Sunday, October 25, 2009

Gas production making an impact on Bradford County

An owner of Beck Oilfield Supply traveled from Oklahoma to Pennsylvania this year to find the best place in the midst of the Marcellus Shale natural gas drilling rush to plant one of his stores.

He picked Wysox, and he wasn't alone. Two other stores that specialize in drilling and gas production supplies have opened within two miles of Beck Supply along Route 6 in the last year.

The supply shops are more than specialty hardware stores; they are tailored to the uninterrupted pace and idiosyncratic needs of gas drilling. Beck Supply's staff - four men from Oklahoma and four locals - are on call at all hours of every day to get equipment to well and pipeline work sites.

"If their guys want food, we go grocery shopping," manager J.R. Jordan said.

Although more than half of Pennsylvania lies above the gas-bearing Marcellus Shale, Bradford County has emerged as a focal point for gas production. Nearly 300 Marcellus Shale drilling permits have been issued in Bradford this year, far more than any other county in the state, and 23 new wells have been drilled.

The work that is marking the hills and farms in Bradford County also is leaving its imprint on the towns and people nestled nearby. In small and rural hamlets that had fallen into the slow routine of decline, the drilling is bringing traffic to streets, customers to restaurants and an urgency to everyday business.

"Things have changed," Bradford County Commissioner Doug McLinko said. "There's storefronts filling back up again, there's vacant lots filling back up again. The independent, family-owned businesses are being saved.

"The impact it's having for real people is pretty incredible."


An industry-financed study released by Penn State University in August projects that Marcellus Shale drilling will create a total economic output of $3.8 billion in the state this year and $13.5 billion in 2020 - an estimate critics say is inflated and not in line with economic multipliers seen in other gas-producing states.

In Bradford County, it is rare to find a new millionaire, but common to hear how the region's newest industry is keeping the towns from dying.


"It takes a lot for the little towns to survive now," [said Bob Morgan, Calkins Motors salesman.] Residents travel to Elmira, Williamsport and Mansfield for work, he said - towns between 15 and 50 miles away.

But gas drilling is beginning to change things. Calkins saw a boost in business after the initial round of gas leasing, when people used their signing bonuses from the gas companies to buy new cars. Tom Calkins IV, an owner of the 61-year-old dealership, did notary work on the side for Fortuna Energy, the dominant gas company in town. And for about six months, the dealership serviced the fleet of Dodge trucks driven by Precision Pipeline workers that are building Fortuna's gas pipelines.

The most visible sign of the boom is the caravan of water and gravel trucks that travel Troy's roads each day.


James Barber, the owner of his eponymous transportation and excavating company, said gas drilling has given him "a pile of work" at a time when the stone business he has been in for 20 years has suffered.

The Clifford-based company hauls water and prepares well sites for Chesapeake Energy in Bradford and Susquehanna counties.

"Without them, I'd have 10 to 12 men sitting at home without a job," he said during a cell phone call from a well pad.

The gas industry has also spurred local entrepreneurs to begin new businesses.

A few blocks from the car dealership, in Troy's town square, Emily Eaton opened Country Clean Laundry Service in April. The expansive store doubles as an after-school hangout for neighborhood kids and there is a cage of free kittens at the front. In the back, Eaton washes, dries and irons work shirts and jeans she picks up from job trailers at drilling sites as far away as Wyalusing.

She got the idea for the business from her husband, who was always looking for laundry services in the towns where he traveled for construction work. She started in her home with one washer and one dryer, then opened the store with six machines and now plans to add three more.

"Even the guys that have campers, they've got washers and dryers that are teeny tiny and they can't handle the jeans and the big heavy Carhart shirts that they wear," she said.

The biggest challenge, after the financial hurdle of making a new business profitable, is getting out the stains. "I get all kinds," she said as she pressed the sleeves of a checked Oxford on an ironing board. "The drilling mud from under the coveralls, the concrete."

Outside the former Ames department store on Main Street south of Towanda there are dozens of white pick-up trucks in the parking lot and a well-used boot brush bolted by the front door.

Chesapeake Energy opened a field office in the abandoned store in November 2008. The Oklahoma-based gas exploration company is in the midst of expanding its rented space in the plaza for the third time in a year.


Chesapeake's footprint in Bradford County is substantial: it has permits to drill in a third of the county's 51 municipalities. A subsidiary, Nomac Drilling LLC, is renovating a former nursing home in Athens Twp. into a dormitory-style residence for 180 workers. In the last two years, the company has paid more than $700 million to landowners in leases and royalties. And it has made over $70 million in payments to Pennsylvania contractors this year.

The surge of money brought by the gas industry is prompting even long-established businesses to adapt.

The Comfort Inn in Wysox, its sister hotel, the Riverstone Inn, its restaurant, and 13 rental houses and apartments are all busy with gas clients, while the local staff is learning to deal with the odd hours and frequent comings-and-goings of the drilling rigs and their workers. Drilling crews generally work 12-hour shifts for two weeks followed by two weeks off.

"There's peaks and valleys," Comfort Inn operations manager Gregg Murrelle said. "There's times they bail out of here, because they're in and out. They might keep their room, they might not."

In the middle of March, the inns catered a white tablecloth dinner complete with bow tie-clad waiters at a remote well site, an event Murrelle admitted was surreal.

He said gas operations workers have kept his business steady despite a dip in corporate clientele during the recession. The gas workers' extended stays helped convince him to go forward with expansion plans - 20 to 25 rooms and a small lounge - even as the corporate travelers that inspired the renovation booked fewer and fewer rooms.

"Especially with the doldrums of the economic times, we've been fortunate," he said. "This whole area has benefited from the influx of natural gas."

There are clearly no vacancies at the Towanda Motel, north of the center of town. It says so on a sign along the road and again on a sheet of paper taped to the office door.

Since April, Chesapeake has booked all 47 rooms for their workers and the company's reservation will continue until at least the end of March.

Workers in camouflage and cargo jeans sit outside the rooms on their off hours, down from the open door of a security guard who has set up a 24-hour post in the room closest to the office, courtesy of Chesapeake. The parking lot has a disproportionate number of pick-up trucks, including an orange one with a Texas license plate and a custom decal that reads, "Every rig needs a roughneck."

Manager Jaimi Patel said the workers are generally good tenants - although some leave the rooms dirtier than others - and having a booked motel means not having to wait at the front desk through the slow winter months for reservations.

Of the four years since her family started running the place, this has been the busiest, she said.

"In this county, everyone is doing well right now."

During the lunch rush at Harkness Family Restaurant, three miles down Main Street from the motel, regulars at the lunch counter and workers bussed in from the rigs were making waitress Christy Bartholomew run.

"It's been booming," she said.

The restaurant serves three meals a day to workers who ride vans in from the well pads as part of an arrangement with the gas companies. Fliers on the bulletin board just inside the door target the new regulars: one, for a house cleaning service, is labeled "Attn: gas lease people"; another advertises a rental home for a small family "or two workers."

Bartholomew said it has been a year since she noticed a big difference in the number of customers from the gas companies, but she hopes they don't bring too much change. For one thing, they don't tip as well as the locals, she said. And the hometown regulars are still the restaurant's priority.

"We just want to make sure that while these guys are here doing their thing, our locals are taken care of," she said. "Because in the end, they're the ones that will still be here."

The prevalence of good news from the beginning of the boom in the county has left its naturally pragmatic residents - the dairy farmers that have cut the size of their herds and the restaurants that specialize in home-style cooking - a little pensive about the future. It may have been demoralizing to watch the towns stagnate, but no one knows quite what a Pennsylvania gas metropolis might look like either.

On the morning after Fortuna agreed to a landmark lease deal for $5,500 an acre and 20 percent royalties with the owners of 35,000 acres in Bradford, Susquehanna and Broome County, N.Y., posters on the online forum, most of whom had a stake in the deal, wondered how the region will change with full-blown development of what one called the "gasicane."

"If you liked things as they've always been around here, you're not gonna be real happy five years out," one poster identified as guardian wrote. "And forget it ten years out."

The new industry is also, at times, struggling to adapt to Pennsylvania.

On Tuesday, the Department of Environmental Protection fined the 2-year-old Towanda branch of Dunn's Tank Service Inc. for illegally storing drilling wastewater in tanker trailers before it could transport it to a treatment plant.

Todd Dunn, owner of Dunn's Tank Service, told The Daily Review his company did not know the storage of the wastewater required a permit.

"We're from Oklahoma," he said. "It was ignorance on our part on not knowing the law."

McLinko, who is decidedly bullish on drilling, said he expects to see problems "between the haves and the have-nots" in the county and, perhaps more noticeably, increased heavy traffic and what he called "idle-time issues" among the workers.

"Do I think that our jails are going to fill up here? No," he said. "Do I think that our police are going to have a hard time monitoring some of the social things that happen at night, such as at some of the taverns? Yes. I think our guys are going to have their hands full."

But, he added, "I'm not pessimistic on it."

"We don't even know what the problems are going to be yet," he said. "Maybe we won't even have problems."

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