Undermined | News | Pittsburgh | Pittsburgh City Paper

A natural-gas drilling boom in Pennsylvania's Marcellus Shale, we're told, will do lots of things, like creating jobs and weaning America off foreign oil. The industry's most impressive accomplishment, though, may be uniting two historic enemies: left-leaning environmentalists and right-leaning devotees of property-rights. Both groups can be expected to oppose legislation -- due out later this year -- allowing gas companies to drill beneath your property even if you don't want them to.

Drilling in the Marcellus involves burrowing a mile underground. Once the shale is reached, the well turns sideways, to reach as much natural gas as it can. Such "horizontal drilling" makes it possible to drill even in suburban and urban areas.

But what if your crotchety neighbor doesn't want to allow drilling?

Such holdouts are a headache for the gas industry. The Marcellus Shale Coalition, a Canonsburg-based group representing drillers, has issued a "fact sheet" observing that by forcing gas companies to go around them, holdouts are "taking away much-needed energy from the rest of us." They are also, of course, raising costs for drilling companies.

To contend with such intransigence, the industry favors what it calls "fair pooling" ... and what critics call "forced pooling." In states with pooling laws, once a large enough majority -- often 60 percent -- of landowners sign leases, a driller can get all the gas in the area, even from beneath land whose owners haven't signed up.

Such a bill is now in the works for Pennsylvania. Last month, state representatives Marc Gergely (D-Munhall) and Garth Everett (R-Muncy) began seeking co-sponsors for a pooling bill -- one that touts pooling as a means to "provide for the protection of the environment," while helping gas companies too.

Still in its early stages, the legislation would parcel out drilling areas in 640-acre "units," which would be overseen by a state "Fair Pooling Office." If 75 percent of the owners within a unit sign leases, the driller has rights to all the gas inside the unit. Holdouts could receive royalty checks as if they had signed leases, or invest in the project more directly, sharing costs and profits. Either way, their gas would be drilled out from under them.

Natural-gas drilling "is coming whether you want it or not," Gergely tells City Paper. "So you have to do it right. To me, that means doing the least harm you possibly can."

Some chemicals used in drilling are toxic, and in June a blowout at a Clearfield County well released a million gallons of liquid, illustrating the threat wells pose to water supplies. Such problems most often happen around wellheads -- and by setting up uniform drilling areas, Gergely says, pooling can reduce the number of wells.

Gergely says he's "not a huge fan of the industry," and his 75 percent threshold is higher than that in other states. But he acknowledges consulting with industry sources on the bill. And opposition to it is certain.

"Pooling says every bit of gas should be extracted," says Myron Arnowitt, the state director of Clean Water Action. "Environmentally, we think that's a bad idea."

Last month, Arnowitt and 30 other environmentalists circulated a letter to state legislators, objecting that while "[s]ome landowners have decided they do not want to lease their mineral rights," gas-drillers "would like [Harrisburg] to overturn the landowners' decisions."

Appealing to property rights is unusual for environmentalists, Arnowitt agrees. In general, "We don't believe that people should be allowed to do whatever they want with their property. But there's consensus that you should be allowed to not do something you don't want to do."

"Individuals should not be forced to give up their property rights," agrees Nate Benefield, director of policy research at the Commonwealth Foundation. Although the conservative think tank generally opposes new environmental regulations, Benefield says, "If you refuse to sell [the gas beneath your land], you shouldn't be forced to."

"The right and left are coming together," Gergely says, ruefully. "I'm not going to win them all over."

How will pooling overcome such opposition?

Environmentalists speculate that pooling will be proposed alongside a "severance tax" on the value of gas. "There's no doubt" the issues will be linked, Gergely agrees. Without pooling, the industry will have to drill more wells -- increasing costs and making a severance tax even more unpalatable, he says. "This is part of what the industry needs," he says.

Indeed, Marcellus Shale Coalition head Kathryn Klaber says legislators often complain that most other states have severance taxes. It's a double standard, she says, to "ignor[e] the fact that [those states] have pooling too."

Pooling and the severance tax will likely come up this fall. Arnowitt expects to see some legislative horse-trading: Industry wants pooling, and government wants new tax revenue. Still, he says, "They're starting to hear from all kinds of people on this. This is the sort of spot they don't like to be in."

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