March 2016 • Issue 71The monthly newsletter of the Pennsylvania Independent Oil & Gas Association

(Continues on page 3)

Mcf. The tax would have included a floor of $2.97/Mcf, so thatproducers would continue to pay a tax on that price even whennatural gas prices dipped below that level. The unconventionalwell impact fee authorized under Act 13 would have beenrepealed, with local governments earmarked to receive $225 mil-lion in place of the impact tax revenues.

This time around, Wolf is proposing a straight severance taxof 6.5 percent. Additionally, the impact fee would remain inplace—local officials loudly protested its proposed eliminationlast year—and producers would be allowed to take a tax credit of100 percent of the impact fees they pay. According to Wolf’sbudget secretary, this would work out to an effective rate of 4percent for the severance tax.

The Wolf administration estimates the tax would generate$217.8 million next year, most of which apparently would beused to support public education.

In a PennLive.com op-ed, PIOGA’s Lou D’Amico observed,“The governor’s severance tax scheme is political and ideologi-cal. It is not based on sound revenue-raising or business princi-ples or fair taxation…. The effect of any severance tax will bethe same: fewer people working, more people unemployed, lesstax revenue to the Department of Revenue and reduced energyproduction in Pennsylvania.”

Wolf’s approximately $33.2-billion FY 2016-17 budget—about $600 million less than what he proposed last timearound—includes a total of $2.72 billion in new recurring rev-enue. In addition to the severance tax, the governor proposesincreasing the personal income tax from 3.07 to 3.4 percent andwould begin taxing lottery winnings. The sales and use taxwould be broadened to cover purchases such as basic cable tele-vision, movie tickets and digital downloads. Taxes on cigarettesand other tobacco products would be expanded and increased.

There are no clear indications how the budget situation willplay out in Harrisburg—not onlyresolving the current budget, but alsogetting a plan in place for the next fis-cal year, which begins July 1.

DEP and DCNRAs part of the budget process each

year, agency heads go before legislativecommittees to answer questions aboutthe governor’s proposed spending planand agency initiatives. These hearingsalways reveal some interesting things.

Even though the ongoing impasse between Governor TomWolf and the General Assembly means there is still nobudget for the current fiscal year, the budget cycle has

begun anew for a 2016-17 spending plan. And while that situa-tion is unprecedented in Pennsylvania’s history, one constantremains—the governor continues to call for a tax on natural gasproduction.

Wolf’s 2015-16 budget proposed a severance tax on uncon-ventional natural gas production of 5 percent plus 4.7 cents per

John Hanger resigns. . . . . . . . . . . . . . . . . . . . 32016 PIOGA Spring Meeting coming up . . . . 4Subpart OOOO and conventional wells . . . . . 5Pipeline report goes to the governor . . . . . . . 8Coast Guard withdraws wastewater policy . . . 9First LNG export from Sabine Pass . . . . . . . 11Alternative Fuels Incentive Grants . . . . . . . . 12Impact fee revenue to drop by $38 million . . 132016 Congressional Call-Up. . . . . . . . . . . . . 14PIOGA hosts Liaison Committee . . . . . . . . . 15

Water table training . . . . . . . . . . . . . . . . . . . . 15Using a BBS program to enhance safety . . . 16Pipeline eminent domain options . . . . . . . . . 18Coming: Survey from RAND. . . . . . . . . . . . . 212015 oil and gas activity statistics . . . . . . . . 22Oil & Gas Trends. . . . . . . . . . . . . . . . . . . . . . 24October Spud Report . . . . . . . . . . . . . . . . . . 26Calendar of Events . . . . . . . . . . . . . . . . . . . . 27PIOGA contacts . . . . . . . . . . . . . . . . . . . . . . 27

Another budget proposal, another severance tax

At the IPAA Congressional Call-Up: Members of PIOGA’sdelegation learn about new pigging technology from GETechnologies after an Energy & Commerce Com mittee meet-ing. Turn to page 14 for more about the event.

Page 2 The PIOGA Press

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February 2014 Page 3March 2016 Page 3

Budget proposal: Continued from page 1

Cindy Dunn, secretary of the Department of Conservation andNatural Resources (DCNR), told lawmakers there is no newactivity on existing unconventional gas leases in state forests, anda moratorium imposed by Wolf prevents any new leasing.(Additionally, in 2015 about 40,000 acres were released from 15state forest leases after no drilling had occurred during the pri-mary term of the lease.) Due to lower gas prices and decliningactivity, royalty revenues were down 46 percent in the first sixmonths of the current fiscal year compared to the same period ayear ago, from $68.3 million to $36.7 million.

Revenue from rents and royalties on state-lands leasing goesinto a dedicated fund that is earmarked for use by DCNR forconservation, recreation and flood-control projects. However,starting under the Rendell administration that account has beentapped for general fund spending and, more recently, forDCNR’s own basic operations. Wolf’s budget proposes shiftingDCNR funding away from reliance on the Oil and Gas LeaseFund, earmarking $61.3 million more in general fund spendingfrom the agency to offset a $51-million reduction in use of thededicated fund by the agency. The Oil and Gas Lease Fund start-ed FY 2014-15 with a balance of $114 million and is projectedto be below $3 million by the time the 2016-17 fiscal year beginsin July.

The governor’s latest budget proposes bolstering the oil andgas fund from an increase in tipping fees at landfills, Departmentof Environmental Protection Secretary John Quigley told theSenate Appropriations Committee. The current $6.25/ton feeimposed on municipal waste would rise to $8 and would beexpanded to include waste from construction and demolition andresidual waste, which are currently exempt. A $35 million ear-mark from the tipping fee would enable the oil and gas fund tocontinue transferring money to support the state EnvironmentalStewardship (Growing Greener) Fund and Hazardous SitesCleanup Fund, according to the budget proposal. ■

John Hanger resignsOne of the Wolf administration’s most vociferous propo-

nents of a severance tax is leaving Harrisburg. John Hangerannounced his resignation in mid-February as secretary of policyand planning. Hanger, whoserved as Department ofEnvironmental Protection secre-tary in the Ed Rendell administra-tion, said he is leaving to spendmore time with his wife anddaughter in Massachusetts.

Before serving as DEP chief in2009-2010, he was the presidentof environmental advocacy group PennFuture and sat on thePublic Utility Commission. Hanger also ran for governor in acrowded field of Democrats against Republican Tom Corbett,but dropped out of the race in March 2014.

Governor Wolf named Sarah Galbally as Hanger’s replace-ment. At the time, she was serving as the deputy secretary forpolicy and planning.

Page 4 The PIOGA Press

We’re switching things up this year, moving our traditional winter meeting to a spring date, consolidating the programto one day to make it easier for more members to attend and relocating to an exciting new venue that’s more conve‐niently located for many of our members. What isn’t changing is the quality of the programming—we will again beoffering presentations important to how your company does business, particularly in these difficult times. As always,there will also be opportunities for networking.

The program will kick off at 9:30 a.m. and last until 5 p.m., followed by a reception and casino time. Participants willreceive $20 free slots play. Here’s the lineup of presentations and speakers:

2016 Pennsylvania Regulatory UpdateScott Roberts, PIOGA Regulatory Consultant

2015 Legislative Actions that Impact the Oil & Gas IndustryDick Gmerek, Gmerek Government Relations

National Regulatory Update – Northern Long‐Eared BatSamantha McDonald, Independent Petroleum Association of America

Dept. of Labor – Penalties for Overtime WorkMartin J. Saunders, Steptoe & Johnson PLLC

PIOGA Initiatives and State of the AssociationLou D’Amico, PIOGA

Lunch Keynote Address: Political Outlook in this Election YearCharlie Gerow, Quantum Communications – Political Analyst & Commentator

Water Management – Options, Obstacles and IdeasBurt Waite, Moody & Associates

Fighting for our Survival – PIOGA’s Litigation UpdateKevin Moody, PIOGA

Panel Discussion: New Developments on Market GrowthModerator: Joyce Turkaly, PIOGACNG/LNG Alternative Fueling & Infrastructure – Robert Beatty, O Ring CNG Fuel SystemsGas‐Electric Coordination – Sandy Spencer, Appellation Pre Fab, LLCManufacturing and Large Volume Consumer – Tim Wetzel, Bridgeworks, LLC

Education, Education and More EducationPipeline and Gas Market Development Public Relations Efforts – Dan Garcia, Leech TishmanUpdate on PIOGA’s Educational Outreach Efforts – Dan Weaver, PIOGA

To find out more and register, visit the Events section at www.pioga.org.

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February 2014 Page 5March 2016 Page 5

State of confusion? SubpartOOOO and conventional wellsBy Roy Rakiewicz and J.P. KleinleALL4, Inc.

As an environmental consulting firm headquartered inPennsylvania, the ALL4 staff frequently communicateswith air quality personnel within the Pennsylvania

Department of Environmental Protection (DEP) regarding vari-ous regulatory and permitting questions, comments regardingdraft permits, and miscellaneous discussions regarding air qualitypolicy in Pennsylvania. During a recent telephone conversationwith a key member of DEP’s central office air quality staffregarding Pennsylvania’s direction on regulating methane emis-sions from oil and gas operations, a question was posed to meregarding conventional well operators in Pennsylvania. The ques-tion was asked because of ALL4’s affiliation with PIOGA’sEnvironmental Committee.

The DEP representative asked why the department does notsee 40 CFR Part 60, Subpart OOOO annual compliance demon-stration reports from conventional well operators. The questiontook me by surprise, and after about 10 seconds of awkwardsilence, I asked him to clarify his question. He repeated the ques-tion and mentioned that DEP has not received any SubpartOOOO annual compliance demonstration reports from conven-tional operators (Note: I find it unlikely that DEP has not seenany Subpart OOOO compliance demonstration reports from con-ventional operators, but that is the language he used).

He found the lack of report submittals from conventionaloperators to be very unusual given that Subpart OOOO has beenin effect since August 2012, applies to several affected sourceswithin the oil and gas industry, and does not exclude convention-al wells from the regulation. In fact, Subpart OOOO makes noreference to conventional wells within the text of the regulationsat all. I reminded him that drilling and well completion opera-tions (and especially conventional operators), in general, havedeclined the past few years and that some conventional operatorshave not drilled a new wellin over four years. I men-tioned I would relay DEP’sconcern to PIOGA duringthe February EnvironmentalCommittee meeting (which Idid). This article is a followup to that discussion, asrequested by PIOGA.

It has been a few weekssince my exchange withDEP, and after thinkingmore about the discussion,we have several ideas on theperceived lack of annualSubpart OOOO reportsreceived by DEP from con-ventional operators. If thereis truly an issue with regardto Subpart OOOO reportingto DEP by conventionaloperators, it could be related

to operator confusion regarding Pennsylvania’s “Exemption 38,”which conditionally exempts unconventional oil and gas wellsfrom Pennsylvania’s Plan Approval Application (PAA) require-ments. Embedded within Exemption 38 is a blanket uncondition-al exemption for conventional wells, including an exemptionfrom DEP “compliance demonstration” reports, due within 180days of completion for unconventional operators. The purpose ofthis exemption is to provide clarity that conventional wells, well-heads and all other associated equipment are eligible for air qual-ity permit exemption as being sources of minor significance.However, inherent in Exemption 38 is that owners or operators(conventional and unconventional) will comply with all applica-ble federal requirements (i.e., Subpart OOOO), including notifi-cation, monitoring, recordkeeping and reporting obligations.

The “disconnect” between DEP’s Exemption 38 and the fed-eral regulations could be causing confusion to conventional oper-ators regarding the applicability of Subpart OOOO to their oper-ations (i.e., conventional operators may assume that Exemption38 also provides exemption from Subpart OOOO). To help alle-viate confusion regarding Subpart OOOO applicability to con-ventional operators (perceived or otherwise), the remainder ofthis article provides a progressive overview of Subpart OOOOapplicability for conventional natural gas well sites. As men-tioned earlier, Exemption 38 includes a blanket unconditionalexemption for conventional wells and associated equipment, assuch, a similar applicability analysis for Exemption 38 is notnecessary.

Subpart OOOO backgroundSubpart OOOO was proposed on August 23, 2011, promulgatedin the Federal Register on August 16, 2012, and became effectiveOctober 15, 2012. Subpart OOOO establishes emissions stan-dards and compliance schedules for the control of volatile organ-ic compounds (VOCs) and sulfur dioxide (SO2) emissions fromseveral new, modified or reconstructed affected facilities withinthe oil and gas industry. Updates to the rule were published inthe Federal Register on September 23, 2013, and December 31,2014. Each update was effective upon publication.

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Subpart OOOO applicability analysisThe steps below were designed to walk a conventional natural

gas well owner/operator through a series of questions andanswers that will result in a better understanding of the potentialapplicability of Subpart OOOO to its operations. Please note thatthe following guidance is a general overview and should be usedas a screening tool only. Step 1 – Identifying affected equipment and processes

The first step in determining the applicability of SubpartOOOO to your operations is identifying what equipment andprocess are potentially covered by Subpart OOOO (i.e., affectedfacilities). Affected facilities for a natural gas well site (conven-tional and unconventional) include:

• Completions of hydraulically fractured wells• Pneumatic controllers• Storage vessels

Questions: 1. Have you performed completion activities on hydraulical-

ly fractured wells?2. Do you own or operate pneumatic controllers or storage

vessels?Answers:

A. If you answered no to both questions above, your conven-tional natural gas well operations are not subject toSubpart OOOO.

B. If you answered yes to either question above, your con-ventional natural gas well operations are potentially sub-ject to Subpart OOOO. Continue to steps 2 and 3.

Step 2 – Understanding the effective dateThe next step in determining the applicability of Subpart

OOOO to your operations is to understand the Subpart OOOOeffective date. 40 CFR §60.5365 specifies that affected facilitiesare subject to Subpart OOOO when construction, modification orreconstruction commenced after August 23, 2011. Questions:

1. Have you completed a hydraulically fractured well afterAugust 23, 2011?

2. Have you installed/modified a pneumatic controller orstorage vessel after August 23, 2011?

Answers:A. If you answered no to both questions above, your conven-

tional natural gas well operations likely are not subject toSubpart OOOO.

B. If you answered yes to either question above, your con-ventional natural gas well operations potentially are sub-ject to Subpart OOOO. Continue to Step 3.

Step 3 – Further defining affected and identifying excludedequipment and processes

It is important to note that not all post-August 23, 2011,hydraulically fractured well completions, pneumatic controllersand storage vessels are subject to Subpart OOOO. Affected facil-ity exclusions can be found throughout the rule and are notalways obvious. A listing of these exclusions and defining char-acteristics are provided below. Completions of hydraulically fractured well exclusions

• Well completion operations without hydraulic fracturing orrefracturing are NOT subject to Subpart OOOO. Pleasenote that wildcat, delineation and low-pressure gas wellsare subject to different well completion and recordkeepingrequirements but are not exempt from Subpart OOOO.

Pneumatic controller exclusions• A pneumatic controller that is not natural gas-driven is

NOT subject to Subpart OOOO.• A pneumatic controller that is not a continuous bleed is

NOT subject to Subpart OOOO.• A pneumatic controller that is not operating at a natural

gas bleed rate greater than 6 standard cubic feet per hour(scfh) is NOT subject to Subpart OOOO.

• A pneumatic controller with a bleed rate greater than 6scfh is exempt from Subpart OOOO when it is requiredbased on functional needs. However, the owner/operator isrequired to tag the controller in accordance with SubpartOOOO.

Storage vessel exclusions• Storage vessels that do not contain an accumulation of one

of the following substances are NOT subject to SubpartOOOO:

– Crude oil– Condensate– Intermediate hydrocarbon liquids– Produced water

• A storage vessel that does not have the potential for VOCemissions equal to or greater than six tons per year is NOTsubject to Subpart OOOO.

• Vessels that are skid-mounted or permanently attached tosomething that is mobile and are located at a site for lessthan 180 consecutive days are NOT subject to SubpartOOOO. It is important to note that Subpart OOOO stipu-lates recordkeeping requirements to utilize this exclusion.

• Process vessels are NOT subject to Subpart OOOO.• Pressure vessels designed to operate in excess of 204.9

kilopascals and without emissions to the atmosphere areNOT subject to Subpart OOOO.

• Storage vessels subject to and controlled in accordancewith the requirements for storage vessels in 40 CFR Part60, Subpart Kb, 40 CFR Part 63, Subparts G, CC, HH, orWW are NOT subject to Subpart OOOO.

There are far too many exemptions listed above to prepare ashort series for questions and answers. In summary, if theexemptions above do not apply to your operations, it is possiblethat your operations are subject to Subpart OOOO. It is also crit-ical to understand that making modifications to the unaffectedequipment listed in Step 1 could make the equipment subject toSubpart OOOO. The term modification is defined within thegeneral provisions of 40 CFR Part 60 and certain specific modifi-cations are also defined in Subpart OOOO. 40 CFR §60.5 pro-vides provisions for making a request for a modification determi-nation. Initial and ongoing compliance with Subpart OOOO isdemonstrated by recordkeeping, submission of notification(s)and submission of annual reports. These Subpart OOOO compli-ance requirements bring this article full circle to the commentmade by DEP (why DEP does not see any Subpart OOOO annu-al reports from conventional well operators).

Do you have any Subpart OOOO affected facilities? Have yousubmitted your compliance demonstrations? Please contact RoyRakiewicz (610-933-5246, ext. 127 or rrakiewicz@all4inc.com)or J.P. Kleinle (610-933-5246, ext. 120 or jkleinle@all4inc.com)if you have any questions. ■

February 2014 Page 7March 2016 Page 7

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Pipeline task force report goes to the governor

Atask force convened last year by Governor Tom Wolf toprovide recommendations on the best way to build outthe infrastructure necessary to get Pennsylvania’s abun-

dant shale gas reserves to market has delivered its final report tothe governor.

The 658-page document contains the same 184 recommenda-tions made in the task force’s draft report in December(December PIOGA Press, page 1). This time, however, the grouphighlighted its top 12 suggestion in six areas. These include:

• Amplify and engage in meaningful public participation. – Establish early coordination with local landowners andlessors.– Educate landowners on pipeline development issues.

• Develop long-term operations and maintenance plans toensure pipeline safety and integrity.

– Train emergency responders.– Enhance emergency response training for responder agen-cies.

• Employ construction methods that reduce environmentalimpact.

– Minimize impacts of stream crossings.– Use best available combination of technologies to protectexceptional value and high quality waters.

• Maximize opportunities for predictable and efficient per-mitting.

– Ensure adequate agency staffing for reviewing pipelineinfrastructure projects.

– Implement electronic permit submissions for chapters 102and 105.

• Plan, site and route pipelines to avoid/reduce environ-mental and community impacts.

– Expand PA One Call for all classes of pipelines.– Identify barriers to sharing rights-of-way.

• Enhance workforce/economic development. – Attract military veterans to the energy workforce.– Enhance science, technology, engineering and math(STEM) education.

The governor created the task force to identify best practicesfor pipeline siting, permitting and safety. Chaired by Departmentof Environmental Protection Secretary John Quigley, the 48 taskforce members and more than 100 additional volunteers servingin 12 workgroups began meeting last July. Of 184 recommenda-tions developed by the task force, the group identified the toptwo recommendations in each category in the final report deliv-ered to the governor.

Over the coming months, recommendations that fall withinthe jurisdiction of state agencies will be further assessed andevaluated for possible implementation, according to DEP.Industry and other agencies were encouraged to do the same forrecommendations that lie within their purviews.

For more information on the report and the full set of recom-mendations, point your web browser to www.dep.pa.gov/Business/ProgramIntegration/PipelineTaskForce. ■

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Coast Guard shelves proposedwastewater barging policy

The U.S. Coast Guard has formally withdrawn a proposedpolicy on shipping shale-gas wastewater by barge, sayingthat the agency had not received significant interest from

industry. Instead, the Coast Guard indicated it would considerwastewater barging requests on a case-by-case basis. The with-drawal notice was published in the February 23 Federal Register.

After being asked by a barge owner in 2011 for permission totransport shale-gas wastewater, the Coast Guard on October 30,2013, proposed a policy that set out a process for performingchemical analyses of each load of wastewater, a radiation surveyof each barge before any personnel entered the barge and beforechanging from wastewater to another cargo, and tank venting toprevent accumulation of radon. It also would have described lim-its on radioactivity concentration and consignment activity(effectively, limits on emission of radiation) for wastewater car-goes.

In response to a call for public comments, the Coast Guardreceived more than 70,000 comments, 98 percent of which wereform letters opposing the barging of produced water in general.

PIOGA joined with the Independent Petroleum Association ofAmerica, the American Exploration and Production Council, theIndependent Oil & Gas Association of West Virginia, theKentucky Oil & Gas Association, and the Ohio Oil & GasAssociation in filing joint comments that raised several concerns,including the agency’s creation of a new definition of producedwater and a new category of oil field waste, the categorization ofproduced water as a hazardous waste, the need for characteriza-tion of every barge load of wastewater, and that radiation levelstaken from U.S. Department of Transportation regulations wereactually thresholds and not upper limits for radiation.

In the February 23 notice, the Coast Guard indicated thatshippers were free to seek permission under existing regulationsfor bulk hazardous waste materials by providing detailed chemi-cal composition, environmental analyses and other informationfor each individual tank barge load. The agency has yet to allowany such shipments.

The Coast Guard left open the possibility of revisiting a stan-dardized process and policy for permits if it finds the currentrules are inadequate to handle requests or protect the environ-ment. ■

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By Joyce Turkaly,Director, Natural Gas Market Development

On February 23, 20 or so supporters of U.S. liquefied nat-ural gas (LNG) export projects convened at thePennsylvania Manufacturers Association office in

Harrisburg to hear Cheniere Energy’s Matt Barr, director, gov-ernment and public affairs, announce that after breaking groundin August 2012, Cheniere, currently the largest U.S. export facili-ty, would ship its first cargo of LNG in just days.

Focusing on our national security, shale gas was admitted tobe a game changer for Europe, as many onlookers view U.S.entry into the market as part of a broader effort to challengeRussian domination. For example, Russia supplies about one-third of Europe’s gas via pipeline. Deutsche Bank estimates thatthe U.S. can position itself for a similar market share in the next10 years.

Cheniere is currently constructing six liquefaction trains atSabine Pass, each with expected nominal capacity of approxi-mately 4.5 million tonnes per annum each. Cheniere has termtolling agreements for supply from trains one through four withBG Group, Natural Gas Fenosa, KOGAS and GAIL, as well asagreements with Total and Centrica, which subscribed to trainsfive through six; trains two through six are in various stages ofdevelopment. The destination of this first shipment is Brazil;however, others that follow this spring are destined for Europe.

Progress in the Gulf has been matched by a greater awarenessat events such as these that continue to expand the dialog onLNG exports and support for the benefits to Pennsylvania manu-facturing by achieving strengthened upstream activities. Whereas

Gazprom calculates its prices using what is cited as “intelligible”by purchasing countries, Cheniere’s prices filed with the U.S.Securities and Exchange Commission disclose market-basedpricing; the purchase and sale agreements are 20-year terms at aprice of $3.50 per MMBtu plus an adjustment of 115 percent ofNYMEX natural gas futures. In all likelihood it is believed that ifRussia views U.S. LNG exports as a threat, it can simply cutprices.

Given a recent American Petroleum Institute study regardingstate-level impacts through 2035, Pennsylvania is expected to seeincreases in state income of $10.3 billion and net job gains in therange of 59,000 as a result of U.S. exports of LNG, rankingPennsylvania third behind Louisiana and Texas. A web-basedmap of LNG export projects can be found atwww.api.org/Policy-and-Issues/Policy-Items/LNG-Exports/API-map-of-LNG-sites-critical-to-US-export-goals

Wrapping up the meeting, David Taylor, executive director thePennsylvania Manufacturers Association announced, “LNG itselfis a manufactured good.” ■

A special thank-you to Tim Wetzel, Bridgeworks LLC and PIOGAManufacturing Subcommittee leader, who accompanied me tothis meeting in Harrisburg.

A milestone to celebrate:First ever United States LNG exportleaving Sabine Pass, Louisiana

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Page 12 The PIOGA Press

DEP’s 2016 Alternative FuelsIncentive Grant Program

Approximately $7 million in funding will be available thisyear through the Department of EnvironmentalProtection’s Alternative Fuels Incentive Grant (AFIG)

Program to support:• 50 percent of incremental cost expenses relative to retro-

fitting vehicles to operate on alternative fuels as a bi-fuel, dual-fuel, hybrid or dedicated vehicle.

• 50 percent of incremental cost expenses to purchase bi-fuel,dual-fuel, hybrid or dedicated alternative fuel vehicles.

• The cost to purchase and install the necessary fleet refuelingor home refueling equipment for bi-fuel, dual-fuel, hybrid ordedicated vehicles.

• The cost to perform research, training, development anddemonstration of new applications or next-phase technologyrelated to alternative fuel vehicles.

• Reimbursement incentives for school districts, municipalauthorities, political subdivisions and nonprofit entities that pur-chase and use biofuel blends including E85 and biodiesel blendsof 5 percent biofuel content and higher.

DEP receives approximately $6 million in funding each yearthrough the utilities gross receipts tax to carry out the provisionsof the Alternative Fuels Incentive Act. The primary goals of theprogram are to improve Pennsylvania’s air quality and reduceconsumption of imported oil through the use of homegrownalternative fuels that will help the Commonwealth’s economy

and environment. DEP is particularly interested in supportinggrant proposals that provide environmental benefits, are market-driven, create jobs and produce economic development withinPennsylvania.

New this yearThe AFIG program will remain open to receive proposals

throughout 2016. Instead of one deadline for acceptance of appli-cations for the year, AFIG now has multiple submission periodsapproximately four months in length, during which prospectiveapplicants may submit applications for consideration. AFIG willaccept applications at any time during the year and evaluate theapplications received after each four-month submission periodand determine awards. DEP will collect and review applicationson April 29, August 26 and December 30.

Applications received during a submission period which donot receive an award can be resubmitted immediately for consid-eration during the next submission period. All applications mustbe made electronically through the eGrants system.

For 2016, there are several changes to the vehicle retrofit andpurchase category:

• Any AFIG application seeking funding to support the incre-mental cost to purchase alternative fuel vehicles or convert vehi-cles to utilize alternative fuels will be capped at $200,000. Noindividual vehicle may receive more than $20,000.

• Vehicle retrofit and purchase applications may include onlyvehicles owned or leased by the applicant (no vehicle or projectpartner aggregation).

• Vehicles of any size operating on alternative fuels are eligi-ble.

• There is no minimum number of vehicles required to apply.• Vehicles supported with an incremental cost grant must be

purchased or converted after January 1 2016.• All vehicle projects, vehicles purchased and delivered, must

be completed within 12 months of the award announcement date.Retrofit and purchase cost incentives will be 50 percent of theincremental cost as long as the total grant award is not exceeded.

Other changes to the AFIG program include alternative fuelrefueling infrastructure for both fleet and home refueling, andany application type other than incremental cost funding requestsfor vehicles will be capped at a maximum award of $500,000.

For complete information and a list of DEP regional contactsfor the program, go to www.dep.pa.gov/Citizens/GrantsLoansRebates/Alternative-Fuels-Incentive-Grant. ■

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NEW PROSPECT COMPANY120 MARGUERITE DRIVE, SUITE 201 • CRANBERRY TOWNSHIP, PA 16066

MARK A. WILLIAMSConsultant Business Development ManagerEngineering, Completion and Drilling Consultants

March 2016 Page 13

2015 impact fee revenue to decline by $38 million

Pennsylvania unconventional well operators are anticipatedto pay $185.5 million in impact fees for 2015 when pay-ments come due on April 1, according to projections by

the state’s Independent Fiscal Office(IFO). The amount represents a declineof $38 million from what was paid for2014.

Factoring in the 2015 amount, opera-tors will have paid $856 million sincethe impact fee authorized under Act 13became effective in 2012. The fundsand distributed to local governmentsand state agencies to offset the impactof unconventional natural gas extrac-tion.

IFO Research Brief 2016-1, issuedin February, uses Department ofEnvironmental Protection data andother publically available information tomake its projections. The paper liststhree primary reasons for the change inimpact fee revenue for 2015:

• Lower fee schedule. The 2015 feeschedule decreases by $5,000 for wellsin operating years one through five due to an adjustment basedon a lower NYMEX annual average price for natural gas.Estimated impact: -$32.7 million.

• Fewer new wells. Wells pay the highest fee in their first

year of operation. The 785 wells spud in 2015 represent a 42.9percent decrease compared to 2014. Estimated impact: -$25.3million.

• Other factors. This includes the net effect ofadditional collections from more wells becomingsubject to the fee (new wells less stripper wells, thelatter which are exempt from the levy) and reducedfees from existing wells as they age and migratedown the fee schedule. Estimated impact: +$20 mil-lion.

Effective tax rateWith the Wolf administration continuing to advo-

cate for a natural gas severance tax, another timelyaspect of the IFO report is the calculation of theeffective tax rate of the impact fee. The tax rate isequal to the annual impact fee revenue divided bythe total market value of Pennsylvania’s unconven-tional gas production. Unlike Act 13’s reliance onhigher NYMEX pricing, the IFO used the averageDominion South spot price for the calendar year,adjusted for post-production costs.

Consequently, while the 2015 NYMEX averagewas $2.66/Mcf, the IFO put its average net price at

$0.74/Mcf. The effective tax rate then for 2015 is estimated at5.5 percent, compared to 2.1 percent for the previous year. Thetable below shows the IFO’s effective tax rate estimates for eachyear of the impact fee’s existence. ■

Page 14 The PIOGA Press

2016 CongressionalCall-Up with IPAAand PIOGA

PIOGA members joined with the 75Independent Petroleum Associationof America members to convene in

Washington, D.C., for the annual IPAACongressional Call-Up on February 29-March 1. In total, we participated in 120meetings with Senate and House offices.Among our most important messages tolawmakers: Our industry remains vital toAmerica’s future.

The PIOGA group met with 15 con-gressmen and senators from Pennsylvania.Many of the Keystone State legislators andtheir staff continue to be knowledgeableabout the importance of oil and gas devel-opment to the nation, but some still needto be educated about the complexities ofour industry as it relates to tax and capitalreinvestments, the need for finding newmarkets, our continued struggle with over-regulation, and voicing our opinion on the need for more reformand oversight with the Endangered Species Act. We certainlyexpressed the damaging effects these issues have on our industry,one that is struggling to stay alive in these trying times with low

PIOGA staff and members attending the IPAA Call-Up were (from left) Danielle Boston,Kevin Moody, Lou D’Amico, Jim Kriebel, Joyce Turkaly, Dan Weaver, Shane Kriebel,Ben Wallace and Gary Slagel.

commodity prices and escalating expenses at the state and feder-al levels.

Our industry continues to face significant challenges and mis-perceptions, and it was critical for our independent producers to

March 2016 Page 15

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get this face time with these members of Congress to discuss thepotential impacts to their businesses and their ability to createjobs, economic prosperity and affordable domestic energy forAmerica. We encourage all PIOGA members to get involved inthis political process and contact your local, state or federal rep-resentatives to keep our issues at the forefront.

PIOGA extends a thank-you to our members who participatedin our annual trip to D.C. to help us talk about the issues: Jimand Shane Kriebel from Kriebel Companies, Gary Slagelfrom Steptoe-Johnson, and Ben Wallace from Penneco OilCompany. ■

Shared strategiesOn January 8, PIOGA hosted 12 mem-bers of the Liaison Committee, madeup of oil and gas associations aroundthe nation. The committee’s purpose isto share information on key state issuesand work together on national issues.

PIOGA’s Where is the Water Table? training on February 26 inPittsburgh was a successful program that attracted 45 registrants.Our thanks go out to the presenters and their companies: TomWalsh and Joe Buck of Civil & Environmental Consultants, JeffWalentosky of Moody & Associates, and Brian Oram of B.F.Environmental Consultants. CEC generously provided the venueand lunch. Thanks too to PIOGA Environmental Committee co-chair Ken Fleeman and PIOGA staff Danielle Boston and TracyZink for their work. We hope to offer several more targeted techni-cal training sessions this year as part of our PIOGATech series,with an emissions topic tentatively planned for our next program.

Page 16 The PIOGA Press

Safety Committee CornerSafety Committee CornerUsing a BBS program to assessthe effectiveness of job planningBy Devin WoodsHSE Manager – AppalachiaSidewinder Drilling, Inc.

Abehavioral-based safety program (BBS) is implementedby many companies as a way to engage employees inactively observing others’ behaviors while working. The

process generally requires an individual to observe an ongoingtask, make some observations based upon a pre-determinedstructure and then identify unsafe behaviors. The individual thenprovides feedback to the employee(s) and also documents theirobservation, often on a card for information sharing and trendtracking.

What is sometimes missed in this process is the underlyingcause of the unsafe behavior. It might be determined that therewas an inadequate tool, personal protective equipment (PPE) thatwasn’t worn properly or at all, or an unsafe positioning of peo-ple. What all of these issues point back to is the job planningprocess being inadequate.

At Sidewinder Drilling, Inc. we use a STRIKE plan for thepurpose of job planning, which also fills the purpose of the stan-dard JSA, or job safety analysis. STRIKE is an acronym (themeaning can be seen below) which explains the process. It is riskbased and implemented at different levels depending upon therisk of the task. For our BBS program, we have an internalprocess called TEAM Observations. TEAM is an acronymwhich stands for:

• Take the time to observe.• Evaluate behaviors and conditions.• Assess the risk.• Make a difference.Throughout our company we saw continued improvement or

decreases in unsafe behaviors over a period of a few years as theTEAM Observation process became more embedded in ourcompany’s culture. But we would often ask ourselves why theseunsafe behaviors were still taking place. After all, we have aSTRIKE planning process, of which the fundamental purpose isto identify hazards and put controls in place, and therefore weshouldn’t have any unsafe behaviors. We then realized that manyof these unsafe behaviors and incidents had one thing in com-mon—they all were at least partially the result of an inadequateSTRIKE plan for the task.

Facing this issue, we decided to use our TEAM Observation

process (BBS) to assess the effectiveness of our STRIKEPlanning process (JSA). The goal was to get people to changethe way they looked at unsafe behaviors and conditions. There isalways a reason why an unsafe behavior is taking place, or anunsafe condition exists. And if, as a company, we have commit-ted to using a STRIKE plan for every task, then where we mustbe coming up short is in that STRIKE plan. The intent is that aswe are making observations of unsafe behaviors, we don’t justredirect that behavior, or tell somebody not to do something, butinstead we determine why they are doing it. This requires sys-tematically reviewing the STRIKE plan that was used for thetask with the people performing the task, and then identifyingeither where the plan was strayed from, or where the shortcom-ings were in the plan. To facilitate and train our personnel in thisprocess, we developed the flowchart shown on the followingpage.

Using this process, we are able to first get an understanding ofwhat hazards were discussed and what controls were decided onprior to the task beginning. So as someone is making an observa-tion, and if an unsafe behavior or condition is recognized, theperson should be able to identify the source of the issue. Sincethey were privy to the information discussed in the pre-taskSTRIKE plan, they will know which aspect of the plan eitherfell short in identifying or which aspect wasn’t followed:

• Steps to complete the task. • Tools, equipment and materials needed to complete the

task safely. • Reveal the hazards that are inherent to each step of the

task. • Inspect the worksite for any additional hazards based on

the current conditions.• Key control measures for eliminating or reducing the haz-

ards. • Ensure agreement from each person involved in the task

that the task can proceed within safe operating limits (i.e.,tolerable risk) and that they understand their role.

Once the underlying issue with the STRIKE plan is identi-fied, it is then important to provide feedback to the individual(s)being observed. Then we still conduct the final step of theTEAM Observation process, and that is to document our obser-vation. But now what we are documenting is the aspect of ourpre-job planning that fell short and allowed the hazard to beuncontrolled. Then we also document the energy source that ledto the hazard.

By using this process in a positive manner, we have seen greatresults in the quality of STRIKE plans throughout our company.We now are more confident we are able to address issues beforethey become unsafe behaviors, which can lead to incidents. Likeany HSE process or system, it must be continually implemented,monitored and adjusted. But we look forward to using this down-turn in the industry as a time to optimize our HSE managementsystem by investing time and energy in our people, and webelieve this is an important step in that process. ■

February 2014 Page 17March 2016 Page 17

Initiating the Assessment:��Identify Personnel performing a task.��Ask if there is a problem with you conducting a TEAM Observation.��Advise them that you will provide a debrief following the Observation.��Any questions?

Ask personnel the questions in the flowchart and assess:��Knowledge of Risk Assessment / STRIKE Process.��Probability the STRIKE was reviewed prior to this Observation.��Consistency of understanding between crew members.

MEDIUM

WasRisk LevelAssessedFor Job?

TEAM Observation for STRIKE Assessment

LOW HIGH

VERBAL

MENTAL WRITTEN

Discuss Each of the Following:��Steps to complete the task.��Tools, equipment and materials needed to complete the task safely.��Reveal the hazards that are inherent to each step of the task.��Inspect the worksite for any additional conditional hazards.��Key control measures for eliminating or reducing the hazards.��Ensure agreement from each person involved in the task that the

task can proceed within safe operating limits (i.e.: tolerable risk) andthat they understand their role. Let’s Review Your STRIKE

What WasAssessed Risk

Level?

WhatSTRIKE Was

Used?

Review of Next Steps:��The TEAM Observation process will be used to assess the

effectiveness of your STRIKE.��If a hazard is identified that was not discussed in our review and an

intolerable risk of incident exists, the job will be interrupted.��If a control measure we discussed in our review is not in place and

an intolerable risk of incident exists, the job will be interrupted.��Additional hazards or the lack of a control measure that does not

present an intolerable risk, will be reviewed during the debrief.��Any questions?

MEDIUM

Are theSteps BeingFollowed?

AnyAdditionalHazards?

ControlMeasuresEffective?

IntolerableRisk Present?

Initiate theMOC Process -STOP the Job:��Discuss the observed Risk(s).��What Steps not followed?��What hazards identified but not

discussed?��What control measures not

effective?��What additional control

measures required?��Modify STRIKE as required.��Ensure agreement to proceed

and risk is controlled / tolerable.

IntolerableRisk Present?

IntolerableRisk Present?

No

No

No

Yes

No

MEDIUM

TEAM Observation Debrief:��What Steps were missed?��What Tools, Equipment,

Materials posed additional risknot identified?

��What additional inherent orconditional hazards identified?

��What control measuresmissed or ineffective?

��Positions of People?��PPE Assessment?��STRIKE Effective?

MAKE A DIFFERENCE��Reinforce Safe Behaviors��Redirect Unsafe Behaviors��Take Corrective Actions

No

AssessRISK

No

Page 18 The PIOGA Press

Availability of ‘quick take’for pipeline rights-of-wayin Pennsylvania – statevs. federal law

The power of a private company to exercise eminentdomain is delegated by state and federal governments.There are two forms of condemnation which may be used

to obtain private property for natural gas pipelines and othermidstream facilities. Under a “straight condemnation,” the actionis initiated in court by the filing of a complaint, proceeds in duecourse to the determination of just compensation and upon pay-ment of just compensation the condemnor takes possession ofthe property.1 The second method of condemnation, commonlyreferred to as a “quick take,” allows the condemnor to file a“declaration of taking,” deposit the estimated compensation withthe court and upon court order title to the condemned propertyautomatically vests in the condemnor.

Pennsylvania statutory law provides for both straight andquick take condemnations. Under federal law, however, the moreexpeditious quick take procedure is prescribed in the Declarationof Taking Act (DTA) and is available only in condemnation pro-ceedings “brought by and in the name of the United States.” 2

Therefore, the quick take authority granted by the DTA isunavailable to private companies. With traditional straight con-demnation being the only course available to private companiesunder federal law, an issue that is often litigated in such actionsis whether a company can gain possession of the property beforethe issue of just compensation is tried.3 The timing of possessionis a critical consideration in the taking of a pipeline right-of-waybecause pipeline projects are often subject to strict deadlines andconstruction depends on many factors, including weather andenvironmental impacts. However, the ability of a company toacquire access to property prior to the payment of just compen-sation depends upon whether state or federal law governs thecondemnation action.

Pennsylvania statutes—Eminent Domain Code or BusinessCorporation Law

In Pennsylvania, midstream companies are granted the powerto condemn private property under two state statutes: theEminent Domain Code (EDC)4 and the Business CorporationLaw (BCL).5 The EDC, which grants straight condemnationpowers, generally prohibits the condemnation of private propertyfor use by non-governmental entities, but creates an exceptionfor property taken by a “public utility” as determined by thePennsylvania Public Utility Commission (PUC).6 Althoughestablishing “public utility” status under the EDC has provedchallenging,7 a private company may still be considered a publicutility for eminent domain purposes if the company supplies itsproduct or service to the general public and does not offer suchproducts or services only to a limited clientele.8 The BCL, on theother hand, provides an alternative source of quick take condem-nation authority to “public utility corporations,” which aredefined more broadly as “[a]ny domestic or foreign corporationfor profit that: (1) is subject to regulation as a public utility bythe [PUC] or an officer or agency of the United States [including

the Federal Regulatory Commission(FERC)]…”9 The BCL allows public utilitycorporations to condemn private propertywhen the taking is reasonably necessary totransport, produce, store or distribute naturalgas or petroleum to or for the public. 10 In acase of first impression, a Pennsylvaniacourt of common pleas interpreted the emi-nent domain powers under the BCL as alsoapplying to gathering lines being con-demned by a for-profit corporation regulatedby FERC, despite such powers beingunavailable under any other state or federallaw.11

Under the statutory framework of boththe EDC and the BCL, a private companymust first apply to the PUC for an agencydetermination on whether the proposed tak-ing is “for the public.” Once established thatthe taking will benefit the public, the com-pany can proceed under either the EDC orthe BCL, but only the latter pro-vides the quick take procedure forthe taking of a pipeline right-of-way or easement.12 Under theQuick Take Statute, a gas pipeline can be condemned when: (1)the company and landowner cannot agree on damages, (2) thecompany makes a verified application to the appropriate court,together with a bond payment and certified copy of the resolu-tion of condemnation, and (3) the company provides thelandowner with at least 10 days written notice by mail or 14-daypublication notice.13

Upon the entry of a court order approving the proposed tak-ing, title to the right-of-way or easement passes automatically tothe condemnor and entitles the condemnor to immediate posses-sion of the same. However, such immediate possession before adetermination on “just compensation” has led to several chal-lenges, albeit unsuccessful, to the constitutionality of the QuickTake Statute.14

Federal statute—Natural Gas ActThe federal government regulates the transport and sale of

natural gas “in interstate and foreign commerce.”15 Private com-panies which transport natural gas in interstate commerce havethe power of condemnation under the federal Natural Gas Act(NGA) for any property that cannot be acquired by contract oragreement.16 The NGA confers upon FERC exclusive jurisdic-tion over the transportation and sale of natural gas in interstatecommerce for resale.17 To condemn property under the NGA, aprivate company must demonstrate that (1) it holds a certificateof public convenience and necessity from FERC authorizing therelevant project, (2) the property interest to be taken is necessaryto the project, and (3) the company has been unable to acquirethe property interest from the landowner.18

Unlike Pennsylvania’s BCL or the federal DTA, the NGAdoes not give private companies the right of quick take or imme-diate entry to the condemned property.19 However, neither theNGA nor the applicable Rules of Federal Procedure governingsuch condemnation actions prohibit a condemnor from pursuingany available procedures to obtain possession prior to the entry

Elena L.Rorabaugh

Brittany A. Roof

Authors:

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of final judgment.20 Therefore, federal district courts inPennsylvania and in other states have examined whether immedi-ate possession of condemned property subject to a FERC certifi-cate of public convenience and necessity may be granted throughthe equitable remedy of a preliminary injunction. The decisionwhether to use injunctive relief to grant immediate access variesamongst the federal courts. However, there have been severalrecent decisions by the federal district courts in Pennsylvaniawhich are consistent in ruling in favor of granting immediateaccess pursuant to a preliminary injunction.

The United States District Court for the Middle District ofPennsylvania in Steckman Ridge GP, LLC et al. v. An ExclusiveNatural Gas Storage Easement, et al. relied heavily on prece-dence from the Fourth Circuit in issuing a preliminary injunc-tion.21 The court adopted the Fourth Circuit’s three-prong testthat must be satisfied in order to grant a preliminary injunctionallowing immediate possession of condemned property: (1) thecondemnor must demonstrate it has the right to take under aFERC authorization, (2) conditions for preliminary injunctiverelief against the property owners must be satisfied and mandato-ry and (3) landowners’ compensation claims must be adequatelysecured (the “Sage factors”).22

Applying the Sage factors, the Steckman court first deter-mined that the condemnor had a substantive right to condemn theproperties by showing it had such right under the NGA and inaccordance with the FERC certificate of public convenience andnecessity that had been issued to the condemnor.23 Next, theSteckman court considered whether the conditions for a prelimi-nary injunction had been met, as follows: (1) condemnor has alikelihood of success on the merits, (2) it will suffer irreparable

harm if the injunction is denied, (3) granting preliminary reliefwill not result in even greater harm to the nonmoving party and(4) the public interest favors such relief.24 The court held that thecondemnor showed a likelihood of success on the merits,because it had already established its right to exercise eminentdomain under the NGA in accordance with the FERC certificate.The condemnor showed that it would suffer irreparable harmwithout the injunction, because completion of the project wouldbe delayed, resulting in the relevant natural gas storage facilitynot being available for service by the deadline, and therebydelaying needed service to its customers. The court also foundthat granting immediate entry would present minimal harm to thelandowners, because the resulting harm could be readily com-pensated from the required bond.25 Lastly, the court consideredthe issuance of the FERC certificate, in conjunction with thepotential adverse effects of a delay in the natural gas supply, infinding that the preliminary injunction was in the interest of thepublic.

Two recent cases heard by United States District Court for theMiddle District of Pennsylvania also decided the issue in favor ofgranting immediate entry to property pursuant to a preliminaryinjunction.26 In both cases, the court held that a district court iswell within its power to grant possession through an injunction ifthe right to condemn has already been established, despite suchright not being specifically enumerated in the NGA. In grantingthe injunctions, the court found that the midstream companiesestablished that they had the right to condemn the property underthe NGA and by virtue of the issuance of a FERC certificate andthat they had met all of the Sage factors as applied in Steckman.The court also weighed heavily the harm that would be incurred

Page 20 The PIOGA Press

if natural gas supplies were delayed by the lack of grantingimmediate possession.

ConclusionMany factors must be considered in determining whether an

action for condemnation of pipeline and other midstream facili-ties should proceed under state or federal law. Considerationsinclude whether a private company meets the definition of a“public utility” under Pennsylvania’s EDC or BCL, whether acompany falls under the jurisdiction of federal law and is subjectto the NGA and FERC, and whether the factors of the projectnecessitate quick possession of the property. If a company is ableto condemn property under Pennsylvania’s BCL, quick takepower will be available and allow access to the property prior tothe payment of just compensation. A company’s ability toacquire access to the property prior to the payment of just com-pensation under the federal NGA, however, requires a more rig-orous test which demands that condemnors meet the require-ments for preliminary injunctive relief. ■

If you would like additional information regarding straight andquick take condemnations in Pennsylvania, please contact ElenaL. Rorabaugh (412-253-8843 or erorabaugh@babstcalland.com)or Brittany A. Roof (412-253-8844 orbroof@babstcalland.com).

1 Steckman Ridge GP, LLC v. An Exclusive Natural Gas Storage Easement, et al.,2008 WL 4346405 (W.D. Pa. Sept. 19, 2008), at *7.2 40 U.S.C. § 3114.3 32 E. Min. L. Found § 10.03.

4 26 Pa.C.S. §§ 101, et seq.5 15 Pa.C.S. § 1511. 6 26 Pa.C.S. §204(b)(2)(i). For purposes of the EDC, Pennsylvania law defines a“public utility” as “[a]ny person or corporations now or hereafter owning or oper-ating in this Commonwealth equipment or facilities for: (i) Producing, generat-ing, transmitting, distributing or furnishing natural or artificial gas, electricity, orsteam for the production of light, heat, or power to or for the public for compen-sation”, but does not include a “producer of natural gas not engaged in distribut-ing such gas directly to the public for compensation.” 66 Pa.C.S. § 102.7 In order to deal with the challenges, the PUC promulgated a “PolicyStatement” in 2007 addressing the guidelines for determining “public utility” sta-tus. See 52 Pa. Code § 69.1401. 8 See Drexelbrook v. PUC, 418 Pa. 430, 435-436 (1965) (describing the publicutility test as “whether or not such person holds himself out, expressly orimpliedly, as engaged in the business of supplying his product or service to thepublic, as a class, or to any limited portion of it, as contradistinguished fromholding himself out as serving or ready to serve only particular individuals”). Seealso Waltman v. PUC, 142 Pa. Commw. 44, 49 (1991) (discussing PUC’s 2-partpublic utility test).9 15 Pa.C.S. § 1103.10 15 Pa.C.S. § 1511(a)(2)-(3).11 Nat’l Fuel Gas Supply Corp. v. Kovalchick Corp., 74 Pa. D. & C. 4th 22, 28-29 (Jefferson Co., 2005) (“[t]he plain language of the statute ... authorizes publicutility corporations operating ‘to or for the public’ to exercise condemnation pow-ers in certain circumstances where eminent domain is otherwise unavailable”).Note that the Natural Gas Act specifically excludes intrastate gathering lines fromFERC regulation. 15 U.S.C. § 717(b).12 15 Pa.C.S. § 1511(g) (the Quick Take Statute). The Quick Take Statute doesnot apply to a taking in fee simple.13 Id. at §1511(g).14 In Keener v. Carnegie Natural Gas Co. landowners challenged the condemna-tion of an easement for a gas distribution line under the Quick Take Statute asunconstitutional, because the statute does not provide for preliminary objections

March 2016 Page 21

as a means of challenging the taking. 157 Pa. Commw. 217, 219 (1993).However, the Keener court found such argument without merit, as an action inequity is the appropriate means for challenging a taking under the Quick TakeStatute.15 15 U.S.C. § 717.16 15 U.S.C. § 717f(h).17 Northern Natural Gas Co. v State Corp. Commission of Kansas, 83 S. Ct. 646(1963).18 Columbia Gas Transmission, LLC v. 10.5068 Acres, 2015 WL 1470698 (M.D.Pa. 2015, at *4, citing Columbia Gas Transmission, LLC v. 1.092 Acres, et al.,2015 WL 389402, at *3).19 40 U.S.C. § 3114(a).20 Fed. R.C.P. Rule 71.1; East Tenn. Gas Pipeline Co. v. Sage, 361 F.3d 808 (4th

Cir. 2004).21 Steckman, 2008 WL 4346405 (W.D. Pa. Sept. 19, 2008). The Steckman courtrelied on the Fourth Circuit’s Sage decision cited in Note 20, supra.22 Steckman, at *40 (citing Sage, 361 F.3d at 822).23 Steckman, at *12.24 Id. at *14. 25 Id. at *16.26 See Constitution Pipeline Company, LLC v. A Permanent Easement for 0.64Acres, et al., 2015 WL 1219538 (M.D. Pa. March 17, 2015) and Columbia GasTransmission, LLC v. 10.5068 Acres, et al., 2015 WL 1470698 (M.D. Pa. March31, 2015). The Constitution Pipeline Company case referred to supra is one ofseveral brought by Constitution to condemn various rights-of-way which weredecided together but reported separately.

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Please participate in a survey from RAND! What is the survey about? The RAND Corporation, a non-partisan and nonprofit research organization, will be sendingPIOGA members an email asking you to complete a 20-minute survey. This study is sponsored by the NationalScience Foundation and is investigating how regional businessleaders and education and training programs collaborate toensure that programs are producing graduates who haveacquired the necessary knowledge, skills, and abilities to suc-ceed in the energy and advanced manufacturing labor market.

When? April-June.

Why should you do this? Your participation is voluntary, butwe hope you take the survey. Your participation is vital to thesuccess of the study. The information collected from these sur-veys will be used to help identify strategies for best preparingyoung workers for prosperous careers in the energy andadvanced manufacturing sector, and in turn promote a healthyregional economy for all. We will all benefit and learn from thestudy.

Who is going to see your responses? All responses will beconfidential and results will be reported only in the aggregate.RAND will provide PIOGA with aggregate findings from thesurvey, which can be shared with members.

For more information about the project and the surveys,visit www.rand.org/labor/projects/shalenet.html.

Questions? Contact the RAND project leaders:Gabriella Gonzalez, 412-683-2300 ext. 4426,ggonzal@rand.orgRobert Bozick, 310-393-0411 ext. 6140, rbozick@rand.org

Page 22 The PIOGA Press

Wells drilled by countyCounty Conventional Unconventional 2015 Total 2014 TotalAllegheny 0 23 23 35Armstrong 0 12 12 30Beaver 0 4 4 12Bradford 0 43 43 94Butler 3 85 88 126Cambria 3 0 3 2Cameron 0 17 17 26Centre 0 1 1 1Clarion 1 3 4 5Clinton 0 2 2 3Crawford 1 0 1 9Elk 4 38 42 55Erie 2 0 2 0Fayette 0 15 15 27Forest 28 0 28 111Greene 0 103 103 259Lawrence 0 7 7 34Lycoming 0 17 17 86McKean 62 33 95 225Mercer 2 23 25 12Potter 1 5 6 0Sullivan 0 4 4 34Susquehanna 0 152 152 238Tioga 0 17 17 30Venango 70 0 70 170Warren 107 0 107 224Washington 1 160 161 230Westmoreland 0 5 5 7Wyoming 0 16 16 58Totals 285 785 1,070 2,161

What types of wellswere drilled?

Unconventional

Horizontal 784

Vertical 1

Conventional

Oil 259

Gas 5

Combined oil & gas 21

Production recap

Unconventional natural gas produc-tion continued to grow inPennsylvania during 2015, just not

at the spectacular rate as in the previousfew years. Production climbed by 13 per-cent last year, from 4.07 Tcf to 4.6 Tcf. Ithad been increasing by about 30 percentper year.

According to the Department ofEnvironmental Protection’s production-reporting website, there were 6,618unconventional wells in production lastyear, up by 653 over 2014.

The top five producing counties in2015 were Susquehanna (1,120.7 Bcf),Bradford (719.7), Washington (662.9),Greene (529.5) and Lycoming (451.4).

Conventional gas production increasedfrom 186.8 Bcf in 2014 to 213.2 Bcf lastyear. Crude oil production, however,declined from 2.2 million barrels in 2014to 1.4 million in 2015.

2015 oil and gas activity

Pennsylvania natural gas consumption by sector

March 2016 Page 23

Wells drilled by operatorOperator Conventional Unconventional Total

Range Resources Appalachia LLC 1 105 106SWN Production Co LLC 0 96 96EQT Production Co 0 94 94Seneca Resources Corp 0 88 88Cabot Oil & Gas Corp 0 66 66Catalyst Energy Inc 54 0 54Rice Drilling B LLC 0 47 47Cameron Energy Co 32 0 32EM Energy PA LLC 0 30 30Hilcorp Energy Co 0 29 29Talisman Energy USA Inc 0 29 29Chevron Appalachia LLC 0 27 27Chesapeake Appalachia LLC 0 26 26RE Gas Dev LLC 0 25 25Vantage Energy Appalachia II LLC 0 25 25XTO Energy Inc 0 20 20CNX Gas Co LLC 0 14 14Universal Resources Holdings Inc 14 0 14Coastal Petro Corp 13 0 13Chief Oil & Gas LLC 0 12 12Gas & Oil Mgmt Assoc Inc 12 0 12SWEPI LP 4 8 12Trimont Energy LLC 12 0 12PVE Oil Corp Inc 10 0 10Wilmoth Interests Inc 10 0 10Branch John D 9 0 9Howard Drilling Inc 9 0 9Lendrum Energy LLC 8 0 8Noble Energy Inc 0 8 8Titusville Oil & Gas Assoc Inc 8 0 8PA Gen Energy Co LLC 1 6 7Stateside Energy Group LLC 7 0 7Xite Energy Inc 6 0 6Snyder Bros Inc 2 3 5SV ABS Interest Wetmore Proj 5 0 5Weldbank Energy Corp 5 0 5Apex Energy (PA) LLC 0 4 4Barnes Resources 4 0 4Bearcat Oil Co LLC 4 0 4

Operator Conventional Unconventional Total

BF Adventures LLC 4 0 4Energy Corp Of Amer 0 4 4Inflection Energy (PA) LLC 0 4 4JKLM Energy LLC 0 4 4PennEnergy Resources LLC 0 4 4Southwell William R 4 0 4Whilton Brooks A 4 0 4William H Brawand 4 0 4Bull Run Energy LLC 3 0 3Interstate Gas Mkt Inc 3 0 3Mead Oil LLC 3 0 3Mieka LLC 3 0 3NTS Energy LLC 3 0 3R&N Resources LLC 3 0 3A&S Prod Inc 2 0 2Dannic Energy Corp 2 0 2Kyle McNeal & Steven McNeal dba

Forest Chem 2 0 2Laurel Mountain Production 0 2 2McComb Oil Inc 2 0 2PA Land Resources LLC dba

PL Resources LLC 0 2 2Pierce & Petersen 2 0 2Stedman Energy Inc 2 0 2D&M Energy LLC 1 0 1Evergreen Resource Co 1 0 1Frederick Drilling Co & Sons Inc 1 0 1Greenland Financial LLC 1 0 1Holden Oil & Gas 1 0 1Johnson Well Svc LLC 1 0 1Northeast Natural Energy LLC 0 1 1TLC Oil Operations Inc 1 0 1Travis Peak Resources LLC 0 1 1Victory Prod Co LLC 1 0 1Warren E&P Inc 0 1 1Wholeben Patricia D 1 0 1

Totals 285 785 1,070

Dan Palmer - Crude Relationship Manager PA / NY

814-368-1263dpalmer@amref.com

Purchasers of Light Sweet Paraffinic Crude Oil

www.amref.com814-368-1200

mmSpecialty Refining Solutions ®

Founded 1881 in Bradford, Pennsylvania. We are committed to supporting the local community,

creating sound jobs and a sustainable future.

Page 24 The PIOGA Press

$20

$25

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$35

$40

$45

$50

$55

$60

$65

SourcesAmerican Refining Group: www.amref.com/Crude-Prices-New.aspxErgon Oil Purchasing: www.ergon.com/prices.phpGas futures: http://quotes.ino.com/exchanges/?r=NYMEX_NGBaker Hughes rig count: http://gis.bakerhughesdirect.com/ReportsNYMEX strip chart: Emkey Energy LLC, emkeyenergy.com

Oil & Gas Trends

10

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60

70

Mon

thM

ar Apr

Apr

May

May

May Jun

Jun Jul

Jul

Aug

Aug

Sep

Sep

Oct

Oct

Oct

Nov

Nov De

cDe

cJa

nJa

nFe

bFe

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ar

Previous Year Currrent Year

Pennsylvania Rig Count

Penn Grade Crude Prices

Pittsburgh 412.497.6000

hdrinc.com

Bridging the gap between idea + achievement

February 2014 Page 25March 2016 Page 25

Natural Gas Futures Closing PricesAs of March 7

Month PriceApril 2016 $21.707May 1.797June 1.902July 2.001August 2.039September 2.068October 2.094November 2.267December 2.545January 2017 2.672February 2.679March 2.639

GeotechnicalEnvironmentalEcologyWaterConstruction Management

Laurel Oil & Gas Corp. A Division of GZA GeoEnvironmental, Inc.

www.laureloilandgascorp.com

Warren ShoenfeltBridgeport, WV 724-766-5150

GZA GeoEnvironmental, Inc.

Laurel Oil & Gas Corp.

www.gza.comwww.laureloilandgascorp.com

GZA GeoEnvironmental, Inc. www.gza.com |

David Palmerton Principal 724-759-2871

Page 26 The PIOGA Press

Cabot Oil & Gas Corp 5 2/29/16 115-22028* Susquehanna Brooklyn Twp2/29/16 115-22030* Susquehanna Brooklyn Twp2/22/16 115-22096* Susquehanna Rush Twp2/22/16 115-22100* Susquehanna Rush Twp2/22/16 115-22101* Susquehanna Rush Twp

Cameron Energy Co 1 2/9/16 123-47889 Warren Sheffield TwpEQT Production Co 9 2/29/16 059-26929* Greene Center Twp

2/29/16 059-26837* Greene Center Twp2/29/16 059-26838* Greene Center Twp2/29/16 059-26839* Greene Center Twp2/29/16 059-26840* Greene Center Twp2/29/16 059-26841* Greene Center Twp

2/29/16 059-26842* Greene Center Twp2/13/16 125-27885* Washington Carroll Twp2/13/16 125-27886* Washington Carroll Twp

JKLM Energy LLC 4 2/19/16 105-21855* Potter Summit Twp2/19/16 105-21857* Potter Summit Twp2/19/16 105-21856* Potter Summit Twp2/19/16 105-21858* Potter Summit Twp

Rice Drilling B LLC 5 2/22/16 125-27798* Washington Somerset Twp2/22/16 125-27790* Washington Somerset Twp2/22/16 125-27792* Washington Somerset Twp2/22/16 125-27794* Washington Somerset Twp2/22/16 125-27796* Washington Somerset Twp

Stateside Energy Group LLC 2 2/5/16 083-56792 McKean Lafayette Twp2/10/16 083-56793 McKean Lafayette Twp

Spud Report:February

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/Business/Energy/OilandGasPrograms/OilandGasMgmt.

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.

February January DecemberTotal wells 26 47 54Unconventional 23 38 41Conventional 3 9 13Gas 23 38 41Oil 3 9 10Combination oil/gas 0 0 3

PIOGA Board of DirectorsGary Slagel (Chairman), Steptoe & Johnson PLLC (representing

CONSOL Energy)Sam 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 AmericaDon 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, LLCJim McKinney, EnerVest Operating, LLCGregory Muse, PennEnergy Resources, LLC Stephen Rupert, Texas Keystone, Inc.Jake Stilley, Patriot Exploration CorporationWilliam Stoner, Universal Well Services, Inc.Burt 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 CommitteePat Carfagna, CONSOL Energy

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

Pennsylvania Independent Oil & Gas Association115 VIP Drive, Suite 210 • Wexford, PA 15090-7906724-933-7306 • fax 724-933-7310 • www.pioga.org

Northern Tier Office (Matt Benson)167 Wolf Farm Road, Kane, PA 16735

Phone/fax 814-778-2291© 2015, Pennsylvania Independent Oil & Gas Association

February 2014 Page 27March 2016 Page 27

PIOGA EventsInfo: www.pioga.org/events

PIOGA Spring Meeting April 7, Rivers Casino, Pittsburgh

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

Pig Roast, Equipment Show and Technical ConferenceJuly 21-22, Seven Springs Mountain Resort Champion

Divot Diggers Golf OutingAugust 25, Tam O’Shanter Golf Club, Hermitage

Industry Events OOGA Winter Meeting

March 16-18, Hilton Columbus at Easton, Columbus, OHInfo: www.ooga.org/events

WVONGA Spring MeetingMay 16-18, Stonewall Resort, Roanoke, WVInfo: www.wvonga.com

IPAA Midyear MeetingJune 27-29, Colorado Springs, COInfo: www.ipaa.org/meetings-events

IOGANY Summer MeetingJuly 13-14, Peek’n Peak Resort, Findley Lake, NYInfo: www.iogany.org/events.php

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

Info: iogawv.com

IOGAWV Sports Weekend

September 9-10, Lakeview Golf Resort, Morgantown, WV

Info: iogawv.com

Eastern Section, American Association of Petroleum

Geologists

September 25-27, Lexington (KY) Convention Center

Info: www.esaapgmtg.org

IOGANY Annual Meeting

October 19-20, Holiday Valley Resort, Ellicottville, NY

Info: www.iogany.org/events.php

IPAA Annual Meeting

November 9-11, The Cloister, Sea Island, GA

Info: www.ipaa.org/meetings-events

Calendar of Events

➤ More events: www.pioga.org

Have industry colleagues or vendors you thinkshould be PIOGA members? Encourage them toclick on “Join PIOGA” at the top of ourhomepage, www.pioga.org. Or, let us know andwe’ll contact them. There’s strength in numbers!

115 VIP Drive, Suite 210Wexford, PA 15090-7906

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