Company, Corps at Odds Over Gas Permits
Pittsburgh Post-Gazette
10 August 2011
By Don Hopey,
Chesapeake Energy is complaining that new federal stream and wetlands
encroachment permit requirements are holding up Marcellus Shale gas
pipeline construction in Pennsylvania and delaying property owner
royalty payments totaling more than $500,000 a day.
But the U.S. Army Corps of Engineers, which reviews pipeline projects
that cumulatively impact more than an acre of streams or wetlands,
denied that significant changes were made to the permit regulation when
it was renewed July 1.
It also blamed the gas industry, and Chesapeake in particular, for
submitting incomplete permit applications that delayed project
approvals.
Chesapeake claims that 128 of the 300 wells it has drilled in northern
tier counties are waiting on permits for connecting pipelines and that
Pennsylvania has been targeted by the federal permit changes that will
increase project review time from 45 days to almost 300 days.
The Oklahoma City-based company's complaints about "arbitrary and
overly burdensome" regulations were detailed in a letter mailed at the
end of July to more than 17,000 leaseholders in Bradford, Sullivan,
Susquehanna, Tioga and Wyoming counties.
The letter, signed by David Spigelmyer, Chesapeake vice president for
government relations, also urges the leaseholders to submit form
letters to their members of Congress, saying the permit review changes
are "unnecessary and are infringing on [your] ability to develop your
mineral rights."
"We have responsibilities to our mineral owners to tell them why
there's been a delay in their receiving royalty payments," Mr.
Spigelmyer said in a phone interview Tuesday.
He also said the permitting delay puts the state at a competitive
disadvantage when vying for drilling investment because without
connecting pipelines, the gas companies can't move gas from the wells
to customers.
The conflict is all about interpretation of the new general permit
regulation, formally known as the Pennsylvania State Programmatic
General Permit-4, which requires companies to detail the cumulative
impacts of proposed pipeline construction on streams and wetlands for
the length of the pipeline.
While some are short connector lines from wells to compressor stations,
others can stretch for tens or hundreds of miles, especially in
northern tier counties where there is no history of gas well
development.
"What's at issue is the Corps wants to look at the cumulative impacts
of a pipeline project from beginning to end and the industry wants to
get permits based on impacts of each stream crossing," said Jeff Hawk,
a Corps spokesman in the Pittsburgh District office.
Companies that want to install natural gas pipelines throughout the
U.S. must apply for Clean Water Act encroachment permits if they cross
or disturb streams or wetlands.
The pipeline companies send permit applications to the state Department
of Environmental Protection, which determines if the proposed pipeline
is a smaller Category One or Two project that can be issued a general
permit by the DEP alone or a Category Three project that has larger
impacts on streams and wetlands and must also pass review by the Corps.
Bill Seib, chief of the Corps' regulatory branch in the Baltimore
District office that covers central Pennsylvania, said the federal
encroachment permits have required regulatory agencies to look at the
cumulative impacts of a pipeline project for 40 years.
But, he said, the state DEP has, in the past, focused on individual
stream crossing impacts in granting permits.
Mr. Seib said the Marcellus Shale gas drilling industry projections
predict between 1,000 and 2,000 new wells will be drilled annually in
the state, and that each will require a pipeline to transport the gas
to market.
But just 10 to 15 percent of all the pipeline projects submitted to the
DEP are classified as Category Three projects, he said, and he doesn't
expect that to change.
"The process for issuing linear projects [permits] has not changed. The
industry says it has changed, but it has not," Mr. Seib said. "The
problem is a lot of the applications we get are incomplete because they
don't include the cumulative impact of a project. That's a problem,
especially with Chesapeake, which doesn't like to explain where a
pipeline is crossing a stream or where it's going."
Reviews of pipeline projects' effects on historical sites and
endangered species, carried out by the state Historical and Museum
Commission and the U.S. Fish and Wildlife Service, can also take time,
Mr. Seib said.
He said the Corps' Baltimore office has 70 pending pipeline permit
applications from Pennsylvania, but only five have been identified as
"federally complete."
Once an application is judged complete, Mr. Seib said, the average
processing time by the Corps' Baltimore District office is 26 days. He
said he didn't know how many of those applications were from Chesapeake.
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