American Oil and Gas Reporter - February 2015 - 114

ConventionSection: Pennsylvania Independent Oil & Gas Association
more clarity as to what types of waters
are protected under the CWA. Notwithstanding oil and gas groups' skepticism,
the agencies claim the proposed rule:
* Does not protect any new types of
waters that historically have not been
covered by CWA;
* Is consistent with the Supreme
Court's more narrow reading of CWA
jurisdiction;
* Will not regulate groundwater; and
* Proposes to reduce jurisdictional
authority and exclude certain ephemeral
and intermittent ditches.
"PIOGA's skepticism is based on the
words of the proposed rule that actually
do all these things the federal agencies'
self-serving description denies," Moody
says. "And PIOGA is not alone. Many
businesses and industries other than ours
agree with our position."
The oil and gas industry also continues
to monitor calls to list the northern longeared bat under the Endangered Species
Act, D'Amico says. "That is a big concern.
I testified on that before Congress," he
says. "In Pennsylvania, listing that species
would have a large impact. In addition to
the northern long-eared bat, Pennsylvania
has issues with protecting the Indiana
bat. We have more than our share of
problems with the ESA."
If the U.S. Fish & Wildlife Service
lists the bat as threatened instead of endangered, it will lessen the regulatory
impacts, but those hits still will be extensive, D'Amico predicts. "It remains to
be seen if the industry can work with
section 4(d) provisions, if the northern
long-eared bat is listed as threatened,"
D'Amico poses.
"There are some provisions that operators have tolerated to some extent, but it
is questionable how much of this operators
can stand and continue to work," he says.
"The oil and gas industry is under constant
assault. Look at the settlements USFWS
has signed with various environmental
groups. It is obvious if you look at the
species for which these groups keep seeking listings that they are targeting our industry to stop energy development. There
is no other way to say it. They are trying
to shut down U.S. oil and gas operations."
The results of the November elections
hold some promise for relief, D'Amico
assesses, with Republican control of the
U.S. House and Senate likely to prove a
benefit to the industry. In particular, he
says PIOGA enjoys a very good rela-

tionship with the Pennsylvania congressional delegation.
"It also is good that there still are
some moderates among Democrats, particularly in the Senate," D'Amico praises.
"They see the benefits of this industry

and do not want to see the country totally
dependent on foreign energy supplies, so
I think things can be better on the legislative side at the federal level. But those
advancements always face the risk of
veto by this president."
Ì

Producers In Marcellus Shale
Fighting Pipeline Bottlenecks
WEXFORD, PA.-Pennsylvania is celebrating 10 years of success in the Marcellus Shale play, with more than 5,900
wells drilled, and producers and service
companies contributing billions to the
commonwealth's economy while supporting thousands of jobs.
However, Lou D'Amico, president of
the Pennsylvania Independent Oil & Gas
Association, says the Marcellus play's
economic impact is not as great as it
could be, in large part because an inadequate pipeline infrastructure does not
offer an economic way for much of the
natural gas to get to market.
"Ultimately, that will affect not only
Pennsylvania but the entire nation," he
predicts. "We have much more supply
available than demand. That is for market
reasons, including the fact that the U.S.
economy still has not popped back. The
country needs to develop its electric
power market as well as its industrial
market for natural gas. In other words,
we need more burner tips."
Pipeline capacity sufficient to handle
Pennsylvania production still is two or
three years away, D'Amico forecasts. He
adds that most of the produced gas likely
will head south to Gulf Coast markets,
as any new infrastructure is unlikely to
improve transportation options to New
York or New England.
"Most of the money being spent in
Pennsylvania is trying to get the pipeline
infrastructure caught up. It seems that
every time someone tries to lay a pipeline,
there is someone trying to stop that
pipeline," he says. "We still have a substantial number of wells that have not
been put on line yet."
Association Chairman Gary Slagel
points out the need for infrastructure improvements is not affecting only Marcellus
Shale well operators. He says at several
of its meetings, the PIOGA Board of Directors has discussed ways to improve
pipelines.

114 THE AMERICAN OIL & GAS REPORTER

"We need to get the infrastructure in
place to move the gas and to take some
of the pressure off not only the shut-in
unconventional wells but also the conventional wells, that basically are under
water," says Slagel, government affairs
specialist with Steptoe & Johnson in
Canonsburg, Pa. "Conventional operators
have no place to move their gas because
the capacity is all tied up with unconventional gas shipments. It is going be a
matter of who lasts the longest, and who
can make the adjustments to survive."
Slagel reports several gas companies
already have announced cuts in their
Pennsylvania capital expenditure budgets
for 2015, and some service firms are reducing staffing levels and not filling vacancies.
If prices were stronger and the infrastructure was in place to move gas out of
state, the commonwealth's producing
community would be better positioned
to handle other issues, such as a more restrictive regulatory environment or proposed tax increases, Slagel suggests. Gas
operators still would complain about
state-related issues, even if prices were
above $5 an Mcf, he says, but those concerns would have far less impact on a
company's bottom line.
Ethane Cracker
Plans for an ethane cracker that Royal
Dutch Shell first proposed to build in
western Pennsylvania in June 2011 appear
to be moving forward, D'Amico reports,
adding that Shell has not yet publically
finalized whether it will build the facility
in Beaver County, Pa.
According to the company, the ethane
cracker would use Marcellus Shale gas
to produce 1.5 million tons of ethylene
annually. Three polyethylene crackers
would produce 500 metric tons each of
gas-phased high-density polyethylene,
linear low-density polyethylene, and slurry.
The company says facility construction

American Oil and Gas Reporter - February 2015

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