The Hilcorp Frack-Gas Stampede to the Utica is Ready to Trample Right Over You: Forced Integration in Lawrence County, PA

Imagine getting this letter one day from Steve Fisackerly, Senior Landman, Hilcorp Energy Company, Houston, Texas:

Dear Landowner, 

As a Hilcorp Energy leaseholder we wanted to take this opportunity to inform you of some additional steps we are taking in our commitment to develop the Utica Shale formation in your area. Enclosed you will find Hillcorp's request to the Pennsylvania Environmental Hearing Board to establish two well spacing units, at least one of which would either include your land or be adjacent to the existing unit in which your land is located. This order would ensure that Hillcorp can fully and efficiently realize the potential of the Utica Shale formation for its leaseholders with the least amount of impact to the surface.

Now imagine doing a little research in the interest of translating this missive and coming upon Hilcorp's application to frack the Pulaski Accumulation--that sits directly under the house you inherited from your mom whose family has owned that property, say 20 acres, for, say, 100 years. Imagine you have loved that land, its forests, its pond, its critters. Imagine you grew up looking out onto the sunset from the back porch of that house, and that you've put both your money and your sweat equity into adding on an extra room, a shed for your tools, and a really cool wood swing set for your own kids.

Then you read this:

The Pulaski Accumulation is an underground reservoir underlying approximately 3,276 acres containing a common accumulation of natural gas in the Utica-Point Pleasant formation, approximately 7400 feet below the surface and 3800 feet below the Onandaga horizon, located in the Northwest corner of Lawrence County and the Southwest corner of mercer County in Pulaski Township...The Utica-Point Pleasant formation lacks sufficient permeability to be drained using a conventional vertical well [therefore, can only be drained via slick water, hydraulic, horizontal fracturing--fracking], [and the recoverable gas] could not be drained from a single well-pad.

Photograph by Wendy Lynne Lee

Now, let's say you've seen a bunch of those flag-waving good American ads for energy security, and for "cheap, abundant natural gas," and it occurs to you that that's all well and good so long as you have a say in the leasing of your family land, it won't be destroyed, that your property values won't be compromised, and that the gas is for domestic markets. You didn't build that swing-set just because you had some extra 2x4s laying around--you want to leave the land to your kids just like your mom left it to you--or better.

Then a neighbor you run into at the grocery hands you something he printed out, and he says it's a good idea to read it. You stick it under your arm, but you've got a sort of sinking feeling about all this, and you read it as soon as you get back to your car:

Bob Svetlak has lived on his family's Lawrence County homestead since 1949, and none of it's for sale — not his house, not his trees and certainly not his gas rights. But he may not have a choice about the gas. Hilcorp Energy Co. has taken legal steps to access natural gas beneath the 14.6 acres Svetlak owns near the Ohio border without his consent, arguing a law more than five decades old gives it the right to combine his land with others into a drilling unit. If Hilcorp succeeds, it would be the first time in Pennsylvania's shale boom that a driller used the tactic, and it could lead to more widespread use. “I didn't buy this land to sell it,” said Svetlak, 73, of Pulaski. “I bought it for peace and property, like a lot of people in this country. I live here for the tranquility.”  (http://triblive.com/business/headlines/4828098-74/hilcorp-pooling-gas#ixzz2wAF2epye)

"That's Bob," you mumble out loud. "He lives right down the road!" What law?" 

The article continues:

Hilcorp is using a legal maneuver known as forced pooling, in which neighboring plots of land are combined into a single unit for drilling. In geologic formations deeper than the Marcellus shale, the 1961 law allows drillers to combine gas rights into pools, even if property owners oppose. [Also see: http://law.psu.edu/_file/aglaw/SummaryOfOilAndGasConservationLaw.pdf 

Photograph by Wendy Lynne Lee

Now you're just pissed, and you're figuring out what that letter means, and you realize it might as well have been addressed to "Dear Sucker." Who the hell decided that Hilcorp could make decisions about what happens on your land? And what 50 year old law gets Hillcorp the right to frack it? It seems to you like all your neighbors are probably just like Bob, and that if you get together, maybe pool your resources to hire a lawyer, you can probably beat this thing. But then you read a little further, and you discover that you're a "small parcel" landowner standing in the way of the big boys, like "Martin “Bruce” Clingan, 71, owner of the 200-acre Clingan's Tanglewood Public Golf Course....whose home is on the Pulaski golf course property," and who says "it's unfair for a few small-parcel owners to block him from getting the most from his property." "You've got to be just shitting me," you say out loud, a little louder now, while your milk gets warm. "Who the hell is this Hilcorps?"

You head home, and read the letter again, but you realize that this is what it really says:

Dear Land-Owning Sucker:

We at Hilcorp are relentless in the pursuit of profit. Hence we have decided that in order to make this gambit on fracking the Utica worth the millions we are going to have to put into it, we have to get every square inch of land we can under our drill bit. And that means yours. 

Thanks, 

Steve Fisackerly, Senior Landman, Hilcorp Energy Company

What adds insult to injury is that Hilcorp has the audacity to ask you to come to a hearing date--3.25-6, 2014--and "voice your support for the Well Spacing Application." In other words, Hilcorp not only wants you to acquiesce quietly to what may be the permanent destruction of your property and tanking of your property values, but they want you to cheerlead for them!

Let's consider an analogy: imagine you are a person with two kidneys--as you likely are--and I tell you that sometime in the past I somehow managed to get title to one of those kidneys through the state. I now decide I need that kidney--not because I don't have two perfectly functional ones, but just because I want more kidneys for my kidney collection that I know I can sell to China for a gazillion dollars. I discover a 50 year old law that says that even though it might do you serious bodily harm, I have title to your kidney. In fact, I have title to that kidney even if its the only one you've got. And, I'd like you to come to a hearing where lots of other folks are being made to give up a kidney, and I'd like you to tell them how excited you are to give up yours. Call it your approval of the KidneyCorp Spacing Application.

 Now perhaps you think this analogy is a bit much. After all, it's just your land that's up for the big drill, not your body. But I'll bet that's not how Bob sees it, and the minute you do a ten minute search into, say, Hilcorp in Ohio, Louisiana, or Alaska or Colorado, you realize that what they're really asking for isn't just your kidney--it's your soul--and they don't give a rat's ass about how they get it, so long as they do, and as quickly as possible, even if it's over the corpse of your family land. In fact, according to Stuart H. Smith, if Hilcorp makes a big mess of your land, they want legislatures to make sure to pass laws that make them entirely immune to liability: 

"Hilcorp, the largest oil producer in Louisiana, purchased the Erath Field from Texaco in 1995 at the dramatically discounted price of $1.5 million. One of the reasons Hilcorp was able to acquire the southern Louisiana oilfield on the cheap is that Erath came saddled with a significant environmental liability. That is, liability in the form of contamination, including asbestos and radioactive waste (primarily radium-226) from past production processes.

Since the 1995 purchase, Hilcorp has made more than $100 million operating in the Erath Field. Not a bad return on investment, even by bloated oil industry standards. But now, much to Hilcorp’s indignation, there are landowner lawsuits pending that threaten to cut into the company’s record-breaking profits. But Hilcorp and its fat-cat CEO Jeffery Hildebrand have no one to blame but themselves.

As part of the 1995 deal, Hilcorp assumed Texaco’s legal obligation to clean up the toxic material left on private property. That legal obligation is clearly stated in the 1995 Purchase and Sale Agreement that formalized the transaction. Further­more, Hilcorp promised to indemnify Texaco for any damages caused by historical operations in the field. In other words, Hilcorp —like many other oil producers that purchased discounted fields —assumed all liability for all contamination at the site."

Samuel James Broussard

"These are contract cases, pure and simple. Hilcorp is violating the terms of its contract requiring a complete cleanup of the existing contamination in the Erath Field.
Despite the absence of any sort of legal leg to stand on, Hilcorp — and dozens of other smaller oil companies across Louisiana — have orchestrated an aggressive campaign to deny landowners their day in court. The industry is putting heavy pressure on the Republican-controlled state legislature to pass a bill that would strip landowners of their legal right to sue oil companies (like Hilcorp) for damages to their private property." (http://www.louisianaweekly.com/letter-to-the-editor-contractual-obligations-and-toxic-waste/).

And if you think the oil and gas industry doesn't own every bit as much of Pennsylvania's governors and legislature, you just haven't been paying attention. 

Let's take one more look at the KidneyCorp analogy:

Kidney (Hil) Corp: If another surgeon makes a big mess of the rest of your body while they're extracting your kidney, and they leave that mess behind, and I buy out their surgical practice, and I agree that cleaning up their mess was part of the bill of sale, well, I didn't mean that, and I am going to make sure to buy whatever legislators I need to to make sure I don't pay a dime, and that you can't sue me.

You: That doesn't seem at all fair. After all, you agreed to take on the liability of the surgeon who left my body in this state of damage. In fact, it can't be restored, but you ought at least be liable for remediation.

Kidney (Hil) Corp: We damn sorry. Got-ta git a'go'in--we hear the Utica a'calling (said aloud in your best Texas accent).

Still not convinced that HillCorp stands for "conscienceless profiteering"? 

• Ohio, 3.10.14: "Ohio authorities shut down a hydraulic fracturing, or fracking, natural gas operation in Mahoning County on Monday after two earthquakes were felt in the area, near the Pennsylvania border...The quakes registered magnitudes of 3.0 and 2.6, the U.S. Geological Survey’s National Earthquake Information Center...The Ohio Department of Natural Resources (ODNR) halted operations of Texas-based Hilcorp Energy — which conducts fracking in the area — while experts from the department analyze data from the earthquakes" ((http://america.aljazeera.com/articles/2014/3/10/ohio-earthquakeslinkedtofracking.html).
  
• Louisiana, 11.15.12: "The Hilcorp Energy Company of Houston has been fined $26,100 by the Environmental Protection Agency for Spill Prevention, Control and Countermeasure violations under the Clean Water Act. A March 28, 2012, inspection of the South Pass Block 24 offshore oil production facility in Plaquemines Parish, Louisiana, found the company failed to address secondary containment for spilled gasoline and collection of oil discharges. The spill prevention and countermeasure plan did not provide a spare pump or method of activation for surface and underground valves at the facility, and the company had not developed or implemented a response plan to address a major oil discharge" (11/15/2012: Hilcorp Energy Company Fined for Violating the Clean Water Act).

• Colorado, 11.20.11: Hillcorp drills a well a small field away from an entire subdivision of homes in Commerce City where land between the subdivision and the well had been ear-marked for an elementary school. Concerned about the possibility that this could be the fate of other communities in Colorado, the Colorado Springs Citizens for Community Rights "has sued the city of Colorado Springs in an effort to move forward a petition to amend the City Charter to ban oil and gas drilling in the city (Colorado Springs group sues to allow vote on fracking ban - The Denver Post http://www.denverpost.com/ci_23214709/colorado-springs-group-sues-allow-vote-fracking-ban#ixzz2wAntzj3d).

But the most egregious case comes perhaps from the beautiful state of Alaska:

Hilcorp pays $115,000 penalty for drilling violations | State News | ADN.com

Hilcorp has paid a $115,500 civil penalty for the latest in a string of enforcement actions drilling regulators have taken against the company during its brief time as an oil and gas operator in Alaska.The Alaska Oil and Gas Conservation Commission says Hilcorp has drawn more than a dozen enforcement actions.The most recent case centers on an oil development well known as Soldotna Creek Unit 44-33. The Soldotna Creek unit is associated with the Hilcorp-operated Swanson River field.Hilcorp failed to notify the AOGCC of changes to an approved permit to drill. And the company failed to test blowout prevention equipment after it was used to control the well, the commission said.The agency suggested the company's vigor since arriving in Alaska had been a problem."The aggressiveness with which Hilcorp is moving forward with operations appears to be contributing to regulatory compliance issues," said an April 10 decision and order from the commission. "Since Hilcorp commenced rig work in Alaska in April 2012, AOGCC Inspectors have observed rig crews unable to perform required BOPE component tests, rig crews not trained in use of well control equipment, and rigs with missing required equipment. Hilcorp's compliance history from April through December 2012 -- including this enforcement action -- shows 13 separate enforcement actions of varying severity since April 2012."The order continued: "Many of these actions were due to a failure to understand regulatory requirements. Strong evidence indicates that Hilcorp has not adequately prepared its personnel for operations in compliance with AOGCC regulatory requirements. Left unaddressed and uncorrected these and similar violations will be repeated." (http://www.petroleumnews.com/pdfarch/984194629.pdf). 

But as recently as May, 2013 Hillcorp continued its "foray" into Alaska "by picking up 19 new leases in the declining Cook Inlet" despite increasing concern raised by fishermen about the decreasing salmon stock due to "the loss and degradation of freshwater habitat," and specifically citing HillCorp:

"In August, Cook Inletkeeper contends, Fish and Game illegally issued permits allowing Hilcorp Alaska to mine boulders and fill a salmon stream in the Redoubt Bay critical habitat area in order to resume oil storage at Drift River" (Group raises new concerns about threats to Cook Inlet salmon habitat | Alaska Dispatch)

So, why should folks in Lawrence County, Pennsylvania believe that Hilcorp's modus operandi will be any less aggressive fracking the Utica-- under your land against your will--but with the blessing of the law? What kind of law is it that allows this kind of mercenary theft and ecological liquidation? 

Let's return to the facts. According to Marcellus Drilling News "The PA Dept. of Environmental Protection balked at invoking the old law to force the landowner and instead tossed this hot potato to the Environmental Hearing Board (Ironic: PA Enviro Court Forcing DEP to Rule on Forced Pooling | Marcellus Drilling News). That's code for "Predictably, DEP too cowardly to tell Hillcorp no." But the Environmental Hearing Board claims--and likely rightly--that it does not have this sort of jurisdiction. 

Photograph by Wendy Lynne Lee

So back the decision goes to DEP, and with it a hearing on 3.25-6, 2014--with virtually no public notice--and the potential to set a precedent for the state that, as an effective antidote to the upset stomach drillers got over Act 13's ignominious demise, could make Pennsylvania not merely the Saudi Arabia of natural gas--but the wild wild west. 

And if you're thinking that sounds romantic or exciting, think again, cuz' the only thing that will be left is a poisoned desert otherwise known as a superfund site. 

Now, time to get on your boots--the ones with the spurs--and saddle up for that hearing: March 25 and to be continued at 8 a.m. March 26 in the Penn State Extension conference room in the Lawrence County courthouse. It will be open to the public (Firm seeks to force drilling on landowners » Local News » The Herald, Sharon, Pa.).

For some other sources, please see:

http://www.dispatch.com/content/stories/local/2014/03/10/ODNR-shuts-down-fracking-operation-following-earthquakes.html

http://america.aljazeera.com/articles/2014/3/10/ohio-earthquakeslinkedtofracking.html

http://yosemite.epa.gov/opa/admpress.nsf/0/54E975706D206FAB85257AB70069E41E

http://www.forbes.com/sites/halahtouryalai/2012/10/03/guess-whos-fueling-the-fracking-boom/

http://gomarcellusshale.com/group/lawrence-county/forum/topics/hilcorp-lawrence-county-pa-well-pads

http://www.alliednews.com/local/x1783680279/Violations-drilling-permits-recounted#sthash.jEZ3gjOz.dpuf

Skytruth Alert: PA Permit Violation Issued to Hilcorp Energy Co in Jefferson Twp, Mercer County 2014-01-15

http://theadvocate.com/csp/mediapool/sites/dt.common.streams.StreamServer.cls?STREAMOID=qBRfsLD0sREKVn6eG4HXOJM5tm0Zxrvol3sywaAHBAlYnNN7y0yPxseDnjbzPlxvE0$uXvBjavsllACLNr6VhLEUIm2tympBeeq1Fwi7sIigrCfKm_F3DhYfWov3omce$8CAqP1xDAFoSAgEcS6kSQ--&CONTENTTYPE=application/pdf&CONTENTDISPOSITION=Jefferson%20Original%20Petition%20-%20Jeff%20v%20Chevron%20_Lafitte_.pdf

Commerce City approves fracking rules - The Denver Post

Read more here: http://www.adn.com/2013/06/14/2940176/hilcorp-pays-115000-penalty-for.html#storylink=cpy