Energy Company Backs Off Gas Permit

Executives Cite ‘Local Resistance’
By Jeremy Hunt

HARRISONBURG – The Houston-based energy company that wants to drill for natural gas in Rockingham County has backed off, at least for the time being, in the face of what executives termed “local resistance.”

Representatives of Carrizo Oil and Gas Co. say the company is no longer “actively pursuing” a special-use permit to explore for natural gas in Bergton.

Rather, Carrizo is focusing on sites in other states where it’s met less opposition.

“We shifted our focus elsewhere and will take that permitting process up at a later date,” Brad Fisher, vice president and chief executive officer, said in a telephone interview from Texas.

Carrizo officials say the decision came well before a consortium of Shenandoah Valley preservationists released a study Monday critical of the company’s application and the state’s permitting process.

Carrizo (Marcellus) LLC, a subsidiary of Carrizo Oil and Gas, has applied for a special-use permit with Rockingham County to drill an exploratory well.

Depending on the exploration’s results, Carrizo would seek to extract natural gas from the Marcellus Shale field, a sedimentary formation underlying much of New York, Ohio, Pennsylvania and West Virginia. A small portion of the formation underlies northwestern Virginia.

A controversial drilling technique called hydraulic fracturing, or hydrofracking, is used to release gas, chiefly methane, trapped in the formation. Hydrofracking involves pumping a mixture of millions of gallons of water, chemicals and sand underground to break the formation and release the gas.

Upon learning of the permit application, stiff opposition from some Bergton-area residents and conservationists quickly arose. The Board of Supervisors tabled the request in February to give officials more time to gather information about the drilling process.

On Monday, three conservation groups made public a report they commissioned by a Tennessee environmental consultant that says a lack of a cleanup plan, the well’s proposed location in the floodplain and risks posed by nearby abandoned wells are “serious causes for concern.”

Opponents point to incidents in other states where using hydrofracking is more prominent. In Pennsylvania, for example, explosions and water contamination have been blamed on energy companies.

Two weeks ago, the Pennsylvania Department of Environmental Protection announced it had fined an energy company nearly $100,000 for allowing fracking fluid to overfill a wastewater pit and contaminate a town’s watershed.

Representatives of Carrizo repeatedly have touted the company’s reputation for responsible drilling in urban areas.

Fisher said Rockingham County’s review “put a drag” on the permitting procedure, and the company may revisit the application next year.

“We’re going to have to take the time to sit down with the local officials and the concerned citizens and try to educate them on what we’re doing and explain how it’s not going to be an issue,” he said.

That could prove to be a long conversation.

Supervisor Pablo Cuevas, chairman of the board, is not convinced Virginia’s permitting regulations are sufficient.

“I don’t think there’s been enough proper coordination with all the agencies involved,” said Cuevas, whose district includes the proposed drill site.

The Virginia Department of Mines, Minerals and Energy is responsible for issuing permits and regulating oil and gas production.

Cuevas and others say the state Department of Environmental Quality, Game and Inland Fisheries and Department of Transportation also should be involved in the process.

Game and Inland Fisheries wrote Rockingham County a letter expressing concerns about the project’s potential effect on streams and wildlife in the area.

The state’s regulations also were criticized in the report released by Community Alliance for Preservation, Shenandoah Riverkeeper and Shenandoah Valley Network.

But Department of Mines, Minerals and Energy representatives have expressed confidence in the agency’s regulations. A representative on Monday said agency officials would review the conservation groups’ report and may respond to it in detail today.

The conservation groups said the report reveals a “long list of environmental and public health concerns.”

One of the concerns raised is that the state does not require emergency management plans.

Further, the drilling plan does not adequately protect groundwater or surface water, according to the report, prepared by Mark Quarles, a geologist with Global Environmental LLC, an environmental consulting firm.

Richard Hunter, director of investor relations for Carrizo, contends that the fluid used in fracking is not as volatile as critics say.

“I personally believe, and … a lot of very educated people feel, the fracking fluid is a very benign material,” he said.

Among identified chemicals – which represent a small percentage of the 2 million to 9 million gallons of water used in a single “frack” – that are known to have been used in hydrofracking are diesel fluid and benzene, a highly flammable liquid used as an industrial solvent.

Carrizo plans to use storage tanks for any wastewater that comes back to the surface, minimizing their potential exposure to groundwater and streams, Hunter said.

Critics, however, point out that the company’s application with the Department of Mines, Minerals and Energy only calls for storage pits.

Cuevas said that until all his questions are answered, he won’t bring the issue off the table.

“Unless the state puts together a better mousetrap, I’m going to have the same attitude,” he said. “If we’re going to do it, let’s do it right.”

Contact Jeremy Hunt at 574-6273 or jhunt@dnronline.com

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