Fracking gives water authorities financial boost, study finds
A number of public water suppliers are making money off of Marcellus shale fracking, but they're not getting rich.
At least not here in Southwestern Pennsylvania, according to new study from Penn State and West Virginia University.
A group of public water suppliers in Southwestern Pennsylvania earned anywhere from $52,000 to $1.4 million from selling fracking water to drillers in 2011, according to the study, “The Use and Value of Water for Marcellus Shale Gas Development.”
Public water suppliers are just one source of water for gas companies that also tap ground water, lakes and rivers, such as the Allegheny River.
During the use of a Marcellus shale gas well, gas companies pump water mixed with chemicals and sand under intense pressure to hydraulically fracture rock.
That “fracking” releases natural gas trapped within the rock.
Drillers need 2.5 million to 8 million gallons of water to develop a single, horizontal gas well, accounting for 10 percent to 20 percent of the total cost of developing a well, according to the study.
For most public water suppliers, the extra income from Marcellus drilling is just that: it's gravy, and it's unpredictable.
“The big issue that we brought out is the erratic nature of the demand, and it's very specific, as it's based on where the drilling pads are,” said Charles Abdalla, professor of agricultural and environmental economics at Penn State and one of the study's authors.
According to 34 water suppliers surveyed in Pennsylvania, they were “measured in their approach,” Abdalla said.
But they were unanimous in wanting to take advantage to make extra money, according to the study.
• The average rate charged was $7.60 per 1,000 gallons — with a wide range of 58 cents per 1,000 gallons at the low end to the high of $16 per 1,000 gallons.
• Revenue was used for repayment of debt, infrastructure improvements and other expenses.
As gas companies will buy their water close to their wells, location and sprawl of the water system determines water sales.
Not surprising, the state's largest private water authority, Pennsylvania American Water, is doing well with demand from Marcellus shale drillers.
In 2012, the water company doubled the revenue from hydraulic fracturing contracts to about $3 million, with a 74 percent increase in sales in excess of 430 million gallons, according to Terry M. Maenza, director of communications for Pennsylvania American Water.
Additionally, the company added five new connections with shale-drilling companies and signed an additional agreement with XTO Energy, which covers a third pipeline extension in Butler County to support drilling operations.
The extension of the pipelines will provide public water is new areas and prevent fewer water truck hauls on Butler roads, according to Maenza.
Given the reach of the Municipal Authority of Westmoreland County — 121,000 customers in Westmoreland, Allegheny, Armstrong, Fayette and Indiana counties — it's not surprising that there are Marcellus drilling operations in need of water in its territory.
The authority expects to earn less than $375,000 for the fiscal year that started April 1 for water sales to gas companies.
“This is revenue that was unanticipated a few years ago,” said Chris Kerr, authority manager. “But for our authority, it's not operationally significant.”
Such water sales account for less than a half percent of the authority's budget with projected revenue of $75 million in this fiscal year.
For Tarentum's borough-owned water company, sales are a “hit-and-miss thing,” said Bill Rossey, borough manager for Tarentum. There are sales, but it's a small part of its water operation.
The borough earned about $5,000 last year selling water to another contractor who then sells it to the gas companies. The borough also gets a $1,000 “convenience fee” for each well that water haulers use to access a borough boat ramp on Wood Street to draw from the Allegheny River.
The Municipal Authority of Buffalo Township, which serves Freeport and Buffalo Township, earned about $4,000 last year for supplying water to a pipeline contractor that was installing the Big Pine Gathering System, a 55-mile network of natural gas pipelines through Butler, Armstrong, Indiana and Westmoreland counties.
“Any opportunity to sell water and generate revenue helps out our bottom line and we look forward that,” said Don Amadee, municipal authority manager.
Mary Ann Thomas is a staff writer for Trib Total Media. She can be reached at 724-226-4691 or firstname.lastname@example.org.
Subscribe today! Click here for our subscription offers.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Services end at Roger’s Chapel in South Buffalo Township
- Westmoreland Veterans Affairs provides rides with van program
- Neupert Raceway Park in Jefferson Township set to break ground in spring
- Manufacturer to expand 28 acres in business park
- Cookies for Our Troops in Arnold meets latest Christmas deadline
- Police seek suspect in theft ring striking Lower Valley
- After fire leveled Washington Township plant, CCF Industries plans to open in spring
- Vandergrift girl hangs on for dear life, defying rare, fatal disease
- VND readers pass along cherished memories of Christmas
- Nightmare of car plowing into home haunts former Arnold woman
- Tarentum restaurant gets closer to reopening