Episode 3 Transcript

Episode 3:
The Promises and Perils of Fracking
Introduction

Hi this is Matt Sisto and I am Shane Kiefer.

[Matt]: For our American Dream’s piece Shane and I will be talking about the Marcellus shale industry. Marcellus shale is a huge deposit of marine sedimentary rock that spans the states of New York, Pennsylvania, Ohio and Western Virginia. In an interview that I had with Professor Carl Kirby in the geology department, he said the importance of the shale comes from the fact that it is a marine sediment. This is important because with the right pressure and heat. The marine organisms will turn into oil or natural gas. This is why we care about it. Pennsylvania has started drilling the natural gas that is lodged in the shale. They use a technique called hydrofracking. Hydrofracking has been found as a way that is most effective at releasing natural gas from the rock. The technique uses millions of gallons of water that are shot down a borehole to break up the rock. Additives like silica and other chemicals are added to make the process better. For an example silica is added to prop open the gaps that the fracking causes and allows the natural gas to flow out. Other additives like B315 as the industry calls it is a friction reducer and is a mixture of chemicals. In actuality 99.34466 % of the fracking fluid is water and silica. This technique has been the point of controversy between activists and as another professor called them fractivists. To explore this issue in depth we decided to hit the dusty trail and travel up to Bradford County to talk with the locals.

(Music)

Bradford county trip:

[Shane]: As a resource to use for the project, I contacted Jim Souto the Vice President at People’s State bank in Bradford County. He came to Bucknell several months ago and gave a lecture for some management classes here on campus and I heard about this through a network of my friends and I reached out to him via email and he was glad to meet us. So we decided to set up a meeting with him up in Bradford County where he has his occupation and works.

So on Sunday, November 24th, we travel up to meet Jim Souto was able to discuss some of the positive and negative aspects of the Marcellus Shale industry, especially from an economic perspective and since he is a banker in the banking industry and works very heavily with the Marcellus shale industries and also lives in the area as well so he has very much first hand prospective on what’s going on up there. Mr. Souto took us on a tour of a drilling site and provided us with valuable information for the podcast as well.

Bradford County currently produces 1/4 of the entire output from the Marcellus Shale industry in Pennsylvania. 97% of the county is leased. In Bradford county, drilling site drill 7000 feet down and can go at a radius of 7000 feet horizontally. On the drive, Mr. Souto took us all over the county and even outside the county in some place to show us the impacts that the industry has created in the area. Bradford County specifically has 23% of the Marcellus shale gas in PA as we have talk about. In terms of the actual process in how the drill sites are set up, the companies drill down approximately 7000 feet and then horizontally 7000 feet as well. And that’s kind of what separates this industry from the traditional drilling industry with the horizontal drilling the separator there. Mr. Souto also established that there is approximately 1000 drilled wells in Bradford County and currently 800 of those are producing the Marcellus shale natural gas.

In terms of the industry as a whole, the county, the area around it, the community, and the environment are being impacted definitely. Obviously what we will see through out the podcast in both positive and negatives ways but specifically there is no way, one of the people we interviewed said, there is almost no way that they can live in the county without having seen some type of impact from this specific industry coming in approximately 2007, 2008. The duration of our journey on Sunday the 24th we encountered various ways that the industry has impacted the area and we decided to break this into various different acts and we will be looking specifically at one main focus in each act.

Act 1 we will be focusing on the impact the industry has had on the individual. Act 2 will be focusing on the impact that the industry has had on the community as a whole as well as the environment in the area surrounding the industry and Act 3 we will be focusing on the impact that the Marcellus shale industry has had on the industry workers whether they be local workers that are originally from the area or they are workers coming in from other parts of the country. 

Act 1: Impact on the individual.

[Shane]: For our first act today we wanted to take a look at how the industry has affected the individual especially individuals who are located in the areas surrounding and directly in the Marcellus Shale industry. The industry came in around 2007, 2008 and they started drilling especially obviously we are focusing on Bradford county today, but this is happened in a lot of northeastern Pennsylvania and even western Pennsylvania as well. So one of the main things that is coming out, I looking at the positive sides of the industry has had on the area just in general and I think that Matt here is going to take a look at some of the negative impacts that is been seen over the duration of the time so one I want to pros to start out talking about is just the money that’s coming from the industry is going to be put back into the individuals pocket and you know mainly that money is coming from the in the royalties that are being gained from the drilling and the production of the well and the natural gas.

Jim Souto talk to us as we were driving and he talked to his little bit about how royalties work and I believe he mentioned was that a typical percentage that the individual can see after they leased their land to the company is producing the natural gas on their property. Those individuals can see a return of approximately between 12% and 20%. So in terms of the royalties just on average the 12% to 20% would be a general percentage to be seen. In terms of the royalties themselves there will be approximately $1000 per a well would be seen per year usually and so for instance if say a landowner has enough landed that the company can put six wells on their property then just on average the landowner would see about $6000 per year.

So in terms of the royalties just on average the 12% to 20% would be a general percentage to be seen. In terms of the royalties themselves there will be approximately $1000 per a well would be seen per year usually and so for instance if say a landowner has enough landed that the company can put six wells on their property then just on average the landowner would see about $6000 per year. And at the onset of the leasing process the landowner usually signing a signing bonus and they would see $10,000 an acre in their signing bonus. For an example if the landowner has 20 acres they might be seeing a $200,000 signing bonus.

This is where a lot of the money is coming from and this is really helping out local landowners. As we spoke about 97% of the land is leased in Bradford County and this is true for a lot of the areas that the Marcellus shale has impacted so this is really improving American dreams for just the people themselves because they’re getting a lot of money from this and that’s now enabling them to go about and do much more with their lives.

[Matt]: And kind was a rebuttal to that, I talked with Professor Wooden in the political science department and she doing research with activist and community leaders in these small rural drilling towns and she has found that a lot of these contracts are quickly written because the drill companies are in a rush to get as much land leased under them as possible so they can get a chokehold over what they can drill or are so there quickly written contracts they usually the landlord sees such large monetary incentive in the beginning and they don’t really read over the contract. So a lot of these people are finding that they are responsible for a lot of the environmental cleanup and all the other externalities that come with drilling because they didn’t fully read their contracts.

There are now community groups and organization that are now working with landowners that are trying to get them out of these poorly written contracts and unfair contracts by some people’s standards. There are certain impacts on the individuals towards the American dream. The Marcellus shale is good for certain people, everyone, like Shane said earlier it’s effecting everyone, in the Bradford County area especially, there is no way it is not effecting you. Either you are gaining a great sum of money from signing in leasing land in royalties or you’re troubled with your contract and have to pay for all of these environmental fees and other permitting fees and other things that are you are stuck with your contact.

[Shane]: Yeah I think you know one of the things that we really saw especially home we sat down with Mr. Souto as he is the vice president chief executive officer of the People’s State Bank in Bradford County, he discussed how especially from his point of view he was seeing majority of his customers coming in who have been to pay off their mortgages by age 30 this is obviously in the younger generations of the people who buy homes in the area but I noticed over the past six or seven years just with the industry coming in people who have had mortgages are now able to pay them off and they’re debt-free.

With more people now being able to pay off the mortgages on their homes and now be out of debt they’re able to suddenly be actually able to own their own homes and achieve that American dream that’s the traditional dream of homeownership which is usually synonymous with success independence and each evening at the American dream which we talked about her and affection I was talking to Prof. wouldn’t interview and she also said a lot of these independence and the achievement of the American dream, which we talked about.

[Matt]: Going off that Shane was talking to Prof. Wooden in her interview and she also said a lot of these homeowners have more disposable income which is allowing them to buy even second homes versus just one and they are able pay off that home as well and so you know using a very large increase in homeownership and that you know that American dream like you said. Professor Wooden also talked about how she owned a second piece of property also up in Upstate New York where they are deciding whether to drill for the Marcellus shale or not and her town is in the in the battle of deciding whether they should allow our not allow to drill for the Marcellus shale natural gas.

[Shane]: Yeah and that’s it that’s a perfect example really of people branching out and having capability is now being able to own that second-home though that extra piece property and I don’t want impossible without possibly just need the income coming in from the industry. The bank in general, I believe he spoke to us just about the bank has profited he also mentioned in a one of the main tenets of the bank’s success is just the success of the people who are clients of the bank and that’s really how the bank functioning and that is how it’s being successful. They are seeing average annual growth rates just in terms of, say for instance I like using examples but say someone had $1000 in the bank other seeing out on average in that bank specifically 30% Annual interest rate interest increase just based on the profits that have come from the year and so that would put them from $1000-$1300 and obviously that is multiplied when someone also has a lot more money so just the banks themselves being successful people themselves being successful.

I think just from my perspective I was from the pro side of this argument a lot of what were seeing from the financial side of things has been really beneficial to the people in the area I know one of the people we spoke with Farmer Fred he had a agricultural little shop where he sold his products and produce and his quote was “If someone from outside the county came in during the recession in 2008 when it was sweeping across the country, they wouldn’t known based on what they saw. Times have been prosperous and a lot of people are doing well because of Marcellus shale.” You’re really seeing a lot of benefits from industry coming in so I think there’s definitely are some negative sides that as well but I think as a whole you’re really seeing a lot of benefits and that’s really all I think that’s just enabling people’s American dreams along the way. Not only from an individual level, but also the people that are employed at the bank all those people have benefited.

[Matt]: Conversely to that a lot with, since I am looking at the negatives of the Marcellus shale you see the property value after the resources have been extracted usually causes great decrease in that value. Since the Marcellus shale drilling in Bradford county is so prevalent right now, he hasn’t see it yet in the area but he can assume that like any boom and bust industry, which is what Marcellus shale is. Once the resources are gone all the money will leave with it so they have been speculations that it will last hundred years or that it will last 15 years, so it’s just really a matter of how long this boom lasts. Another kind of negative this is the prices for rents in these towns a lot of these companies brought in drillers from Oklahoma and Texas just because local of the workers do not know how to work this equipment yet and they wanted to start drilling immediately, so drilling companies would pay a ton of money for these rents for renting apartments or homes and landlords saw an increase in rent prices.

One story is where old lady renting this one house for 20 years and the landlord kicked her out because he could increase the rent by $1500 and the workers would have no problem renting it. Another probably came into is a lot of the activists and people who are really fighting against the hole drilling in our counties are talking these drillers. So in our trip, Jim and I went into this one diner. Shane had headed over to Farmer Fred’s, and we saw drilling trucks in the parking lot of the diner so we thought hey lets want to try and talk to them see if they have any insight on the industry. So when we first walked in no one came up and talked to us. So we just went around, Jim being a local from town, and very out going went up to people and started talking to people, just trying to make it more personal. And then we got to this table of drillers and who clearly did not want us to be there. I explained to them that I was from Bucknell and that I was doing a project on the Marcellus Shale. They were giving us short answers to our brief questions, we didn’t even really ask any questions. And then finally after about a minute one of the large drillers said to us “I think the best advice for you is to leave this restaurant right now.” And so Jim and I quickly packed up our stuff and just scooted out of there. We said enjoy your meal, we didn’t mean to interrupt your meals so this is another thing a lot of the drillers are on a tight leash in terms of their company.

If they get caught fighting in a bar or anything in town they are immediately fired there is no second chance really and so big problem is that they basically stick among themselves and they basically block out everyone else because their job is on the line and this is one of the cons to individual. A lot of these drillers don’t get to experience, they are a tight knit group amongst themselves and are not really a part of the social fabric of the community.

Act 2: Impact on the Community and Environment

[Shane]: So in the second act we want to be explored just how the industry has affected the community itself and the businesses in the community and the environment and any environmental issues, are there any evaluations I think that’s something that we are going to see you so I guess to start off, Matt, would you like to talk about some of the things that you saw that might be a negative from the industry coming in, impacting the environment. I know because that’s for a lot of people this is their main problem with the industry, the Marcellus shale industry is the impacts that it is having on the environment.

[Matt]: That’s very true Shane, like you said everyone is concerned with the environmental impacts. Hydrofracking uses a ton of water. According to Farmer Fred, “The biggest concern for me, as a farmer is the water quality. In agriculture that is the biggest thing. If you don’t have good water, it makes it impossible to farm. Cattle need good water to drink and the fields need it to have quality crops.” Usually a well uses about 3 to 5 million gallons of freshwater per a well and granted they are able to recycle a lot of it but since in Bradford County they take their pumping stations that are tied to the Susquehanna River and they’re pumping water directly out of the river and then putting those into holding ponds, which they then take the water out of there and they go pump into the ground so it’s a lot of water is what it said earlier you going to be getting the introduction about 87% of the fluid that is going down a borehole is water and this under pressure this is what’s fracturing the rock a lot of it is the degradation of the environment comes from the flattening of the hillsides that are basically making these room large drilling platforms you need about 3 acres of flat compacted land on to support these large drilling facilities with all their support stuff the generators, gasoline, and diesel that they need to run the generator stuff and you can see all the roads that they put in also they cut, clear cut all these stripes of land to run pipelines and the also roads I think they just spent something like $300 million on a new interstate pipeline that will help deliver the gas from Bradford county out to the East Coast and also to the Great Lakes region.

Another impact to the environment is just you know general ugliness if you will, of the drilling platforms because they are, they’re pretty tall they’re about 6, 7 stories tall and they are going 24/7, 365 day a year. There’s no real break in the drilling process and they usually drill on each pad usually about 3 to 6 wells on each pad and on a property there could be multiple pads, so it takes multiple months for them to drill on certain properties. And if you’re neighbor you’re not getting any royalties or licensing fees from the drilling platform, but you’re having to deal with all this noise pollution and maybe even possible water pollution, from his drilling for Marcellus shale so 

[Shane]: Obviously those are some valid points that you bring up about the environmental impacts of the effects that this is had on the area itself holding a lot of these communities where the Marcellus shale industry has come in, but I think some of these effects can be mitigated by just simple explanation. I think a lot of it is people don’t really understand the full spectrum of the argument, specifically on the topic of water supply. The industries are regulated on how much water they can take out Susquehanna River or any water source, that they are puling water from but specifically looking at the example of the Susquehanna River the companies are only allowed to take a maximum of 1,000,000 gallons per day out of the river and specifically the river itself is flowing at a rate of 2,000,000 gallons per minute so 1,000,000 gallons a day coming out of the river is really in the grand scheme of things it’s really not that big of a difference that’s making and a lot of times these companies are not taking the full 1,000,000 gallons per day either so really not making that big of an impact and they’re not allowed to take water from the existing ponds that are on the property for instance if a farming has leased his land to the company has a pond on the property the companies that are coming in drilling not allowed to use that that freshwater source so it’s not impacting the wildlife specifically also obviously you give me about point that the pads and the drill sites that are created are kind of ugly I guess you say on the landscape themselves but we did see example of a pad that have been created and then once it was up and activated as a drill site only 3 to 4 months later the area that wasn’t being used it’s very small area that needs to actually be used for the drilling, the area that wasn’t begin used on the pad was now getting overgrown again with grass so it was returning to its natural state.

So a lot of people are not seeing as many impacts. And we were driving through the community on a trip were driving through areas that are active drill sites active really is and we don’t we did not know, we cannot see you couldn’t tell a difference in from something that was I guess we just assume at least, I assume that going through those areas, those were not drilled because it looked normal it looked like a normal community. And another thing, going beyond that and also just like to talk about the community level. I’d also like talking about the impact that they had on small businesses from the industry coming in and specifically we visited a restaurant and we spoke with a local bartender there and he was from the area originally and he talked about how since the drilling industry started he’s seen an increase in business coming in his customers or now want to spend more money when they coming by food additionally the workers he said he said that with those were the people coming in this anymore money those were not only the workers there also community members who now getting more money from the royalties they were being paid from their land and that the natural gas production, but the workers themselves are also willing to spend more money and you know that’s just generating a lot of revenue for local businesses and a lot of local businesses were able to adapt to the industry coming in. They are now producing things that are tailored to the industry there’s an example of one store who was a beverage distributor and with when the industry came in they shifted their production and actually they kept a beverage distribution but they also included a propane, home heating, oil distribution production as well so the were able to expand they business and actually it will improve that the base of customers that they were out of reach so they are generating a lot more revenue just from that as well.

I think that the small businesses have really become diversified were seeing gas stations now selling more products just that are geared towards the workers different types of food one of the gas station employees said their now they’re selling Chinese food is on southern food and that’s coming from it is the diverse preferences of the workers additionally another thing that we can also see as you know Community itself is I know Matt was talking about the roads that would be put in for the industry and I was clear-cutting trees, but the industries themselves have spent approximately $400 million on road infrastructure improvement alone. And this is being seen not only by the industry workers themselves and the companies but it’s also benefits enjoyed by the community as well so in a while the roads that are being put in, can be seen as a negative that is as their impact on the environment you can see themselves with tree clear cutting, you’re also seeing benefits you are seeing better road conditions.

On our trip we were driving around we didn’t see hardly any pothole roads we didn’t see really any negative road conditions the roads were all in really good shape so I think I was also just wanted to be seen as a as a positive and we also spoke with Farmer Fred a local farmer from the area and he discussed his opinions on this as well just how he’s seen at the community impacted over the years. “I’m from the area. I grew up on a dairy farm and over the years I have really seen the areas change with the drilling industry coming in. However I am not opposed to it. Contrary to what people would believe, I have a sustainable biofuel engineering degree and I personally I am not opposed to the natural gas industry. I see it as a natural stepping-stone away from coal, which is much dirtier as a fuel source compared to natural gas. I see it as a transition fuel into a cleanlier energy future.”

[Matt]: And then Shane to rebuttal that a little bit so we happen come across police officer granted he was newly transferred to the area, but he discuss the recent, recent as in the last four or five years the rise in crime. A lot of these, since a lot of these workers that drill companies bring in are from out-of-town a lot, he has found a lot of the you know the locals and the people brought in, the foreigners if you will brought in, are you getting into fights and just general any type of crime really is on a rise you know whether he said you know assaults, domestic violence, drunk fight, bar fights and even the bartender alluded to this a little bit. him there’s very like I said earlier the groups between the drillers and the local people others to specific groups within the community and sometimes you know you get your 2% for each group that we don’t want to have it out with the other group and they can’t makes it hard for everyone else that was the one real problem to police officer saw with the Marcellus shale, was just an overall increase in crime you know there is a lot more income now so people have a lot nicer things and so theft is also up. Pretty much any type of general crime is on the rise.

Act 3: Impact on the Industry Worker

[Matt]: So Shane and I we were nice enough to be treated to lunch by Jim. So we sat in this bar, this local town bar in Bradford County and we just happened to notice—Jim actually picked it up—this guy, he had these muck boots on and a lot of the workers, the drill workers, wear these muck boots and it’s a big seller at all the local stores. And so we just pulled him aside and just started talking to him and he was very open to talking about the kind of work that he is in, what he does on the drill and it was actually a great insight, working on the drill. Some of the problems he said he had with were the safety regulations they’re actually very strict. They need fire retardant clothing, and they need special types of boots. They often have to have hard hats on, safety glasses on and a lot of these other safety regulations like barriers underneath these drill platforms, the fabrics that line these pads so that nothing spilled either gasoline, drilling fluids, diesel fuel; none of these would get spilled into the environment. Also, what he was doing, since it was so cold that day when we went up, he had to thaw out the pipe before they used it to drill, because it was all stacked up and had frozen because it was wet and it was metal and it froze together. Basically he had to use this methyl alcohol, rubbing type method, and basically loosen up the ice and then chip off the ice. He was a little bit annoyed because it takes a long time. He was spending basically the whole day doing one pile of pipe when it he had a blowtorch, which you typically use for something like this, you could have it melted and done in three hours versus eight. The problem is that with the safety regulations is that there are no open flames allowed on these drill pads. It makes everything a lot harder and a lot longer because you have so many safety regulations.

Shane also talked about how the water, and they have the cap on the million gallons a day. They have to stop if they reach that million gallons and they don’t want to stop drilling obviously so they want to make sure they have enough already in advance so once they do start drilling they keep going and then these safety regulations, they just get in the way sometimes. He also talked about the difficult conditions that these workers face—a lot of these platforms are out in the middle of farm fields so there is no wind protection. They are in valleys, and these wind gusts funnel through these valleys into these certain points and it gets really cold. He was telling us that day how the top of the platform, the thermometer at the top, read negative 34. That’s at the point where metal starts to get real brittle and then it gets dangerous. He also told us, and started talking to us about, how a lot of non-local workers were starting to move back home and a lot of the local workers were starting to pick up the jobs that these guys had. There’s this worker at the bar, this driller, he was basically a “drillhand”. He didn’t necessarily have the job of pulling the pipe together and linking it together to shove it down into the borehole as they were drilling, but he was kind of more of a handler: he helps off the platform, but he was still within the pad. He brought up the topic of reversing the brain drain.

A lot of the young people are coming back to the area because they feel like they have the opportunities for success. Before the whole Marcellus Shale, it was a predominantly farming community and a lot of the younger people didn’t feel like they had the opportunities they needed, so they would leave and it would actually make the town very… they referred to it as a “brain drain”. And a lot of the young people leave and they don’t come back because there are no opportunities for them. You could actually see a lot of the older folks in the area when we were going around. Conversely, this Marcellus Shale has brought in a lot of younger minds, because of all the engineering that is needed and all the money to be made through this, whether it’s supporting the drillers or physical drilling itself or supporting the companies in corporate offices that they have built in regional areas. The driller was talking about how he served in the military over in Iraq and came back over and realized that he had opportunities here. He was a local person—Jim actually knew what high school he went to—so he realized, hey, there is some money that can be made here, might as well get at it while I can. He was very fortunate here he was very thankful that he was fortunate enough to get a job in drilling because he was making good money and its hard work, yet a lot of people are trying to get these jobs. He was thankful that he was still able to get the job.

Finally, to tie act three to the American dreams: a lot of these young workers are coming back and realizing that they have success in making their own American dreams whether it be starting a family, they earn enough money to start that family, pay off their house quickly, start a new business on their own, some type of business that supports the drilling industry, such as a restaurant. A lot of people make money with delivering services such as cleaning services because more people have disposable income, etc.

More restaurants, more service stations, more places that serve drillers, drill companies, office spacing, a lot of just buildings in general: storage spaces like warehouses, a lot of people have put those up on land that they own and companies lease those to store equipment that they don’t need for immediate drilling. And so, a lot of these young people are realizing this American dream and fulfilling it in Bradford County and they are becoming more successful and they becoming part of what we as society believe to be the American dream.

Conclusion:

[Shane]: As you can see, the Marcellus shale and drilling industry is a controversial topic. Throughout the semester, we have been using the cultural geography lens to look at topics that are not necessarily close to home. With this podcast, we were able to shed light on an issue that impacts many people from the Pennsylvania area as well as members of the Bucknell community. In utilizing what we learned about the core nature of having a cultural geography perspective, we see that the Marcellus Shale industry also serves as a prime example of the power relationships that are held throughout society. This came in the form of the boom-or-bust resource, natural gas. Additionally, we saw the value of identity through the drill workers, community members, and small business owners. All of them are simply striving to not only discover their identity within their community, but also to find their own American Dream with what fate has given them. Thus, we can see that the Marcellus Shale industry does play a large role in shaping the American Dreams of many people. Some of these dreams are met at the expense of destroying someone else’s dream, so in the end, we are still left with the lingering question: is it worth it?