Water pipelines mostly a pipe dream in the Marcellus




Happy Valley Road in Morgan Township has been a bustling thoroughfare for the past several years, with tanker trucks zooming through the Greene County community 24 hours a day.

The township has tried to find alternate routes to break up the truck flow. EQT Corp., the oil and gas company drilling shale wells in the area, has hired enforcement officers to slow traffic down.

But like it or not, Happy Valley is a main drag for thousands of water trucks necessary for the company’s development in a part of the county where many residents rely on private well water. The water EQT is hauling is guzzled up during hydraulic fracturing operations.

Shirl Barnhart, a Morgan Township supervisor, sees the problem as an opportunity. EQT needs water. So do Mr. Barnhart’s constituents. And no one wants this many trucks on the road.

So Mr. Barnhart has asked the Pittsburgh-based energy producer to pitch in to extend a local water pipeline that could serve both the industry and about 30 Morgan households. The investment would run between $300,000 and $400,000.

EQT hasn’t taken him up on the offer, he said, “because they really don’t see a way of benefiting from it.”

And the company is concerned about the proposal, Mr. Barnhart said, for a couple of reasons.

“Number one is they think it’ll be admitting they’re doing something wrong, which it isn’t,” he said. “It’s to get trucks off the road. But they feel if they start doing that, they’re going to admit guilt.”

Because some township residents have complained about tainted water from gas operations, Mr. Barnhart said the company is nervous that contributing to a public water line would imply fault.

The company also worries it won’t be able to get enough water from the Southwestern Pennsylvania Water Authority in Jefferson, Mr. Barnhart said.

EQT spokeswoman Linda Robertson wouldn’t comment on Mr. Barnhart’s proposal directly but said there are two things the company considers in extending water pipelines: “to reduce truck traffic and provide a benefit to the community we’re operating in.

“We look at the number of drilling locations a line extension would serve; our timeline for drilling; and, most importantly, whether the utility is able to meet that timeline,” she said.

Truck traffic is Mr. Barnhart’s main complaint with the oil and gas industry, which otherwise has brought many benefits to his township, he said.

“We’ve had people killed,” he said, referring to truck drivers whose vehicles flipped on the roads. “We’ve had garages run over.”

Last month, a truck carrying freshwater for EQT collapsed part of an historic Greene County bridge. “That was here,” Mr. Barnhart said, in Morgan Township.

“I think every township supervisor is concerned about this,” he said. “That’s the main reason we want to see these water lines extended.”

Hard sell

Despite the seemingly win-win scenario for communities and operators, few water pipelines serve the industry. Not that the idea isn’t being pushed.

In 2010, Aqua America, a Bryn Mawr-based water utility, formed Aqua Capital Ventures as an unregulated subsidiary whose mission is to build water pipelines for oil and gas operations.

“We like to spend capital, to put a pipeline in the ground to get water from A to B,” said Tom Rafferty, director of business development. “It’s what we do every day. The producers don’t do this every day.”

Mr. Rafferty has had scores of meetings with oil and gas companies over the past few years, but very few bites.

“Everybody’s on board when you first talk to them,” he said. “But when push comes to shove ...”

Aqua America’s model calls for it to finance and build pipelines in exchange for firm commitments from oil and gas companies to buy a certain amount of water over a fixed period of time. That could be anywhere between three and 15 years.

Many producers have been unwilling to commit before a line is built, even though that's how many natural gas and liquids pipelines are commissioned.

“The risk to the producer is, I think, the unknown,” Mr. Rafferty said. “It’s control. They want to be first in line, if and when they need water.”

In 2012, Aqua America and Penn Virginia Resource Partners, a midstream company later bought by Recency Energy Partners,  to install a network of water pipelines in Lycoming County. Three operators subscribed for the service: Range Resources, Shell Western E&P Inc. and Southwestern Energy Co.

For Aqua, the investment was about $50 million.

These kinds of opportunities are few and far between.

“The issue is that you have to construct the water line so that it has some type of residual value,” said Tim Seibert, president of Ohio-based Integrity Kokosing Pipeline Services, which builds water pipelines for oil and gas companies.

The pipeline, when left dry after fracking is complete, must have some other purpose to justify its cost.

Companies could keep ownership in case they decide to refrack those wells, Mr. Seibert said, or they could turn the pipeline into a gas or liquids conduit instead. Both Aqua and Integrity build their water pipelines to the specifications of gas lines to keep that option open.

There’s also the possibility of using the water line to serve residents, just as Mr. Barnhart wants for his township.

That was the intent of Pennsylvania American Water, another utility that extended a line in Butler County to deliver water to Rex Energy Corp.’s fracking operations there. When Rex is done, the line will be used to serve a new housing development.

Extending that water line is projected to eliminate 500,000 truck round trips during the next five years, according to Josephine Posti, Pennsylvania American Water’s spokeswoman.

Money and location

For producers that consider installing water pipelines, the motivations are traffic safety, economics, and logistics. One truck hauls 4,200 barrels of water, while shale wells guzzle up to 10 million gallons within a span of a few days, Mr. Seibert said.

Consol Energy Inc., the Cecil energy company drilling dozens of wells at Pittsburgh International Airport, is building a 12-mile water line to supply those wells during fracking. The water lines will be buried alongside the gas gathering lines and will run directly to wells.

That’s uncommon, even for companies that use water pipelines for fracking. A more typical scenario might be a pipeline that draws from a large source, such as Range Resources’ tap into the Ohio River, then delivers water to a network of impoundments where that water is stored and later either trucked to well sites or delivered through temporary, above ground pipelines, as with Range.

The decision to build a water pipeline — and Consol has built many, according to Mark Stebbins, district operations superintendent for gas — often comes down to density. It begins to make sense only when there are at least a dozen or a few dozen wells in a particular location with a reservoir nearby. 

Then there’s geography — hillsides, mountains, railroad tracks — and demographics.

Like any other pipeline, water lines require companies to get leases from landowners to run across or underneath their properties.

“If it’s long distance, you’re dealing with many people and one person can hold up the operation,” Mr. Stebbins said.

“There are roads everywhere in Pennsylvania, but there’s not necessarily the ability to put pipelines through these communities,” he said.

Mr. Seibert said there has been increased interest in water pipelines from companies that have defined their core areas and can think about infrastructure planning more confidently than in the beginning of the shale gas rush. As they think about where to put their gas gathering lines, those companies are looking at tossing water lines in the same ditch.

“It is now becoming a common practice for E&P and midstream companies to install buried freshwater pipelines in a common right-of-way for fracking purposes,” he said. “It is becoming more common for companies to install freshwater intake structures for one common water source for multiple areas of drilling.”

The largest water pipeline project in Appalachia will span more than 170 miles when completed.

It will be a series of underground pipelines in West Virginia, built by Antero Resources, to service its Marcellus operations. Along with another, smaller pipeline system in Ohio, Antero is spending close to $500 million to construct these lines.

According to its annual report, Antero expects piping the water will reduce well costs by $600,000 to $800,000 each and take 1,850 trucks off the road for each new fracked well.

Integrity Kokosing recently completed a $62 million leg of the project and is hoping for more work with Antero. It’s been, by far, the company’s biggest project to date.

Anya Litvak: alitvak@post-gazette.com or 412-263-1455.

Join the conversation:

To report inappropriate comments, abuse and/or repeat offenders, please send an email to socialmedia@post-gazette.com and include a link to the article and a copy of the comment. Your report will be reviewed in a timely manner. Thank you.



Advertisement
<--Google analytics Ends-->