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'Fracking' brings prosperity, problems to Pennsylvania

Times are good these days at the Linde Corp., where despite a sluggish economy nationally, the company is on a hiring binge.

The construction company, based near Wilkes-Barre in northeastern Pennsylvania, has seen its workforce nearly triple over the past five years as it switched from helping to build big-box stores to laying miles of natural gas pipelines connecting hundreds of gas wells drilled in the rolling rural terrain here in Susquehanna County.

"It has completely changed the complexion and future of the company," Linde spokesman Kevin Lynn said of the natural gas boom that has transformed the region. So bright has gas made the company's prospects that it recently gave $100,000 — its largest gift ever — to help build a new hospital near here.

Matt and Tammy Manning of nearby Franklin Forks say the gas boom has affected them, too, but for the worse. More than a year ago, the water coming out of their household well turned dark gray. Tests by the state found dangerous levels of methane in it, and regulators are investigating the cause. The couple must buy bottled water to drink, while a gas company that drilled in the area furnishes non-potable water for showers and washing clothes.

"Our house could've blown up with the levels we had," said Tammy Manning, 42. "It's very scary."

Pennsylvania's headlong plunge into drilling for natural gas from Marcellus shale formations deep underground has produced winners and losers — and provides a window on what could occur in Western Maryland should the drilling spread there. Businesses that cater to the energy industry have opened or expanded, while landowners who signed leases allowing wells to be drilled on their property have been able to buy new trucks and pay off loans with royalty payments from the billions of cubic feet of gas being siphoned daily across the state.

But the surge in drilling has fed a fierce nationwide controversy around the technique used to extract the gas, known as hydraulic fracturing, or "fracking." The crossroads village of Dimock became ground zero for that furor three years ago after a homeowner's well blew up from a buildup of methane, and 18 other households alleged that their wells had been contaminated by Cabot Oil & Gas, the Houston-based company drilling in their community.

Homeowners in other Pennsylvania communities also have complained that their wells were fouled and their health endangered. The allegations — disputed by the industry and only rarely upheld by state authorities — have caused bitter divides, pitting neighbors and even family members against one another.

While the state has tightened regulations and the industry says it has installed additional safeguards, the long-term effects of the state's burgeoning gas industry on health and the environment are unknown.

In Maryland, a similar energy bounty is believed to lie beneath the surface in Garrett and part of Allegany counties, which sit atop the eastern edge of Marcellus shale deposits that sprawl from New York to eastern Kentucky. Energy companies leased the right to drill in nearly a third of Garrett, though some are letting the leases lapse in favor of drilling elsewhere.

But the O'Malley administration has held off permitting fracking for gas until studies can tell whether it can be done safely. A state advisory commission has been examining the issues for more than a year and expects to take at least another year before concluding its work.

Several fracking-related measures are pending in Annapolis, including one that would levy a state tax on extracted gas. A proposal to impose a moratorium on the drilling technique was killed last week in a Senate committee.

While Marylanders debate what could happen if fracking is allowed, Pennsylvanians are struggling to understand what is under way.

Hydraulic fracturing has been in use since the 1940s to help extract oil and gas from deep underground. Millions of gallons of water, sand and chemicals are pumped at high pressure down a newly drilled well to crack or fracture rock layers in which gas is trapped, freeing it to be brought to the surface.

What's new about the current boom is the combination of fracking with directional drilling, in which a well is drilled vertically for several thousand feet, then gradually bent sideways for a mile or more. The method increases the ability to tap layers of gas-saturated shale.

Together, horizontal drilling and fracking have enabled drillers to tap natural gas in shale deposits previously thought too hard or too costly to access. The U.S. Energy Information Administration projects a 44 percent increase nationwide in natural gas production over the next three decades.

Pennsylvania's shale gas output topped 1 trillion cubic feet in 2011, according to federal data, exceeded only by that of Texas and Louisiana. Houston-based Cabot has drilled more than 200 wells in Susquehanna County alone. With those wells among the most prolific statewide, company officials have told investors they are looking to drill as many as 3,000 more.

The shale gas boom has lifted Pennsylvania's economy, but how much is unclear. Republican Gov. Tom Corbett recently declared it had produced hundreds of thousands of jobs there. State labor figures indicate that the number of jobs in "core" gas-related industries grew by 14,000 from mid-2008 to mid-2011, but administration officials say the industry supports many other jobs, directly or indirectly.

Drilling fell off last year, as natural gas prices fell to record lows amid a glut of production and lagging demand in a still-sluggish economy. But there's plenty going on in Susquehanna County, where trucks hauling water and equipment rumble over crumbling two-lane country roads, and drilling rigs light the night sky as they work 24/7 boring into the earth.

"The restaurants are thriving," said Mary Ann Warren, one of three elected county commissioners. "The motels are full; the hotels are full."

But there also are allegations that the industry has polluted some residential wells.

After a group of Dimock residents complained that their water had been fouled, Pennsylvania's Department of Environmental Protection accused Cabot of failing to ensure that its wells did not leak methane into the groundwater aquifers used for drinking water.

The company disputed the allegations, arguing that its wells were properly constructed and that methane occurs naturally in groundwater in the area. But Cabot agreed to put up more than $4 million — twice the assessed value of the affected properties — to compensate residents. The company also offered to install treatment systems to filter out the methane, and it agreed to a drilling moratorium in a 9-square-mile area until state officials could be assured that there were no more problems. The stoppage remains in effect.

Most residents who complained accepted the state-negotiated deal, but a few have refused.

"I want my water back," said Ray Kemble, 57, one of the holdouts. Kemble, a mechanic who's lived in Dimock for more than 20 years, said the state found 27 chemicals in his well.

The state and the U.S. Environmental Protection Agency, which did its own testing, told him the contaminants are at low enough levels to be safe, but Kemble is unconvinced. "I have a house that's worth zero," he said.

Others in the community, with industry support, launched a "Dimock Proud" campaign that criticizes the complainers for tying up drilling and giving the community bad publicity. A few signs are still evident along the roads.

"This literally divides towns, neighbors," Kemble said. "It's a war."

Dimock isn't the only place where there have been complaints. The Mannings of Franklin Forks have sued Oklahoma-based WPX Energy Inc. over the sudden spike in methane in their well. Gas industry spokesmen have said the gas in the Mannings' water and in other contaminated wells in the community came from shallow aquifers, not from the deep Marcellus formation tapped by fracking. The Mannings are still waiting for the state to conclude its investigation.

In neighboring Bradford County, scene of the most intense drilling in the state, Sherry Vargson said she's been waiting more than two years for the state to tell her how her water became contaminated. She calls her decision in 2006 to allow drilling by another Oklahoma-based company, Chesapeake Energy Corp., "the biggest mistake of my life." Though the one-time lease payment of $19,000 helped pay off her son's college loan, she said she and her husband had to sell their dairy herd on their 197-acre farm to make way for a well and pipeline that has yielded only about a $1,000 a year in royalty checks, she said.

Water from their kitchen tap fizzes like seltzer water, and she can ignite a foot-long flame by holding a match to the faucet when it's on. The state says her water is safe to drink despite the methane, Vargson said, but she's not reassured. Her dog and cat steer clear of it.

"If animals won't drink it, why would I?" she asked. "I'm supposed to be smarter." She and her husband are trying to sell the place now.

The gas boom hit Pennsylvania so quickly that the state had to play catch-up, former officials acknowledge. Those in office now say the state has increased its oversight in the past few years, hiring more staff and tightening drilling regulations, including measures meant to prevent the kind of gas migration seen in Dimock and elsewhere.

"The regulations are tighter," said George Stark, a Cabot spokesman, "and we exceed the regulations."

At a Cabot well in nearby Auburn township, company representatives show how they encase their wells with steel pipe and layers of cement to guard against leakage, going beyond what's required by the new state rules.

At the urging of the state, Cabot and most other energy companies collect and recycle the "mud" they pump down the well — a slurry of water and bentonite clay used to lubricate the diamond-studded drill bits grinding through layers of rock. They also collect, treat and reuse much of the "flowback" of fluids pumped down the well to fracture the shale — often laced with salts, minerals, heavy metals and radioactive elements.

Before, drilling crews had simply pumped those fluids into open pits, which at times leaked or ruptured. Or they hauled them to municipal sewage treatment plants, which proved incapable of removing all of the contaminants, so they wound up in rivers and streams, including the Susquehanna, the Chesapeake Bay's main tributary.

Pennsylvania officials say the new rules have made drilling safer. Inspectors made more visits to gas wells last year than in 2011, yet found fewer violations, according to Kevin Sunday, a spokesman for the state Department of Environmental Protection. Even so, the number of serious or repeat violations triggering state action rose by 40 percent, to 266.

The changes Pennsylvania has made appear to have helped reduce groundwater problems, but it is too early to know by how much, said Robert B. Jackson, a researcher at Duke University who has been studying the impact of fracking. And there are questions about how the sheer volume of drilling and related activity is affecting air and stream quality, and how it might be altering the state's farming and forests.

"When you factor in the human element, incidents and accidents are inevitable; you're never going to bat 1.000," said John H. Quigley, who was secretary of conservation and natural resources under the previous governor, Edward G. Rendell. Quigley is now advising the Maryland Department of Natural Resources as it studies how to protect ecologically rich forests in Garrett County.

Pennsylvania has permitted gas drilling in its state forests, and while there are required safeguards, Quigley said a million or more acres of woods might ultimately be cleared for drilling, pipelines and access roads.

"A lot of drilling is taking place in some of the most sensitive habitat,'' he said, noting that drilling in under way in 80 percent of the Pennsylvania watersheds that support trout. "We are not going to know for years what the real impacts are."

Some health experts are worried about the long-term effects on people living in communities surrounded by drilling activity. Pennsylvania health officials are not tracking residents' complaints, according to Dr. Bernard D. Goldstein, professor emeritus at the University of Pittsburgh's Graduate School of Public Health.

"They basically are simply doing their best not to find out if there are health impacts,'' he said, calling it a "head in the shale" stance. It's been left to universities such as his and the University of Pennsylvania to launch independent studies, he said.

Maryland and New York, which has put fracking on hold for study, should be in no hurry to allow it, Goldstein said. Pennsylvania is a "guinea pig" for other states, he said, as the industry and regulators alike learn by trial and error how to extract the gas more safely.

"I think it's in the advantage of states to stall," he said. "Over the long run, we'd be much better off taking our time."

tim.wheeler@baltsun.com

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