Sunday, December 13, 2009

Fasting activists inspiring others in Copenhagen to hang tough and demand Climate Justice NOW!

"I support Climate Justice Fast!" sent you a message on Facebook...‏
From: Facebook (notification+pu1pu1md@facebookmail.com)
Sent: Sun 12/13/09 4:23 PM
To: Aubrey James Shepherd (aubreyshepherd@hotmail.com)
Anna C Keenan sent a message to the members of I support Climate Justice Fast!

--------------------
Subject: Hunger for Survival - Thursday 17 December 2009

Hello, Climate Justice Fast supporters,

http://www.facebook.com/anna.c.keenan?ref=profile#/event.php?eid=227106867068&ref=mf

During the COP15 conference, the Climate Justice Fast here in Copenhagen has inspired people around the world to higher levels of activism, and has generated a huge number of media hits from Turkey to Japan to Greece to Korea and all around the world!

Due to the inspiration that the fasters have provided to - in particular - the 1000-strong youth activist contingent at the conference, the youth groups and a number of large environmental organisations have decided that they would like to invite their members to fast for one day - THIS THURSDAY 17 DECEMBER - in support of the CJF, and solidarity with the millions who have and will lose their lives due to the preventable and involuntary hunger, disease and conflict resulting from climate change.

We have created a facebook event here - sign up if you are willing to join the day of fasting and reflection: http://www.facebook.com/anna.c.keenan?ref=profile#/event.php?eid=227106867068&ref=mf

Many notable climate and sustainability leaders, including Vandana Shiva, will also be joining in this fast and moral call.

“If not us then who, and if not now then when?”

One day before the Heads of State arrive to finalise the deal in Copenhagen, we are calling for all people, everywhere across the world, to join a single global day of fasting – voluntarily going without food – and personal reflection on the climate crisis, and what we as humanity need to do to solve it.

Commit to join the day of fasting by joining this facebook event - and inviting all of your friends!

http://www.facebook.com/anna.c.keenan?ref=profile#/event.php?eid=227106867068&ref=mf

Now, we must be done with trying to persuade politicians with debates and intellectual argument. They have heard it all already. Now they face a decision about what is simply morally right.

On Thursday 17th December, we will therefore not yell, but instead quiet our voices and raise up our hearts in silence, not telling our leaders what they should do, but instead use the historically symbolic and powerful act of the fast to ask our leaders to reflect on the gravity of the choices they are about to make.

http://www.facebook.com/anna.c.keenan?ref=profile#/event.php?eid=227106867068&ref=mf




*** UPDATE on the fasters ***

Sara Svensson, Anna Keenan and Paul Connor are all now on the 39th day of their fast, having started on the 6th of November. Matthieu Balle, a solar panel installer from Paris who joined us immediately after hearing about us on French radio, is now reaching his 22nd day. Daniel Lau and Michael Morphett have both bravely decided to end their fasts, following medical advice, after both passing 30 days without food - a heroic feat.

The fasters are all in high spirits and good health, and are under appropriate medical supervision.

****

Tuesday, December 1, 2009

SWEPCO raises rate but gets only half what it requested from the PSC

Swepco Raises Rates for Arkansas Customers
By The Associated Press - 11/25/2009 12:24:00 PM


LITTLE ROCK - Southwestern Electric Power Co. has won regulatory approval for two rate hikes for its Arkansas customers.

Swepco said Wednesday that a base rate increase in December will raise residential bills by 5 percent, or $3.84 for a customer using 1,000 kilowatt hours per month. A second increase will go into effect upon completion next summer of a 508-megawatt, natural gas-fueled power plant in Shreveport, La. To help pay for the $386 million plant, Arkansas customers will see an increase of 4¼ percent, or $3.17 a month for 1,000 kilowatt users.

Combined, Swepco customers will pay 9.41 percent more for electricity, or $7.01 per month for 1,000 kilowatt users. That comes to $84 per year. The total is less than half that SWEPCO originally sought.

Swepco withdrew an increase it requested to pay for the $1.6 billion coal-fired electric generation plant it is building in southwest Arkansas. The Arkansas Court of Appeals in June rejected the permit the PSC granted for the John W. Turk plant in Fulton County.

"If the certificate for the Turk Plant is confirmed by the Arkansas Supreme Court, Swepco will return to the APSC with a request for recovery of financing costs during construction of the plant," the company said in a news release.

The PSC approved a settlement agreement that provided lower rate hikes than Swepco had sought. Swepco originally wanted $53.9 million, including $25.3 million for cost-of-service and $28.6 million for recovery of financing costs for building the Stall Unit in Shreveport and the 600-megawatt Turk Plant. Customers would have paid 17.7 percent more - $15.43 per month or $185 per year - under the original request.

Swepco has 113,500 Arkansas customers.

The 5 percent increase is for the utility's base rate, which covers costs of building, maintaining and operating the company's electric system. Fuel cost isn't included in that rate, which is the sou rce of most rate hikes.

Swepco says the base rate increase is its first since 1985.

(Copyright 2009 The Associated Press. All rights reserved. This material may not be broadcast published, rewritten, or redistributed.)

Wednesday, November 4, 2009

The nation's top newspaper exposes the loophole in environmental-protection rules

November 3, 2009
EDITORIAL
The Halliburton Loophole

Among the many dubious provisions in the 2005 energy bill was one dubbed the Halliburton loophole, which was inserted at the behest of — you guessed it — then-Vice President Dick Cheney, a former chief executive of Halliburton.

It stripped the Environmental Protection Agency of its authority to regulate a drilling process called hydraulic fracturing. Invented by Halliburton in the 1940s, it involves injecting a mixture of water, sand and chemicals, some of them toxic, into underground rock formations to blast them open and release natural gas.

Hydraulic fracturing has been implicated in a growing number of water pollution cases across the country. It has become especially controversial in New York, where regulators are eager to clear the way for drilling in the New York City watershed, potentially imperiling the city’s water supply. Thankfully, the main company involved has now decided not to go ahead.

The safety of the nation’s water supply should not have to rely on luck or the public relations talents of the oil and gas industry. Thanks in part to two New Yorkers — Representative Maurice Hinchey and Senator Charles Schumer — Congress last week approved a bill that asks the E.P.A. to conduct a new study on the risks of hydraulic fracturing. An agency study in 2004 whitewashed the industry and was dismissed by experts as superficial and politically motivated. This time Congress is demanding “a transparent, peer-reviewed process.”

An even more important bill is waiting in the wings. Cumbersomely named the Fracturing Responsibility and Awareness of Chemicals Act, it would close the loophole and restore the E.P.A.’s rightful authority to regulate hydraulic fracturing. It would also require the oil and gas industry to disclose the chemicals they use.

The industry argues that the chemicals are proprietary secrets and that disclosing them would hurt their competitiveness. It also argues that the process is basically safe and that regulating it would deter domestic production. But if hydraulic fracturing is as safe as the industry says it is, why should it fear regulation?
The New York Times, November 2, 2009

Thursday, October 15, 2009

Ducks Unlimited Banquet October 29, 2009, in Fayetteville, Arkansas

Please click on images to move to Flickr site and use magnifying tool above photo to ENLARGE for easy reading.
09
09

Tuesday, October 13, 2009

Green Groups Guild meeting Thursday

From: Green Groups Guild (ggg@listserv.uark.edu) on behalf of ggg (ggg@UARK.EDU)
Sent: Tue 10/13/09 2:31 PM
To: GGG@LISTSERV.UARK.EDU

Meeting 10/15/09 7:00 p.m.
209 Thompson Ave. Three Sisters Bldg on Dickson above Fez Hookah Lounge.
Patrick Kunnecke
GGG President
ASLA Vice President
4th Year Landscape Architecture Student
479-544-1906

Tuesday, October 6, 2009

Runners and Sponsors sought for Nov. 7, 2009, 5K veterans' memorial race to benefit Fayetteville National Cemetery

Please click on image to move to Flickr site and ENLARGE for easy reading. The Regional National Cemetery Improvement Corporation meets at 10:30 a.m. Saturday October 10 and needs to add sponsor names to the file for the race T shirts and the brochures so that printing can begin. Already, Tyson Foods has donated at the Medal of Honor level and has challenged others to join them at the top of the list, thanks to the effort of RNCIC Secretary Peggy McClain.
RNCIC 5K sponsorship levels 09

Sunday, October 4, 2009

Slant drilling remains controversial in Fayetteville Shale natural-gas area

Drilling method sparks dispute
Gas panel, firm spar over rule
By Seth Blomeley
Sunday, October 4, 2009
LITTLE ROCK — The Arkansas Oil and Gas Commission wants to slow down some natural-gas drilling in the Fayetteville Shale, a move opposed by one of the largest producers in the shale, Southwestern Energy Co. of Houston.
“Our biggest fear is not protecting the royalty owner,” said Commission Chairman Chad White of Magnolia. “The commission is the only thing standing between the royalty owner and the [production] company to make sure the [royalty owner] is not ripped off in some way.”
But some county officials question whether the commission’s proposal would lead to more wells being drilled and heavy equipment causing more damage to roads.
“The less wells we have dotted all over the landscape the better [for the roads],” said Faulkner County Judge Preston Scroggin.
The nine-member commission unanimously passed a rule during its July meeting aimed at monitoring types of wells in the Fayetteville shale.
But Southwestern, county officials and some others stood ready to voice opposition during a Sept. 15 meeting of a legislative committee that reviews agency rules and regulations and decides whether to sign off on them.
Anticipating a roughreception in the committee meeting, Larry Bengal, the executive director of the Oil and Gas Commission, asked for the rule to be taken off the agenda, and it was.
Bengal said Southwestern opposes the rule change because it could slow down production in some wells by a month or so.
He’s now working with Southwestern to find a middle ground to present to the commission during its Oct. 28 meeting in Fort Smith.
The Fayetteville Shale natural-gas deposits, located in north-central Arkansas, have been an economic boon to the state, and some officials, including Gov. Mike Beebe, have credited the drilling activity for cushioning the blow of the recession in the state.
From 2008 to 2009, the number of wells in the shale grew from 679 to 1,388.
The disagreement between the commission and Southwestern is over what’s called “cross-unit” drilling.
Much of the drilling in the Fayetteville Shale is horizontal, crossing property boundaries at times.
“The average [cross-drill] is now up to 4,000 feet,” Bengal said. “Some are proposed for 6,000 feet or so.”
That can mean that multiple landowners, gas producers and royalty owners are due proceeds from the sale of the gas.
Bengal said the commission in 2006 developed a way to allow cross-unit drilling using a formula that divides up proceeds on a percentage basis depending on the well.
“We’re the only state that does this,” he said. “It’s a unique methodology. Although I cannot say with absolute certainty no other state has adopted a similar cross-unit-well approach, I am not aware of the issue being addressed similarly in any other major oil- and gasproducing state.”
Officials with the Interstate Oil and Gas Compact Commission in Oklahoma City and the Gas Processors Association in Tulsa didn’t return messages last week.
Arkansas’ cross-unit drilling procedure was established with the purpose of facilitating development of the Fayetteville Shale, but since then it’s brought complications as the industry started drilling longer wells with different types of angles, Bengal said.
In March, the commission started drafting ways to revise the cross-unit drilling rule. Since then, it has gone through nine drafts, according to commission files.
The 2006 rule allows Bengal to make the call on whether to approve cross-unit wells. Parties on the losing end can appeal to the commission.
Now, with the proposed change to the rule, the commission wants to hear each of those cases.
“It’s very hard to write a rule that covers every nuance and every scenario,” Bengal said. “At the commission level, testimony from witnesses can be questioned and you can be more flexible in decisions as opposed to a strict regulatory rule.”
Natural-gas producers would prefer that staff members handle those decisions because it would take less time, he said.
In a Sept. 18 e-mail to thecommission, Southwestern Energy attorney Mark Boling said the “real problem” with the commission’s rule-change proposal is that it “does not allow director the necessary latitude” to approve each application.
Boling, through company lobbyist Danny Ferguson, declined to answer questions from the Arkansas Democrat-Gazette.
Instead, Boling issued a statement that Southwestern’s goals are to “minimize waste” of natural gas, protect rights of royalty owners, “minimize surface disturbance,” and “promote efficient development” of natural gas in the Fayetteville Shale.
A form letter to the commission from opponents, including Southwestern and several county judges, touted cross-unit drilling as a way to reduce the number of wells being drilled, and the access roads and heavy equipment needed to drill them.
The commission countered in papers prepared for the legislative committee that it wasn’t against cross-unit drilling but only wanted to change the approval process.
But White, the commission chairman, said the commission also wants to require that a well be drilled on each drilling section, which is one square mile.
That’s only fair to royalty owners, he said.
Without a well to himself, one royalty owner could only get a percentage of the revenue from the “little sliver” of the cross-unit well coming onto his land from a neighboring section, he said.
What about road and environmental concerns of drilling more wells?
“We’re trying to allow as many wells drilled off the same pad as we can,” White said.
He described a pad as a place where heavy equipment can drill wells in several locations, including other sections, with separate wellheads. He said that would eliminate road damage. But he said more pads may have to be built in some cases.
It’s unclear how another major shale driller, Chesapeake Energy of Oklahoma City, feels about the commission’s plan. White said the company was OK with it. Bengal said they opposed it.
A Chesapeake spokesman, Danny Games, said he was unfamiliar with the issue.
White said he understands the industry seeking to maximize profits, especially with the low price of natural gas. It’s down to $4.64 per 1,000 cubic feet but the price needs to get up to $8 to $10 for the high cost of horizontal drilling to be profitable, he said.
Beebe said last week that he’s studying the issue and has been kept apprised by staff of the debate.
“I hope the commission would be very mindful and protective of the landowners,” Beebe said. “[Royalty owners] don’t normally have as much day-to-day background and knowledge as the [production] companies do.”
The governor said the commission must be the “guardian” of the rights of royalty owners.
Of the nine commissioners, five have either been appointed or reappointed by Beebe, who took office in 2007. The other four were appointed or reappointed by former Gov. Mike Huckabee.
Arkansas, Pages 17, 19 on 10/04/2009

Copyright © 2009, Arkansas Democrat-Gazette, Inc.
All rights reserved.
This document may not be reprinted without the express written permission of Arkansas Democrat-Gazette, Inc.

Material from the Associated Press is Copyright © 2009, Associated Press and may not be published, broadcast, rewritten, or redistributed. Associated Press text, photo, graphic, audio and/or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. Neither these AP materials nor any portion thereof may be stored in a computer except for personal and noncommercial use. The AP will not be held liable for any delays, inaccuracies, errors or omissions therefrom or in the transmission or delivery of all or any part thereof or for any damages arising from any of the foregoing. All rights reserved.

Thursday, September 10, 2009

League of Women voters sponsoring discussion of Arkansas' electric future on September 23, 2009

Concerned about a proposed SWEPCO rate increase and developing energy efficiency?
A panel of experts will discuss the electrical power dilemma facing
Arkansas and ratepayers during a public information program
moderated by Hoyt Purvis, University of Arkansas Journalism Department.
Wed., Sept. 23, 2009, from 6:00 to 8:00 at the Fayetteville Public Library
This is also a special LWVWC membership invitation event. Come early, 5:30 to 6:00, for refreshments and visit the membership table before the program for more information.
Topic:
Arkansas finds itself with a need to expand electrical production at the same time it has overcapacity. A controversial coal-fired generating plant, choice of what fuels should be used in the future, an urgency to upgrade transmission, serious environmental concerns and ratepayer costs combine for a perfect “electrical” storm. Learning what Arkansas is facing and what that means to ratepayers is the focus for this League of Women Voters of Washington County’s public program.
Panel Participants:
Sandra Byrd, VP, Strategic Affairs, Arkansas Electric Cooperative Corporation and former chair of the Arkansas Public Service Commission
Nicholas Brown, President and CEO of Southwest Power Pool, Inc.
Ken Smith, Executive Director of Audubon Arkansas, an organization involved in the lawsuit over the J.W.Turk, Jr. coal-fired plant
Eddie Moore, an attorney working with Audubon on electric efficiency and ratepayers issues and representing the Arkansas Public Policy Panel on energy issues during the 2009 legislative session

Monday, August 10, 2009

PSC chairman spins threat of major ratepayer costs if coal-fired plant not built

Gladys - I believe it was you who asked, at the CCTF meeting a week ago, what was the effect and the status of the recent Ark Appeal Court's judgement against the Turk coal plant. This rather long article is a pretty complete answer to that question. Cheers - Art

Date: Sun, 09 Aug 2009 10:00:00 -0500
From: slcox1@aep.com
Subject: Fw: PSC Chairman Suskie comments on court of appeals ruling of SWEPCO
Turk plant - Ark Business
Swepco Ratepayers Could Be on Hook for Cost of Turk Plant

PSC Chairman Paul Suskie: "If the Court of Appeals' ruling stands, I don't see how a plant can get built anywhere in the state of Arkansas, period."

By Jamie Walden
8/10/2009

"If the Court of Appeals' ruling stands, I don't see how a plant can get built anywhere in the state of Arkansas, period. Whether it's a solar farm, a wind farm, you're going to have to have, I think, amendments to law," Suskie said. "Because of the way the Court of Appeals interpreted it, you would have to have a fundamental rewrite."

Swepco Ratepayers Could Be on Hook for Cost of Turk Plant
By Jamie Walden - 8/10/2009
If Southwestern Electric Power Co. can't complete its embattled John W. Turk Jr. coal-fired power plant in Hempstead County, Swepco customers in Arkansas and elsewhere could be on the hook for more than $876 million.
The case, now on appeal to the Arkansas Supreme Court, appears to hinge on three major issues, one of which could permanently alter the approval process for power plants in Arkansas.
In early 2007, three private hunting clubs and a family trust launched an offensive on the Turk plant, claiming it would harm the environment. In June, the plaintiffs won their case in the Arkansas Court of Appeals. The argument by Hempstead County Hunting Club Inc., Po-Boy Land Co. Inc., Yellow Creek Corp. and Shultz Family Management Co. targeted the approval procedure by the Arkansas Public Service Commission and simultaneously argued that Swepco didn't adequately document a need for the Turk plant or its evaluation of alternative locations.

The PSC regulates the construction and location of power plants under the Utility Facility Environmental & Economic Protection Act of 1973. A company must obtain a Certificate of Environmental Compatibility & Public Need, or CECPN, to build a plant.
The PSC also wields the authority to approve the transmission lines that transport the power generated by the plant.
Ever since legislators wrote the utility act in 1973, the PSC has interpreted the method of handing down these approvals in one consistent way. But recently the Arkansas Court of Appeals said the PSC has been doing it wrong all this time.
And/Or
The contentious clause grants the Public Service Commission exclusive and final jurisdiction "for the expeditious resolution of all matters concerning the location, financing, construction and operation of electric generating plants and electric and gas transmission lines and associated facilities in a single proceeding."
The PSC has, for the past 36 years, interpreted the "single proceeding" to mean an issue is heard solely by the commission. "Not in a district court or a circuit court here, not in front of one state agency here, have it all in one place," PSC Chairman Paul Suskie said.
Furthermore, the use of the word "and" in that construction - "electric generating plants and electric and gas transmission lines and associated facilities" - has led the PSC to handle the construction of a plant in one docket and the transmission lines in another docket. Despite the division of those hearings, the PSC thought it was following the law because the proceeding was held by one body.
The Arkansas Court of Appeals, however, interpreted that phrase to mean the plant construction, transmission lines and associated facilities should all be part of one hearing.
"Piecemeal consideration of all the matters concerning a generating plant and its transmission lines corrupts the spirit and letter of the law," the appellate court wrote.
Suskie said that Ed Dillon, an attorney with Entergy in 1973 who helped the PSC staff write the legislation, filed the first application for the White Bluff coal-powered plant in Redfield just months after the legislation was passed. Dillon, with first-hand knowledge of the law, separated the plant application from the transmission lines application.
"It's pretty compelling to me when the attorneys that wrote the law then months later apply it that way," Suskie said.
The Court of Appeals disagreed and was unmoved by the "we've always done it this way" argument.
"Significantly, the APSC's procedure of separating generating plants from transmission lines in CECPN proceedings has never been challenged in a court proceeding. The mere fact that the practice has gone unchallenged cannot create a presumption that it is proper," the appellate court wrote.
Suskie said the PSC contemplated the transmission lines in the first proceeding, but didn't approve the transmission line sites until the second hearing. However, he said that in the first proceeding to approve the plant, the PSC dictated certain rules that Swepco must follow when siting the transmission lines.
The PSC addressed the transmission lines "on the front end because in the orders, we put conditions upon it. And some of those conditions were, 'You could not run transmission lines over sensitive areas and the interveners' property,'" Suskie said.
In this case, the hunting clubs were some of those interveners.
The determination of the sites where the transmission lines would run, however, occurred during a different proceeding. And the plaintiffs argued that affected parties, such as property owners, should know the whole plan, including the sites of the transmission lines, before a plant is approved.
Part of the commission's duty, though, is to make the process "as expeditious as possible." Separating the hearings does just that, Suskie said.
"If you did all those at once, it would extend the time frame. ... It could easily run two years, but the statute requires the Arkansas commission to do it as 'expeditiously as possible,'" Suskie said.

"In the way this case was handled, the Turk plant was approved. And then after it was approved, [Swepco] continued with the processes for approvals, the air permit and so forth. Well, after that took place, we were still in the process of siting the transmission lines."
The PSC approved the Turk plant in November 2007, and then finally gave the nod to the plant's transmission lines in January.
The division of hearings can also be convenient for out-of-state businesses. Because a plant, depending on the size, can often take longer to build than the laying of transmission lines, the time needed to bring an operation online is shorter if a business can start earlier on the plant.
A Question of Need
Regardless of how the Supreme Court rules on the question of whether two PSC proceedings complies with the law - if, that is, the high court chooses to hear the case when it reconvenes after Labor Day - the plaintiffs still allege there is no need for the Turk plant. And proving need is one of the first hoops through which a utility provider must jump before getting a CECPN.
Charles Nestrud of Chisenhall Nestrud & Julian PA of Little Rock, which represents the groups challenging the project, pointed to Swepco's market in Texas.
Because transmission lines for the Turk plant cross state lines, Swepco also had to present its case before public service commissions in Texas and Louisiana.
"Swepco's need has deteriorated. In the Texas proceeding, they couldn't project that they needed this power plant because the need had evaporated," Nestrud said. "If you look at their latest [annual report], their wholesale sales are down, their retail sales are down."
Paul Chodak, president and chief operating officer of Swepco, disputed the notion that the need for the Turk plant had disappeared.
"Now, have we seen an economic downturn? Sure, we've seen an economic downturn. But we're building this plant to last the next 40 years, really the next 60 years," Chodak said. "So what the economy does in a two-year time frame is not the basis by which you build a plant."
Nestrud also contended that a natural gas plant makes more fiscal and environmental sense than a coal plant.
"We believe that now with the cost of this plant having escalated the way it has, with the gas prices having decreased below anybody's projections, and with the cost of carbon-capture for coal plants, this plant could never survive in a cost comparison of alternatives," Nestrud said.
Chodak said Swepco aims for energy diversity with a current portfolio of 60 percent coal plants and 40 percent natural gas facilities.
"To point to one summer where natural gas prices are low - and I'm sure they're forecasted to stay low into the future - I would urge you to go back and look at what gas prices were last year," Chodak said.
"The certainty about forecasts is that they are wrong. I don't know if they are wrong high or if they're wrong low."
Alternative Locations
Finally, the Court of Appeals cried foul at the treatment of alternative locations during the process.
"Swepco's application states that the Hempstead site was selected because it was large enough to accommodate the facility, had water supply, had nearby rail access, and had a property owner willing to sell," the appellate court wrote. "The other sites were not mentioned.
"Staff witness Clark Cotton admitted that Swepco's [environmental impact statement] did not contain a description of the comparative merits and detriments of each alternative location as required" by a section of the utility act.
Plaintiffs' attorney Nestrud agreed. "They didn't look at need and compare that to environmental impacts and to alternatives that were available. So when all that occurs, I don't agree that it's a forgone conclusion that they're going to get a certificate."
Court of Appeals Judge Josephine Linker Hart, in her concurring opinion, addressed what has become a major point of controversy in the case: why the "mostly idle" Union Power Station plant in El Dorado, owned by Entegra Power Group LLC, wasn't considered as an alternative location.

Suskie said that Entegra didn't bid on the Arkansas project and thereby fulfill certain requirements held by the Louisiana Public Service Commission. For the past 10 years, the Federal Energy Regulatory Commission has required utilities to plan by region because transmission lines cross state borders, multiple states are involved in approving a project like the Turk plant.
"The [Louisiana commission] asked for proposals to meet that need, and Entegra never bid."
Arkansas and Texas didn't require Swepco to solicit bids.
Entegra later tried to intervene in the Arkansas docket. Though Suskie wasn't on the PSC at the time, he said the commission saw that move by Entegra as an attempt to block a competitor from entering the market.
"They didn't bid at the proper time. And then they wanted to intervene in the Arkansas docket essentially to block the plant from being built because it's competition," Suskie said.
Holding the Bag
Although Swepco, which has 113,500 customers in Arkansas, has the most cash in play, other parties stand to be affected by the outcome of the case.
The Arkansas Electric Cooperative Corp., which has about 490,000 Arkansas customers, has a 12 percent ownership stake in the plant.
If the Supreme Court takes on the case and sides with the Court of Appeals, Swepco would be forced to restart what has been a multiple-year application process. And if plaintiffs' attorney Nestrud is right and Swepco can't demonstrate a need for the plant this time around, customers would be left holding the $876 million bag.
According to Swepco's most recent quarterly report, the company would seek to increase its rates to recoup $136 million in contract termination fees plus whatever it has invested in the plant thus far. Swepco had spent more than $740 million as of last week on the Turk plant, spokeswoman Kacee Kirschvink said.
"If the Turk Plant cannot be completed and placed in service, Swepco would seek approval to recover its prudently incurred capitalized construction costs including any cancellation fees and a return on unrecovered balances through rates in all of its jurisdictions," the filing states.
So what are the possible outcomes? Suskie said the Supreme Court could kick the case back to the PSC for more hearings, uphold the PSC's procedure or support the appellate court's decision.
"If the Court of Appeals' ruling stands, I don't see how a plant can get built anywhere in the state of Arkansas, period. Whether it's a solar farm, a wind farm, you're going to have to have, I think, amendments to law," Suskie said. "Because of the way the Court of Appeals interpreted it, you would have to have a fundamental rewrite."

Saturday, July 18, 2009

Fayetteville food drive and Washington County "stop the quarry" efforts touted on square on Saturday July 18, 2009

Please click on images to ENLARGE view of details. The finger points to the area where the red-dirt pit that owners want to convert to a limestone mine sits on the edge of Fayetteville. It is up to the Washington County Quorum Court to see that the proposal is not allowed. Residents of Fayetteville and the rest of Washington County must let their justices of the peace know their feelings about this project or it could become an even uglier disaster than shown on the poster. And the limestone pit is estimated to take 75 years to deplete!



Saturday, May 2, 2009

FarmToTable theme of today's program in the Rose Garden of the Walton Art Center with renewable-energy lecture at Night Bird bookstore at 2 p.m.

Please click on image to ENLARGE view of OMNI Springfest poster.

Please click on image to ENLARGE view of poster.

Solar Power Struggle
Professor Richard Hutchinson of Louisiana Tech University in Ruston will speak on "The Struggle for the Solar Future" at 2 p.m. on Saturday, May 2, at Nightbird Books on Dickson Street in Fayetteville, Arkansas.
An inquiry into environmental change and the obstacles and opportunities in the path of the renewable energy transition.
Sponsored by OMNI Center for Peace, Justice, and Ecology.

Tuesday, April 28, 2009

Louisiana Tech professor to discuss the struggle for the solar future Saturday afternoon at Nightbird Books on Dickson Street in Fayetteville

Please click on image to ENLARGE view of poster.

Solar Power Struggle
Professor Richard Hutchinson of Louisiana Tech University in Ruston will speak on "The Struggle for the Solar Future" at 2 p.m. on Saturday, May 2, at Nightbird Books on Dickson Street in Fayetteville, Arkansas.
An inquiry into environmental change and the obstacles and opportunities in the path of the renewable energy transition.
Sponsored by OMNI Center for Peace, Justice, and Ecology.

Wednesday, April 22, 2009

City of Clinton to treat wastewater from gas-production sites

The Morning News

Local News for Northwest Arkansas


Clinton To Begin Treating Water From Gas Drilling

By Rob Moritz
THE MORNING NEWS
LITTLE ROCK — Within two months, Clinton in north-central Arkansas hopes to begin treating water used in the natural gas drilling process, Mayor Roger Rorie said Tuesday.

Rorie said the city has reached agreements with four companies drilling for natural gas in the Fayetteville Shale play to treat the water they use, avoiding the need to store the water on so-called land farms or inject it deep into the earth.

The state Department of Environmental Quality said Monday tests found evidence of environmental contamination in 11 permitted land farms across north-central and western Arkansas. Four of those sites are located within the Fayetteville Shale formation.

"The average citizen doesn't have any idea how much water is used by one of these companies for gas drilling," Rorie said Tuesday, adding that a small drilling site may use 5 million gallons of water, while a large site may use up to 15 million gallons.

Rorie scheduled a news conference for 1 p.m. Wednesday to announce agreements with Chesapeake Energy, Petrohawk Energy Corp., Southwestern Energy Co. and XTO Energy.

Department spokesman Aaron Sadler said state environmental experts have met with Clinton officials and support the plan.

"It's probably a good thing," he said. "If everything can be recycled in a safe manner, then we see this as a big benefit to the environment. It keeps (wastewater) out of land farms and gets rid of a waste stream."

The water will be recycled in an idle sewer treatment plant the city built specifically for processing waste from the Pilgrim's Pride chicken processing plant. The plant closed in October.

Rorie said Siemens Water Technologies, an international company that already recycles water used by offshore oil rigs, is helping provide some of the technical expertise and equipment for the process.

The initial goal is to recycle 630,000 gallons of water a day at the site, with gas companies bringing their used water to the plant in 42-gallon barrels.

"We want a closed loop system where they can take the water back and use it again," he said.

Rorie said he hopes to eventually eliminate the need to store contaminated water on or beneath earth's surface where used drilling water is stored until the chlorides and other chemicals settle and it can be used for irrigation.

"We know this is going to be profitable," he said, adding he did not know exactly how much money the city would make recycling the water. "We do expect a real return ... yes, the city is going to make money, but our number one objective is to clean this water up."

Tuesday, April 21, 2009

ADEQ shows signs of life in effort to reduce massive pollution by natural-gas production sites over Fayetteville Shale

ADEQ NEWS RELEASE
A study conducted by the Arkansas Department of Environmental Quality (ADEQ) found that fluids used in natural gas production have been improperly applied by landfarms operating in the state, thus endangering the environment.

The study findings were released in a report Monday. The report indicated that existing practices had, in many cases, caused environmental harm. Particularly, all 11 sites that land applied fluids at some point had improperly discharged the fluids so as to cause runoff into the waters of the state. Also, chloride concentrations in soil used for land application were abnormally high.

ADEQ Director Teresa Marks ordered the department’s study in November 2008 because of repeated permit violations at some of the sites. At that time, Marks also halted consideration of any new landfarm permit applications until the study was completed.

“With the increase in the number of landfarms and applications for landfarms due to expanded drilling activity in the state, concerns about the resulting environmental impact warranted a closer look at these operations,” Marks said.

ADEQ has taken enforcement actions against all 11 landfarms studied and has sought to revoke permits at two of the sites. Additional enforcement actions are pending and other revocations could be forthcoming.

The study supports changes to all existing or new landfarm permits. The changes include requirements that routine soil and water sampling be conducted at specified locations in the presence of an ADEQ inspector and that fencing be erected around all on-site ponds.

“The results of the study have caused us to put additional measures in place to ensure that these facilities are complying with the terms of their permits and are not causing harm to the soils and waters of the state,” Marks said. “We recognize that there is a waste stream created by the drilling practices that must be dealt with, but we want to make sure it is dealt with in a way that will not cause harm to the environment.”

Scientists in ADEQ’s environmental preservation and water divisions prepared the report. ADEQ employees visited the 11 landfarms between November and January.
Video on environmental damage of natural-gas drilling

On many site visits, the department discovered downstream concentrations of chlorides and total dissolved solids that were higher than those taken upstream.

While landfarm permits prohibit land application of any fluid with chloride levels higher than 3,000 milligrams-per-liter, four facilities held fluids with levels over the permitted maximum.

Soil at eight of the sites contained chloride amounts that exceeded permitted limitations.

The study found that the high chloride content at some sites might irrevocably damage the soils there.

In addition, the study found at nine sites concentrations of total petroleum hydrocarbons (TPH) in amounts that suggested that application of oil-based drilling fluids had taken place. ADEQ permits strictly prohibit such application.

The full report is available on the department’s Web site, www.adeq.state.ar.us. A link to the report is located in the “Hot Topics” section on ADEQ’s home page.

Saturday, April 18, 2009

Brown thrashers among the many species to be seen on World Peace Wetland Prairie during Sunday's Earth Day celebration

Please click on image to Enlarge view of one of the many species of birds feeding and picking nesting sites on World Peace Wetland Prairie on April 17, 2009. The elusive brown thrasher is often able to slip into the thickets before a camera can capture its image. But the attraction of scattered brush piles and the excitement of mating season can make them a bit careless.

Tuesday, April 14, 2009

League of Women Voters offers two excellent speakers for Earth Day celebration

Joyce Hale reports:
The League of Women Voters would like to invite non-members to hear one or both of the special speakers we have invited to our state convention. It will be held at the Fayetteville Library on Sat., April 25. As an Earth Day activity, we think that both of these programs have important ecological messages.

Dr. Matlock's presentation is an important big picture of water issues and the reality of future needs. He gave this program to the Annual Meeting of the Fayetteville Natural Heritage Association and was so well received we asked for an encore. If you missed him there, here is a chance to see a fine presentation.

Dr. Theo Colborn is a Paonia, Colorado scientist who has won international awards for her studies of chemical influence of the endocrine system. When she found herself near one the massive natural gas development regions of the West, she and her non-profit science foundation evaluated the process in light of her years of chemical study. Her warnings of the dangers have alerted Congress and residents of impacted areas to the protections that are needed because of Federal safety exemptions granted the oil and gas industry.

I hope you will schedule one or both of these programs into your recognition of Earth Day and pass this information to others. I add more detail below. If you have any questions, please let me know.

Happy Earth Day!

Joyce

10:15 to 11:30 a.m. – "Everything is Connected: Water Quality in Arkansas and Poverty in Africa" by Dr. Marty Matlock, Associate Professor of Ecological Engineering in the Biological and Ecological Engineering Department at the University of Arkansas. Dr. Matlock is deeply involved in sustainability and the impact of humans on ecosystems, especially water. In working toward ecosystem restoration design and management he serves as an advisor for five national organizations and provides technical support for USDA FAS in the Mid-East Peace Process.

2:00 to 3:15 p.m. – “What You Need to Know About Natural Gas Production and Delivery” by Dr. Theo Colborn, who has written and lectured widely on the human health and environmental threats posed by endocrine disruptors and other industrially-produced chemicals at low concentrations in the environment. Dr. Colborn founded a scientific non-profit organization which reports environmental policy development and analysis, environmental advocacy, medical ethics, philosophy and children's environmental health. As a Colorado resident, she has studied the impact of natural gas development and is nationally recognized for warning the public of related health risks.

Monday, April 13, 2009

Game and Fish Commission to set aside gas-leasing money

http://www.nwaonline.net/articles/2009/04/11/news/041209arstatelandleases.txt
The Morning News

Local News for Northwest Arkansas


Game & Fish To Set Aside Gas Income

By The Associated Press
LITTLE ROCK — The Arkansas Game and Fish Commission says it will hold onto millions it receives from natural gas leases on state land it manages, pending a judge’s decision on whether the agency can keep the money.
A citizen lawsuit has been filed to challenge the commission’s attempt to not to share the $32 million rather than have it used as state general revenue. The agency has sought to have the lawsuit dismissed, arguing the James Dockery of Little Rock has no standing to sue.
Dockery argues that the money belongs to the state. He also says the park land may need state funding in the future to mitigate harm to the land caused by drilling.
The commission and Dockery’s lawyers reached an agreement earlier this month to keep the lease money separate.
An order released Friday by Circuit Judge James Moody Jr. said now that the state Legislature has appropriated $32,227,000 in gas lease revenue to the commission, the funds “shall be kept in a special gas lease revenue sub-fund SDG 0800 within the Game Protection Fund at the Arkansas State Treasury and the defendant will not expend any of the $32,227,000 in gas lease revenue funds until this court enters a final, appealable order or decree in this case.”
Commission attorney Jim Goodhart said the agreement constituted a “voluntary restraint on our part not to spend the money.”
“The court is being told that both parties are in agreement that the Game and Fish Commission will not expend any of the funds that were being appropriated this session by the Legislature until the court issues a ruling in the case,” he said.
Dockery’s attorney, Q. Byrum Hurst Jr. of Hot Springs, said his co-counsel, Sam Perroni of Little Rock, negotiated the deal.
“The Game and Fish Commission was very reasonable in agreeing to segregate the money,” Hurst said. “We always believed the court would’ve entered that order anyway, but, of course, you never know, and it would’ve taken some time to get that litigated.”
Hurst noted that there was testimony during the legislative session about problems arising as the Fayetteville Shale is developed by natural-gas drilling operations.
“I think it was sort of eye-opening that although the shale is a great revenue source, there are problems in lots of areas,” Hurst said.
Goodhart said the agreement would simply save time and money for each side.
The commission voted in July 2008 to accept the terms of the leases with Chesapeake Energy for drilling rights in the Gulf Mountain and Petit Jean River wildlife management areas after taking bids on the opportunity to explore the lands. The leases will allow the Oklahoma City-based company to have access to more than 7,500 acres in the Petit Jean River WMA in Yell County and nearly 4,000 acres in the Gulf Mountain WMA in Van Buren County.
Both leases are for five years but they are automatically renewable if the company finds gas. The leases carry a 20 percent royalty payment — well above the 12.5 percent minimum royalty that state law mandates. If the company produces gas on the land, it can automatically renew the leases.
The Legislature considered a number of bills related to natural-gas drilling.

Sunday, April 5, 2009

Jim Bemis suggests forming local chapters of independent producers and royalty owners

In case you missed. Maybe we ought to start a local chapter of the "Arkansas Independent Producers and Royalty Owners Association " I've seen the Texas version, but didn't know we had the association in Arkansas.

Jim

Environmentalists, gas firms split on lobbyists' influence
BY CHARLIE FRAGO

Posted on Sunday, April 5, 2009

URL: http://www.nwanews.com/adg/News/256566/

The 87th General Assembly is the first to convene after the increase in the severance tax on natural gas last year, and as the legislative session nears its end, opinion is divided on how powerful the gas lobby has become and what that means for the state.

Environmentalists say companies like Southwestern Energy Co. and Chesapeake Energy Corp. have pushed legislation to increase the power of an industry that many say has helped the state avoid the worst of a nasty recession.

The companies referred questions to a gas industry association official who said the industry was surprised that some bills considered by industry officials to be noncontroversial - like establishing that a majority of the Oil and Gas Commission shall be experienced in those fields - drew fire.

But the gas industry, said J. Kelly Robbins, executive vice president of the Arkansas Independent Producers and Royalty Owners Association, didn't come to the state Capitol "with a plateful of things trying to get enacted" in the session scheduled to end Thursday.

Many lawmakers say that the drilling in the Fayetteville Shale has been an important boost. That may have produced some hesitation among legislators to challenge an economic engine estimated by University of Arkansas at Fayetteville researchers to have had an impact of more than $2.3 billion in 2008.

"It's an industry that we'd like to keep in Arkansas. If we do too much, it might be what pushes them over the edge as far as exploiting our minerals," said Rep. Jonathan Dismang, R-Beebe, who has challenged natural gas companies on several occasions this session.

But Rep. Bruce Maloch, DMagnolia, co-chairman of the Joint Budget Committee, said he didn't think the gas companies had exerted too much influence.

"I've never been in a meeting public or private where it's been said, 'Hey, we've got to do something for these guys,'" Maloch said.

Here are some of the higherprofile issues involving natural gas this session:

Legislation to ensure that a majority of the nine-member commission have experience in development, production or transportation of oil or gas failed in its first try in the House.

Some members, including Dismang, questioned if it would unfairly restrict the influence of royalty owners and others.

Eventually signed into law as Act 389, Robbins said he was surprised that the bill sponsored by Rep. Garry Smith, D-Camden, became a "lightning rod" for criticism of the industry.

Maloch agreed, saying most boards and commissions have a majority of members with experience in whatever industry that board oversees.

But not every board has the power of the Oil and Gas Commission, said Rod Bryan of the Arkansas Conservation Alliance, an environmental organization.

"They have offices in three cities and the power of an agency. They call them a commission so that they can have their cake and eat it, too," Bryan said.

Maloch's proposal to codify a prudent operator standard for oil and gas companies to protect them against lawsuits also drew attention.

A 2000 Arkansas Supreme Court ruling awarded $109 million to royalty owners after the court found that gas companies had sold gas at below-market rates to a sister company.

The ruling contained "dicta" - or judicial remarks not directly related to the ruling - that oil and gas companies had a fiduciary responsibility to royalty owners.

Examples of a fiduciary responsibility are an executor of an estate and an heir or a guardian and a ward, Maloch said. That kind of legal arrangement requires that any action only be done in the best interests of the heir or ward, he said.

"I don't know of any business that operates that way," Maloch said. "That would mean that the mineral owner could demand that the natural gas company drill a well to extract $500,000 worth of gas even if it costs $3 million to drill the well."

Maloch's legislation, now Act 719, codifies the "prudent operator standard" already in practice in courts in Arkansas and neighboring states, he said.

That standard requires companies to act in good faith and for the mutual benefit of the company and royalty owner.

The Senate changed the bill to remove language that some attorneys thought would benefit the gas companies in negotiations, said Sen. Jim Luker, D-Wynne.

Luker said the gas industry has "put money in the pockets of people who had been of modest means," but "those who don't directly benefit financially are not quite as satisfied."

"Our job is to try to strike a balance," he said.

"People fussed for a long time that we weren't taxing them enough. We finally got it done and they said we didn't do enough. Well, we got them paying something," Maloch said.

Copyright © 2001-2009 Arkansas Democrat-Gazette, Inc. All rights reserved. Contact: webmaster@nwanews.com

Tuesday, March 31, 2009

New fracking process in the extraction of natural gas worse than some people thought

Video on fracking for natural gas
This just came in from New York League friends who have recently become
aware of the new fracking process used to extract natural gas. Be sure to
view the newscast video. There is a brief glimpse of Dr. Colborn in the
video they are showing. A video of Dr. Colborn's discussion about
chemicals used in natural gas drilling will be part of the League's State
Convention April 25, 2:00 pm at the Fayetteville Public Library. League
members are encouraged to attend, but the public is also invited to attend
this program. The Arkansas League members have been discussing natural gas
drilling for two years, but many are just now realizing that the process is
different and has been exempted from most of the Federal health and safety
regulations, while states lack sufficient protections.

>http://www.weny.com/News-Local.asp?ARTICLE3864=9143415
Video on fracking for natural gas
Joyce Hale

Friday, March 27, 2009

Game and Fish Commission sued over use of gas-leasing money

Game, fish agency says plaintiff lacks standing in lawsuit
BY L. LAMOR WILLIAMS
Posted on Friday, March 27, 2009
URL: http://www.nwanews.com/adg/News/255822/
The Arkansas Game and Fish Commission is arguing that a lawsuit filed by a Little Rock man who says money from natural gas leases held by the agency should go to the state's general fund should be dismissed because the plaintiff hasn't suffered any harm.

The commission said in a response to James Dockery's lawsuit that, among other things, Dockery has no claim to the mineral leases and does not belong to any class of persons who claim to be hurt by the lease agreement.

Dockery's attorney, Q. Byrum Hurst Jr. of Hurst, Morrissey & Hurst in Hot Springs, said he disagreed.

"I don't believe that's an accurate statement of the law," Hurst said. "He does have an injury because he's a taxpayer in the state of Arkansas. I think we'll prevail on that issue but we'll certainly ask the court to make a ruling."

Hurst described his client as "something of a social activist" and said Dockery filed the suit on behalf of the entire state. Hurst said Dockery wanted a ruling on the issue from the courts opposed to previously issued attorney general opinions.

Jim Goodhart, general counsel for the Game and Fish Commission, said he didn't have much to say about the suit.

"We've essentially responded and we will be defending the agency based on the legal defenses that are outlined in our answer to the lawsuit," Goodhart said.

Game and Fish Commission sued over natural-gas money

Goodhart said Quattlebaum, Grooms, Tull & Burrow PLLC will take the lead during litigation while his office will serve as co-counsel.

"My attorneys here are working on the case as well, but we have a significant number of legal matters pending and we wanted to have some specialized litigation assistance," Goodhart said. "We handle a lot of litigation firsthand in our agency, but we only have three lawyers in our office."

Goodhart said he hopes the case will be over quickly.

"The plaintiff 's asked the court for expedited consideration on the court's docket and when we answered, we responded that we also would appreciate the court's expedited consideration," Goodhart said. "So we're hoping it will move quicker than usual matters."

The Perroni and Koehler law firm in Little Rock is joining Hurst in the suit which also asks the court to prohibit the Game and Fish Commission from us- ing any of the money until a ruling is issued.

Hurst was unavailable for comment, but Sam Perroni said the firm agreed to assist because "we believe in the issue."

"We were asked to assist primarily because he needs some local counsel to help facilitate things," Perroni said. "Also we have had some experience over the years with cases of this nature."

In July 2008, the commission reached a $29.5 million agreement with Chesapeake Energy for the lease of 11,500 acres in the Gulf Mountain and Petit Jean River wildlife management areas.

The Gulf Mountain site in Van Buren County is situated over the Fayetteville Shale, a geologic formation primarily in north-central Arkansas that's proved to be rich in natural gas. The lease is for $28.3 million for 4,000 acres.

The Petit Jean River Wildlife Management Area lease totals $1.2 million. That land is considered part of the Arkoma basin, where Chesapeake Energy has natural gas operations in nonshale formations.

Both leases are for five years and carry a 20 percent royalty payment - well above the 12.5 percent minimum royalty mandated by state law. If the company produces gas on the land, it can automatically renew the leases.

Drilling in the Fayetteville Shale is projected to have a $22 billion effect on the state's economy between 2005 and 2012, according to a study by the University of Arkansas that was partially funded by Chesapeake Energy.

Gov. Mike Beebe had called on the constitutionally independent Game and Fish Commission to share its revenue from leasing wildlife management land, saying the money belonged to "all 2.8 million Arkansans."

However, Goodhart raised concerns that spending the money on nonwildlife causes would risk the Game and Fish Commission's eligibility to receive future federal grants, which total about $20 million a year. The agency submitted a $95.4 million budget for the 2008-09 biennium.

In September 2008, Loren Hitchcock, deputy director of the Game and Fish Commission, reported that the U.S. Fish and Wildlife Service had given the green light for the agency to share the funds with the state's Oil and Gas Commission and the Arkansas Department of Environmental Quality, which is set to get $3.5 million of the lease revenue.

When Beebe was attorney general, he issued an opinion on the issue in 2006, which reads in part:

"In my opinion the funds may not be redirected to purposes other than those listed in Amendment 35. As noted above, the funds may only be expended for 'the control, management, restoration, conservation and regulation of the birds, fish and wildlife resources of the State' and for 'no other purposes.'"

Amendment 35 to the Arkansas Constitution established the commission as a nearly independent state agency.

Copyright © 2001-2009 Arkansas Democrat-Gazette, Inc. All rights reserved. Contact: webmaster@nwanews.com

Sunday, March 1, 2009

Game and Fish Commission sued over use of gas-leasing money

The Morning News

Local News for Northwest Arkansas


Lawsuit Filed Over Leases To Gas Company

By The Associated Press
LITTLE ROCK -- A lawsuit filed in Pulaski County aims to stop the Arkansas Game & Fish Commission from solely using the money generated from leasing state lands to Chesapeake Energy Corp.

James Dockery of Little Rock filed the suit against the commission, which will be getting about $30 million from land leases to the gas exploration company in wildlife management areas. Dockery claims the money should go into the state’s general budget and be available to all agencies.

“Historically, leasing Game & Fish land is for the purposes of hunting and fishing,” Byrum Hurst Jr., Dockery’s lawyer, told the Arkansas Democrat-Gazette. “Now, we have a situation unique in the state. All of a sudden we have Game and Fish property being leased to oil and gas companies and producing not only oil and gas, but huge amounts of revenue that appears to be headed to the pockets of the Game & Fish Commission and nowhere else.”

Jim Goodhart, general counsel for the Game & Fish Commission, said, “We’re aware that we’ve been sued.”

“I’m not going to comment on what is in the lawsuit because we’ve not been served yet,” Goodhart said Friday. “We expect to be served, and after we’ve had an opportunity to review it, we’ll take appropriate action to defend the state’s interest.”

The commission voted in July 2008 to accept the terms of the leases with Chesapeake for drilling rights in the Gulf Mountain and Petit Jean River wildlife management areas after taking bids on the opportunity to explore the lands. The leases will allow the Oklahoma City-based company to have access to more than 7,500 acres in the Petit Jean River WMA in Yell County and nearly 4,000 acres in the Gulf Mountain WMA in Van Buren County.

Though the commission initially balked at offering other state agencies any of the money, it later agreed to share $3.5 million with environmental regulators.

Dockery’s lawsuit cites the environmental concerns that might arise from exploration in the state’s Fayetteville Shale play as a reason for the need to share the money.

“The general public, including the Plaintiff, has not been informed as to whether the chemicals used to extract gas are toxic or contains various toxins which could be harmful,” the suit claims.

Teresa Marks, the director of the Arkansas Department of Environmental Quality, said she hadn’t studied the lawsuit. However, she sought to put to rest Dockery’s concerns about the effects of drilling.

“It appears to me that the plaintiff is concerned about environmental protection in the state,” Marks said. “If that is something he is concerned about, then he should be pleased that we are getting some of that money because it will certainly be going to the protection of the environment in the state.”

Tuesday, February 24, 2009

City of Clinton may have found a way to clean and recycle water from Fayetteville shale gasp-drilling rigs

Mayor: Method found to purify drilling water
BY AMY UPSHAW
Posted on Tuesday, February 24, 2009
URL: http://www.nwanews.com/adg/News/253313/
Using an idle sewer plant in town, the city of Clinton has found a way to recycle contaminated water used in the natural-gas drilling process, the Arkansas Democrat-Gazette has learned.

"We have a process that will clean all the drill wastewater," Clinton Mayor Roger Rorie said Monday evening.

In a meeting next week, the mayor, along with Siemens Water Technologies representatives, will present to four of the gas companies drilling in the Fayetteville Shale findings from recent tests the city conducted on water taken from drilling sites. Several elected officials also have been invited.

"We feel like we have the answer for the Fayetteville Shale," Rorie said.

The Fayetteville Shale is a geologic formation where companies are drilling for natural gas in north-central Arkansas.

Natural-gas companies use millions of gallons of water to drill each well in the formation and to break up the rock to release the gas. Some wastewater already is being spread on vacant land in a process called land application or land farming.

Other wastewater from drilling is too salty or laden with chemicals and must be pumped into injection disposal wells. Arkansas, because it's newer to the shale business, lacks infrastructure to adequately process both types of drilling water.

Teresa Marks, director of the state Department of Environmental Quality, said Monday evening that her agency will have to evaluate several things before the city could begin the water-recycling process.

"That would be wonderful if that could happen because certainly recycling that water would be a wonderful thing for the environment," Marks said. "This may be a viable option, but what we'll have to do is look at the law, the terms of [the city's] permit and the technology they have, to see if they can successfully treat what's in that ... water."

Rorie said his city does not yet have a contract with any drilling companies and has not been paid by any of the companies to conduct the tests. But if the companies and the state approve the idea, Rorie said, the city could move equipment for the process into the sewer plant within days.

The city stands to gain a substantial amount of money if the process is given the go-ahead, though Rorie said he isn't pushing the idea for the city to "get rich." Treating the wastewater could help the city keep its drinking-water supply safe, he said.

The sewer plant, one of two in the city, has been idle since October. It was dedicated to processing waste from the Pilgrim's Pride chicken processing plant until it closed in Oct. 10.

Because the plant offered hundreds of manufacturing jobs, the city took out millions of dollars in debt to build the sewer plant and a 16-inch waterline to serve Pilgrim's. In 2007 alone, the city spent $140,000 upgrading the sewage plant.

Since the processing plant closed, the city has been losing about $30,000 a month in water and sewer revenue. To cope, the city laid off one employee and would have laid off another had he not retired.

The city has lost all of its major manufacturing companies over the past few years. Rorie believes that this water-treatment process would create 50 to 60 new jobs in Clinton.

Natural-gas companies drilling in the area gave the city permission to take water samples of "flow back" from drilling sites. Using filtering equipment from Siemens, the city processed the water at its idle sewer plant.

Samples of the water were pulled out during three different stages of treatment and sent to the private lab, Environmental Service Co.

"We've got potable water," Rorie said.

The city hopes to recycle 80 of every 100 gallons of water it treats by selling it back to the gas-drilling companies.

The rest, he said, would go into injection wells.

A spokesman for Chesapeake Energy said Monday night that the company has been in informal talks with Rorie about the possible water recycling.

"We look forward to learning more," spokesman Mark Raines said.

A spokesman for Southwestern Energy Co. did not return a call for comment.

Asked what gas company officials have said to him about the idea, Rorie said, "They have been jumping up and down wanting to know when we will be in operation."

Information for this article was contributed by Laura Stevens of the Arkansas Democrat-Gazette.

Copyright © 2001-2009 Arkansas Democrat-Gazette, Inc. All rights reserved. Contact: webmaster@nwanews.com

Monday, February 23, 2009

Sierra Club to meet at 7 p.m. Tuesday Feb. 24, 2009, for presentation on environmental bills in legislature

The Ozark Headwaters Group of the Sierra Club will be meeting
tomorrow, Tuesday Feb. 24th, at 7 pm at U.S. Pizza Company on Dixon
Street in Fayetteville. The Bicycle Coalition of the Ozarks has a fun
and informative presentation planned. Also Bill Kopsky of the Arkansas
Public Policy Panel will be discussing the environmental bills that
will be coming before the Arkansas Legislature this year and the
upcoming rally day at the Capitol building. You do not have to be a
member to attend!
For more information contact Molly at mollyrawn@gmail.com or at 479 527 9499

Monday, February 16, 2009

House committee caps citizen rights not gas wells

Eminent-domain Bill Dies in Committee
By Arkansas Business Staff - 2/11/2009 3:15:01 PM


A bill restricting private oil and gas companies from claiming eminent domain failed to make it out of a House committee on Wednesday.

HB1178 by Rep. Jonathan Dismang, R-Beebe, went before the House Committee on Agriculture, Forestry and Economic Development but was killed on a 9-6 vote.

The bill clarified that a pipeline company does not have the authority to exercise the power of eminent domain for the purpose of the construction or operation of a gathering line. Dismang said the purpose of the bill was to provide landowners the ability to effectively negotiate with oil companies over the location of gathering lines and well sites.

The bill is a response to the activity in the Fayetteville Shale play.

More analysis from Capsearch.com Here: http://www.capsearch.com

February 11, 2009
Rep. Dismang’s Eminent Domain bill fails in committee
Filed under: Uncategorized — Matt Price @ 3:11 pm
HB1178 from Rep. Jonathan Dismang went before the House Committee on Agriculture, Forestry and Economic Development today. The bill clarified that a pipeline company does not have the authority to exercise the power of eminent domain for the purpose of the construction or operation of a gathering line. Rep. Dismang stated that the purpose of his bill was to grant landowners the ability to effectively negotiate with oil companies over the location gathering lines and well sites. Mr. Don Rainey, an attorney in Searcy, Arkansas testified that he has represented landowners in White County for over 30 years and that he did not believe oil and gas companies should have the power of eminent domain for gathering lines and well sites. Mr. Rainey stated that prior to enacting A.C.A. §23-15-101 the power of eminent domain had never been granted by the Arkansas Legislature to unregulated private corporations.

Mr. Jerry Canfield, Esq., an attorney for Chesapeake Energy, spoke against the bill. Mr. Canfield stated that Article 12, Section 9 of the Arkansas Constitution allowed the power of eminent domain to be given to privately held corporations. Within Chesapeake’s business, the process of “Unitizing” pipelines was essential to the effective transport and production of natural gas. Mr. Canfield further stated that private condemners pay full value of the property easement even if the condemner takes only the easement and not the full fee.

Representatives of groups including the Fayetteville Shale Citizens Association, White County Farm Bureau, Arkansas Conservation Alliance and Arkansas Farm Bureau spoke in favor of the bill while several royalty owners spoke against the bill. Of particular note were statements made by Kenneth May, President of the White County Farm Bureau and Rodney Baker with Arkansas Farm Bureau. Mr. May stated that his 6,300 member group took up the issue of oil and gas companies eminent domain power and at a December meeting unanimously voted to support HB1178. Mr. May said that the complete unanimity with which his group supported this bill and the fact that the bill was being addressed today demonstrates that a real problem exists. Though conservative, Mr. Baker said that Arkansans recognize that there is a need for eminent domain. However, in this instance, Mr. Baker stated that the Arkansas Farm Bureau saw the use of eminent domain as Chesapeake taking advantage of the Arkansas Code to avoid regulation while simultaneously obtaining the power of eminent domain.

The final vote was 9 votes against and 6 votes for HB1178.

FOR: Sample, King, Rice, Dale, Betts, Nickels.

AGAINST: Everett, Reep, Davenport, Wills, Lowery, Cash, Reynolds, House and Patterson.

Tuesday, February 10, 2009

Arkansas Times reports on arrogance of natural-gas pipeliners

Pipeline company’s right to condemn land contested.
Published 2/5/2009
Beverly Strain-Eads is 70 years old. She's a great-grandmother and a cattle rancher. About 24 years ago, she bought a ranch near Greenbrier called the Circle Z. It was her plan to raise cattle along with the help of Kirk Hicks, a long-time friend and business partner who now works as the ranch foreman, and eventually sell the land for development. This, she thought, would surely be enough to support her family, and the Hicks family, in the years after their retirement.

That was before she got a letter from Arkansas Midstream, a pipeline company owned by Chesapeake Energy. The letter, which she received in March of last year, said a pipeline would be installed on her land. She had seven days to respond to the letter and if she had not agreed by that time the company would condemn the land and file for eminent domain.

Work began in May and was complete in December. The result: “It's torn up my ranch from north to south and east to west,” she said. “They have caused over $200,000 of legitimate damages to my property: fences down, ponds ruined, big valves put up on my land.”

Strain-Eads is not alone: Other landowners across the state have received similar letters. A White County landowner has sued, arguing that pipeline companies' power of eminent domain is restricted to common carriers, lines that transmit gas from multiple sources, across state lines or provide some other public benefit, and not gathering lines, those that take gas from only one company's well to a transmission line. Plaintiffs plan to appeal a Circuit Court ruling in favor of the pipeline company to the state Supreme Court.

The Arkansas Public Service Commission takes the position that it does not have regulatory authority over gathering lines. Landowner advocates say if that's the case, then pipeline companies shouldn't have the power to condemn land to build them.

State Rep. Jonathan Dismang, R-Beebe, agrees, and he has introduced a bill that would keep companies that build gathering lines from using the power of eminent domain.

“These gathering lines are not community lines, they're just for one producer,” Dismang said. “The problem is that eminent domain is being used as a first resort instead of a last resort. Companies have been operating in the state for years and have never used eminent domain to acquire a pipeline easement. But Arkansas Midstream feels that they have that power and they're not really negotiating with our landowners.”

The line going across Strain-Eads' land is a gathering line. Unlike many landowners, Strain-Eads had an advantage: She was able to hire a lawyer to negotiate portions of the right-of-way agreement. But, attorney Bryan Christian said, unforeseeable damages “exceeded the value that we received for signing the agreement.”

“Once they got their foot in the door they just went crazy,” Strain-Eads' partner Hicks said. “They ruined an entire winter crop of hay by leaving a gate open and letting all the cows trample and eat the grass. They've ruined the bedrock under our main watering pond and they cut down about a football field's worth of trees and said it was just a mistake.”

Strain-Eads is worried about the future of her land. Aside from the damage to the cattle business, she's worried the value of her property will decline due to Arkansas Midstream's presence there. She said she's too old to worry about fighting any battles, but somebody had to do it.

“I'm not in this to make money or be greedy,” she said. “I just want them to pay me for what they've messed up. They've offered to buy the ranch a couple of times. And there are a lot of things that mean more to me than just a dollar amount and one of them is that beautiful pristine ranch. You've got to do something to get their attention and money is the only thing they understand.”

Dismang's bill is scheduled to go before the House Agriculture, Forestry and Economic Development Committee on Feb. 11. He said he's got some support, but knows it will be a tough fight.

Chesapeake didn't respond to the Times' requests for comment.



http://www.arktimes.com/articles/articleviewer.aspx?ArticleID=dacd0c12-6c39-4094-ba11-a73246b3e9f4

Sunday, January 25, 2009

Houma Today


New state drilling rules focus on safety

Jeremy Alford
Capitol Correspondent

Published: Sunday, January 25, 2009 at 8:00 a.m.
Last Modified: Saturday, January 24, 2009 at 11:17 p.m.
BATON ROUGE -- Louisiana has enacted what may be the most stringent rules in the country to regulate oil-and-gas companies that drill over water in close proximity to an interstate system.

From a historical perspective, it’s yet another industry first in instances where water and oil overlap.

In the early 1900s, Caddo Lake in Mooringsport hosted the first above-water drilling operation in the U.S.’s long history of energy production.

Over the past decade, just off the shores of Terrebonne and Lafourche parishes, explorers have reached ever deeper to siphon oil and gas from the ocean floor – lately at depths of 5,000 feet or more.

Endorsed by Conservation Commissioner James Welsh earlier this month, the new policy prohibits companies from drilling wells within 1,000 feet of an interstate highway that runs over a major waterway.

Most other states don’t have such a rule. Those that do have an average 100-foot threshold.

Along the Interstate-10 and Interstate-12 corridor and beyond, that’s prime property.

It includes areas like the I-10 crossing of the Atchafalaya Basin, Mississippi River and Lake Pontchartrain; the I-12 crossing of the Amite River; and the I-20 crossing of the Red River, among others.

Louisiana officials still are reeling from the gas-well blowout in November 2007. The blaze was tremendous and closed I-10 at Ramah, right outside Grosse Tete, for a 11 days.

Welsh said the state is so serious about taking a preventive approach that another set of rules went into effect in December to complement the ban.

They call for recurring training, design specifications, new diverters and updated requirements for the quick operation of valves controlling gas and fluid flow.

“We want to minimize as much as humanly possible all potential well blowouts, no matter where the well is located,” Welsh said.

Oil-and-gas companies aren’t overjoyed about the new regulations, Welsh said, but most have been quick to point out their attention to safety.

For instance, Bridas Energy USA Inc., which was responsible for operating the Ramah well in 2007, plans to re-drill in the same area, only this time under the new 1,000-feet guidelines.

“The new rules have placed new burdens on oil-and-gas exploration companies,” Welsh said, “but they too recognize the need to make the drilling process as safe as possible for their employees and the public.”

Jeremy Alford can be reached at jeremy@jeremyalford.com.


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Tuesday, January 13, 2009

Natural-gas CEO being paid well. How much is your gas bill this month?

Chesapeake CEO McClendon Gets $75 Million Bonus
By Arkansas Business Staff - 1/7/2009 4:27:01 PM


Chesapeake Energy Corp. of Oklahoma City and CEO Aubrey K. McClendon have agreed to terms of a new five-year contract, whereby McClendon will receive a one-time $75 million bonus, an annual salary of $975,000 and yearly bonuses that will not exceed his 2008 total of $1.95 million.

After taxes, the bonus will net McClendon $43.5 million, according to a U.S. Securities and Exchange Commission document filed Wednesday. The parties reached the agreement Dec. 31, according to the filing.

Chesapeake (NYSE: %%CHK) is active in the Fayetteville Shale Play, a natural gas reservoir in north-central Arkansas. The company is one of the play's largest producers. The company has worked to enhance its cash holdings since this summer when natural gas prices began to fall from the high of about $14.

The company closed the sale of a 25 percent stake in its Fayetteville Shale holdings in September. BP America purchased the stake for $1.9 billion. Chesapeake has sold stakes in several other of its natural gas holdings and reduced its capital expenditures multiple times to help raise its cash position.

Monday, January 12, 2009

Violators of water rules don't share details of problem or ideas for solution

Facilities mum on violation solution
BY L. LAMOR WILLIAMS
Posted on Monday, January 12, 2009
URL: http://www.nwanews.com/adg/News/249127/
The company that owns two facilities used to discard water used by natural-gas drillers is remaining silent about how it will fix violations that led to emergency orders halting disposal operations.

The two facilities, Fayetteville Shale Land Farm in Lonoke County and Central Arkansas Disposal in White County, are owned by Fayetteville Shale Land Farm LLC. Both permits are registered to Ron Carl, and each lists the same Carlisle address.

Attorney John Peiserich of Perkins & Trotter PLLC, a Little Rock-based environmental law firm, represents the company. He said he couldn't comment because his client was "in the middle of enforcement action negotiations" with the Arkansas Department of Environmental Quality.

"I'd just as soon not make any comment, but we've met with them and are attempting to resolve these issues," Peiserich said.

The two facilities remain closed. Teresa Marks, the Department of Environmental Quality's director, said Fayetteville Shale Land Farm expects to remain closed until spring.

A typical land farm, as such facilities are called, has two large plastic-lined ponds where water and rock sediment discarded after drilling is stored. When one pond is full, the owner can submit water samples to the Environmental Quality Department and if approved, the water from that pond can be used to irrigate crops while the other is being filled.

According to Environmental Quality Department records, Central Arkansas Disposal has the largest ponds in the state, holding up to 180,000 barrels of the castoff water. Among the other 11 facilities in the state, the smallest ponds hold 25,000 barrels each. Each barrel is 42 gallons.

Central Arkansas Disposal is accused of maintaining a third pond about two miles away from the primary facility and pumping the water through underground pipes into the reservoir.

After a nearby property owner reported seeing dead fish in streams on his land Dec. 4, the department investigated. The inspector reported finding a "large unlined, unpermitted waste treatment reservoir" that was emptying into Raft Creek, which feeds the Steve Wilson/ Raft Creek Wildlife Management Area in White County. Central Arkansas Disposal was ordered to stop operations on Dec. 12.

The Fayetteville Shale Land Farm was cited Dec. 3 for allowing the water to run off the property after irrigation. Under the terms of the permit, drill water must be completely absorbed by crops, leaving no puddles or runoff.

The fluid is generated by companies drilling for natural gas in the Fayetteville Shale, a geologic formation that stretches from north-central Arkansas to the Mississippi River.

A man who answered the phone at Searcy-based Central Arkansas Disposal said no one there would be making any comment.

Marks said the department is working with Central Arkansas Disposal to develop a plan for fixing the violations.

"I actually went to the site to visit with them," she said. "It sometimes helps me to have a visual, particularly if there's significant interest from adjoining landowners or significant outcry from the public."

Marks said the department often works with any permit holder in violation because it saves time since their remediation plans must be approved by the department before implementation.

"We've not gotten any final documentation at this point, but this has been given to enforcement," she said. "Their position is that it was an accidental release into the reservoir.

"They did acknowledge that drilling waste did get into the reservoir, but that the reservoir was for holding water for irrigating farm land and that no drill waste was supposed to get into it," Marks said.

She said pipeline valves to the off-site reservoir had been closed.

Marks said there are 13 such facilities licensed to operate in Arkansas. Of those, 11 have had violations within the past few months that have resulted in enforcement action. It usually takes about two months from the date of inspection before sanctions are levied. Violations ranged from not having the proper clearance at the top of ponds - 24 inches minimum is required - to irrigating with more water than was approved by the department.

The largest fine in recent history was levied against Comer Mining Corporation in Sebastian County in December for $19,400, Marks said. The company's violations included:

No records of when, where and how much of the water was used to irrigate crops.

Not submitting reports to the Department detailing the origin, transporter and volume of the water taken in.

Flooding one field with the castoff water and mud.

Not submitting the required water and soil samples to the department.

Inspectors discovered the violations after inspections in March 2007 and in February, June and August.

Marks said fines can be as much as $10,000 per day of being in violation and that the department considers issues such as whether harm was done to the environment, whether the act was intentional and whether the company involved has a history of violations.

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Monday, January 5, 2009

On a different environmental front, Antrim Caskey reports through AlterNet on coal-ash spill in Tennessee

Legislature may see bill to protect public and environment from drilling-site waste

Something to consider supporting by contacting legislators and governor during the upcoming session.
Don't be shy about pointing weaknesses and strengths of the bill. Amendments will occur. Your comment can make a difference:

AN ACT TO AMEND ARKANSAS CODE § 8-4-203 TO REQUIRE FINANCIAL ASSURANCE FOR THE CLOSURE OR RESTORATION OF PERMITTED SITES IN THE STATE OF ARKANSAS THAT LAND APPLY OR STORE FLUIDS GENERATED OR UTILIZED DURING EXPLORATION OR PRODUCTION PHASES OF OIL OR GAS OPERATIONS; AND FOR OTHER PURPOSES.

AN ACT TO REQUIRE FINANCIAL ASSURANCE FOR LANDFARMS.

SECTION 1. Arkansas Code § 8-4-203 is amended to add a new subsection to read as follows:

8-4-203. Permits generally.

(c)(1)(A)(i) All facilities that land apply or store fluids generated or utilized during exploration or production phases of oil or gas operations shall be closed in a manner that ensures protection of human health and the environment.
(ii) As used in this subsection “land application or storage of fluids generated or utilized during exploration or production phases of oil or gas operations” means land-farming through the controlled and repeated application of drilling fluids to a soil surface or the practice of receiving and storing said fluids from offsite for waste management.
(iii) Surface facilities associated with Class II injection wells are specifically excluded from the requirements of this section.
(iv) Land applications at the drilling or exploration site that are authorized pursuant to any general permit issued by the Department are specifically excluded from the requirements of this section.
(B) Within sixty days after the effective date of this Act, each existing, permitted facility regulated under this section shall submit to the department the following:
(i) A plan to close the permitted facility and make any site restoration deemed necessary by the Department;
(ii) A detailed cost estimate to close and
restore the permitted facility that meets the requirements of this subsection and is approved by the Department; and
(iii) A financial mechanism that demonstrates, to the department’s satisfaction, the permittee’s financial ability to ensure adequate closure and any necessary restoration of the permitted facility in accordance with the requirements of this subsection.
(C) After the effective date of this Act, the department shall not issue, modify, or renew a permit for facilities regulated under this subsection without the permit applicant first demonstrating to the department’s satisfaction, the applicant’s financial ability to ensure adequate closure and any necessary restoration of the permitted facility in accordance with the requirements of this subsection.
(D) The amount of any financial assurance
required under this subsection shall be in an amount that is equal to or greater than the detailed cost estimate prepared by an independent professional consultant for a third party to close the permitted facility in accordance with closure plans approved by the department.
(i) For new permits, the applicant shall submit to the department, for approval, a detailed cost estimate to close and restore the facility based on the proposed operation and capacity of the facility from the date the permit is issued through the following October 1;
(ii) For renewal or modification applications, the permittee shall submit to the department, for approval, a detailed cost estimate to close and restore the permitted facility based on closure plans approved by the department; and
(iii) On or before August 15 of each year, all permittees shall submit to the Department for approval, a detailed cost estimate to close and restore the permitted facility in accordance with closure plans approved by the department.
(E) The financial assurance mechanism shall be renewable on October 1 of each year during the duration of the permit.
(F) Documentation that the required financial assurance mechanism has been renewed must be received by the department by September 15 of each year for the duration of the permit or the department shall initiate procedures to take possession of the funds guaranteed by the mechanism and suspend or revoke the permit under which the facility is operated. Any permit suspension shall remain in effect until a financial assurance mechanism is provided to the department in accordance with this subsection.
(G) The permittee is responsible for ensuring that documentation of annual renewal is received by the department by its due date.
(2) The permittee or applicant’s financial ability to adequately close or restore the land application or storage facility shall be demonstrated:
(A) By obtaining insurance that specifically covers closure and restoration costs;
(B) By obtaining a letter of credit;
(C) By obtaining a bond or other surety instrument;
(D) By creating a trust fund or an escrow account;
(E) Through the use of a combination of any of the above; or
(F) By any other financial instrument acceptable to the director.
(4) Any financial instrument required by this subsection shall:
(i) Be posted to the benefit of the department;
(ii) Provide that it cannot be cancelled without sixty days prior, written notice addressed to the department’s Legal Division Chief as evidenced by a signed, certified mail, return receipt; and
(iii) Be reviewed by the Department upon receipt of the cancellation notice, to determine whether to initiate procedures to revoke or suspend the facility’s permit and whether to initiate procedures to take possession of the funds guaranteed by the financial assurance mechanism.
(4) Before the department may release any financial assurance mechanism, it must receive a certification by a professional engineer that the permitted facility has been closed and restored in accordance with closure plans approved by the department.
(5) It is explicitly understood that the department shall not be responsible for the operation, closure, or restoration of any facility permitted under this subsection.
SECTION 2. EMERGENCY CLAUSE. It is found and determined by the General Assembly of the State of Arkansas that establishing financial assurance requirements for the closure of commercial facilities that land apply or store fluids generated or utilized during exploration or production phases of oil or gas operations is necessary to protect human health and the environment and that a delay in the effective date of this Act may result in harm to human health or the environment. Therefore, an emergency is declared to exist and this Act being necessary for the immediate preservation of the public peace, health, and safety shall be in full force and effect from and after the date of its passage or approval. If the bill is neither approved nor vetoed by the Governor, it shall become effective on the expiration of the period of time during which the Governor may veto the bill. If the bill is vetoed by the Governor and the veto is overridden, it shall become effective on the date the last house overrides the veto.

Thursday, January 1, 2009

Drop in gas price makes severance-tax payoff uncertain

 
As tax on natural gas kicks in, intake unclear
BY SETH BLOMELEY
Posted on Thursday, January 1, 2009
URL: http://www.nwanews.com/adg/News/248190
Arkansas' increased severance tax on natural gas, approved in April after much debate, takes effect today amid questions about how many dollars it will produce for the state and what those dollars will do.
The tax is based on the price of natural gas, which has plummeted since the state last produced revenue estimates.
That means projections of $57 million to be collected in 2009 are uncertain.
The bulk of the revenue is to be spent on roads, but fluctuations in the price of oil have created more uncertainty on exactly how it will be used, said Cliff Hoofman of North Little Rock, a member of the Arkansas Highway Commission.
"We have talked about setting aside [severance tax revenue] for some identifiable project, but our discussions a few months ago was that we should put that on hold because we were experiencing a real calamity in the reduction in department revenue," Hoofman said. "Now, we don't know what's going to happen. We're sort of in a holding pattern."
Much of Highway Department revenue from the state is based on a gasoline tax of 22.5 cents per gallon. Fuel tax receipts for the department from July through October were $73.4 million, down from $77.9 million in the same period in 2007, said Randy Ort, department spokesman.
Highway off icials have blamed the decrease on the fact that people bought less gasoline because of the high prices earlier in 2008. But now that the price of gasoline has dropped from $4 a gallon to $1.50 a gallon, officials say it's unclear whether fuel tax revenue will go up.
Hoofman said the severance tax money may end up simply making up for the loss in the fuel tax revenue. He said it "would be irresponsible" to start new projects with the money until the department has a better idea of the amount of tax col- lections.
The severance tax was increased after a surge in drilling in the Fayetteville Shale natural gas deposits in north-central Arkansas.
The previous rate was 1 cent per 1,000 cubic feet of gas, which was set in 1957 and was based on volume so it hadn't increased since then. The tax raised about $600,000 a year.
Gov. Mike Beebe and the Legislature increased the tax to 5 percent of proceeds from the sale of gas by the producer less the cost of treating and transportation.
The state projects revenue to increase to about $100 million by 2013.
The proceeds are to be divided four ways, with 5 percent going into state general revenue. Of the remaining 95 percent, 70 percent is to go to state highways, 15 percent to counties and 15 percent to cities.
Beebe called a special legislative session to raise the tax after negotiating with natural-gas production companies on an increase. That led to consensus in the Legislature to approve it.
Little Rock attorney Sheffield Nelson had called for an initiated act to raise the tax by an even greater amount, if the Legislature and the governor failed to act.
Nelson said some have argued that Beebe's agreement with the gas companies is too soft and contains too many exemptions.
"But it's 100 times more than what the state has been getting up until this time," Nelson said. "It's quite an accomplishment."
Nelson, a former Republican gubernatorial nominee and former natural gas utility executive, said "time has proven" that he and his supporters were correct to back off pursuing a ballot initiative to raise the tax.
He said he thinks that the economic downturn could have made it harder to raise any tax.
"Had we fought a very tough battle from that time until November, even if we had won, there would have been negative consequences," Nelson said. "No one would come down with a good taste in their mouth. I think we would have won but we would have burned so many bridges."
For example, he said had a ballot initiative been successful he doubted that natural gas producer Southwestern Energy of Houston would have decided to build a $25 million regional headquarters in Conway, which was announced Dec. 18.
At the time of the severance tax's passage in April, the price of natural gas traded on the New York Mercantile Exchange was $10 per 1,000 cubic feet. Now, it's $6.
"That's probably artificially low," Nelson said. "It's tagged to a certain degree of what's happening with oil. It will go back up."
Oil is a major ingredient in asphalt. So even though the Highway Department would have gotten more severance tax money when the price of natural gas was high, roads were more expensive to build and fix because of the increased price for asphalt, Hoofman said.
Hoofman said it's unclear whether the price for asphalt will decline with the reduction in oil prices the past couple of months. He said there should be some indication of that next week when project bids are opened.
Beebe spokesman Matt De-Cample said the governor expected uncertainty in the price of natural gas.
"We'll just take it as it comes," he said.
State revenue estimates were based on $8 natural gas. Richard Weiss, director of the Department of Finance and Administration, said the state hasn't updated it's revenue estimates for the severance tax.
Beebe said in 2008 that he wanted the severance tax money to be spent at the Highway Department based on "money following the cars," meaning in areas of high traffic and in places where it could help economic development.
DeCample said that's Beebe's general philosophy on highway revenue but that the governor has no specific plan on spending the severance tax money.
"We accepted the adjustment of the Arkansas severance tax," said Danny Games, spokesman for Chesapeake Energy Corp. of Oklahoma City. "We and our royalty owners pay similar types of taxes in most of the other states where we operate."
A Southwestern Energy spokesman didn't return a message.
Also taking effect today are two proposals approved by the people at the Nov. 4 election:
An initiated act that bars unmarried people living together from adopting children or being foster parents. The American Civil Liberties Union has filed a lawsuit challenging the law in Pulaski County Circuit Court.
A constitutional amendment calling for annual sessions of the Legislature, which now meets in regular session every odd-numbered year. So the first additional session under the terms of the amendment would be in 2010.
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