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PA Natural Gas Politicians Want To ‘Unleash’ PA’s Gas Industry - What We Need First Is For Industry To Take Up The Slack; Oil & Gas 2.0; True Energy Independence

Pennsylvania is squarely in the middle of a national debate over “unleashing” our considerable reserves of natural gas to help supply the parts of Europe now dependent on natural gas from Russia.

Based on what we know now-- as of March 6-- here’s where the debate stands.

Sen. Gene Yaw (R-Lycoming), Majority Chair of the Senate Environmental Resources and Energy Committee, put out an op-ed last week-- “Are We Nuts? American Energy Is Key To Undermining Putin’s War.”

Sen. Yaw said, “Putin spent years bolstering Russia’s economy with oil and gas exports, knowing full well the West’s race to renewables left them vulnerable and dependent.”

“... short-sighted climate policies – like forcing Pennsylvania into the Regional Greenhouse Gas Initiative (RGGI) and canceling natural gas and oil infrastructure, the Keystone XL pipeline [Canadian oil, not in Pennsylvania] chief among them – are so very dangerous. People across the world, not just in Ukraine, will die from the leverage Russia holds over global energy exports.”

“Some analysts believe crude oil prices may reach $150 per barrel this summer, up from roughly $50 just two years ago when American energy policy prioritized independence.”

“Our elected officials must set aside their allegiance to green energy lobbyists and turn up gas production so that we can crush Putin’s war machine without setting a single foot on foreign soil. As a nation that prides itself on its staunch defense of liberty, we must not undermine Ukraine’s fight for freedom by bankrolling their aggressor. And natural gas is the most valuable commodity Russia has – for now.”

Rep. Daryl Metcale (R-Butler), Majority Chair of the House Environmental Resources and Energy Committee, issued a press release calling on Gov. Wolf to “unleash PA’s full potential to power the free world” and “end his job-killing, punitive crusade against the production and exportation of Pennsylvania natural gas and other abundant fossil fuels.”

“You know of our immense potential, yet the State has been hamstrung by regulation, bans, time-intensive permitting, RGGI, and further taxation while you support energy means that cannot possibly power the needs of the 21st century.”

“Just as the shallow [conventional] oil and gas wells of Pennsylvania fueled the allies of the first World Wars, we should currently make use of our advanced production methods and technologies to provide Liquified Natural Gas (LNG) and other resources to Europe and abroad.”

Divert Existing Exports Of LNG

First, to the extent Europe needs natural gas now, the ability to export liquified natural gas in the U.S. is nearly at full capacity. It would take years to build new capacity. Read more here.

Action Item: The natural gas industry should be called on to divert existing shipments of LNG to fill emergency needs in Europe to help with this life-threatening humanitarian crisis.

Doing whatever they can to divert existing LNG exports is the only option we have for getting help to Europe immediately and in the coming months.

Does Europe Want Our Gas?

The European Union is set to unveil an energy plan this week to accelerate a transition to clean, renewable energy and to “reduce permanently our dependence on imports of natural gas.” And they meant all natural gas imports. Read more here. Read more here.

Germany has taken the extraordinary step of freezing the Nord Stream 2 gas project worth $11 billion to avoid becoming even more dependent on natural gas. Read more here.

Again, acting now to divert existing U.S. LNG shipments to Europe would help ease, but not eliminate any gas shortages.

Action Item: But the real question is does the European Union-- our potential customer-- want to be dependent on natural gas in the future?

Doesn’t look that way, but we’ll know more when the EU unveils their plan.

Unleashing Gas/Oil Development In PA

Both Sen. Yaw and Rep. Metcalfe called for an increase in natural gas production in Pennsylvania. Rep. Seth Grove (R-York) announced plans to introduce legislation to “reform the drilling permit process,” fund pipeline development and also end RGGI carbon pollution reduction program. Read more here.

DEP Secretary Patrick McDonnell said during his House budget hearing, “The brake that you see on the natural gas industry has been the price of natural gas in terms of pulling things out of the ground. We have wells that are being drilled that are not producing, or unable to produce simply because there's no need for that value.” Read more here.

The natural gas industry could increase production today because many wells have been shut-in waiting for higher natural gas prices before companies will open them for production.

The Independent Fiscal Office reported during the fourth quarter of 2021, 10,322 horizontal gas wells were producing natural gas. Read more here.

DEP reports as of February 18 there are 12,769 active unconventional wells in the Commonwealth. Read more here.

Action Item: So today, the industry could start taking the steps needed to start opening 2,447 natural gas wells for production. No new wells have to be drilled.

On March 1, PA Environment Digest reported Pennsylvania’s unconventional natural gas industry failed to drill 40 percent of the wells it had been issued permits for by DEP. Read more here.

Action Item: So today, the industry could develop an action plan to start revisiting many of those well sites to determine if they can be drilled and brought back into production, since they were already permitted once by DEP.

The natural gas industry could even start drilling on the 65 percent of State Forest land it leased in 2008 and 2010, but never developed for gas. Read more here.

With respect to the RGGI carbon pollution reduction program, it relates to controlling pollution from electric generation power plants, it has no relationship to increasing natural gas production itself.

It seems to have been thrown in as an afterthought because the natural gas legislators involved have always opposed it.

Nationally on the oil side, the CEO of the top shale oil company in the U.S. said they could not ramp up production of oil this year due to supply chain issues and Wall Street demanding more dividends with the spike in the price of crude oil. Read more here.

More Pipelines

Responding to questions at DEP’s House budget hearing about delays in issuing permits for natural gas pipelines, Secretary McDonnell said, “Not on our end.” Read more here.

In fact, natural gas legislators frequently point to the cancellation of the Keystone XL pipeline as an example of a project delayed, but-- 1) that’s a Canadian oil pipeline; and 2) it’s not in Pennsylvania.

The Senate budget hearings last week spotlighted the fact Pennsylvania’s experience with new pipeline construction shows state laws are not strong enough to prevent environmental damage and protect public safety. Read more here.

The brand new Revolution natural gas pipeline in Beaver County exploded in 2018 due to very poor construction practices, which resulted in criminal charges and stiff penalties by DEP and the Public Utility Commission. Read more here.

The cross-state Mariner East Pipelines were issued hundreds of notices of violation, penalties were assessed to the limits of state law, but still construction resulted in the contamination of private water wells, major spills in two recreation facilities-- Raystown Lake and Marsh Creek State Park-- and dozens of other spills to local streams, sinkhole damage as well as criminal charges related to environmental violations. Read more here.

There is no state law or regulation that requires natural gas and hazardous liquids pipelines to carry something as basic as insurance or show they can pay for the deaths they cause or damages if pipelines explode, leak or kill someone, something every vehicle owner has to do. Read more here.

Frustration in the ability of state law to prevent damage caused by pipeline construction related to the Mariner East Pipeline can be illustrated by a 2018 quote from Republican Sen. Don White (Indiana County) at a Senate Committee meeting-- “We should be able to deal with that company and put them out of business.” Read more here.

DEP and the Public Utility Commission, the Attorney General and Gov. Wolf have all called on the General Assembly to toughen laws regulating pipelines to no avail. Read more here.

Action Items: All these pipeline issues need to be fixed before more pipelines are built. Read more here.

Oil & Gas Drilling 2.0

Pennsylvania’s experience with shale gas drilling and conventional oil land gas drilling have highlighted significant flaws in the state laws regulating their development.

What Pennsylvania needs, while the natural gas industry is taking up its own slack and responds to the immediate crisis as outlined above, is to develop an Oil & Gas Drilling 2.0 Program.

Here are a few fundamental things that need fixing--

-- Reduce Taxpayer Liability For New Abandoned Wells: DEP records show 256 conventional oil and gas drillers [Read more here] and 12 unconventional drillers with drill pads in 17 counties [Read more here] received notices of violation for abandoning wells without plugging them.

Abandoning wells by the conventional oil and gas drillers is pervasive and routine in the industry.

In addition, oil and gas wells drilled before April, 1985 require no bonding at all to cover plugging costs and the existing amount of bonding in no way equals today’s taxpayer costs for plugging.

Wells not plugged are left to taxpayers to pay for and represents billions of dollars in taxpayer liability. Read more here.

Action Items: To protect taxpayers, we need to--

-- Close the pre-1985 well bonding exemption, but state law needs to be changed; and

-- Have real bonding for all active conventional wells that reflect today’s costs for plugging and there is a proposal before the Environmental Quality Board now to do just that. Read more here.

-- Plug The Hole In Funding DEP’s Oil & Gas Regulatory Program: DEP is expecting a $10.5 million deficit in revenue to cover the estimated $25 million it costs the agency to regulate conventional and unconventional oil and gas drilling. Read more here.

DEP receives only $46,100 in fee revenue from conventional operators to cover the $10.6 million it costs the agency to regulate that industry. Read more here.

Action Item: Update the way the Oil and Gas Program is funded to provide a dedicated, predictable source of revenue paid for by the industry.

-- Accelerate Update Of Conventional/Unconventional Drilling Regs: DEP is now in the process of updating both the conventional and unconventional drilling regulations to incorporate new information they have learned about drilling since 2016. [Read more here]

Action Item: This process needs to be accelerated to make sure Pennsylvania has the latest environmental protection requirements.

-- Ban Road Spreading Oil & Gas Wastewater: The conventional oil and gas industry is still allowed by DEP to spread its production wastewater on dirt and gravel roads without any controls or limits. Read more here.

Over the last three years 2.3 million gallons of their wastewater has been disposed of by this method. Read more here.

DEP received a significant study of the water quality impacts of road spreading of conventional oil and gas wastewater from Penn State on December 30. It is one in a series of studies in the last two years on this topic. The study is expected to have a major impact on how DEP deals with this issue. Read more here.

Other Penn State studies have clearly shown road spreading conventional oil and gas wastewater is a threat to the environment and public health.

Click Here to read articles on this issue.

Action Item: DEP has banned the practice for the unconventional drilling industry, but so far has not taken the same action on the conventional side, even though it has the same chemical and physical characteristics.

DEP needs to ban road spreading of conventional oil and gas wastewater.

Beginning Of A Responsible Oil & Gas Agenda

So a responsible agenda for helping Europe in the short run and chart a longer term True Energy Independence policy would include--

-- Divert Existing LNG Shipments: The natural gas industry should be called on to divert existing shipments of LNG to fill emergency needs in Europe to help with this life-threatening humanitarian crisis.

-- Does The EU Even Want Our Gas? The European Union-- our potential customer-- is set to unveil a plan this week to transition more quickly to clean, renewable energy and “reduce permanently our dependence on imports of natural gas.” And they meant all natural gas imports, so will the EU want our gas in the longer run?

-- Take Up The Slack With Existing Wells: So today, the industry could start taking the steps needed to start opening 2,447 natural gas wells for production. No new wells have to be drilled.

-- Take Up The Slack By Relooking At Existing Permitted Wells: So today, the industry could develop an action plan to start revisiting many of those well sites to determine if they can be drilled and brought back into production, since they were already permitted once by DEP.

-- Strengthen State Pipeline Laws Based On PA’s Experience: Our experience shows the state’s pipeline laws haven’t prevented environmental damage or protect public safety. They need to be strengthened.

-- Protect Taxpayers From Increasing Liability For Plugging New Abandoned Wells: The state needs to--

-- Close the pre-1985 well bonding exemption;

-- Have real bonding for all active conventional wells that reflect today’s costs for plugging and there is a proposal before the Environmental Quality Board now to do just that.

-- Fund The Oil & Gas Regulatory Program: Update the way the Oil and Gas Program is funded to provide a dedicated, predictable source of revenue paid for by the industry.

-- Completely Ban Road Dumping Of Drilling Wastewater: DEP has banned the practice for the unconventional drilling industry, but so far has not taken the same action on the conventional side, even though it has the same chemical and physical characteristics.

DEP needs to ban road spreading of conventional oil and gas wastewater.

True Energy Independence

Like the European Union, Pennsylvania and the United States need to think about what True Energy Independence would look like.

True Energy Independence is not only developing homegrown energy resources-- and the jobs along with it-- but those energy resources based on commodities where foreign energy markets do not dictate what we pay for energy and energy prices don’t move at the whim of despots.

The most concrete example of this concept today is-- while gasoline in Pennsylvania just crossed the $4 per gallon mark, drivers of electric vehicles saw no change in what it costs to “fill up” their tanks.

It’s a long term goal, but the transition is already happening as a result of market-driven changes and changes in investment strategies by private industry and governments.

It’s not going to be easy.

There are lots of issues to work out-- like critical minerals, sustainable sourcing, grid reliability-- but the better direction seems very clear.

Continuing to go down the same path of promoting more and more of the same commodity energy resources means we only guaranteed we’ll continue to be held hostage to the whims of international energy markets and despots for what we pay at the gasoline pump, what we pay to heat our homes, power our businesses and farms and pay for electricity.

Why not determine our own future through True Energy Independence?

Get The “Big Picture”

Here are links to articles and NewsClips on this issue from this past week so you can get the “big picture” of what’s being talked about--

-- PA Natural Gas Politicians Want To ‘Unleash’ PA’s Gas Industry - What We Need First Is For Industry To Take Up The Slack; Oil & Gas 2.0; True Energy Independence [PaEN]

-- DEP Budget Hearing: Unconventional Natural Gas Industry Didn’t Drill 40% Of The Wells It Had DEP Permits For [PaEN]

-- True Energy Independence Means More Renewables, Not Letting Foreign Markets Or Despots Dictate What We Pay For Energy [PaEN]

-- Inquirer - Andrew Maykuth: A Small Measure Of Relief Is Coming For Shell-Shocked Philly Area Natural Gas Customers

-- MCall: Utility Bills Have Risen, Will They Go A Lot Higher? That Depends Of Factors Still To Be Determined, Including the Crisis In Ukraine [PPL- Your utility bill increased because the cost of natural gas, other energy supply sources increased]

-- Inquirer - Andrew Maykuth: Philly Gasoline Prices Over $4 A Gallon For The First Time In 14 Years [Electric Vehicle Drivers Haven’t Seen Any Change]

-- MCall: Lehigh Valley Gasoline Prices Surge Over $4/Gallon, How Much Higher Can They Go? [This Isn’t Hurricane Katrina Or Demand For Gasoline Here, This Is All Because Foreign Energy Markets Are Setting The Price - Windfall Profits Tax Anyone?]

-- TribLive: U.S. Gasoline Prices Rise On Higher Oil Prices Brought On By Russian Invasion Of Ukraine

-- TribLive: PA, Pittsburgh Region Hit With Record High Gasoline Prices

-- LehighValleyLive: Increasing Role For PA To Help Europe Meet Energy Needs Faces Hurdles, Critics

-- WNEP: Calls For Pennsylvania To Supply More Natural Gas

-- PG - Anya Litvak: Who Decides What ‘Responsible’ Natural Gas Production Really Means?

-- The Epoch Times: Republicans Urge Gov. Wolf To Unleash PA’s Immense Natural Gas Reserves

-- Altoona Mirror: Russia War Spurs Republican Lawmakers To Push State’s Fossil Fuels [Tieing Us Closer To Foreign Energy Markets That Set Prices]

-- PoliticsPA: The Politics Around Energy And Russian Invasion In PA

-- Gov. Wolf Blasts Republicans For Exploiting Crisis In Ukraine To Line Pockets Of The Natural Gas Industry

-- PA Cap-Star: Wolf, Republicans Spar Over PA Natural Gas Exports, Russian Imports

-- City & State PA: PA Republicans Call For Pipeline Expansions Following Invasion Of Ukraine [And Lash Us Tighter To Energy Commodities Whose Price Is Determined By Foreign Energy Markets And Despots]

-- Republican Rep. Metcalfe Calls On Gov. Wolf To Ban On Russian Sourced Energy, Unleash PA’s Full Potential To Power Free World

-- Guest Essay: Are We Nuts? American Energy Is Key To Undermining Putin’s War - Sen. Yaw (R-Lycoming) [That’s Not What Europe Is Thinking - They Want True Energy Independence.]

-- PG Guest Essay: When It Comes To Natural Gas, Russia Is Putin Us On - State Treasurer Stacy Garrity [Clever, But Not factual: PA hasn’t ‘halted’ natural gas export projects, drillers don’t use 40% of their permits]

-- The Guardian Guest Essay: Oil & Gas Lobbyists Are Using Ukraine To Push For A Drilling Free-For-All In The U.S. [And Their Politicians]

-- ScrantonT Editorial: Lackawanna Transit Should Prepare For Electric Buses

-- U.S. EIA: U.S. Retail Electricity Prices Rose At Fastest Rate Since 2008, Driven By Natural Gas And Energy Commodities [Whose Price Is Determined By Foreign Energy Markets And Despots]

National/International--

-- NYT: What Putin’s War Could Mean For Fossil Fuels; EU Leaders To Announce A Proposal Next Week To Accelerate The Clean Energy Transition, ‘Reduce Permanently Our Dependence On Imports Of Natural Gas’

-- Financial Times: Top US Shale Oil Boss Warns Crude Could Hit $200 With Western Energy Embargo, Can’t Replace Russian Supplies Because Of Supply Chain Issues, Demands From Wall Street To Pay Dividends With New Windfalls [Pioneer Natural Resources]

-- Reuters: U.S. Weighs Cutting Russian Oil Imports Amid Broad Public Support

-- Financial Times: Oil Soars To $110 As European Energy Groups Shun Russian Crude

-- Reuters: Oil/Natural Gas Prices Soar As Russian Energy Supply Fears Intensify