Environmentalists liken the restriction to a gag order on medical professionals. Drilling companies say it’s necessary to protect trade secrets.

Similar limits on medical professionals have become law in Pennsylvania and other drilling states. The rules are separate from new chemical disclosure guidelines in the bill.

An Ohio legislative committee was debating the provision Tuesday ahead of a possible vote.

It is part of a wide-ranging energy bill that lays out other rules for Ohio’s growing oil and gas industry. The legislation also adjusts Ohio’s alternative energy standard to include waste heat.

The House Public Utilities Committee is slated to debate rules Monday. They are part of a wide-ranging energy bill that the Ohio Senate with support of Republicans and some Democrats.

Concern remains among environmental groups.

The bill requires that well operators disclose chemicals used in hydraulic fracturing. Environmentalists say details will be scant and reporting will come only after wells have been drilled.

The National Resources Defense Council also has criticized the bill for removing the public’s ability to appeal state-issued drilling permits.

The Ohio Department of Natural Resources says the rules are among the toughest in the nation.

The Democrat, surrounded at a Statehouse ceremony by environmentalists and Twinfield Union School students who pushed for the ban, said the law may help Vermont set an example for other states. The ban may be largely symbolic, though, because there is believed to be little to no natural gas or oil beneath the surface in Vermont.

The gas drilling technique, called hydraulic fracturing, or fracking, involves the high-pressure injection of water and chemicals into the ground to split rock apart and release natural gas or oil.

It’s being used extensively in the rapidly expanding natural gas industry in several states, including New York. Critics have blamed the practice for contaminating drinking water wells of some residents living near the drilling operations, but natural gas industry officials dispute those claims.

Shumlin said the increased amounts of natural gas obtainable through hydraulic fracturing were not worth the risk to drinking water supplies.

In the coming generation or two, “drinking water will be more valuable than oil or natural gas,” Shumlin said.

“Human beings survived for thousands and thousands of years without oil and without natural gas,” he said. “We have never known humanity or life on this plant to survive without clean water.”

Shumlin then appeared to contradict himself, saying other states should emulate Vermont’s ban on hydraulic fracturing but also should be the “guinea pigs” for testing the process.

“I hope other states will follow us,” he said. “The science on fracking is uncertain at best. Let the other states be the guinea pigs. Let the Green Mountain State preserve its clean water, its lakes, its rivers and its quality of life.”

The Vermont Public Interest Research Group’s executive director, Paul Burns, who spoke at the bill signing, said that he had traveled Tuesday to a rally in Albany, N.Y., put on by critics of hydraulic fracturing and that the crowd there was buoyed by the Vermont action. New York is one of the states, along with Pennsylvania, Ohio and West Virginia, where gas drillers have flocked because of the Marcellus Shale, a massive underground rock formation estimated to contain 84 trillion cubic feet of recoverable natural gas, enough to supply the nation’s gas-burning electrical plants for more than a decade.

Industry groups panned the Vermont ban.

The American Petroleum Institute said Vermont was pursuing an “irresponsible path that ignores three major needs: jobs, government revenue and energy security.”

America’s Natural Gas Alliance said the Vermont law was “poor policy that ignores fact, science and technology.” It said natural gas is being produced “safely and responsibly.”

Houston-based oilfield services company Baker Hughes Inc. reported Friday that there were 95 drilling rigs operating in Pennsylvania, down one from the previous week. That’s also down from 108 a year earlier and from a peak of 116 reached during the summer of 2011.

There were 22 rigs in West Virginia last week, up one from the previous week and up four from a year ago.

Drilling rigs bore the holes and set pipes, but all wells don’t go into production immediately.

A coalition of environmental groups is pushing for a complete ban on shale gas drilling, but the industry and landowners hoping to lease to drillers are working to lift some of the restrictions and halt the movement toward local bans.

“Industry estimates that when you look at the cumulative effect of prohibitions and setbacks, 40 to 60 percent of their leasehold is effectively undevelopable,” said Tom West, an Albany lawyer representing gas companies.

The Marcellus is a gas-rich shale deposit thousands of feet underground in parts of Pennsylvania, New York, Ohio and West Virginia. It’s estimated to contain 84 trillion cubic feet of recoverable natural gas, enough to supply the nation’s gas-burning electrical plants for 11 years.

The formation produced just over 1 trillion cubic feet of gas in Pennsylvania last year, providing $3.5 billion in gross revenues for drillers and more than $400 million in landowner royalties, according to an analysis by the Associated Press.

Industry insiders and environmental groups say it’s impossible to quantify how much gas would be off-limits to production under the various bans and restrictions in New York because the amount of gas that can economically be extracted won’t be known until wells are drilled.

Drilling hasn’t been allowed since 2008, when the state began an environmental review of high-volume hydraulic fracturing, or fracking, which frees gas from shale by injecting a well with millions of gallons of water mixed with chemicals and sand. After drillers poured into Pennsylvania in 2008, environmental problems including methane-contaminated private water wells, salt in rivers from wastewater dumping and spill-polluted streams prompted regulatory reforms in that state and touched off a vocal opposition movement in New York.

The Marcellus Shale comprises 20,569 square miles beneath 23 counties across the southern half of New York, with the most gas likely to come from areas where the shale is thickest and deepest underground. That’s in the counties along the Pennsylvania border, with the prime area considered to be in Broome and Tioga counties and parts of Chenango and Chemung counties.

About 25 municipalities have enacted bans on gas drilling, and about 75 others have enacted moratoriums. Dozens of other communities are considering them. That amounts to 1,015 square miles of the Marcellus region under local bans, 2,171 square miles under moratorium and more than 2,400 square miles under consideration for a ban or moratorium, said Karen Edelstein, a geographic information systems consultant in Ithaca who closely follows the oil and gas industry and serves as a consultant for environmental groups.

The majority of those communities are outside the region most likely to see development. Only one, the city of Binghamton, is in one of the prime counties, Broome.

The Joint Landowners Coalition of New York, which represents about 70,000 landowners seeking to lease land for gas drilling, is working to counter the push for municipal bans. The group has drafted a resolution supporting gas drilling, and several town boards have adopted it.

The Pittsburgh Tribune-Review reports that O&G Investment Holdings LLC, a subsidiary of Petro Evaluation Services Inc. of Wooster, Ohio, filed the countersuit Thursday against the Beaver County landowners.

The landowners claim that O & G deceived them into signing leases that Chesapeake Energy Corp. of Oklahoma City now holds.

In the lawsuit O & G Investment Holdings makes a counterclaim that the landowners are breaching the contracts they signed and have “slandered” the leases, causing the company to lose revenue because the properties don’t have producing wells on them.

Steven C. Townsend, a lawyer for the landowners, says the O & G claims have no merit.

But any impact that reduces coal power plant usage in the U.S. can be minimized in part because B&W expects to gain business through its technology and services that make coal-fired plants environmentally cleaner, they said in an earnings conference call with industry analysts. In addition, B&W sees strong demand for coal-fired plants elsewhere in the world, particularly Asia, where natural gas prices are not as low as in the United States, they said.

A glut of natural gas in the United States has driven down the fuel’s price to the lowest in at least 10 years. That has pressured electric utilities to switch to the now-cheap and cleaner-burning natural gas from coal in some places. Other U.S. coal-fired plants have been closed or are expected to close because of reduced demand for electricity and the high cost of meeting stricter environmental standards.

“We project a relatively small number of coal units coming off line, a little bit more than we had projected last year, obviously,” said James Ferland, president and chief executive officer. “But the great bulk of the coal units today including the larger units remain online in our projections for 15 to 20 years and we don’t expect that to change.”

Ferland, a former Westinghouse Electric Co. top executive, in April succeeded long-time B&W employee Brandon Bethards as CEO. Bethards, 64, officially retired on Tuesday.

Charlotte-based Babcock & Wilcox reported that revenue and earnings grew for the first quarter of 2012. In addition, B&W has billions of dollars in back orders from customers.

B&W released its first-quarter earnings after the stock market closed Wednesday.

Shares of B&W on Thursday rose 38 cents to $24.91. Shares are up 3.2 percent since Jan. 1 and are down 17.6 percent from a year ago.

B&W said it earned $46.7 million, or 39 cents per share, on revenue of $765.9 million. The company a year ago earned $13.5 million, or 11 cents per share, on revenue of $684.7 million.

B&W’s large campus in Barberton, which makes up a significant part of its Power Generation Group, focuses largely on coal power plant technology.

“Today, the Power Generation Group has more than $4 billion in bids outstanding or in progress,” Ferland said.

“More importantly, more than $2 billion of these bids are environmental systems and services where we have historically maintained a strong market position.”

The Power Generation Group had revenue of $414.3 million in the first quarter, up $58.1 million or 16.3 percent from the first quarter of 2011, said Anthony S. Colatrella, B&W’s senior vice president and chief financial officer.

Prolonged low natural gas prices in the United States are expected to have the greatest long-term impact on a sector that makes up less than 10 percent of Power Generation Group’s revenue stream, Colatrella said.

B&W’s Nuclear Energy segment had revenue of $86.6 million in the first quarter, up $21.3 million from a year ago.

B&W’s Nuclear Energy segment works on commercial nuclear power plants, U.S. Navy power plants and is also developing a small, modular nuclear reactor that it hopes to market globally to electric utilities.

Jim Mackinnon can be reached at 333-996-3544 or jmackinnon@thebeaconjournal.com

CLEVELAND: The Ohio Department of Natural Resources plans to triple its staff of oil and gas field inspectors to keep up with the increase in drilling activity around the state.

Department spokeswoman Heidi Hetzel-Evans tells the Plain Dealer in Cleveland the state hopes to have 90 inspectors working by early next year. It currently has more than 30.

Director James Zehringer says the department has started hiring and training inspectors to make sure shale wells are built and inspected properly.

A district supervisor for the Division of Oil and Gas Resources Management says keeping up with inspections can be a daunting task.

The state had more than 64,000 wells operating in 2011 and inspected 18 percent of those, or more than 11,000. But that left more than 50,000 wells unchecked.

A Quinnipiac University poll released Wednesday found voters favor the governor’s tax trade-off idea 60 percent to 32 percent. The plan is stalled at the Statehouse.

The landline and cellphone survey of 1,069 registered voters also found large majorities see jobs in oil and natural gas drilling and positives from casino gambling. Thirty-five percent had never heard of the hydraulic fracturing drilling method, while 47 percent considered it not at all likely they’d visit a casino in the next year.

The survey, conducted from May 2-7, has a margin of error of plus or minus 3 percentage points.

A rule-setting committee will meet Monday to debate rules related to drilling permits, well construction and industry standards amid an Ohio fracking boom in the Utica and Marcellus shale formations.

State natural resources director James Zehringer sent a letter Friday assuring 1,500 traditional oil and gas producers the technical rules would be both environmentally safe and business-friendly.

If the rules clear the committee, the earliest they could take effect is May 28. The natural resources agency would decide the effective date.

Zehringer’s letter also told smaller producers that a severance tax increase proposed by Republican Gov. John Kasich probably would not apply to them.

The proposed “fracking” rules also set standards for proper construction of wells and wastewater disposal.

Interior Secretary Ken Salazar said the long-awaited rules will allow continued expansion of natural gas drilling while protecting public health and safety.

“As we continue to offer millions of acres of America’s public lands for oil and gas development, it is critical that the public have full confidence that the right safety and environmental protections are in place,” Salazar said.

The proposed rule will “modernize our management of well-stimulation activities, including hydraulic fracturing, to make sure that fracturing operations conducted on public and Indian lands follow common-sense industry best practices,” he said.

Industry groups and Republican lawmakers say federal rules are unnecessary, arguing that states already regulate hydraulic fracturing, in which water, sand and chemicals are in injected underground to break up dense rock that holds oil and gas.

Critics say the chemicals have polluted water supplies, but supporters say there is no proof.

Tom Amontree, executive vice president for America’s Natural Gas Alliance, an industry group, said the Obama administration “may not fully appreciate” significant regulatory steps taken by states such as Colorado, Texas and Wyoming to oversee hydraulic fracturing.

“State regulatory bodies have repeatedly proven that they have the understanding of their state’s own unique geologic conditions, the on-the-ground expertise needed to oversee this important work, and most importantly, the ability to respond to rapid change,” Amontree said.

As drafted, the federal proposal would create reporting requirements and “regulatory impediments” that could substantially affect the ability of companies to drill on public lands, he said.

The government maintains that the new rules, which have been under consideration for a year and a half, reflect industry concerns. For instance, the rule on disclosure of chemicals used in fracking was softened to allow companies to file reports after drilling operations are completed, rather than before they begin, as initially proposed. Industry groups said the earlier proposal could have caused lengthy delays.

Though the findings were unique to Wyoming, they ricocheted amid heightened scrutiny of fracking in other drilling regions including the Marcellus Shale states of Ohio, Pennsylvania and New York.

The struggle by both Wyoming officials and the EPA for message control shows the extent to which they fretted about the findings.

Wyoming depends on oil and gas for its economic well-being while environmentalists have pushed the Obama administration to crack down on a process responsible for increasing U.S. onshore production.

During the delay, state officials raised dozens of questions about the finding that the controversial procedure that has become essential to unlocking oil and gas deposits in Wyoming and beyond may have tainted groundwater near the gas patch community of Pavillion.

All-out press against EPA

Gov. Matt Mead contacted EPA Director Lisa Jackson and persuaded her to hold off any announcement, according to state emails and an interview with the governor. The more than 11,000 emails made available to the AP in response to a state records request show that Wyoming officials took advantage of the postponement to “take a hard line” and coordinate an “all-out press” against the EPA in the weeks leading up to the announcement Dec. 8.

Meanwhile, the chief state regulator of oil and gas development fretted over how the finding would affect state revenue.

And even as the state questioned the EPA’s science, there were internal doubts about how effective those objections would be.

“It’s already too late. The White House has already seen the report with conclusions,” wrote Gary Strong, an engineer with the Wyoming Oil and Gas Conservation Commission, following a presentation by EPA deputy assistant regional administrator Martin Hestmark. The emails indicate that the federal agency was being pressed by the White House to release its report.

But the state’s questions did set the stage for additional groundwater and household well water sampling in the Pavillion area that began a couple weeks ago.

Isolated testing

The emails also suggest an uneasy partnership now that the EPA and Wyoming, as well as U.S. Geological Survey and two American Indian tribes, say they are working together on further study of the Pavillion groundwater.

However, some recent re-sampling by the EPA of household well water in the Pavillion area took Mead and other state officials by surprise. They had presumed that only two monitoring wells the EPA had drilled to test for groundwater pollution would be retested this spring.

“I won’t tell anybody not to test. But if you’re going to test, you need to bring everyone in the process,” Mead said in an interview Monday.

The EPA did not make Jackson available for an interview. EPA Region 8 Director Jim Martin said in a statement through spokesman Richard Mylott that the EPA “has been transparent and has relied on the best science” to inform Pavillion-area residents about their water.

Environmentalists including the Natural Resource Defense Council and Sierra Club have looked to the Obama administration EPA to get tougher on fracking, the practice of cracking open oil and gas deposits by pumping pressurized water, fine sand and chemicals down well holes. They maintain that fracking is a threat to clean groundwater.

The EPA study in the Pavillion area followed years of complaints from homeowners that their well water took on a chemical stink around the time that fracking picked up in their neighborhood about eight years ago. Environmentalists welcomed the draft report as validation of their concerns.

Heavy revenue producer

Wyoming is the third-ranked state for onshore gas production and ninth for onshore oil production. Nearly every new oil and gas well in Wyoming that isn’t a coal-bed methane well is fracked.

In internal emails that followed the Nov. 4 briefing, state officials expressed support for fracking as crucial to oil and gas extraction, a $7.7 billion a year industry in Wyoming that accounts for 20 percent of the state’s gross domestic product.

“The limiting of the hydraulic fracturing process will result in negative impacts to the oil and gas revenues to the state of Wyoming. A further outcome will be the questioning of the economic viability of all unconventional and tight oil and gas reservoirs in Wyoming, across the United States, and ultimately in the world,” wrote Tom Doll, supervisor of the Oil and Gas Conservation Commission, in a long email that circulated among top state officials.

Wyoming’s top state regulator of oil and gas development, including essentially all fracking in the state, Doll was a district manager for Tulsa, Okla.-based Williams Production Company until 2008.

Governer questions timing

The spark for Doll’s missive was the closed-door meeting at Wyoming Department of Environmental Quality headquarters in Cheyenne two days earlier. EPA administrator Martin briefed Wyoming officials about what the EPA was about to announce based on its research in Pavillion. Doll took part by phone.

“Contaminants present at high concentrations in the deep monitoring wells are likely a result of hydraulic fracturing,” read a “Key Findings” slide in an EPA PowerPoint presentation shown at the meeting. Each slide was marked “Confidential — Do Not Disclose.”

The public announcement more than a month later stated that the groundwater “contains compounds likely associated with gas production practices, including hydraulic fracturing.”

The EPA also suggested at the private meeting that gas development likely had contaminated household well water in the Pavillion area but that current data did not definitively support such a link. The EPA has made no such claim in public to date.

Emails show that Mead sought to reach Jackson within hours. Mead confirmed that he got her to hold off on the findings report until state officials could review the data.

“When I talked to Lisa Jackson they were going to release the findings regardless. That wasn’t even the question. The question was on the timing of it. We wanted a chance to see what are they basing this on,” Mead told the AP.

“She said, ‘Well, maybe we can hold off a couple weeks to give you guys this data.’ ”

The Republican governor says the current tax rates of 20 cents a barrel on oil and 3 cents per 1,000 cubic feet of natural gas are ridiculously low and energy companies “pay nothing” on highly prized natural gas liquids.

The industry counters that even without Kasich’s proposed increase, oil and gas companies will be paying more than $1 billion in new taxes by 2015.

The proposal is stalled at the Statehouse.

Kasich wants to raise severance taxes to 4 percent over time and use the proceeds for modest statewide income tax cuts beginning in two or three years.

Under his plan, oil and gas companies would pay a lower 1.5 percent tax rate for up to two years as they recoup their startup costs.

“I don’t want all this money to escape Ohio,” he said during an Ohio Energy Jobs Summit on Wednesday. “And our severance tax is going to be at a level that will allow us to be very competitive and it will allow us to reduce our income tax in the state and benefit all families.”

Kasich’s plan would raise between $327 million and $561 million annually by fiscal 2016, according to Ohio Department of Taxation estimates.

The exact amount is dependent on how long it takes oil and gas drillers to recoup startup costs, and what the market prices are for the natural gas, oil, and natural gas liquids being extracted from the Marcellus and Utica shale underlying eastern Ohio.

A combined $973 million beyond what’s currently being collected could be raised from 2013 and 2016 to go toward income tax cuts, the state estimates.

A competing analysis produced for the industry by Kleinhenz & Associates in November indicated that oil and gas tax collections would rise by 4 percent by 2015 — to $1.05 billion — even if current tax rates don’t change.

The consultants attribute the increase to projected growth in the shale drilling business, saying it would lead to increased collections in other categories of taxes that energy companies pay, including commercial activities, income, and sales taxes at the state level as well as county property and municipal taxes.

“There’s a whole list of other taxes we pay,” said Jerry James, president of the Ohio Oil and Gas Association. “The governor always just sorts out the severance tax that’s unique to our industry, but it’s not the only tax that we pay.”

Gary Gudmundson, a spokesman for the state tax department, noted that virtually every Ohio business pays the commercial activities tax and property taxes, not just oil and gas companies.

A 4 percent rate in Ohio would still be lower than the 5 percent severance tax levied in neighboring Michigan and West Virginia, but more than the 0.1 percent charged in Illinois.

Pennsylvania has no severance tax on oil and gas but recently authorized local governments to impose a drilling “impact fee.”

Data from the nonpartisan National Conference of State Legislatures shows Ohio’s severance tax rates are among the lowest in the nation.

Southeastern disclosed a 13.6 percent stake in Chesapeake in a filing with the U.S. Securities and Exchange Commission. Southeastern is a Memphis-based fund manager run by Mason Hawkins.

Chesapeake, the second-largest U.S. gas producer, posted an unexpected first-quarter loss and said it might run out of cash next year. The company has been pursuing investments in Utica shale drilling in eastern Ohio.

Reuters reported that for at least four years, Chief Executive Aubrey McClendon ran a private hedge fund that traded in contracts for oil and natural gas — commodities that Chesapeake produces. The report suggests that running the hedge fund could have influenced Mc-
Clendon’s decisions at Chesapeake.

The revelation follows the disclosure of personal loans McClendon had taken out to cover his investments in the company’s wells. Some of those loans came from a group that was also planning to buy Chesapeake assets.

McClendon, who was stripped of his chairmanship by the board, apologized Wednesday to shareholders “for all the distractions” caused by news reports about his financial dealings. He also disputed some of those reports.

“Your mother told you not to believe everything you read or hear for good reason, and that’s certainly been the case for the past two weeks,” McClendon said in a conference call with analysts.

Chesapeake, based in Oklahoma City, reported a net loss of $71 million, or 11 cents per share, for the first three months of the year. Stripping out a charge for what are called derivatives contracts, Chesapeake made money, but not as much as Wall Street expected.

Chesapeake, which has been a big player in the U.S. natural gas boom, has been hurt by a plunge in natural gas prices this year. In response, it’s been shifting more of its production toward oil.

The Republican governor wants to raise the severance tax on oil and gas to 4 percent over time and use proceeds for income-tax cuts. His proposal has stalled at the Statehouse.

The Ohio Department of Taxation estimates the severance tax increase would raise between $327 million and $561 million by fiscal 2016. The total depends on the extent of start-up costs recovered and market prices for the natural gas, oil and natural gas liquids being extracted through shale drilling.

An industry analysis emphasizes tax payments from all sources will increase to $1.05 billion by 2015 as the industry prospers.

“I’ve been in good times and bad times, obviously. I’ve never seen anything that’s had the economic development impact this has and the job creation,” said Vincent Matteo, who has spent more than 30 years in development work.

In the last three years, Williamsport — population 30,000 — has added about 115 companies, fueled by natural gas in the Marcellus shale.

It is an energy boom that could foreshadow what’s coming to eastern Ohio with its liquid-rich Utica shale.

The boom in Williamsport is creating lines at local restaurants and no vacancies at area hotels. In 2010, the Williamsport area was the seventh-fastest growing economy in the United States with a 7.8 percent growth rate, according to the U.S. Bureau of Economic Analysis. The ranking is measured by percentage change in real gross domestic product by metropolitan area.

That has resulted in an estimated 2,000 new jobs in Williamsport, a one-time lumber capital that is best known as the home of baseball’s Little League World Series every summer.

The boom has had a big financial impact because of the number of workers landing well-paying drilling and supply jobs.

With 120,000 people, the Williamsport-Lock Haven area is well positioned in Pennsylvania’s so-called Northern Tier, a forested, mountainous, sparsely populated region of state parks, forest and gameland along the Pennsylvania-New York line.

Lycoming County, with Williamsport as the seat, has 521 horizontal wells in the Marcellus shale. Neighboring Bradford County has 1,041 wells, more than any other county in the state. Susquehanna County has 503 wells, and Tioga County has 746.

In southwestern Pennsylvania, Washington County has 597 wells and Greene County has 434, according to Pennsylvania Department of Environmental Protection records.

The black marine shale that is 384 million years old underlies Pennsylvania, New York, eastern Ohio, West Virginia and Maryland. It covers 95,000 square miles and is the second largest shale area in the United States.

It is named after a New York village near Syracuse where the rock is exposed.

The shale is 4,000 to 8,000 feet under Pennsylvania and between 50 and 200 feet thick. However, the shale is only 50 feet thick near the Ohio River. That makes the Marcellus shale in Ohio riskier and less appealing to drillers. Ohio has a deeper Utica shale that the drillers want.

According to some estimates, the Marcellus shale could hold 500 trillion cubic feet of natural gas. If 10 percent is recovered, that’s enough natural gas to fuel the United States for two years.

New York has imposed a moratorium on drilling, but it could be lifted later this year.

However, drilling has proceeded with enthusiasm in Pennsylvania, with 5,270 wells started since 2006.

The shale is under 40 of Pennsylvania’s 67 counties.

A report from the Marcellus Shale Coalition says the industry has created 214,000 jobs in Pennsylvania, citing data from the state Department of Labor and Industry.

Shale gas in 2010 contributed $76 billion to the state’s gross domestic product, a number projected to increase to $231 billion by 2035.

Optimistic estimate

According to a study by Penn State University, the Marcellus shale could provide 25 percent of America’s natural gas by 2020. That would make the Marcellus shale the No. 1 source of natural gas in the United States.

The Marcellus shale might be able to produce 17.5 billion cubic feet of natural gas a day in 2020, the study said. By then, it could be responsible for creating 256,000 jobs and generating $20 billion in added value to the state’s economy, the study said.

“This is truly a remarkable milestone,” said Kathryn Klaber, president and executive director of a pro-drilling coalition.

Pennsylvania’s new capital

Williamsport now proudly calls itself the energy capital of Pennsylvania.

Lycoming County’s unemployment rate in January was 6.7 percent. Three neighboring counties — Tioga, Bradford and Sullivan — all had unemployment rates under 6 percent.

The growth has meant more sales tax revenue for Lycoming. Between 2006 and 2010, sales tax revenue increased by 10.4 percent. During the same time period, the state saw a 2.8 percent decrease overall.

More than 20 energy companies, including Chesapeake Energy Corp., Anadarko Petroleum Corp., Range Resources Corp., Southwestern Energy Co., XTO Energy Inc. and Cabot Oil and Gas Corp., are in Lycoming. Several have established regional headquarters in Williamsport.

An area on East Third Street, known as the Gold Strip, has been a benefactor, too. One addition was a Kohl’s department store. Last October, it was announced that a former lumber company site would be converted into a conference and tourist center.

Beyond gas companies, Williamsport experienced an increase in hotels, supply companies and restaurants.

A Marriott Towneplace Suites was built, specializing in long-term stays. Another motel was added.

Matteo said a Williamsport segment he calls legacy companies has benefited, too.

“You’ve seen the growth not only from the companies moving into the area, but from ... the ones that have been here, that have expanded their employment as a direct result of the natural gas exploration,” he said.

Alice Crane and Rigging increased its work force from roughly 50 to 75 employees four years ago to more than 200 now. The company also doubled its number of cranes and trucks.

RS Albert’s, a manufacturer of plastic products, expanded. It produces roller-coaster safety harnesses but now uses that same plastic to contain spills at well sites.

Caught off guard

The Marcellus boom caught Williamsport off guard in 2006-07.

Matteo remembered a meeting when a county commissioner mentioned activity at a courthouse where property deeds were being researched.

“There were these long lines at the computers and people are looking up deeds and we don’t why. Obviously, they were the land men looking up ownership,” Matteo said.

At one point, Lycoming officials traveled to the Dallas-Fort Worth, Texas, area to meet with government, private businesses and citizens there to discuss gas exploration.

Matteo said he has been asked whether he sees money in the creation of energy jobs.

He said no. “I see jobs. I don’t see money … and that’s what it’s all about,” he said.

Doug Livingston and Caitlin Cook of the News Outlet contributed to this story. The NewsOutlet.org is a collaboration between the Youngstown State University journalism program, Kent State University, the University of Akron and professional media, including WYSU-FM radio and the Vindicator (Youngstown), the Beacon Journal and Rubber City Radio (Akron).

Documents obtained by The Associated Press through a public records request show D&L Energy sought state permission in February to study vibrations at the North Star #1 well. The Ohio Department of Natural Resources has yet to respond.

D&L closed the well after a New Year’s Eve quake reached 4.0 magnitude. A state moratorium on deep-injection drilling near the site has halted regional disposal of millions of gallons of wastewater from hydraulic fracturing and other drilling activity.

A March 9 state report tied the well to the quakes. D&L wants the chance to disprove that finding.

Virginia-based Dominion Resources Inc. is seeking to export 1 billion cubic feet per day through a terminal it owns in Maryland. A previous legal settlement dating to the 1970s gives the Sierra Club the ability to reject any significant changes to the purpose or footprint of the existing natural gas terminal in Cove Point, Md.

The environmental group says the export project could result in major damage to the Chesapeake Bay and nearby Calvert Cliffs State Park in Maryland.

Dominion says the Cove Point terminal is well-situated to export gas from the prolific Marcellus Shale region, which lies beneath Pennsylvania, New York, West Virginia, Ohio and other states.

“The damage that this project would bring to the Maryland coast as well as the disastrous effects of the fracking boom on communities in states like Pennsylvania make it clear that exporting liquefied natural gas is bad news for Americans’ air, water and health,” said Michael Brune, executive director of the Sierra Club.

Exporting liquefied natural gas, or LNG, would drive up the cost of domestic natural gas, Brune said, reversing the effects of a natural gas boom that has driven U.S. prices to 10-year lows.

Thomas F. Farrell II, president and CEO of Dominion Resources, said the company intends to go forward with the project.

“We have reviewed the various regulations, agreements and rulings from various regulatory bodies governing the site and are confident that we will be able to locate, construct and operate a liquefaction facility at Cove Point,” Farrell told reporters.

Dominion will design the plant to minimize damage to the environment, Farrell said.

The dispute over the Maryland plant comes as federal regulators have approved the first large-scale natural gas export facility in the United States.

The Federal Energy Regulatory Commission cleared construction of the Sabine Pass LNG terminal in Cameron Parish, La., last week. The facility, owned by Houston-based Cheniere Energy Inc., will chill natural gas into a liquid that can be shipped on tankers, allowing U.S. producers to export natural gas overseas for potentially huge profits. An existing LNG import facility at the Louisiana site will be converted also to handle imports.

The push for exports represents a turnaround from just a few years ago, when U.S. companies were seeking to build LNG terminals that would receive natural gas from other countries.

Those plans changed as improved drilling techniques, such as hydraulic fracturing and horizontal drilling, allowed drillers to gain access to natural gas wells that were hard to reach in the past.

Hydraulic fracturing, also called fracking, involves blasting mixtures of water, sand and chemicals deep underground to stimulate the release of gas. It is often combined with horizontal drilling, which can increase production far beyond a vertically drilled well.

Brune, of the Sierra Club, called on the Energy Department to review potential dangers of fracking. No federal agency has fully analyzed or disclosed such dangers to the public, he said.

Gas companies say fracking has been used safely for decades.

———

Follow Matthew Daly’s energy coverage in Twitter: @MatthewDalyWDC.

Some counties’ residents are ecstatic at the possibility they might be sitting atop lucrative deposits of natural gas/oil products. Others are dismayed to learn smaller volumes of gas and oil might lie deep under their feet than previously estimated.

At the center of what’s happening is a newly released map from the Ohio Department of Natural Resources’ Division of Geological Survey. It shows excellent drilling potential under much of Stark County. Large tracts of Tuscarawas, Coshocton and Trumbull counties also rate excellent. So, too, does eastern Portage County.

Larry Wickstrom, one of four men involved in developing the map, says he is a little flabbergasted by all the attention it is getting.

The map is “just the addition of new information ... and fine-tuning what we have,” he said. It is merely the state’s best guess as to what might be found thousands of feet underground.

Areas outside the main development area could still be productive, he advised, and the map probably will change as state geologists get even more information.

The map, relying on new data, shows a slightly different footprint in eastern Ohio for Utica shale, identifying a core area for drilling that covers 10.8 million acres from Ashtabula County south into Guernsey County.

Much of the drilling in Ohio has been located in Carroll, Harrison, Columbiana and Jefferson counties. Those four counties generally rate good to very good, according to the new data.

Summit, Medina, Wayne and Portage counties are all in the good area. Most of Cuyahoga, Lake and Lorain counties are now excluded.

The map was unveiled to little fanfare in March at a statewide meeting of the Ohio Oil and Gas Association and has gotten increasing attention as word of its existence has spread. It is based largely on the level of hydrocarbons found in Utica shale cores the state owns.

Over the years, more than 40,000 wells have been drilled through the Utica shale to deeper formations. The state has stored those core samples at Alum Creek State Park near Delaware.

Occasionally, researchers would sample the cores. Then about three years ago, the samples started generating increased interest from drilling companies.

Companies took core samples to have them analyzed in their labs. Because they paid for the studies, the companies were allowed to keep their research private for a year before giving the data to the state.

As the information began trickling in, state geologists took the new data and began revising its maps.

To date, energy companies have drilled 60 horizontal wells into the Utica shale in Ohio, and a total of 194 permits have received state approval. That total includes 10 permits in Stark, six in Portage and one in Medina counties.

State officials have predicted that more than 2,250 wells could be drilled in Ohio by the end of 2015.

One big question that remains unanswered is whether there is enough pressure in the western part of the Utica shale formation, where it is thinner, to send oil up well shafts, Wickstrom said.

Most of the drilling companies have not begun to prospect the potentially oil-rich area that generally lies west of Interstate 77.

The exception is Oklahoma-based Devon Energy Corp., which has applied for state permits for wells in Medina, Ashland and Knox counties. The company has said it is more interested in Ohio’s oil than its natural gas.

Chesapeake Energy Corp. is the No. 1 player in Ohio and is attracted by the so-called wet gases: ethane, butane and propane that are found in Utica shale. That makes Ohio financially attractive at a time when natural gas prices remain very low.

Records show landowners can get signing bonuses of up to $5,800 an acre plus royalties as high as 21 percent on what’s produced by wells. The average leasing bonus in Ohio is about $2,500 an acre.

Bob Downing can be reached at 330-996-3745 or bdowning@thebeaconjournal.com.

Anadarko Petroleum Corp. released preliminary data on three wells it has drilled in eastern Ohio. The information was provided to the Ohio Department of Natural Resources and released to the media on Thursday.

The newest well, the Brookfield A-3H well in Noble County, delivered 9,500 barrels of crude oil and 12 million cubic feet of natural gas during its first 20 days in production, the company said.

Two wells in Guernsey County — Spencer A-1H and Spencer A-5H — produced a combined 20,000 barrels of crude oil and 37 million cubic feet of natural gas in two months, the company said.

The Houston-based company also has permits to drill in Muskingum County.

“Though it is very early in our exploration program, the strong initial results are encouraging,” Bob Daniels, a senior vice president at Anadarko, said in a statement.

“We expect to begin flowing back our fourth Utica exploration well in the next few days and are currently drilling our fifth exploration well,” he said.

“We plan to continue an active drilling program throughout the year, as we evaluate the liquids-rich potential of our 390,000-acre position in the Utica shale.”

All three wells were drilled to a vertical depth of about 6,500 feet and a horizontal length of about 5,000 feet, the company said.

Anadarko operates the Brookfield and Spencer wells with a 100 percent working interest, subject to a participation agreement with Artex Energy Group LLC.

Chesapeake wells

On April 2, the Ohio Department of Natural Resources’ Division of Oil and Gas Resources Management released the first official production data covering 2011 from nine Utica wells in Ohio.

Those reports covered nine horizontal wells drilled by Chesapeake Appalachia LLC. There were six wells in Carroll County and one each in Portage, Harrison and Mahoning counties.

Five of those wells were in production in 2011 and generated nearly 2.6 billion cubic feet of natural gas, plus 43,513 barrels of oil. The other four wells were not in production but did produce some oil.

The preliminary production for all the wells for natural gas was very high, state officials said

The reported volumes of oil are lower than estimated, but higher than conventional wells, the state reported.

Until April 2, most production data had been tightly held by drilling companies, although Oklahoma-based Chesapeake Energy Corp. had provided some data on select wells in 2011.