Spectra Energy Watch

6-Minute Video Highlights - Pitt Prof Warns:

“Boom Town” Model for Shale Gas Ignores Air & Water Impacts;

No Adequate Disposal for Frac Water

Even PA Gov. Rendell Admits to Oil & Gas Execs:

5 “Challenges” to Shale Gas Drilling - All Environmental

University of Pittsburgh Prof Dan Volz challenges the “boom town” sales pitch for natural gas drilling in the Marcellus Shale - a model that claims the benefits far outweigh the risks.

“Much is said about the benefits of drilling in the Marcellus Shale,” Volz said.  “But none of the cost-benefit analyses touted by the gas industry and government take into account what is known as ‘public goods’ - like impacts on air and water.”

Shale Gas Rocks?

Volz’s point was illustrated in a recent “Energy Report” published by The Wall Street Journal (May 10, 2010).  The cover essay is titled, “How Shale Gas Is Going to Rock the World,” by Amy Myers Jaffe of the James A. Baker III Institute for Public Policy at Rice University.¹ (See “Links & Resources” below.)

Ms. Jaffe’s analysis of shale gas runs more than 2,000 words, yet “environmental risk” is dismissed in 129 words.  Amazing scholarship.

Perhaps Ms. Jaffe might want to listen to the audio file of Pennsylvania Governor Edward Rendell speaking to oil and gas execs at the “Natural Gas Nation” Policy Roundtable.  It was held in Dallas on March 25, sponsored by the George W. Bush Institute.² (See “Links & Resources” below.)

Gas Industry “Protector” Admits 5 “Challenges” - All Environmental

Rendell declares himself a “protector” of the gas industry and says, “I’ve been a good spokesman minimizing the potential for groundwater pollution.”

Yet he acknowledges “five challenges” involved in shale gas drilling - every one of them environmental.  They include: how to divert millions of gallons of water necessary for shale gas drilling; how to prevent gas migration; and what do we do with the frac water?  Hardly minimal risk to the environment.

Perhaps Ms. Jaffe and her colleagues at Rice could talk to landowners in their own state like Tim Ruggiero of Decatur, Texas.  The Ruggiero family has two shale gas drilling rigs 200 feet from their back door.  You can read about it here: http://www.spectraenergywatch.com/blog/?p=605

They have had numerous leaks and thousands of gallons of chemical spills on their property.  The videos of these events are staggering.  As Ruggiero tells folks, “I am not opposed to drilling.  I am opposed to being poisoned.”

Perhaps Ms. Jaffe could talk to victims of that rockin’ shale gas world and advocate solutions to the environmental risks.

Dr. Dan Volz is Assistant Professor of Environmental and Occupational Health at the Graduate School of Public Health at the University of Pittsburgh.  Volz is also Director for the Center for Healthy Environments and Communities there.  For additional background, see link: http://www.pitt.edu/~cdv5/Biography.htm

Here is the website link for the Center for Healthy Environments and Communities: http://www.chec.pitt.edu/

Invest 6 minutes with Dr. Volz.  Click on the “start” arrow on the screen, or at the bottom of the video screen.

Links & Resources

¹ Energy Report - “Shale Gas Will Rock the World” - from The Wall Street Journal: For those with a subscription to The Wall Street Journal, you can access the online version of the Energy Report at this link (you may have to cut and paste this link into your browser window): http://online.wsj.com/article/SB10001424052702303491304575187880596301668.html?KEYWORDS=shale+gas

² Governor Rendell made his comments at a policy roundtable called “Natural Gas Nation” on March 25, 2010. The conference was conducted by the George W. Bush Institute in Dallas, Texas.  Here is a link to the audio file of that roundtable discussion: http://georgewbushinstitute.files.wordpress.com/2010/03/ngn_05_roundtable.mp3

For ease of use, I made a transcript of the governor’s comments which can be accessed here.  In a few places where a word or phrase was unclear I’ve indicated that.  See p. 3 for the Five Challenges:  gov-rendell-ng-nation.

Finally, here is a link to the website for the “Natural Gas Nation” conference: http://georgewbushinstitute.com/natural-gas-nation/

Speaking from Experience:

5-Minute Video Highlights with Ron Gulla;

2^nd Marcellus Shale Well in Pennsylvania

Drilled on His Property in 2005

Property owners thinking about signing a gas drilling lease should talk to landowners who have done it.  Make sure that dream of a shale gas “Powerball” win doesn’t turn into a nightmare.

Attached to this post is a 5-minute highlight video of Property Owner Ron Gulla talking about his experience.

In a sense, Ron owns a piece of Marcellus shale gas history, as Range Resources drilled the second Marcellus shale gas well in Pennsylvania in 2005.

And the company drilled it on Ron Gulla’s 141-acre farm in Hickory, Pennsylvania (Washington County).

Ron speaks knowledgeably about his experience with shale gas drilling, Range Resources and the Pennsylvania Department of Environmental Protection.  His advice to property owners wondering whether they should sign gas leases is simple:

“Never lease.  Why would you want someone to come on your property and dump chemicals?”

Invest 5 minutes with Ron Gulla and learn from his experience.  Click on the “start” arrow on the screen or at the bottom of the video screen.  Following are some additional resources you can evaluate.

Links & Resources

Gulla’s experience has been widely reported including two previous posts on this blog:

Ron Gulla (February 9, 2010): http://www.spectraenergywatch.com/blog/?p=522

Ron Gulla 2 (April 5, 2010): http://www.spectraenergywatch.com/blog/?p=546

Thinking about leasing?  Get as much information as you can - Marcellus Powerball: http://www.spectraenergywatch.com/blog/?p=494

Best Oil & Gas Development Practices - Here is a 6-page resource for elected officials and individual property owners looking for examples of how to improve the oil & gas industry’s current approach to drilling.  It includes recommendations for environmentally friendly drilling technology to transparency on industry practices.  As the report states:  “We support drilling right in Texas: responsible energy development that protects private property owners, water, the environment, and public lands while enabling energy production.”  Here is a pdf file of the document:  drill_right_texas_final1 It is sponsored by Earthworks at this website: http://www.earthworksaction.org/publications.cfm?pubID=444

Gibson’s Law Clerk from George Mason University Law School

Blogs About “Victims of Eminent Domain”

Then Deletes Comment from Victim of Eminent Domain

Penn State Grad Now Works for Judge Gibson in Johnstown, PA

Uses Smiley Faces

Why Did Law Clerk Censor Blog Comment?

Adverse Effects of Spectra Energy’s Eminent Domain

How often does one get a chance to help a law clerk for a federal judge grow in wisdom and grace on the issue of eminent domain?  In a blog yet.

Josh Blackman is a law clerk for Judge Kim R. Gibson of the US District for the Western District of Pennsylvania (Johnstown, PA).  Blackman is a graduate of Penn State University and George Mason University School of Law (Magna Cum Laude), where he was also an editor on the Law Review.

Mr. Blackman is in a position to examine first hand how judges treat the victims of eminent domain cases; and to confirm that property owners do not stand on a level playing field legally, economically or politically.

Self-Absorbed Blog

Law Clerk Blackman is the author of a breathlessly self-absorbed blog.  In a recent post on eminent domain, he was “proud to report that my most recent article [on eminent domain] has been published in the Loyola Law Review.”  Link to Blackman’s Post: http://joshblackman.com/blog/?p=4340&cpage=1#comment-3512

His post voiced sympathy for “victims of eminent domain takings,” but he quickly removed a comment from a victim of eminent domain and has declined to respond to two of my queries sent via his blog site.

Judge Kim R. Gibson

His boss, Judge Kim R. Gibson, could provide primary source material to Mr. Blackman.  And the eminent domain action took place in Bedford County, PA, not far from Johnstown where Gibson and Blackman are located.

On Sept. 19, 2008, Judge Gibson granted $5 billion Spectra Energy the right to take “immediate possession of and entry onto the [five] properties owned by the Defendants.”  Houston-based Spectra Energy came to Pennsylvania in order to seize property and/or property rights to construct a 12 billion-cubic-feet underground natural gas storage reservoir.  This project is known as Steckman Ridge.

The irony, as property owners can attest, is that Spectra Energy was already doing construction work on these properties.  Apparently, it was not afraid of offending the court prior to a decision.

“Irreparable Harm”

Attorneys have told me it is essential to establish “irreparable harm” in an eminent domain case.  In Gibson’s section on “Irreparable Harm to Steckman”- his decision appears to hinge on financial harm to Spectra Energy because the company won’t meet its commercial deadlines for making money by selling gas storage to other gas companies.¹ (For a pdf file of Gibson’s 36-page memorandum, see “Links & Resources” below.  The “Irreparable Harm” section is found on pp. 30-33 of his order; pp. 32-34 of the pdf file.)

Since when is it the public’s responsibility to ensure a company’s commercial success?  Gibson’s thoughts on “harm to Steckman” run 3 pages while the “harm to defendants” - otherwise known as “victims of eminent domain takings” -  is brushed away in less than a page (p. 33 of original document; p. 35 of pdf file).

It is always easy for theorists to manage other people’s lives.  But this post will look at the adverse effects of eminent domain under the subhead, Adverse Effects for Landowners.

“Public Interest”

In his section titled, “Public Interest,” Judge Gibson emphasizes supplying gas for the “heating season,” as if there were no gas available (emphasis added):

“The Court finds that timely completion of the natural gas storage facility will assist to a reasonably significant degree in ensuring an adequate supply of natural gas for the public during the 2009-2010 heating season (November 2009-March 2010). Failure to complete this project could have an adverse effect on the supply of natural gas for the public or could adversely impact natural gas prices.” (p. 34-35 of Gibson’s order; pp. 36-37 of pdf file)

For those who like to manage by facts, this is a significant assertion, yet it offers no facts in support of it - other than to cite three platitudes from the Federal Energy Regulatory Commission, which again offer no facts to substantiate concern about an alleged heating season supply crisis or price stability.

Spectra Energy’s 12 billion-cubic-feet underground natural gas storage reservoir was said to be vital to the public interest.  Apparently, however, Gibson was unaware of the fact that Pennsylvania has more underground gas storage fields than any other state in the continental US, according to the Energy Information Administration of the Department of Energy.² (For a link to the EIA report, see “Links & Resources” below.)

Eminent domain is an important issue that is getting a lot of attention in communities and states across the country.  Pennsylvania and New York will see more eminent domain takings because of the shale gas “boom” (Marcellus Shale — a big topic at Blackman’s undergrad alma mater, Penn State).  More drilling means more pipelines, which mean more threats of eminent domain; and perhaps even more underground gas storage reservoirs.

Surprise!  Our Blog Kept a Copy of JOSH’s Blog

Since Mr. Blackman invites comments, I twice posted essentially the above on his blog (mine was comment #6); but it was removed the same day.  Mr. Blackman has yet to reply to my queries as to why the comment was removed.

I anticipated Mr. Blackman’s action, however, and made a pdf file copy of the blog post while it still had my comment.³ Social media technology cuts both ways, Mr. Blackman.  (See “Links & Resources” below for a copy of the post with my comment — #6.)

Perhaps Mr. Blackman was concerned that Judge Gibson would chastise him for permitting one of the “victims of eminent domain takings” to have the temerity to challenge the judge’s rationale — even in such a small way as a comment on his law clerk’s blog.

This on a website that, in addition to blog posts, offers JOSHPICS, JOSHCASTS, AND JOSHVLOGS, to name only a few selections.

JOSHPICS, for example, is an album with more than 35 photos (at last count) of JOSH with legal and political celebrities.  Plus there are 25 photos of JOSH’s autograph collection with many of the same notables.

He even posts a video of his 91-year-old grandfather commenting on Chief Justice Roberts.  Then, as if to ensure grandfather doesn’t steal the show, JOSH notes:  “And you wonder where I get my opinionatedness from,” punctuated by a smiley face.  Seriously.  Here’s a pdf file copy: joshvlogs-c2ab-grandfather-smiley-face

It’s beginning to look like it’s all about JOSH!

Learning comes in two forms, it is said:  parchment (formal education) and scar tissue (life’s experience).  In an effort, to provide some of life’s wisdom and guidance to a law clerk and magna-cum-laude law school grad, here is a grown-up conversation for JOSH - with no smiley faces.

Open Letter to JOSH Blackman

From your website to your less-than-compassionate response to one of the “victims of eminent domain takings,” one infers that you are more comfortable with abstractions than real life.  (All the photos with legal and political celebrities are part of an abstract fantasy, just like the Supreme Court fantasy league on your website.)

As you tell the ABAJournal Blawgs Directory: “I am pursuing a career in legal academia, and hope to use this blog as a sandbox for my developing thoughts and ideas.”⁴ (See “Links & Resources” below.)

Children play in sandboxes; and trial law is not a place for children.  It has been said that trial law is the last true blood sport.  So it makes sense that you’d rather be in “legal academia.”

Stand Up for Your Principles

Part of your personal challenge as you strive to grow in wisdom and grace will be to stand up for your principles.  Unless, of course, you are merely substituting platitudes for principles because it feels good and sounds good.

If you really believe in “the victims of eminent domain takings,” don’t run from one because he critiques your boss’ decision.  (And shame on your boss IF he would be displeased with you because such a comment appeared.)

Yes, it is not easy to stand up to the boss.  I’ve gone toe-to-toe with CEOs, and it isn’t fun.  But I respected them and believed in my own point-of-view.  You can fight for your principles without being nasty or cowardly.

When your boss cited the three platitudes from the Federal Energy Regulatory Commission to justify the “public interest” taking, one of the points said in part (emphasis added):  “Based on the benefits the Steckman Ridge Project will provide to the market and the lack of any identified adverse effects on … landowners or communities….”

Adverse Effects for Landowners

Perhaps you and Judge Gibson would come to Bedford County and see what property owners now live with.  Remember the law of unintended consequences as it applied to the Supreme Court’s Kelo decision.

With its threat and power of eminent domain, granted under the badge of government, Houston-based Spectra Energy constructed its Steckman Ridge facility.  It is a 12 billion-cubic-feet underground natural gas storage reservoir, with a nearly 5,000 horsepower compressor station sitting on top, with more piping than a small city.  (See photos at bottom of blog post.)

Homes are nearby and an elementary school is 3 miles away.

Among the adverse effects, there are reports of contaminated water supplies and dead livestock.  At least one family has filed a lawsuit against Spectra Energy.

Among the adverse effects, there have been ongoing operational problems at this facility from the beginning.  This includes emergency shutdowns which result in uncontrolled release of gas (toxic volatile organic compounds) and sometimes oily contaminate into the air (and on nearby properties).

Both Spectra Energy and the Pennsylvania Department of Environmental Protection (DEP) keep repeating that such shutdowns/blowdowns are “not uncommon.”  Both use identical language, but they refuse to furnish the stats.

After months of prodding, Spectra Energy finally admitted, “Yes, we do track all of our compressor units’ performance as part of our system reliability monitoring efforts, but this is not data that we report externally.”

The company also declines to let me interview the project engineer for this facility.  Why?  Wouldn’t an engineer who led the team to build this facility be able to answer questions with fact-based responses?  Wouldn’t he be proud to verify that this facility was built to the highest engineering standards?

Unless it wasn’t.

Could Judge Gibson Help Us Get Info?

Hey, maybe the judge could issue an order requiring Spectra Energy to release its data and permit its project engineer to answer questions!  A little pro bono work to help victims of eminent domain.

One government official told me, “We are mystified at why this compressor station is having a lot of problems.  Compressor stations do not typically have lots of hiccups…. This is not new technology … it is standard technology, at least 50-60 years old.”

In the meantime, based on unofficial record keeping by nearby landowners, there have been 25 shutdowns and/or blowdowns of the Steckman Ridge compressor station between August 23, 2009 (the first, big emergency shutdown) and the end of April 2010.

Why must the victims of eminent domain assemble information on the ongoing performance problems at this facility?  Why doesn’t Spectra Energy disclose the information?  It keeps telling everyone in sight that it wants to be a good neighbor.

And gives out refrigerator magnets to prove it.

Track Record Looks Like a Rap Sheet

Our concern is significant because Spectra Energy has a track record that looks like a police rap sheet (a little legal lingo there):

• “Unlawful Conduct” - The Pennsylvania DEP has issued two Notices of Violation for the company’s “unlawful conduct.”⁵ (See “Links & Resources” below.)

• Fiery inferno - Spectra Energy’s underground gas storage reservoir outside of Houston (Moss Bluff) suffered catastrophic failure in 2004 with two explosions, 6 days of fire with flames as high as 1,000 feet and two evacuations.  The company does not want to talk about it.  The project manager at FERC told me they were not aware of this when they approved Spectra Energy’s proposal for the storage reservoir in Bedford County.⁶ (See “Links & Resources” below.)

• PCB Contamination - Spectra Energy acknowledges in its Form 10-K (filed with the Securities and Exchange Commission on Feb. 27, 2009) that, “some of our pipeline systems are contaminated with [toxic] PCBs.”  The EPA has concluded that PCBs cause cancer in animals and are a probable human carcinogen.⁷ (See “Links & Resources” below.)

• Top Civil Penalty Ranking - Spectra Energy’s Texas Eastern pipeline division is tied for #7 on the EPA’s list of the 21 “Top Civil Penalty Cases of All Time” - the National Enforcement Trends (NETs) document which is on the EPA website.  The $15 million penalty was for massive PCB contamination along the company’s 9,000-mile pipeline.⁸ (See “Links & Resources” below.)

It seems reasonable to conclude that Spectra Energy is in Pennsylvania to capitalize on the so-called Marcellus Shale “boom” - about which there is much controversy on whether the risks will outweigh the benefits.

Approved for Hydraulic Fracturing & Toxic Chemicals

You see, JOSH, while this is a so-called storage reservoir, Spectra Energy has drilled and is operating 13 injection/withdrawal wells; and has permission from the Federal Energy Regulatory Commission (FERC) to drill 10 additional wells for a total of 23.

Further, according to FERC, Spectra Energy filed for the record nearly 300 pages of Material Safety Data Sheets (MSDS) “for every drilling mud and hydraulic fracturing component it could possibly use.”  Several of the chemical compounds listed in the MSDS papers are identified as cancer causing or probably carcinogenic.

FERC further acknowledged that, “If their tests show that they are not getting optimal flows, they would perform hydraulic fracturing to improve the flow of gas.  A propping agent such as sand would then be used to keep the fractures open.”  Sand, water and chemicals - hydraulic fracturing, with all of its environmental problems.

The Pennsylvania DEP Oil & Gas Inspector for Bedford County also confirmed that Spectra Energy requires no special permit for hydraulic fracturing.

So, JOSH, thanks for your less-than-compassionate response to the “victims of eminent domain takings.”  May you grow in wisdom and grace.  And may you and your family never, ever face the threat of eminent domain, and the adverse effects that follow.

Links & Resources

¹ Memorandum Opinion and Order of Court - Judge Gibson’s opinion ruling against property owners and for big gas, Houston-based Spectra Energy. Note:  Because of a distribution memo on the front, there is a two-page difference in the pagination cited between Gibson’s memorandum and opinion and the pdf file. Thus page 33 of Gibson’s order is page 35 of the pdf file:  memorandum-opinion-order-of-the-court

² The EIA report on underground gas storage fields in Pennsylvania and the US is available at this link: http://www.eia.doe.gov/pub/oil_gas/natural_gas/analysis_publications/ngpipeline/undrgrnd_storage.html

³ Josh Blackman’s original blog post with uncensored comments – see pp. 4 &5 of pdf file: kim-gibsons-law-clerk-blog-eminent-domain1

⁴ ABAJournal Blawgs Directory: josh-blackmans-blog-blawgs-aba-journal

⁵ Unlawful conduct - Details are treated in two posts on my website which include testimonials from landowners and documents such as the DEP “Notice of Violation” and Spectra Energy’s formal response.  Unfortunately, on the day before “April Fool’s” day, the DEP announced it had fined Spectra Energy a pathetic $22,000 for air and water quality violations at its Steckman Ridge compressor station.

Emergency Shutdown: http://www.spectraenergywatch.com/blog/?p=372

Spectra Promises: http://www.spectraenergywatch.com/blog/?p=466

⁶ Fiery Inferno - This post on this incident is detailed and offers external sources for verification.

Moss Bluff Incident:  http://www.spectraenergywatch.com/blog/?p=390

^{7, 8} PCB Contamination - Details and source documents (including Spectra Energy’s 10-K Form and the EPA Top 21 List) are covered in two posts.

Spectra PCBs 2: http://www.spectraenergywatch.com/blog/?p=498

Spectra PCBs?: http://www.spectraenergywatch.com/blog/?p=480

Clearville’s Blog -  For more perspective on the adverse effects of Spectra Energy’s operations in Bedford County, check out this blog and its video posts.  In particular, see these two posts:

Clearville “Big Bird Report” Spectra Energy’s Steckman Ridge Compressor Station 2010: http://clearville.wordpress.com/2010/01/27/clearville-big-bird-report-steckman-ridge-compressor-station-2010/

Spectra Energy’s Steckman Ridge Compress Station & Chemical: 1,2 Dichloroethane: http://clearville.wordpress.com/2010/01/26/352/

Spectra Energy's Steckman Ridge compressor station in Bedford County, PA, with home and child's playset nearby. It has had ongoing operational problems since its startup. (Click on photo to enlarge.)

This is a portion of the Spectra Energy facility which looks like a small city and sits on top of a 12 billion cubic feet underground gas storage reservoir. (Click on photo to enlarge.)

Welcome to the land of "adverse effects" on property owners, thanks to eminent domain brought by Spectra Energy, the Federal Energy Regulatory Commission, and the court. (Click on photo to enlarge.)

Landowner:  Gas Companies will Continue to Behave Badly

Until Made to Stop

Ruggiero Family Story:  Can’t Happen Here?

Mayor Tillman:  Average Barnett Shale Well Loses Half

Production After 1^st Year

Texas Landowner Tim Ruggiero: "Gas companies will continue to behave this way until they are made to behave differently."

Mayor Calvin Tillman speaks to audience members after presentation in Clearville, PA.

“I am not opposed to drilling.  I am opposed to being poisoned.”

These words of Tim Ruggiero, a Texas landowner from Decatur, Texas, are worth repeating and remembering.

Both Ruggiero and Mayor Calvin Tillman of DISH, Texas, recently spoke to audiences in New York City, Philadelphia, Clearville, Midway and Pittsburgh, PA.

They traveled at their own expense to share their personal experience with the shale gas “boom” in Texas via the Barnett shale.  Their goal is to educate landowners and elected officials in Pennsylvania and New York on what to expect from the so-called Marcellus shale boom - beyond the glittering promises of the gas industry.

It is a tough love message.  They say they do not want what happened in DISH and in Decatur to happen elsewhere.

They want hopeful landowners and public officials to understand that while jobs and money for some may or may not result from drilling activity in the Marcellus shale, residents and communities should be prepared to deal with air and water contamination; deceptive practices (and promises) from the gas industry; and little or no help from government regulatory agencies.

This point-of-view is not from theorists who have no skin-in-the-game with gas drilling.  It is from a landowning family who now have a huge gas rig 200 feet from their back door and who are dealing with documented air and water contamination, including irresponsible practices at the drill pad that are creating health problems.

It is from a small town mayor who received little or no response from the gas companies and state regulatory agencies until the town council agreed to spend 15% of its annual $70,000 budget for an air study which “confirmed the presence of multiple Recognized and Suspected Human Carcinogens in fugitive air emissions.”

For background (including a copy of the air study plus other documents), read part 1 of Tillman’s and Ruggiero’s message to audiences: http://www.spectraenergywatch.com/blog/?p=577

Ruggiero Family Story

The Ruggiero family education on the behavior of gas companies had a nasty beginning.  Here is their story as Ruggiero tells it:  On the morning of September 16, 2009, Aruba Petroleum waited until the Ruggiero family left for work and school, then used cutting torches to open a 50-foot-wide section in their pipe and cable fence.

Aruba then brought in 5 or 6 bulldozers and backhoes through the fence to prepare a drilling pad near their house.  The company and some 30 employees bulldozed 3 of the family’s 10 acres and filled the area with gravel.  They now have a huge gas rig on a well pad 200 feet from their back door.

Welcome to the ‘Split Estate’

Aruba and other gas companies can do this because the law says they can.  Split estate refers to the fact that, in many western states, mineral rights are often severed from surface rights in such a way that property owners who own the surface rights have little control over their property.¹ (Refer to documentary film on this subject, titled “Split Estate.”  See “Links & Resources” below.)

While terms may be different, Pennsylvanians and property owners in other states are familiar with mineral rights being severed from surface rights in the chain of title.  In Texas, mineral rights dominate surface rights to an extant that the owners of the surface rights have little protection, according to Ruggiero.

Aruba Petroleum’s site supervisor delivered a terse message to the family.  The company would be drilling not one, but two wells on their property.

Good Neighbor Policy

Ruggiero describes what happened at their first meeting following Aruba’s forced entry onto their property:  “The site supervisor, held a one-page surface-use agreement, and said, ‘Texas law says that we only have to give you $1,500 per site.  But since we’re such good neighbors - and we want to be a good neighbor - we’re giving you $15,000 per site.  In other words, if you sign this, you’ve got $30,000.  Or if you don’t sign it, we’re only going to give you $3,000.  Either way, those 3 acres are now ours.’”

The new “good neighbor” added a frac tank to hold the produced water; four condensate tanks, an incinerator, and a waste water pit.

Hydraulic fracturing or “produced water” is a combination of water, sand and toxic chemicals, according to Dan Volz, Assistant Professor of Environmental and Occupational Health at the University of Pittsburgh.  For more information, see the April 12 post on Dr. Volz’s comments: http://www.spectraenergywatch.com/blog/?p=563

Ruggiero notes, “We have had numerous leaks and thousands of gallons of chemical spills on our property.”  One evening at 10:00 pm, for example, as he checked his property (they own two horses), he heard a “venting sound.”

“One of the hatches on top of a condensate tank was open and the [liquid] condensate and the gas was gushing out of the tank like a geyser,” Ruggiero said.  “It was coming out in surges.  You could see it running down the side of the tank and going off into the air.”

No one showed up until 9:00 am the next morning.  The contaminated geyser ran all night and Ruggiero made a video.  Several videos from the Ruggiero property can be seen on YouTube, among other places.² (See “Links & Resources” below.)

The operator’s hazardous materials response came in the form of a crew that power washed the condensate tanks.  As Ruggiero makes clear, the company’s response to its spill was to wash the contaminated liquid into the ground.

9,000 Gallon Spill

“There have been so many spills and leaks on our property that I started writing them down, because you can’t keep up with them otherwise,” Ruggiero says.  He speaks of leaks from the frac tank, condensate tanks, leaking hoses, valves, methane leaking out of the ground through saturated soil, “fugitive emissions” captured via infrared cameras - the list goes on.

Ruggiero shared details on one spill with this blog.  It involved at least 9,000 gallons from the condensate tank to the frac tank, he said.  “We tested the produced water and found BTEX in it,” he adds.

BTEX is an acronym for benzene, toluene, ethylbenzene and xylene - four volatile organic compounds (VOCs).  On the subject of benzene alone, for example, the Agency for Toxic Substances & Disease Registry reports:  “The International Agency for Research on Cancer (IARC) and the EPA have determined that benzene is carcinogenic to humans.”³ (See “Links & Resources” below.)

‘Gas Gang’ Behavior

Ruggiero’s assessment is sobering:  “If they’re behaving this badly on one site, 200 feet outside my back door, what are they doing on remote sites, or sites where access is only through locked gates?”

“We’re not getting any help from the two agencies that are supposed to be protecting us, our health, our kids and our property from all of this nasty stuff,” he said.  “They pretend to.  They talk a good game.  They generate lots of paper … but nothing ever really gets done. Nothing.”

Ruggiero calls these companies the “gas gang.”  If they show up on your property, watch out, he warns.

“These folks make promises they have no intention of keeping,” he says.  “We know there are people with contaminated water.  There are people who have health issues, people who are losing their livestock.”

“If it can happen to me, it can happen to you,” he says.  “Gas companies will continue to behave this way until they are made to behave differently.”

Beware of Moles

Mayor Calvin Tillman of DISH, Texas, is about one-half hour from Decatur where Tim Ruggiero lives.  His experience is as mayor of a small town with 11 pipelines and as many compressors, 18 gas wells and four gas metering stations.

One piece of advice he shares with audiences is to beware of “moles.”

“A lot of times, when the energy companies come in, they’ll find somebody who may be a community leader, somebody who is outspoken, somebody who knows everybody, somebody who’s been around for awhile,” he said.

“They’ll say to that person, ‘Hey, I’ve got a deal for you.  You get all these people here to sign up - and I’ll give you two percent of all the royalties.’”

“That could be a lot of money,” Tillman says.

“So if there is someone who is particularly interested in you signing over your minerals, there may be a reason why.”

Shale Gas ‘Powerball’

Tillman joked about folks who think they will move to Beverly Hills once they sign a lease.  But royalty payments may not be as high as landowners hope; and they may drop off rapidly with the declining productivity of shale gas.

In the Barnett shale, Tillman says he has found leases ranging from $75 per acre to $30,000 per acre.  He notes that, “The $75 per acre probably dates back to the 1980s because they started testing the fracturing technology and were leasing back then.”

“The $30,000 per acre was a couple of years ago when market prices for natural gas were so high,” he adds.

Royalty rates he has looked at range from 12% to 30%.  “Obviously, depending on the market and on what lease you sign, royalty payments can vary dramatically.”

But there is another factor in the reality of shale gas.  “In the Barnett shale, the average well loses half of its production after the first year,” Tillman says.

If the market price of natural gas drops, he adds, “They turn down production on the wells. They scale way back.”  Guess what that means to royalty payments?

Similar economics apply to communities, especially small communities, according to Tillman.  It is very easy for small towns to become dependent on the tax revenue from minerals.

Tillman likens it to heroin addiction.  The town of DISH once received 60% of its property tax revenue from minerals, according to Tillman.

“In Texas, minerals are taxed just like your house or real property,” he explains.  “So you can get an immediate revenue boost if you’ve got minerals in your community.”

“When shale gas wells lose 50% of their production after the first year, communities may discover they can’t pay for that new fire station,” Tillman says.  “You end up having shortfalls in your budget; and you’ve got to raise taxes to build new schools.”

Help Industry Do the Drilling Right

Texas Landowner Ruggiero told this blog:  “The oil and gas industry has had a 150-year head start, but we’re making progress.  I’m not trying to stop the drilling.  I’m trying to get them to do it right.  There is a right way to extract gas and a right way to treat individuals and communities.  Gas companies will continue to behave badly until they are made to behave differently.  We need to help industry do the right thing, because they won’t get there on their own.”

Links & Resources

¹ Split Estate - a high-quality, 76-minute documentary film about the challenges faced by property owners in several western states as they deal with energy companies that seem to have no boundaries.  The title refers to the fact that in these states, mineral rights are often severed from surface rights in such a way that property owners have little control over their property.  Health and environmental problems follow.  Link:  http://www.splitestate.com/

² See videos of Aruba Petroleum’s irresponsible practices on the Ruggiero’s property on Txsharon’s Channel on YouTube: http://www.youtube.com/user/TXsharon

³ Agency for Toxic Substances & Disease Registry (ATSDR) - Based in Atlanta, George, the ATSDR is a federal public health agency of the U.S. Department of Health and Human Services.  Here is a 2-page pdf file of the agency’s ToxFAQ^TM on Benzene:  atsdr-on-benzene

Best Oil & Gas Development Practices - Here is a 6-page resource for elected officials and individual property owners looking for examples of how to improve the oil & gas industry’s current approach to drilling.  It includes recommendations for environmentally friendly drilling technology to transparency on industry practices.  As the report states:  “We support drilling right in Texas: responsible energy development that protects private property owners, water, the environment, and public lands while enabling energy production.”  Here is a pdf file of the document:  drill_right_texas_final It is sponsored by Earthworks at this website: http://www.earthworksaction.org/publications.cfm?pubID=444

Corinth, Texas - is an illustration of what communities and local governments face when dealing with the gas industry.  XTO says it wants to put two wells on 24 acres; but it also asked for variances on 11 local ordinances related to gas drilling.  Instead of a required 600 feet setback from homes, for example, it asked for a variance to drill as close as 100 feet.  Initially, the company would not disclose future plans; but after much prodding admitted it wanted to drill more than two wells on 24 acres.  One homeowner led the charge to activate citizens about what was about the happen in their community.  Check out the following links:

Corinth Cares: http://corinthcares.wordpress.com/about/

News Report - “Residents:  No to XTO - People push Corinth to deny request for 11 drilling variances”            Denton (Texas) Record Chronicle, April 17, 2010 http://www.dentonrc.com/sharedcontent/dws/drc/specialprojects/drilling/stories/DRC_Corinth_XTO_0417.2556e5722.html

Christine Ruggiero - After reading Tim Ruggiero’s story in this blog, you may also want to read the perspective of his wife, Christine.  It can be located at this link:  http://www.earthworksaction.org/cv_DecaturTX_ruggiero.cfm