Sinking gas prices put Hopewell's fortunes on hold
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Around Hopewell in Washington County, Range Resource's blue-and-white drilling permit signs are as ubiquitous as the green hills they dot. The signs are posted everywhere: in the middle of corn fields, at the front of residential driveways, behind local diners.
Located in the heart of the Marcellus Shale natural gas region, Hopewell is the most densely drilled township in Pennsylvania. Drilling has proceeded consistently through the last five years, and some of the earliest land leases to allow for drilling were taken out in 2005.
Residents said that by last year the majority of the 950-person community had a tie to the shale industry, as property lessees or simply beneficiaries of the growth drilling brought to town.
These days, the drilling is slowing -- though not stopping -- as the result of declining natural gas prices. In the wake of the shale rush comes new attention paid to transporting the gas by laying pipeline. The shift has some in the area worried that the prosperity hydraulic fracturing initially brought the town may not be long-lasting, or delivering on its promises.
"You can see the slowing down," said David Carlisle, one of the township supervisors. "It's like opening a valve. You get a lot of water to start with, and then you get less."
Mr. Carlisle said Range hasn't applied for new permits since early spring, whereas a few years ago, the company was planning each permit a year or two in advance.
Of the nearly 70 drilling permits applied for in Hopewell since 2008, 47 are listed on Department of Environmental Protection's latest records as active producers of natural gas; the rest aren't producing, either because drilling hasn't occurred or because they haven't been linked to pipelines. And DEP records show no new permits taken out in Hopewell after July 2010.
Several large properties that leased with Range as early as 2008 have not yet been drilled, and Mr. Carlisle said he knows of at least two sites leased to Range that remain outstanding and untouched.
He estimated about two-thirds of the drillable land in the township was already leased to Range, adding that company officials have told him it will be as long as a year or two before they come back to drill the rest of the land.
A local couple, Jean and Peter Pleska, said they felt cheated by the lease they signed with Range in 2011. They held out, said Ms. Pleska, 71, hoping to get more money for their 18-acre property. But they ended up receiving only $100 an acre, while their son down the road got $500 an acre for an area the same size. And there has been no drilling on their property yet, so they haven't seen any royalties.
"The people that are satisfied with [drilling] are the people who have made a whole lot of money off it," said Mr. Pleska, 75.
He and his wife were told by Range that drilling on their property won't happen anytime soon, because gas prices are too low.
Prices dropped in summer 2011 and the low numbers carried through this summer, according to data from the U.S. Energy Information Administration.
In Hopewell, there's still an insistence that the drilling will soon pay off, even if it hasn't put money in everyone's pockets just yet. Residents say six years ago Hopewell was a ghost town. Today, it's full of "out-of-towners" who bring their business and muddy boots traipsing through.
And local companies are booming: Among others, Brownlee Trucking and Red Oak Water Transport, both based out of southwestern Pennsylvania, have signed lucrative contracts with Range.
But when people start talking a little longer, they add that they're not sure how much longer the pleasant side effects will last.
"I'm worried," said a pipeline engineer for Alex E. Paris Contracting Co., based near Avella. He would not give his name because he is not allowed to speak to the press.
"There's a lot more work now, in the last five years, but I'm not sure about the lifetime of the drilling."
Several other workers for local companies echoed his concerns -- none were allowed to speak to reporters, and all of them worked with Range Resources or its pipeline partner company Mark West.
Nearly everyone in the area has a stake in the drilling. Two out of three township supervisors, including Mr. Carlisle, hold leases. Range also has drilled in the Cross Creek County Park, which is public land, and Mark West has built pipeline under about 20 of the town's roads.
Hopewell business owners like Alice Esposta, 85, who has run Breezy Heights Tavern and Restaurant for 58 years, are inextricably linked to the industry as well. Ms. Esposta said her restaurant had seen increased profits and interest during lunch hour -- so much that she has to open an hour early.
Other restaurants like Pizza Casa, a diner in Independence Township, have begun a breakfast hour to serve workers as early as 7 a.m.
Ken Romano, a manager for U.S. Foods, which supplies many of the restaurants in the areas, said his customers had been able to afford larger deliveries in recent years, but that starting new businesses is still cost-prohibitive for most people. He said the industry will have to stick around for a long time before businesses can successfully start up and continue.
"It's probably kept a lot of people above the failing mark," he said. "But even in this area, I'm seeing a low number of deliveries, overall."
Mr. Carlisle, the township supervisor, said five dairy farms had failed in Hopewell just in the last few years. And while drilling is happening on farmers' land, they're not growing on it; Mr. Carlisle said it takes up to three years for the land to regain fertility after it has been drilled using hydraulic fracturing technology, which shoots treated water into shale formations underground to release gas.
In this interim stage, while the drilling isn't providing much new wealth for landowners, it's the laying of pipeline that might offer some residents more cash flow. Mr. Carlisle, like many other landowners, received compensation-per-foot on the pipeline Mark West built through his property; he declined to say how much he was paid.
Public records of the exact numbers and locations of pipelines are privileged information for security reasons, but Robert McHale, a spokesman for Mark West, said the company has only laid "a handful" through Hopewell so far, with more to come. In Washington County's 861-square-mile area, there are more than 962 miles of piping, according to Pennsylvania's Public Utility Commission, which regulates certain pipelines.
Some of the work associated with drilling may spill over to pipelining, since Mark West relies on some of the same companies that worked with Range for the initial drilling, workers said. They added that even after drilling is done or if the slowing continues, transport, maintenance and construction jobs will remain available.
But many local workers learned to do specialized jobs when drilling started, like Ian Hyslop, who works in water transportation for Red Oak; Mr. Hyslop already underwent nearly three months of training before he could work on well pad sites. He and his co-workers said their jobs depend on more drilling.
Mr. Hyslop added that if drilling slows, he would try to get a job welding or working in equipment on the pipeline side of things. Still, several engineers and environmental impact assessors who work on pipeline drilling said that work is limited, too.
If the jobs and sudden influx of new prosperity in the area start drying up, Hopewell might end up right back where it started.
Rick Olenick, who drives trucks for a company that levels land to be drilled, remembers what Hopewell used to look like.
"There's no industry here. Nothing. Just farms," he said.
Each three- or four-mile pipe takes only a few months to finish. Workers estimated their jobs around Hopewell would last five more years -- a long time frame in the often nomadic lives of drillers, but not as long as some would like.
"There's only so much natural gas," said Joey Vincent, a 24-year-old pipe fitter. Mr. Vincent moved to Pennsylvania from Michigan nearly four years ago for the work, but doesn't expect to settle here. "Eventually it's going to slow and I'm going to want to look somewhere else."
First Published August 27, 2012 12:00 am