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Seismic surveys, antique Pennsylvania infrastructure and the 'big fight' on the horizon

March 19, 2014 - Ben Klein
From the Pittsburgh Post-Gazette, AP

For two days, trucks wandered through the streets of Aliquippa, thumping the ground with heavy metal plates and sending shockwaves deep into the earth to gauge how much natural gas lies beneath.

That part of the seismic survey didn’t take long, but preparations for it — public hearings and panicked calls to the police — spanned more than a year.

The advance battle trekked through the courts, too.

Seitel Inc., a company hired by oil and gas companies to create a 3D map of the area’s geology, filed two lawsuits against half a dozen townships in Beaver County and was the target of another filed by the two local water authorities.

The legal vibrations are starting to calm. But to some extent, the shockwave that has engulfed southern Beaver County is regarded by residents and township officials as the first line of offense against oil and gas development.

“I’m not for drilling,” said Dwan Walker, Aliquippa’s mayor.

The city tried to keep out Seitel but has since developed a good working relationship with the company as the result of a settlement to a lawsuit filed by Aliquippa’s water authority in October.

“Progress is going to go on,” Mr. Walker said. “I’m just concerned about what’s in it for us? They’re taking pictures of all this gas and we reap no benefits. Individuals will stand to make money, but the city as a whole ….”

The lay of the land

Seitel collects data by placing geophones — breadbox-sized devices attached to a tangle of wires — 220 feet from one another and measuring the vibrations coming from small, underground explosions or from the vibroseis trucks that pound the ground.

Communities involved in the conflict with the company — Hopewell, Shippingport, Greene, Center and Potter — were worried about the impact of the vibrations on the region’s older homes and public infrastructure.

In Aliquippa, Mr. Walker’s immediate concern is the city’s old infrastructure — water pipelines that date to the 1800s. Longer term, Mr. Walker is looking at how to usher the faded industrial powerhouse through a new industrial boom. The expectation that Royal Dutch Shell will build a sprawling petrochemical complex in nearby Potter reverberates throughout conversations about the area’s future.

“The good thing is, the cracker plant’s coming,” he said. “The bad thing is, the cracker plant’s coming.”

It’s still unclear where or if operators might drill in the townships covered by Seitel’s survey.

Range Resources, a Texas company that has been the most active in leasing oil and gas rights in that region, estimates most of Beaver County falls into the richest gas pocket of the Utica Shale. It also holds promise for good Marcellus Shale and Upper Devonian wells, so to the extent that all three layers could be developed, the region is among the richest spots in Pennsylvania, Range’s estimates show.

The company has leased more than 9,000 acres in Hanover, Independence and Raccoon townships.

Range spokesman Matt Pitzarella said he’s unaware that Seitel has been having issues with the townships, even though Range is a client of the company.

“It’s not uncommon for townships that are newly hosting development to have some ups and downs as they iron out their process and better understand the industry,” Mr. Pitzarella said. “We enjoy very positive working relationships in the townships where we work and those relationships have strengthened over the years.”

Oklahoma-based Chesapeake Energy Corp., which has also leased acreage in the area, declined to comment.

Legal battles

Seitel started notifying residents of its intention to survey in late 2012. It got 1,900 residents across sections of Beaver and Allegheny counties to allow the drilling of shallow holes on their properties where the company would set off explosives. The project spans 16 municipalities and 157 square miles.

At that time, the townships that ended up fighting the company didn’t have ordinances to guide seismic development.

“When [Seitel] approached those municipalities, they all started to say you have to get a permit under a yet-to-be-adopted ordinance,” said Shawn Gallagher, an attorney with Buchanan Ingersoll & Rooney PC who represents Seitel.

Aliquippa was among the first to adopt such an ordinance. Mr. Walker admits the document was designed to keep out seismic activity. Hopewell, Potter and others adopted nearly identical ordinances.

“What we were kind of hoping is we could kind of keep them away from here,” said Rex Trimm, an Aliquippa resident who has been among the most vocal critics of Seitel.

“In Aliquippa, we all decided with city council that we didn’t like this idea,” Mr. Trimm said. “Our infrastructure is too old for it — if they bring a thumper truck around, it would crack foundation and break water pipes.”

The ordinances included conditions that Commonwealth Court Judge Keith Quigley would later call “onerous and arbitrary.”

They imposed an application fee of $1 for each acre of land that would be surveyed. For Hopewell and Potter townships alone, that would have amounted to $13,500. They also wanted Seitel to inspect all township-owned structures, buildings, wastewater treatment facilities and pump stations before and after the survey activities.

“Ever since we first approached these municipalities, it seems like it has been a never ending parade of new obstacles,” Mr. Gallagher said.

In August, Seitel sued Hopewell and Potter townships, arguing that not only were the ordinances unnecessarily burdensome but that the municipalities were trying to change conditions on the fly in order to delay Seitel’s work. The lawsuit was filed in Commonwealth Court in Harrisburg, partly because the seismic ordinance was related to oil and gas activity that fell under Act 13, the state’s oil and gas law.

In September, a Commonwealth Court judge agreed with Seitel.

“After that first hearing, Hopewell repealed their ordinance,” Mr. Gallagher said. “They started posting on their website saying there’s no court order.”

Hopewell decided that if the only reason the case was heard in Harrisburg was because its ordinance was governed by Act 13, then it could eliminate the ordinance and no longer be bound by the judge’s decision.

In October, Seitel sued Shippingport, Greene, and Center townships, arguing that without enacting their own ordinances, they were in effect trying to enforce Hopewell’s by writing it into contracts with Seitel.

The Harrisburg judge again sided with Seitel, but a Commonwealth Court panel decided on March 7 that this case didn’t belong in Harrisburg. Because the Pennsylvania Supreme Court invalidated the parts of Act 13 that deal with local ordinances, Harrisburg no longer had jurisdiction, the panel found.

Back in Beaver County, Seitel began placing its geophones along state and local roads in December and Hopewell paid for a series of robocalls telling residents that Seitel never got the right to use public roads.

Residents in several townships began calling the police to report that unknown boxes with wires were discovered on their lawns, triggering additional debates of where a public right-of-way begins and ends. South Heights Council President Bob Schmetzer went around collecting as many geophones as he could find and turned them into the police department as evidence of trespassing.

In total, Seitel estimates about 34 geophones were never recovered. Each costs about $1,300, but the real value is in the data they couldn’t record.

“There’s $5,000-a-day worth of data that’s completely unrecoverable,” Mr. Gallagher said.

Seitel places the value of its entire data library at $197 million, of which $119 million is from unconventional 3D surveys such as this one. As of a month ago, it had surveyed 1,100 square miles in the Marcellus and Utica formations, with another 250 square miles under way, Seitel’s public records show.

The company’s legal conflicts in Beaver County reached a fevered pitch when, on Feb. 4, Judge Quigley enjoined Hopewell from telling residents to “remove, destroy, or otherwise prohibit [Seitel] from placing its geophones in the rights-of-way” and from “otherwise arbitrarily and unreasonably interfering by any means whatsoever with petitioner’s seismic operations.”

Learning from Aliquippa

Hopewell officials took that decision as a gag order. From then on, township residents started showing up at meetings in Aliquippa, trying to learn about Seitel’s operations and plans for the region.

Aliquippa was spared a lawsuit because it chose to work with Seitel, Mr. Gallagher said. In fact, many of the municipalities involved in the current survey had ordinances similar to those in Hopewell, Potter and Aliquippa. But Seitel was able to work with all but five to limit some restrictions while abiding by others.

Mr. Walker saw it as a way to remain in control.

“We fought them,” the Aliquippa mayor said. “We argued, disagreed. They could have easily added us to the lawsuit and we would have had no recourse. They would have had carte blanche in the city. But [instead] they walked step by step with us.”

The township stipulated that no vibrational testing can take place above its pipelines and in areas with particularly sensitive structures. The parties whittled down a list of 500 possible locations by half. Seitel added Aliquippa to its bond, increasing its insurance coverage.

When the time came to send out the trucks, a code enforcement officer and a police officer — paid for by Seitel — traveled along with the trucks as they went through Aliquippa and Center, to monitor and catalogue any potential damage.

“They’ve come through and we don’t have any problems,” said Terrance McConnell, general manager of the Aliquippa water authority.

But both Mr. McConnell and Mr. Walker are already dreading will come next.

“Drilling — that’s the big fight,” Mr. Walker said. “That’s going to come.”

 
 

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