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Permit delays, regulatory uncertainty concerning to gas business

| Thursday, May 5, 2016, 11:00 p.m.
A gas pipeline site cuts through land near Jobes Road in Delmont on Tuesday, Sept. 9, 2014.
Steph Chambers | Trib Total Media
A gas pipeline site cuts through land near Jobes Road in Delmont on Tuesday, Sept. 9, 2014.

Environmental permitting delays and regulatory uncertainty threaten to harm Pennsylvania's oil and gas industry and stifle investment in the sector as it struggles with low prices, business leaders told lawmakers gathered in Washington County on Thursday.

“We repeatedly hear from clients … that Pennsylvania is the most challenging and unpredictable regulatory environment that they see,” said Dustin Kuhlman, office manager for Robinson-based Civil & Environmental Consultants.

He told members of the House Majority Policy Committee that staff at various Department of Environmental Protection regional offices take different approaches to analyzing permit applications from oil and gas clients, leading to longer delays in some districts such as Pittsburgh. Subjective decisions by reviewers are allowing applications to be put aside, undermining a much-lauded policy implemented in 2013 to reduce approval time, he said.

“Many of our operators wait for more than 200 days for a permit,” said Dave Spigel­myer, president of the North Fayette-based Marcellus Shale Coalition. Such delays and inconsistencies, combined with ever-changing environmental rules and a perennial debate over how to tax the industry, make companies leery of committing money to gas projects, he and others said.

“Pennsylvania is one of the more difficult places to operate. I've heard it as well,” said Gene Barr, president of the Pennsylvania Chamber of Business and Industry.

Committee Chairman Kerry Benninghoff, R-Centre County, who organized the legislative roundtable at the Hilton Garden Inn at Southpointe, promised further review of the permitting problems raised by the speakers and some lawmakers.

“It really struck a nerve with me, the red tape and bureaucracy,” said Rep. Tommy Sankey, R-Clearfield.

In an emailed response, DEP spokesman Neil Shader said the department “is working to improve consistency across the agency, including permit processing, however processing times for individual permits depend on many factors. Staffing levels and volume of permits can affect processing times, and both of those vary from office to office.”

Secretary John Quigley last week addressed the complaint that “DEP can't turn around permits” during a visit with Tribune-Review reporters and editors.

“That's not true,” he responded, saying that department reviewers meet time limits set by the 2013 policy 89 percent of the time. The policy has different time limits for different types of permits.

Quigley reiterated a position he took during budget hearings in Harrisburg that consultants hired by oil and gas companies to handle lengthy erosion control and water obstruction permits submit incomplete applications more than 10 percent of the time. In a review of applications, he found 30 percent were technically deficient.

“There are a lot of companies in Pennsylvania not getting their money's worth out of their consultants, but they like to blame DEP for it,” Quigley said.

Kuhlman called Quigley's remarks “counterproductive” and defended the work of engineers filing for permits. He said reviewers in the southwest regional office in Pittsburgh — where it takes about 100 business days to get an oil and gas-related permit — might disagree with and reject findings in a permit application that would be accepted in the north-central office, where the average is 20 business days.

If an application is deemed incomplete, it's put aside and its processing time is not counted against the decision guarantee, Kuhlman said.

Spigelmyer said DEP has blamed problems in the southwest oil and gas office on staff turnover.

“I know they're focused on trying to improve the permit times,” he said.

Quigley has blamed low staffing, a budget deficit and years of neglecting technology improvements for some struggles in the department he took over last year.

“We're going to invest in technology: e-permitting, e-paying, e-everything across the agency,” he told the Trib. “We are committed to improving internal business processes ... and being more responsive to the regulated community. That requires investment.”

Gas well drilling has slowed dramatically as prices fell to 16-year lows because of an oversupply. Part of the industry remains busy, though, seeking to build pipelines that can ease the glut by taking gas to lucrative markets, or to build plants that use gas and related liquids.

Attracting companies for projects such as a petrochemical plant to process natural gas liquids (NGLs) requires knowing what regulations, permitting processes and tax policies will look like, speakers told the lawmakers.

“What we really need now is to find, in the region, demand for these NGLs, rather than export them elsewhere,” said Greg Floerke, an executive vice president at gas processor MarkWest. “There's a lot of value that we're losing by not having the plants that can take advantage of that.”

David Conti is the assistant business editor at the Tribune-Review. Reach him at 412-388-5802 or dconti@tribweb.com.

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