Fragale (Vice Chairman), Freedom Energy Resources LLCFrank J. Ross (2nd Vice Chairman), T&F Exploration, LPJames Kriebel (Treasurer), Kriebel CompaniesCraig Mayer (Secretary), Pennsylvania General Energy Co., LLCTerrence S. Jacobs (Past President), Penneco Oil Company, Inc.Thomas M. Bartos, ABARTA EnergyStanley J. Berdell, BLX, Inc.Carl Carlson, Range Resources - Appalachia, LLCMike Cochran, Energy Corporation of AmericaMike Colpoys, National Fuel MidstreamDon A. Connor, Open Flow EnergyTed Cranmer, TBC ConsultingJack Crook, Atlas Resource Partners, LPMichael Donovan, Seneca Resources CorporationRobert Esch, American Refining Group, Inc.Michael Hillebrand, Huntley & Huntley, Inc.Jim Hoover, Phoenix Energy Productions, Inc. Ron McGlade, Tenaska Resources, LLCGregory Muse, PennEnergy Resources, LLCBill Polacek, Environmental Tank & Container Stephen Rupert, Texas Keystone, Inc.Jake Stilley, Patriot Exploration CorporationWilliam Stoner, Universal Well Services, Inc.Todd Tetrick, EnerVest Operating, LLCMatt Tripoli, IMG MidstreamBurt A. Waite, Moody and Associates, Inc.Thomas Yarnick, XTO Energy

Committee ChairsEnvironmental Committee

Paul Hart, Fluid Recovery Services, LLCKen Fleeman, ABARTA Energy

Legislative CommitteeBen Wallace, Penneco Oil CompanyKevin Gormly, Vorys, Sater, Seymour and Pease LLP (ViceChairman)

Pipeline & Gas Market Development CommitteeBob Eckle, Appalachian Producer Services, LLCRon McGlade, Tenaska Resources, LLC (Assistant Chairman)

Health & Safety CommitteeWayne Vanderhoof, RJR Safety, Inc.

Meetings CommitteeLou D’Amico, PIOGA

Tax CommitteeDonald B. Nestor, Arnett Carbis Toothman, LLP

Communications CommitteeTerry Jacobs, Penneco Oil Company, Inc.

StaffLou D'Amico (lou@pioga.org), President & Executive DirectorKevin Moody (kevin@pioga.org), Vice President & General Counsel Debbie Oyler (debbie@pioga.org), Director of Member Services and

Finance Matt Benson (matt@pioga.org), Director of Internal Communications

(also newsletter advertising & editorial contact)Joyce Turkaly (joyce@pioga.org), Director of Natural Gas Market

DevelopmentDan Weaver (dan@pioga.org), Public Outreach DirectorDanielle Boston (danielle@pioga.org), Director of AdministrationTracy Zink (tracy@pioga.org), Administrative Assistant

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PIOGA EventsInfo: www.pioga.org/events

PIOGATech: Air Quality Compliance TrainingMay 25, Clean Air Engineering, Inc., Pittsburgh

Summer Golf Outing & PicnicJune 6, Wanango Golf Club, Reno

Pig Roast, Equipment Show and Technical ConferenceAugust 23-24, Seven Springs Mountain Resort Champion Note da te change

Divot Diggers Golf OutingSeptember 22, Tam O’Shanter Golf Club, HermitageNote date change

Industry EventsWVONGA Spring Meeting

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KOGA 80th Annual MeetingJuly 19-21, Northern Kentucky Convention Center, Covington

Info: koga.memberclicks.net/upcoming-events

IOGAWV Summer Meeting

August 7-9, The Greenbrier, White Sulphur Springs, WV

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Geologists

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