Friday, August 03, 2012
YOUNGSTOWN, Ohio -- The Buckeye Water District in Wellsville was enjoying a
seven-month windfall of sales to the tune of $24,000 per month by selling water
to energy giant Chesapeake Energy Corp. at $15 per thousand gallons. Then in
May, Chesapeake approached the Buckeye board of directors with an ultimatum:
either lower the price to $5 per thousand gallons, or lose the business for
good.
“The board told them ‘No,’ ” says Buckeye Water District manager Al
DeAngelis. “We charge our residential customers $10.17 per thousand. It wouldn’t
have been fair to them.”
The board researched the prices other water districts were commanding in
other regions, DeAngelis says, especially in southwestern New York and northern
Pennsylvania, where they were getting $16 per thousand gallons. “We were the
first guys on the block with an agreement here,” he says.
Water has become a precious, much sought commodity for energy companies as
oil and gas exploration accelerates in the Utica shale in eastern Ohio. Giant
energy companies such as Chesapeake require between three million and six
million gallons of water to hydraulically fracture a single well.
The process involves injecting water, sand and a smattering of chemicals
under pressure into the well so it can crack open tight shale formations and
release natural or wet gas trapped for millions of years.
Since the Buckeye Water District stopped selling water to Chesapeake,
DeAngelis says, the company has opted to secure contracts with private owners of
lakes and ponds while also procuring water at no cost from streams and
creeks.
“They’re running a lot of trucks,” DeAngelis observes. “Where exactly they’re
getting their water from, I don’t know.”
The practice has engendered new concerns from opponents of hydraulic
fracturing, who are worried that big corporations are not only poisoning water
supplies with chemicals, but also depleting the resource.
Youngstown resident Lynn Anderson was dismayed to learn that a brine truck
could simply pull up to a city fire hydrant, hook its hose to the coupling, and
fill its tank full of city water – water that would be used for local oil and
gas operations.
She was even more troubled to learn that the city had no mechanism in place
to monitor just how much water was being drawn from the hydrant. For all the
water department knew, Anderson says, these companies could be helping
themselves to thousands of gallons more than they’re entitled to.
“The water department said that they trusted them,” Anderson says, “that they
didn’t monitor it.”
Anderson, an environmental activist who lives near Mill Creek Park on the
west side of Youngstown, believes the oil and gas industry poses a serious
threat to the availability of clean water, especially during periods of dry
weather and drought.
Not only are these companies polluting water supplies through hydraulic
fracturing, she argues, they’re also consuming vast quantities of water that, as
of now, is not being recycled through the ecosystem.
“There’s the danger of these companies sucking water out of our streams,
lakes and creeks,” she says. “We’ve got to be vigilant and protect our
water.”
Citizen activists such as Anderson fear these companies – both large and
small – pose a long-term risk to the environment and are putting pressure on
communities to sell them water.
One of Anderson’s friends and another woman in early July witnessed a brine
truck employed by Bocor Holdings LLC of Canton filling up from a hydrant at the
corner of McGuffey Road and state Route 616. The two, out scouting the McGuffey
Wildlife Preserve, were disturbed when they also found out that a natural gas
well was being drilled toward the back of that land.
Anderson and the others contacted the Youngstown Water Department, inquired
about the city’s contracts with oil and gas companies and requested that meters
be placed on the hydrants being used so that the city could better monitor water
consumption.
“By Friday, July 13, the department said that those hydrants would have
meters on them,” Anderson says. “We’re interested in seeing the outcome of
it.”
According to records, Youngstown this year entered into two contracts with
oil and gas companies allowing them to use city water directly from two
hydrants. Bocor was awarded a permit to use 80,000 gallons from the McGuffey
hydrant from June 20 through Aug. 20. Bocor provided a one-time payment of
$481.80, documents state.
Another company, Everflow Eastern of Canfield, was granted a permit to draw
4,000 gallons of water from a hydrant at 5611 Gilbert Drive in January. It paid
$136.00 for the water, records show.
These charges reflect standard bulk rates that the city bills industrial
users, and these two companies have contracted with the city for decades, says
Gene Leson, chief engineer at the city water department.
“We sell bulk water to a multiple of companies,” Leson relates. “If it isn’t
available, we sell a fire hydrant permit.” A homeowner who wants to fill a
swimming pool, for example, can obtain a permit, he says.
He says that Bocor and Everflow Eastern Partners L.P. have been doing
business with the city for decades, but in light of the recent concerns about
accountability, Leson thought it prudent to monitor the hydrants. “Now, it’s
being metered,” he says. “We read the meter on the hydrant and then process a
bill.”
Anderson and 16 others have signed a petition and have called on Youngstown
Mayor Chuck Sammarone to terminate sales of city drinking water to oil and gas
companies since “the pollutants they add are not able to be processed out by
water treatment plants and this water is rendered ‘unrecoverable,’ ” the
petition reads.
Some of the larger oil and gas companies are beginning to use new fracking
techniques such as foam or propane, which reduces the quantity of water needed
to hydraulically fracture a well. Moreover, Chesapeake has started to recycle
water at some of its well sites, and operates a recycling station in Carroll
County.
Still, most of the wastewater is disposed of in injection wells scattered
across Ohio. Once the water is “stored,” it cannot be recovered.
But most water suppliers believe there’s plenty available to serve energy
companies and residents, even during dry spells.
“We’re not concerned about drought or the impact of the industry,” says Tom
Holloway, director of the Mahoning Valley Sanitary District. MVSD supplies
treated water to the cities of Youngstown and Niles and the village of McDonald
from the Meander Reservoir. The reservoir level is down just more than seven
inches, not nearly enough to constitute concern.
MVSD is yet to secure an agreement with an energy company, but its board was
to hear a proposal from a representative of Consol Energy Corp. July 27,
Holloway reports. “It’s a matter of convenience for a lot of these drillers,” he
says, many of which want to purchase water from nearby sources.
Consol is drilling a well in Ellsworth Township in Mahoning County and
another in Vienna Township in Trumbull County.
Other water districts are taking time to pause before allowing the sale of
water to oil and gas drillers.
One of these districts is the Muskingum Watershed Conservancy, which includes
several sources in eastern Ohio such as Tappan Lake, Atwood Lake, Clendening
Reservoir and Leesville Reservoir.
The watershed district has conducted one water sale to Gulfport Energy, but
has placed other potential sales on hold until the U.S. Geological Survey
finishes a study on how much excess water is available for use.
Others are welcoming the prospect of more business, and are taking measures
to prepare for what could be a major lift for water sales in the region.
The Columbiana County Port Authority recently entered into an agreement with
Aqua Terra Asset Management LLC, which would allow the company to act as an
agent to sell water treated by the city of East Liverpool to energy companies at
$9 per thousand gallons.
Under the agreement, East Liverpool would collect $6.46, the port authority,
$1.50, and Aqua Terra $1. Drivers are able to fill their trucks at a hydrant on
property where the port authority’s offices sit.
The city has an excess capacity of two million gallons per year it can sell.
Should additional supply be necessary, East Liverpool could also sell untreated
water directly from the Ohio River at $5 per thousand gallons, similar to an
agreement the city of Steubenville has in place.
The city of Warren, also expecting to capitalize from the sale of its water
to energy companies, is making preparations to accommodate the emerging shale
industry.
“We’ve been approached from a couple of companies at this point,” reports
Robert Davis, director of utility services for the city of Warren. “Right now,
we don’t have any contracts.”
Anticipating what could become a long-term, vibrant source of business over
the next several years, the city of Warren is slated to invest more than
$100,000 toward expanding its fill stations at its water filtration plant in
Cortland.
The improvements would include infrastructure upgrades such as road widening,
and the addition of new fill stations capable of handling multiple brine
trucks.
“We do have some in use,” Davis reports. “So we’re ready to sell when they’re
ready to buy.”
Rates would hover between $7 and $10 per thousand gallons, Davis says, but
any rate would also depend on just how much water is being used. “We think in
the next couple of months, we could solidify some contracts.”
Business derived from the oil and gas industry could command as much as
$300,000 a year, Davis says.
The filtration plant processes about 13 million gallons a day, and Davis
expects to use an additional one million for oil and gas drillers. The plant,
however, has the capacity to process 22.8 million per day, so there is excess
capacity.
Warren draws its water from Mosquito Creek Reservoir, and Davis says, it is
monitoring drought conditions. “Right now, we’re in a drought watch. We’re about
3 feet, 4 inches below the summer pool.”
Should the water level fall another three to four feet, a drought warning
would be issued, Davis reports. “Right now we’re OK, but we do need some
rain.”
Keith Fuller, director of corporate development at Chesapeake, says his
company takes into consideration low water levels before submitting applications
to the Ohio Department of Natural Resources for withdrawal permits. Chesapeake
hauls water by truck to well sites, runs pipelines directly to the well from
freshwater sources, and purchases water from municipalities, he says.
“Intervals of low river flows are an annual reality,” Fuller says.
“Chesapeake performs impact analyses prior to applying for permits, and we
employ multiple monitoring systems to confirm that water is withdrawn only from
sites where flow rates remain above their permitted minimums.”
Fuller says these restrictions are often in place during the summer months,
when water levels are low. As such, Chesapeake draws most of its water during
high-flow months, and then stores that water for future use. “Preparations in
expectation of these restrictions ensure Chesapeake’s operations aren’t affected
and that there are no impacts on the waterways,” Fuller says.
According to data provided by ODNR, Ohio consumes 11.7 billion gallons of
water per day, the vast majority used by industry, especially electric power
plants.
Under Ohio law, any industry using 100,000 gallons per day must register with
ODNR. Current demand is not adversely affecting the state’s water supplies, says
ODNR spokeswoman Heidi Hetzel-Evans.
“Currently, there have been no new water withdrawal registrations by oil and
gas operators,” Hetzel-Evans says. Provisions in SB 315, the new law signed by
Gov. John Kasich that places new regulations on drilling activity, now requires
operators to provide their water source, rate and flow in the permitting
process, she says.
Still, these measures offer little consolation to concerned citizens such as
Anderson, who have widely complained that government isn’t doing enough to
protect its most valuable resources.
“The state has cut back on anything that protects the environment, but
they’ve ramped up anything that harvests timber or oil and gas in the state
parks,” Anderson says. “How logical is that? To me, it’s frightening.”
