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Fish commission to lease waterways for gas drilling

| Sunday, July 10, 2011

The Pennsylvania Fish & Boat Commission said it plans to lease portions of its 43,000 acres of waterways for natural gas exploration to generate money to rebuild more than a dozen dams that are in danger of collapse.

Donegal Lake, a popular trout-fishing area in Donegal Township, will be the first commission property in Southwestern Pennsylvania to be drilled for Marcellus shale natural gas, according to commission spokesman Eric Levis.

The commission estimates it will need $78 million to repair the 16 dams, which are classified as high risk because they cannot hold 50 percent of the maximum precipitation that a region could receive.

Six of the dams are in Butler, Washington, Westmoreland, Fayette and Somerset counties. The commission estimates it will cost $26 million to repair them.

Levis said 14,000 acres â€' or about one-third â€' of the commission's waterways are potential drilling sites. It has not yet leased property in Clinton County for drilling and is seeking proposals for a Lycoming County site.

The agency needs a revenue source because the commission receives no state funds, Levis said. It is supported by license fees and some federal money. The agency's $51 million annual budget has remained stagnant for the past three fiscal years, according to the state Budget Office. As a result, the commission said it faces a $36 million shortfall for the dam repairs.

Levis said the commission will sell water to the energy companies for use in drilling operations.

He would not reveal how much revenue the commission expects to earn or how much gas might lay beneath Donegal Lake. The state considers the information proprietary because it is subject to negotiations with drilling companies, he said.

"We're not releasing those numbers," Levis said. "We're involved in multiple negotiations, and we want the best deal."

Though the commission hasn't formally approved plans by Williams Production Appalachia to begin drilling at the 90-acre Donegal Lake site, the Tulsa-based energy company has a lease with the commission and is building a drilling pad on private property near the lake.

Commission directors must vote to allow drilling before any work can begin, Levis said. That could happen this fall, he said.

Williams plans to drill to 9,000 feet beneath the lake to extract gas. A permit application with the state Department of Environmental Protection indicates Williams plans to drill three to 10 wells. Drilling could start next year, Swan said.

To move the gas to market, a 16.5-mile pipeline will be built between Indian Creek in Fayette County and Cook Township in Westmoreland. The pipeline will connect to a Texas Eastern line in the village of Mill Run, Fayette, and will transport gas extracted from Donegal Lake and other wells along the route.

Kelly Swan, a spokesman for Williams, said the Securities and Exchange Commission has barred company officials from publicly discussing the size of the Donegal Lake gas deposits because the company is in the process of offering a public stock sale.

"We believe it's there. That's why we applied for a drilling permit," Swan said. "We can't get into specifics until you discover specific amounts as you begin to drill."

Williams already has a number of drilling sites in Derry, Cook, Donegal and Unity townships in Westmoreland County, according to real estate records.

Environmental concerns

Environmental and conservation groups are concerned about the potential impact of drilling and the pipeline on watersheds.

"The wells will be off a scenic highway (Route 711) and near a lake and trout stream," said Beverly Braverman, director of the Mountain Watershed Association in Indian Head, Fayette County. The nonprofit organization works to clean up streams in the Indian Creek Watershed that have been contaminated by discharge from abandoned coal mines.

The Indian Creek Watershed includes about 21 streams in Fayette and Westmoreland. The creek originates in Forbes State Forest and flows west along the Pennsylvania Turnpike and into Mill Run, then drains into the Youghiogheny River at Connellsville.

According to the permit filed with the DEP, the pipeline will involve 71 crossings into wetlands and 41 stream crossings.

Swan said crews will drill under streams to minimize damage in "sensitive areas." Company inspectors will be stationed along the pipeline daily to ensure that construction adheres to state DEP requirements, he said.

Williams will implement a stream enhancement project that will include planting 114 trees and 105 shrubs to compensate for any environmental damage, he said.

Conservation groups have no legal avenue to block drilling because property owners don't own the mineral rights, said Veronica Coptis, a community organizer for Braverman's group.

"There's really no way to stop this from happening," Coptis said. "The Mountain Watershed is unhappy with the pipeline because it is going through a watershed area."

Gas lines excavation can disrupt the flow of streams and the life cycles of animals that inhabit watersheds, environmentalists contend. Gas wells can impact water quality and the amount of water in streams. Construction of access roads can disrupt animal and plant life.

Drilling has raised concerns about bromides and other chemicals used in the fracking process. Bromide is a salt that reacts with chlorine, which is used to treat drinking water. It creates Trihalomethanes, which can be harmful to humans if consumed in large quantities.

Dave Sewak of Somerset County, who works for Trout Unlimited, an environmental group that advocates for the protection of fishing streams and watersheds, said drilling near fishing areas is under way in Bradford, Washington and Greene counties.

"A lot of development is occurring around mountain streams," Sewak said.

Driven by geology

The watershed issue is not unique to Westmoreland and Fayette counties.

There are 17 watersheds in Washington County and gas wells have been drilled near all of them, said Jennifer Halchak, a watershed specialist for the Washington County Conservation District. The largest is the Chartiers Creek Watershed, which flows into Allegheny County in the Upper St. Clair and South Fayette areas.

Drilling is under way near streams in Amwell, Morris, Hopewell, Mt. Pleasant and Independence, she said.

While the Fish & Boat Commission said it has not commissioned a study on the potential impact on its fishing areas, Sewak said improper drilling site construction could cause erosion and sediment damage. The pads where the drills are based, storage areas, roads and compression stations also can erode the soil, he said.

Drilling pads range in size from 3 to 5 acres, according to the Penn State Cooperative Extension Service.

"Continued erosion will suffocate stoneflies, mayfliesand caddis (fly) eggs," Sewak added. The insects at times are the main food source for trout.

Attorney Ed Bilik of Greensburg, who operates Western Pennsylvania Gas Leasing Consultants LLC, negotiated deals to place the pipeline with several property owners along Route 711. He said it could be in operation by the fall of 2013.

"The whole business is driven by geology, geology, geology," Bilik said.

He said the pipeline is the key to development in the area for both the natural gas industry and local businesses.

"Drilling takes place wherever they can get gas to market," Bilik said. "The pipeline will be a big boom for leasing. Then the question is once the exploratory wells are drug, how well will they do. What will follow will be a lot of drilling.

"If people want to get good value for their gas rights, they have to make way for the pipeline. This is big money," he said. "Everybody and their brother is trying to take advantage of landowners."

Additional Information:

At a glance

Pennsylvania Fish & Boat Commission properties above Marcellus shale deposits

Allegheny County

• Deer Creek

• Kilbuck Access

• Glenshaw Access

Armstrong County

• Rosston

• Cowanshannock Creek

Fayette County

• Dunlap Creek

• East Fredericktown

• Greenlick Run Lake

• Virgin Run Lake

Indiana County

• Hemlock Lake

Westmoreland County

• Donegal Lake

Additional Information:

Repair costs

Cost to repair high-risk dams in Southwestern Pennsylvania

Westmoreland County

• Donegal • $4.2 million

Washington County

• Canonsburg • $3.5 million

• Dutch Fork • $5.4 million

Butler

• Glade Run • $4 million

Fayette

• Virgin Run • $4.2 million

Somerset

• Lake Somerset • $4.7 million

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