Property Rights Foundation of America®
Founded 1994

Government Persecution in the Pennsylvania Oil Patch

By Thomas A. Miller
Petroleum Producer, Allegany, New York

Seventeenth Annual National Conference on
Private Property Rights
October 26, 2013
The Century House, Latham, N.Y.

 

Good Morning!

I am a fourth generation independent oil producer. Grandpa Miller bought his first oil property in1919 from William T. Piper, the famous aviator who was also an oil producer. I have been working on wells since I was about ten years old. I started pumping them by myself when I was twelve, starting a gas engine by tramping the six foot flywheel by myself. Although I live in New York State very near the Pennsylvania border, I operate wells in both states.

My topic today is "Government Persecution in the Pennsylvania Oil Patch". Pennsylvania crude oil is blessed with a unique chemistry which makes it particularly suited for making lube stock. It has a considerably greater yield of lube stock per barrel than other crude oils. Penn Grade Crude Oil is a biodegradable paraffin-based oil containing no asphalt and only traces of sulfur and nitrogen. It has a naturally high viscosity index, meaning that the viscosity varies little with temperature. In addition to lubricants, many specialty products are made from Penn Grade Crude, including paraffin wax, petrolatum, or petroleum jelly, white oils, ink oils, and microcrystalline wax. It is the base for medications and cosmetics. The micro wax is even used as an ingredient to harden candy that would otherwise be too soft. Fuel is produced only as a by-product.

Penn Grade Crude is found only in Pennsylvania, New York, West Virginia and Ohio. I have personal experience in both New York and Pennsylvania as I operate wells in both states. I will be speaking today mainly about Pennsylvania because of a current crisis and my personal involvement. That by no means is meant to imply that everything is hunky-dory in New York State. I do not have personal experience in West Virginia and Ohio so I am not qualified to comment on those states.

Crude oil from natural seepages and springs had been known of for centuries and is even mentioned in the Bible. Penn Grade Crude was used principally as a medication but the oil industry which changed the world had its beginning with the discovery of the Drake Well in Titusville, Pennsylvania in 1859. The Drake Well has been called the "well that saved the whales" because prior to its discovery a principal source of oil for illumination and other uses was whale oil and the whales were headed for extinction.

The original oil boom which ensued after the Drake Well followed the Oil Creek valley to Oil City and beyond. Some of the wells originally produced thousands of barrels per day, much of which ended up in Oil Creek, a tributary of the Allegheny River, because the facilities needed for storage and transportation at that time were wholly inadequate. Oil Creek got its name from the natural oil seepages along its banks that existed prior to the Drake Well.

Today, the site of the Drake Well and the Oil Creek valley are a state park. The beautiful valley which was formerly denuded of trees and covered with a forest of derricks is now lush with timber and other vegetation and the creek is teeming with fish. No intervention by man was necessary to bring it to this point. Once the activity was gone nature took over.

At present the oil industry has existed in Pennsylvania for over 153 years. The industry is still alive but may now be on its death bed. It consists of many small to medium sized independent producers of shallow wells with depths ranging mostly from 400 to 2000 feet producing from Devonian aged sandstone formations. There has been considerable new drilling with wells stimulated by hydraulic fracturing but there are also many so-called "legacy" wells still in operation that were stimulated by shooting with nitroglycerine. I personally am operating some wells that date from the 1890's.

The industry in Pennsylvania started to come under attack in 1984 with the passage of Act 223 which introduced micro-management of all oilfield activities. One provision of it was a requirement for a surety bond for the life of the well plus one year in the amount of $2500 per well on every well or a blanket bond of $25,000 on ten or more wells, regardless of the age of the well. The bonds were pretty much unavailable from surety companies. That left self-bonding as the only alternative. Since the production of the old wells is measured in gallons rather than barrels it takes a lot of wells to make a living. The cost would be prohibitive. At that time $25,000 was a whole lot more than it is today. I can remember oil at less than $5.00 per 42 gallon barrel.

Prior to Act 223 most small independent producers were mainly concerned with getting oil out of the ground and being able to pay the bills. They spent most of their time working hard in the woods. From many lean years in the oil patch the small producers became skilled at using Yankee ingenuity to get the job done. Small producers would operate old wells and occasionally drill a new well generally using a cable tool rig, often owned by the operator. All you would need for site preparation is a path wide enough for a bulldozer to pull the rig between the trees. Material for the well could be salvaged by plugging old, non-profitable wells. The wells were often stimulated with a nitroglycerine shot which required no more than a pickup truck sized rig. Some of the wells were hydrofraced, requiring somewhat more equipment.

With the passage of the act a group of producers got together and formed Pennsylvania Independent Petroleum Producers, or "PIPP". We call ourselves "PIPP's moms and pops". I have been a director of PIPP since 1987. In the early days PIPP organized bus trips to the state capital in Harrisburg. We also spent one winter with three crews taking turns spending Mon. through Wed. every week the legislature was in session to lobby with our green and white PIPP hats. We finally gained an exemption to the bonding requirement for pre-act wells but it took twelve years and a change of administration. While we were lobbying for the exemption we were told that we were wasting our time because they would eventually "get us" for our produced water discharge.

Oil wells are a lot like cows. They don't get better with age. You eventually have to drill some new wells if you are going to maintain enough production to make a living. The many provisions of Act 223, along with the collapse of oil prices made it next to impossible for a little guy to drill. We endured a low oil market for a good many years where there was very little new drilling. Probably the majority of small producers had to have some other source of income to survive, whether it was another full or part-time job, a side business, or a spouse's income. All this time we lived in fear of a visit from the EPA, the DEP, formerly the DER, in Pennsylvania, or in New York, the DEC. The oil market finally started to pick up and there was incentive for new drilling. Meanwhile, the cost of compliance with the DEP regulations & policies in both money and time greatly increased the cost of drilling a well. Added to that is the fact that some processes and materials formerly used are no longer readily available making more expensive alternatives necessary.

With the rise in oil price in recent years has come an increase in new drilling, mainly by larger independents and investor-financed companies. It is still difficult for the small family operations because of the large capital outlay and the overwhelming burden of the state and federal requirements. A big item is the risk of opening Pandora's Box that could happen when the inspectors come to supervise the new drilling and would then try to find some kind of problem with existing wells on the property. You could then be completely out of business with no way to pay the bills. Fortunately for small operators, the higher price enabled some of the old wells to become profitable while the increased costs made others non-profitable. However, it became possible to make a profit with less production if costs could be controlled. Believe me, we became really good at working with essentially nothing through the lean years.

Then, came the shale boom. Almost overnight we had major companies, both domestic and international, invading the oil patch and leasing vast amounts of acreage. Companies like Royal Dutch Shell, Chesapeake and Chevron were now in the oil patch. In 2010, one larger independent company that had been based in my town sold their considerable acreage in New York and Pennsylvania to Shell for 4.7 billion dollars. That is billion with a "b". The former owner of East Resources is Terry Pegula, the present owner of the Buffalo Sabres. The shale boom took off with rapidity in Pennsylvania, particularly in the sweet spots which don't include most of the oil region that lies in the western part of the state. The new technology involving hydraulic fracturing of horizontal bores rather than vertical boreholes in shale proved to be tremendously successful and in a short time made energy self-sufficiency a possibility for the USA.

At first I thought that maybe this would finally be a chance for the little oil producer to plug his wells and retire if he wanted to if he could earn a royalty by leasing his acreage to the shale developers. In other words, he could afford to go out of business without going bankrupt, losing everything he has, or going to jail. However, as it turns out, the Marcellus Shale gas boom has probably been the worst thing that has ever happened to the small Pennsylvania petroleum producer. I am not saying that the shale development is a bad thing in itself. It could be a wonderful thing as was expounded on by Bonner Cohen in his presentation at last year's conference. Only government can take a wonderful technological advancement like that and turn it into a negative.

Back when I first got in business it was possible to sell an old well for a hundred dollars to a salvage company that would plug the well to state specifications and make their profit on the salvage value of the material salvaged from the well. I bought my first property in 1972 for $1500 for 15 wells, just what had been offered to the seller by a salvage company. Well, times have changed! Shell has been plugging a large property with hundreds of wells near my home. Because of their ridiculous overkill in the name of safety and kissing up to the government the plugging cost has been averaging $80,000 per well. While it may not cost that for a small operator, this, along with costs inflated by government contracts has significantly driven up costs for the little guy.

With the East Resources purchase Shell acquired about 400 barrels per day of oil production from new wells that East had drilled. American Refining Group, one of the two refiners of Penn Grade Crude left in existence, approached Shell to see if they could secure that production. Shell replied that they were not interested in shallow oil production, that they were only interested in the acreage for shale development, and that they planned to plug and abandon all of the oil wells. When a well went offline because it needed to be serviced, they would not service the well, supposedly because there was not a service rig in the whole field that would meet their safety specifications.

Since Shell eventually had contractors in the area with rigs meeting their specs to do the plugging, they decided to service some newer oil wells on a nearby property. I heard a rumor that they were paying $5000 for a minor servicing job to replace wear parts in the down hole pump. This is a job that I can do by myself, in three or four hours with a rig that I built on a 1952 Ford 8N farm tractor. When I asked a man who was involved with the Shell plugging operation, he said that he found that hard to believe because the contractors will not show up for less than $6000. He said that if there happens to be lightning, they will leave for the day but still get their $6000. There are all kinds of stories like this. One man lost his job because he hauled a truckload of city water from the city of Olean, NY and accidentally spilled two quarts of city water on the well location. The matter went all the way to Shell's office in Texas. Shell has even built a concrete road into at least one Marcellus shale well location. I do not have documentation on all of this but it came from believable sources.

With all the clamor from self-proclaimed experts such as Josh Fox and Yoko Ono (I still haven't been able to find out where they got their petroleum engineering degrees!) spurred on by the media, there has been an outcry by the gullible public environmental do-gooders to punish the oil & gas industry. After all, everyone knows that we in the industry are a bunch of crooks and always rip you off. Whenever they think of oil & gas they think gasoline. Isn't transportation a right, rather than a privilege such as use of private property? I don't like paying $4.00 for gasoline either but I understand why it costs what it does. I remember putting 38 cent gasoline in my 1959 Volkswagen Beetle when I was in college but you could buy a loaf of bread then for about that much. What does bread cost now? I would like to see how far and how fast you could get there on $4.00 worth of horse feed. And still everyone has to have an SUV and drive everywhere for anything, no matter how trivial!

Well, the legislators have responded with new environmental laws feasted on by the regulators. In Pennsylvania, we now have Act 13 and Chapter 78 regulations. This is a set of draconian "one size fits all" regulations that apply whether you operate a single hundred year old shallow well making two gallons of crude oil per day or a hundred unconventional horizontal shale gas wells costing 7 or 8 million dollars apiece. The administration in Pennsylvania is bragging that they have "the best environmental law in the US, if not the world". The enforcement agency in Pennsylvania is the Department of Environmental Protection, or DEP. They have hired dozens of new inspectors, supposedly for the Marcellus development. However, because of the decline in the gas market due to over supply as a result of the success of shale development, shale drilling has dropped precipitously. So did the DEP lay off some or all of these inspectors? No, they sicced them on the shallow oil industry. Members of PIPP have had as many as five inspectors coming at a time and each one tells them something different. The attitude and psychology of these inspectors reminds one of the TSA inspectors at the airports. They really love that power!

We have been told by veteran DEP (or DER) retirees that in the past, the people from non-oil producing parts of the state for the most part didn't know or care that there was oil production in the state. The enforcers knew they were regulating a vital industry and that if they were unreasonable they could regulate the industry out of business. However, then they would lose their jobs because they wouldn't have an industry to regulate. In the past there was a requirement for eight years of practical production experience in the industry to be hired as an inspector. That has all changed with all the hype against "fracking". Now there is widespread concern and publicity with an overall impetus to "punish the polluters".

We were also told that it takes too much effort for the DEP to take all the steps required to promulgate regulations so they are now setting "policy" and are issuing NOV's (Notices of Violation) for violations of "policy". It seems that "policy" changes from day to day and inspector to inspector.

New inspectors are hired with no practical knowledge of what they are supposed to be regulating. They have been told by their bosses that they will lose their jobs if they don't write fines. One producer had an inspector tell him that a well was not in compliance. When he asked the inspector what the problem was, he was told that there was a greasy spot on the ground the diameter of a baseball. The producer kicked some dirt over the greasy spot and asked "Is that better?" He was then told that the wellhead was greasy and that he had to wipe it off every day. Are we talking about an oil well or a piece of furniture?

Another producer was issued a whole stack of NOV's. I looked at some of them. One was for the grass being worn off where he drove his truck into a well site. Another was for having a five gallon pail sitting by the well. Supposedly, there is something in the new regulations (or policy) that prohibits anything in the location except the well. Whose property are we talking about?

One very onerous provision of the regulations is a "no discharge" requirement. Since the sandstone formations are ancient ocean beds, depending on the geology, there is usually a certain amount of water produced with the oil. The DEP calls any of this produced water "brine". It may be somewhat salty but in the shallow oil formations it is generally of low concentration and usually the greater the volume, the lower the salinity. A cow produces more urine than the produced water from some wells. Bear in mind that the oil industry has been in Pennsylvania for over 153 years and most of the produced water has just been discharged. When big companies like Pennzoil, who is no longer in Pennsylvania, had large secondary recovery projects, they had single point discharges of tens of thousands of barrels per day. Some of them actually kept the streams flowing in dry weather and some of the streams are renowned for their trout fishing.

I couldn't find actual figures for Pennsylvania's road salt usage, but New York DOT alone spreads 950,000 tons of road salt per year. New York City uses 300,000 tons annually. When you ask about that, they say it is ok because it is in the name of "public safety". They will say that oil field produced water contains minerals. Do you think the road salt doesn't? It is used just as it is mined from the ground. Any produced water from shallow oil wells in Pennsylvania is absolutely insignificant compared to road salt.

Several years ago, a study on produced water was done in the Allegheny National Forest by a reputable engineering firm. It was commissioned by the DEP (or DER). The net result of the study was that the water discharged was actually beneficial to the forest due to the nutrients it contained. When the results of the study became known, it was not what the DEP wanted to hear and they disregarded the study. I have seen with my own eyes where vegetation around a produced water discharge was much more lush than that a few feet away. I have seen frogs breed in the discharge pits and deer using them for watering holes.

There are some oilfields in other states where the produced water has high concentrations of salt. It is usually disposed of into underground formations through disposal wells. In this oilfield we just do not have the formations that will accept the water and if we did, I am sure DEP and EPA would make the permitting process prohibitive. The State's answer to this is to haul the water to one of two so-called "brine plants". For years, these plants would filter out the dirt, which was hauled to a landfill, and the water, with any salt still in it, was discharged into the Allegheny River. It was fine, as long as the plant operator paid the right fees. Now, there is movement underway by a radical environmental group to shut down one of these plants and I understand the other one has made or is making changes in the process that will raise the cost significantly.

For most of the legacy wells, operated by small family-owned companies or individuals, this is out of the question anyway. The transportation costs alone would kill any profit, not to mention the tipping fee. Some wells are miles from a highway and the water is discharged at the individual well so collection would be a severe problem. They are not accessible by truck, especially in winter. Storage is another problem. Since the water is of such low salinity, it freezes. Part of the new rules, or at least policy, forbids below-ground tanks. Separator tanks (to separate oil & water) have traditionally been set into the ground to prevent freezing. A lot of wells are only pumped weekly or less, so the entire system would be frozen in winter weather. PIPP conducted a survey regarding produced water in June. Of 80 respondents, 49 replied that they would shut down completely if they could not discharge their water. That would involve an estimated loss of 44,000 barrels of oil per year.

On some properties, the producer may be lucky enough to own the property in fee simple, where he owns surface and minerals both but on the majority of properties there is either severance of the mineral and surface estates or a working interest lease. Where there is severance the original landowner has sold the mineral estate for compensation and the buyer then owns the mineral estate by legally recorded deed. In the historic oil patch, this is universal and many severed deeds go back over a hundred years. I was told by an oil & gas attorney that the minerals deed is actually the primary deed with the surface being the residual deed. These minerals deeds come with surface rights spelled out in the deed, including ingress and egress, rights to construct structures, pipelines, etc. as deemed necessary by the minerals owner, and the right of non-disturbance of his operations. Some deeds even include the use of timber if used on the property. On some properties, the shallow minerals may be severed from minerals below a certain depth or oil & gas may be severed from other minerals. There are also working interest leases where the lessor gets a royalty, usually one eighth of all oil revenue and the lessee enjoys all the above-mentioned privileges as long as he sells oil in paying quantities with usually a grace period of perhaps five years thereafter.

The DEP personnel were bragging this past spring that they would have us out of business by April 1. They decided to set an example. One member of PIPP had eight wells on a property where the owner of the surface had a royalty on the production. The surface owner sold his property to an Amish man but reserved the royalty. The Amish guy thought he was getting the royalty. (He should have read his deed.) When he found out he didn't have the royalty coming he complained to the DEP. DEP came on the property unannounced, cut a pipeline, and put dye in it. The producer was charged with three felonies and a misdemeanor for "discharging produced water on the land or waters of the Commonwealth of Pennsylvania". He was told he could be fined up to $10,000 per day up to whatever time frame the DEP desired, into millions of dollars, and could get up to eight years in prison. He hired an attorney and eventually retained an environmental attorney to fight his case. He was not allowed to say anything about the case until the sentencing. While the case was ongoing, the defendant was told by DEP that if he would turn someone else in they would go easy on him.

On very short notice, PIPP members who had e-mail addresses listed in the PIPP office were notified and about 60 PIPP members showed up at the courthouse for the sentencing, although PIPP mistakenly understood that it was to be a hearing. On the advice of his attorney, the defendant plead guilty to the misdemeanor and one of the three felonies. Since he plead guilty, the other two felony charges were dropped. He was sentenced to pay $10,000 in fines, over $4000 for investigative costs (apparently for cutting his pipeline), and unspecified prosecutorial costs. He also got 200 hours of community service and a maximum of five years probation contingent on completion of 20 remedial actions specified by the DEP, including digging so-called "contaminated" soil out of a wetland area and sending it to a landfill. He paid over $100,000 in attorney fees. No one from the DEP, or the Amish man, was present at the sentencing. Prosecution was represented by one young woman from the State Attorney General's office. (While proceedings progressed, a note was passed around the courtroom. One of the PIPP people, on the way to the courthouse passed a PENNDOT crew that was shoveling sand and salt off a bridge into the river. Apparently, that is approved activity since the State is doing it.)

The most pitiful part of the whole thing was that the defendant was required to read an apology to the court, the Commonwealth of Pennsylvania for "polluting the waters of the Commonwealth", and to family, friends, and associates for the embarrassment caused them. We are talking about a 64 year old family man, a US veteran of service in Korea, who has worked hard all his life. He told me that he learned one thing from all of this and that was that if he had it to do over again, he should just go on welfare and then all he would have to do is walk to the mailbox to get his check.
Prior to the producer's sentencing we had to wait for another case for a guy who plead guilty to possession of heroin and drug paraphernalia. I think he got a $5000 fine, a couple years of probation and some community service.
The soil excavated as part of the remedial actions had to be stored in dumpsters covered with tarps, for a time, while approval was attained to take it to a landfill in Ohio. The tarps started to bulge. When they were removed, the so-called contaminated soil was lush with green vegetation. Not one tree was killed throughout the whole ordeal.

Another member of PIPP, who actually drills several wells a year, using investor money, has been harassed repeatedly by DEP inspectors. While drilling the top section of hole through the fresh water zone, the drill cuttings were directed into a pit with a 6 mil liner. This is the same process used for drilling a domestic water well, except that the cuttings would just be blown on the ground and become part of the soil. There was a slight scum on top of the water in the pit with the cuttings caused by the lubricant, a vegetable-based oil, applied to the down-hole hammer drill at a rate of about one teaspoonful per joint of drill pipe. The inspector determined that the cuttings were thus contaminated. The operator was ordered to remove the water, haul it away for disposal, and to dig another pit to be lined with a 20 mil liner and transfer the cuttings to the new pit, encapsulate the cuttings with the liner, and bury it.

The same producer, whose property is on a remote township road, was asked by the township supervisor if he would take his bulldozer and re-profile a road ditch near his property as a favor to the township. He did so to the approval of the supervisor. To quote the producer:

Later that day a DEP Water Quality Specialist came along to inspect our operations. He proceeded to tell me that what we did to the ditch was a violation. He instructed us to take our backhoe and remove any material on the bank of the ditch, install a rock-filter in the Township ditch and seed and mulch the entire ditch that we defined and cleaned out. I told the DEP Water Quality Specialist that the Township Supervisor had asked us to clean out and define the ditch. I also told him that the Township would be coming soon with their grader to clean out the ditches and that they would tear out the rock-filter and freshly seeded ditch. The DEP Water Quality Specialist told me that he does not regulate the Township but that he does regulate my operations.

Another incident on the same producer's property was dubbed "Cameragate". An employee came to work one day and noticed a trail cam focused on the oil producer's access road. As one would imagine, this was rather unsettling. The oil man installed a camera of his own to observe whoever was attending to the first camera. When the producer's employee returned, their own camera was gone. The employee then took the original camera down and opened it up to reveal a notice that it was property of the DEP. The producer turned the camera in to the local sheriff's office. The DEP brought charges against him. They visited the employee involved and told him that if he would give them something on his employer, they would go easy on him. He told them that he didn't have anything to tell. They made the same attempt with four other employees.

Eventually, after some publicity was generated, at least among others in the industry, and I believe some of the legislators, the matter was settled in the local court with the producer paying for the cost of the camera security cable that was cut by his employee. When the court clerk enquired as to what the matter was called, he told her "Cameragate" and that is what she wrote.

These are just a few examples to demonstrate the tactics of threat and intimidation employed by the government agents. There are many aspects of the new regulations that are impossible for small operators to comply with or to even understand. One is a quarterly mechanical integrity test required on every well. The DEP had a seminar to instruct operators on how to conduct the test. They limited attendance. The big companies will probably have a person or a whole department for this. This is impossible and totally useless for the small operator with almost no pressures involved and who may use an old whiskey barrel or a 55 gallon drum for a separator.

I believe that it is obvious that trying to appease these people is like trying to bail out the ocean with a coffee can. If the industry is to survive, there has to be some sanity injected into the matter. To this end, PIPP has tried to talk with the DEP and the administration on several occasions. There was even a meeting between a PIPP delegation and the governor although the governor showed up some time after the meeting was in progress and then slept through part of it.

The state legislators from the oil region of northwestern Pennsylvania have been very supportive as has US Rep. Glenn Thompson. When some of the legislators attempted to talk with the governor's "Energy Executive", one Patrick Henderson, Henderson told them that they just represent a bunch of polluters. This was very insulting. We live and work hard on the land that we love and care for. We come from a very rich industrial heritage that has made life better for all.

On July 24, PIPP conducted a field tour with the new DEP secretary, Chris Abruzzo, along with an entourage of DEP personnel, several legislators and staff, and people from the industry. The tour encompassed production operations, introduction to oilfield workers, and witnessing of a poor-boy frac job. It was concluded with a dinner graciously provided by ERGON Refining, and discussions. It ended on an optimistic note but so far that is about as far as it has gone.

I had a chance to have a personal conversation with the secretary while on the tour. I told him about a couple of oil producers who had been hurt severely as a result of vicious complaints to the DEP. I told him that the regulations just enable such people. He acknowledged that but added that they have mandates from the Federal Government. When the Obama administration didn't get Cap and Trade to destroy the American economy they said they would do it with regulation through the EPA. I have several copies of the Constitution and none of them say anything about any authority to regulate the environment. We also have a Tenth Amendment. But they are doing it. Look at what has happened to the coal industry!

On October 10, less than three weeks ago, PIPP held a press conference right at the Drake Well, the birthplace of the oil industry in the "Valley That Changed the World". It was emceed by former Pennsylvania Senator and US Congressman John Peterson who grew up a mile from the Drake Well. Over a dozen people spoke about different aspects of the industry and the devastating effects of the DEP's heavy-handedness. Six different legislators also spoke in support of the industry. The event was attended by over 300 people.

The speakers included Terry Clark from ERGON Refining's West Virginia refinery and Bill Murray from American Refining Group, representing the two refiners of Penn Grade Crude. Their plants are set up solely to refine Penn Grade Crude. If they cannot maintain enough feedstock to operate the refineries efficiently, they could lose profitability and be forced to close. American Refining is so concerned about crude supply that it purchases billboard, radio and newspaper advertisements seeking crude oil supplies. Both refiners have an annual picnic for their crude suppliers.

American Refining Group operates the Bradford refinery in Bradford, McKean County, Pennsylvania, not to be confused with Bradford County. Bradford is a city of about 9000 people. The Bradford refinery has been in continuous operation since 1881. It is the oldest continuously operating refinery in the world. The refinery employs 363 full-time at the refinery itself and annually purchases three million barrels of oil from 450 producers of shallow oil wells. With all the local services, materials and utilities they buy, they provide 250 million dollars in local economic impact in a year, providing jobs for thousands. The ERGON Newell, West Virginia refinery processes around 7 million barrels per year, employs over 400 and buys crude from 1800 oil producers. The editor of the Bradford newspaper, who is apparently biased against the oil industry, did not see fit to send a reporter to the press conference.

On the day following the press conference, Gov. Corbett visited northwest Pennsylvania. He told about all the wonderful things he was doing for the Commonwealth and all the jobs that will be created. When he was asked about the impact of the regulations on conventional well producers he said: "That is the cost of doing business. We have to protect the environment."

A fellow PIPP director and fourth generation oil producer, Mark Cline, who happens to be with us today, managed to get a chance to speak with the governor after being introduced by his state Representative. Mark's summary, which demonstrates the arrogant attitude of the governor, is included in your folders. Mark has a son who is also an oilman and his father and my father were high school classmates. Both are WW II veterans.

With your indulgence, I would like to remember a friend who passed away a year ago Tuesday. He was an independent oil producer in New York and Pennsylvania and worked on oil wells his whole adult life, except for his time in the US Army. The man worked seven days a week and operated a lot of wells by himself, with some part time help from a family member. I knew Jerry since I was a child and I knew his parents. He had a group of adjacent properties, one of which had a house where the homeowner owned the surface rights. When the present owners moved in several years ago, they apparently had a desire to force him out. They would repeatedly complain to the DER about one thing or another, just trying to make trouble. My friend put up with a lot over the years. The homeowners would ride their horses on his land but that was alright. I was told he even drilled a water well for them with his rig free of charge.

Well, Jerry buried his wife July 6 of 2012 after he cared for her while she was bedridden for four years. When I offered my condolences, he told me that he is a survivor and he will make it. I didn't see him much for a while but three months later he stopped at my shop one Friday afternoon and said he had problems. I had never seen him so down. He was almost always upbeat. I asked him what the problem was and he told me that the woman in that house had turned him in for his water discharge. Apparently, she had heard about "zero discharge". Now this was in an old waterflood area in a valley that has probably had around 6 to 9 thousand wells drilled in it. Jerry's were some of the few dozen left. The wells produced virtually fresh water that had been injected for secondary recovery. He told me that he had a visit by more than one DEP inspector and was ordered to cease operations by Monday, as he did. He told me that he was married for 21 years and if you doubled that, it was how long he had worked on that property-42 years, formerly with his father. Despite his constant leg pain, I presume from arthritis, he told me "I can handle taking care of the wells but I can't handle this!" Three weeks later, he was found dead of a heart attack on another property beside his truck with his phone in his hand. I believe that thanks to that woman and the DEP, his spirit was broken.

This man was well loved by just about everyone in his little town. At his funeral there was story after story about the nice things he did for people. Whenever a neighbor needed a backhoe, chainsaw or tractor, he was there to help and would never take a nickel. One man told about how there was a poor family with a bunch of children along the way to one of his properties. Jerry would leave a carton of soda pop by the road. The kids would then leave the empty carton. Next time, he would take the carton and leave a full one. Fortunately, Mrs. Obama never found out about it. He even had bird feeders in his well locations and would put a lighted Christmas tree in a well location high on a hill for his neighbors in the valley to enjoy.

This is the kind of people that are being persecuted! Isnt it about time to call off the dogs?

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