OT: Pennsylvania Oil Industry in Danger of Extinction

The 153 year old Pennsylvania oil industry is in severe danger.

Penn Grade crude is a unique petrochemical feedstock produced only in NY, PA, WV and Ohio. Paraffin-based Penn Grade Crude oil contains no asphalt and only traces of sulfur and nitrogen. Besides being particularly suited for lube stocks, it is the source for many specialty products including bases for medications and cosmetics and even food additives. There are two refiners who are set up to refine Penn Grade exclusively: American Refining Group in Bradford, PA and Ergon in Newell, WV. ARG is the oldest continuously operating refinery in the world, operating since 1881.

The environmental zealots in Harrisburg are planning to hit the industry with one-size-fits-all regulations designed for the deep Marcellus Shale gas wells which is an entirely different industry. These new regulations will kill the conventional oil industry and starve the refineries of feedstock. The refineries themselves employ about 800 directly but thousands are involved in crude production, service companies, supply companies, excavation and trucking companies, utilities, fabrication and machine shops, and the general local economy of western PA. The refineries are big customers of the railroad. Many tanker loads of crude are hauled into the refinery daily. The impact would be felt in the other states as well.

To try to save the industry a massive letter writing campaign has been mounted. You do not have to be from PA to comment.

THE INDUSTRY NEEDS YOUR HELP!

It is best explained here:
Bradford Landmark Society - home - Bradford Pa History Historical Society

Thanks,
Tom

Sorry, there's no cure in sight for the next fifty years and maybe never. Like an alcoholic unwilling to seek help before hitting absolute bottom, the electorate will continue to award carte blanche to the environmental zealots until they come to realize that said zealots have wreaked profound economic harm upon them. At some point, either they will (1) start voting the zealots out of office (unlikely, inasmuch as the zealots are invariably aligned with the redistributionist left, who award the food stamps); (2) start offing the zealots (my sentimental preference, albeit wishful thinking), or (3) move their businesses to states with less regulation (very likely, and a well established trend...upper New York State comes to mind. The problem is that demographic change only results in Congressional redistricting after the census every ten years, so any meaningful institutional change will only take place long, long after the taxpayers have all voted with their feet and left only the taking class in place). I hate to hear of enterprises being legislated out of business, but it is inevitable. Why are you still there?

Oldwrench,

There are several reasons why I am still here. My family has been in this business for generations. we have put our lifetimes into building what we have but it really doesn't have much of a market value if any. Old wells are a liability. You are required to plug wells no longer in use. Plugging costs have gone from where the salvage value of the material in the well would pay for the plugging with even a small profit to costing thousands of dollars. I have worked my whole adult life to accumulate the tools and equipment I have to work with. A lot of it is homemade.

The preservation of the history of the local oilfield, the people who built it, and the machinery that was used for the appreciation of future generations is a priority to me. I am involved in a couple of museums and have managed to preserve an extensive collection of oilfield artifacts in spite of what has been lost to metal thieves.

You can't exactly pick up your wells and move them somewhere else although a friend who has a well behind the McDonalds Restaurant in Bradford got a letter from McDonalds asking if they could move the well over a few feet so they could build on to the building. The well has been there since the 1870's.

The small independent producers are not only in danger of going out of business but also of losing all their assets and possibly going to prison as standard operating practices of the last 150 years have been made into felonies.

In my case, I am busy caring for both parents with dementia. I am to old to start over. Even if I could I am not so sure the grass would necessarily be that much greener in another state.

I would say I am typical of many other small producers in this oil patch. Many of us are operating wells that are a century old. I hope this answers your question.

Tom

Penn Grade Crude said:

I would say I am typical of many other small producers in this oil patch. Many of us are operating wells that are a century old.

Click to expand...

An then why are you posting on a "Machinist's" website ?

digger doug said:

An then why are you posting on a "Machinist's" website ?

Click to expand...

Almost everything we have and use in this industry is made of metal and has been machined. I didn't really anticipate that anyone reading this forum would be ignorant enough to not know that. Old wells require a lot of maintenance. Down hole pumps have wear parts that need to be replaced or repaired. Surface pumping equipment has to be maintained and repaired. It takes equipment to service the wells, pipelines, roads, etc.

I mentioned in my previous post that a lot of my equipment is homemade. I have a machine shop where I fabricate and repair equipment. I also use the shop to do some work on my antique equipment and favors for friends.

When production of wells is measured in gallons it takes a lot of wells to make a living. Not all of them are a hundred years old but a few are. The shallow well operators range from owners of one well making 2 gallons of oil a day to mom & pop operations with dozens of wells to larger independents with hundreds of wells. I only mentioned the century old wells to demonstrate that since they haven't caused a problem in the first hundred or more years that maybe they don't need to be included in the new requirements designed for deep shale wells costing millions of dollars and drilled by companies such as Shell, Chevron, and Chesapeake. The shale wells require a 5 acre location and hundreds of truckloads. The new rules, for example would essentially require a virtual highway into our shallow wells that do not really need much more than a cowpath into a location that is 50 by 100 ft. for drilling and completion and even less after completion. The roads specified would take a swath several hundred feet wide on a steep hillside (Hillsides are pretty much the rule in this field.) to maintain the slopes demanded by the regulations. To me, this appears to be environmentally counterproductive but the regulators supposedly know more than we do.

One local family-owned larger independent drilling, servicing and production company had plans to drill 100 wells this year. They have scrapped their plans and have cut their employment from near 100 to 45 employees because of the new regulations and heavy handed enforcement. In order for production to be maintained new wells are needed but the old wells with their settled dependable production are the backbone of the source of feedstock for the refineries. Even most new wells are stripper wells. You just hope that they pay out before the production rate declines too far. The curve eventually levels off.

I started this thread on a sub-forum entitled "Manufacturing in America and Europe". If refineries in PA and WV making all kinds of products from crude oil is not manufacturing in America I don't know what is. I also would think that the shops producing pumping, drilling and servicing equipment would also qualify as such. Their existence is severely threatened by the new regulations. A refinery can't refine oil if there isn't any to refine and a shop can't manufacture equipment if there is no market for it. It just seems to me that a lot of the posts that I have read on this website are less related to the subject than this thread but what do I know?

I have been working on oil wells since I was 10 years old. I started pumping wells by kicking the 6 foot flywheel on a gas engine when I was twelve. I was wiring pumping equipment for 480 volt three phase power when I was a teenager. I have several VFD's in use. I have carried ten quarts of nitroglycerine in each hand. When I was a kid we had a baseball diamond behind the former school (now the firestation) where there was a rodline connecting a slave jack on a well to a central power just beyond second base. The rodline was probably a foot and a half above the ground. We just had a rule that if the ball was over the rodline, it was an automatic home run. That would probably be national news of child cruelty today. We didn't have gloves or uniforms. We were lucky to have a ball and a bat. I remember walking from one end of town to the other to see if one family or another had a useable softball we could use, even if it was wrapped with friction tape.

I started this thread here because it was my belief that the readers of this forum are above average in intelligence, practical knowledge and common sense, and had a concern for the plight of American industry. More than that, however, I expected them to have a genuine sense of truth and justice, integrity and human concern for their fellow men and women who are trying to make a living.

Sorry I didn't get back sooner but I was testifying last evening at a hearing over a hundred miles away in an effort to save our industry. I didn't get home until well after midnight. After I wrote this post my browser crashed when I attempted to downsize the photos so I had to rewrite the whole thing. Now I have to go check on my elderly parents and then pump my wells.

Tom



Photos: Old well in woods, 110 year old well with homemade service rig, Well drilled in 1985, Well drilled in 1914 with tanks

Some More Photos



Photos: From my living room window (Sorry--Off topic!), Central power I built in early '70's, Celebrating 125th anniversary of Bradford refinery, My dad servicing well at age of 88

Interesting website on the rodline technology here:

The Central Power

In the early 70's I lived in Wellsville NY, rodlines were all over and a few still ran on occasion. There were pumpjacks all over the place, peoples yards, along any road, parking lots. As a kid from suburbania it was a real surprise to see oil field equipment in the state of NY.

Instead of killing off the oil industry, tree hugger types ought to illegal! Between the EPA fascists and animal rights idiots our lubrication needs will be reduced to rendering "useless" humans for any slickem we need.

The way I see it, and I don't know shit, is that the US Govt. that has national drilling regulations, has ceded control to the LOCAL municipalities to regulate this drilling. Now the " Industry" has to suffer the wrath of the LOCAL populace which will be most affected by this drilling, pro or con. Sorry boys, this is way it's supposed to work.

Penn Grade Crude,

The people in the oil patches need to be raising hell with their local representatives. Remind the reps that this is how we eat and we vote. If there is an association of small oil producers, get together with the refineries and start leaning on the elected people.

Explain to the reps who will vote on the bill the difference between what the oil people do and what the frackers do.

If the oil people let a stream of oil run through rich folks golf course, it ain't gonna be the environmentalists giving you trouble.

Having people from out of state write letters isn't going to have near as much influence on your state senator and representative in your district as you will.

Maybe you didn't vote for them or like them, but their job is to take care of the people in their district.

Paul, transplanted from Western PA

Daryl,

I believe that for the most part, the local people welcome our industry. As I said, we have been here for over 150 years and are a very significant part of the local economy. The threat is from the state. The new regulations are presently being considered by the Environmental Quality Board, an entity of the PA Department of Environmental Protection. This advisory board has members from all segments. The problem here is that with all the concern about the deep shale development, we have been lumped into the same regulations. Joe Blow with his two wells making a total of 10 gallons of oil per day cannot do everything the same way that Royal Dutch Shell with hundreds of wells costing seven million dollars apiece can. The problem is that the urban people who have no understanding, except from all the hype about the shale revolution, are all of a sudden up in arms. Before the shale gas boom, most of them had no idea or even cared that our industry existed. The shallow well industry is a completely different industry but they do not understand that.

The Federal Govt. does not regulate drilling. The state does. The state does get federal mandates from EPA. When Obama didn't get Cap and Trade to destroy the American economy, he said he would do it through the EPA. This has already devastated the coal industry.

Paul,

Did you look at the link in my original post? Please also check out PIPP.

The problem is not our representatives. They are with us all the way and have gone to bat for us. The problem is that they are outnumbered by their counterparts from the other parts of the state and the big cities. We have more than one association. I have been on the board of one of them since 1987 and was on the board of another one before that. Believe me, we have covered all the bases you mentioned and then some. In the past we even had three crews who took turns camping out in the state Capital all winter. I had a pumping unit running on the front steps of the capital building. They all knew us from our green and white hats. We would go from door to door lobbying.

As I mentioned above in my reply to Daryl, we are now going through a process with the EQB. The EQB has solicited input from the public, thus the letters. The idea is to overwhelm them with numbers of letters to get their attention and let them know it is not just a handful of people that are concerned. We have gotten a lot of support from our friends and neighbors. The letters are in stores and restaurants. They are also having a series of formal hearings around the state. I testified at one last night. There are some real crackpots out there speaking against industry. One last night called for an end to all fossil fuel production.

Tom

Tom,
I feel your pain.
I have been to Bradford a couple times, always wanted to learn more about the history of the area
and your industry.
THANKS for posting this.

Thank you for posting from me also.
Rob

You are a scion o a 150 YO company. That you work to keep 10 gal per day pumps working kind of gives the lie to all those IN the oil field who say that ALL them dippersticks are shut down..

YOU make money, at TEN GALLONS per day? All them oilfield experts say that all of YOU guys have pulled the plug on those 1 HP motors that have been running, and kept your family in clover for 150 years. I argued that you had not, BIG FIELD people argued that you had.

They will not help you at all , all they know is thousands of BPD. You came to the wrong place. All we have here is BIG oilfield "Machinists", them who are making big bucks cutting threads. That IS NOT a big time professional "Machinist" job. Cutting an oilfield thread after a week or so of training on an automated machine does not a Machinist make.

I am sure that ALL of you who, here, ARE Oilfield "Machinists", will be upset by this. You are TOO REAL MACHINISTS!

Bullshit! You are good at ONE thing. We have THOUSANDS of posts here of REAL Machinists, them who work to less than a thou.. They do not work on 40 foot sections of drill rod or pipe. Some of them do, but not as a constant diet.

I never did, nor would I have liked to. That you make big bucks doing so does you not a "Machinist" make.

George

Penn Grade Crude, ignore this guy for your own sanity. You're an entrepreneur and I feel your pain.

I'm sorry that you are overwhelmed by treehuggers but that is unfortunately the way things are, and like I said it is not going to improve anytime soon. Back in Maryland I lost a piece of property in an industrial park when USF&W decided part of it was a wetlands. Along with very restrictive building setbacks this was enough to prevent effective use of the lot. Many local enviros were on the government payroll at various levels and although I didn't want to believe it, their main goal was to prevent any kind of industrial activity, no matter how benign. That is not hyperbole, it's true, and it's what you are facing. I was not being facetious in asking why you were still there. I uprooted my home and shop and moved out west, and for the next twenty years I cheerfully paid my taxes in a jurisdiction that appreciates industry. Why stay there and allow the parasites to torture you?

daryl bane said:

Now the " Industry" has to suffer the wrath of the LOCAL populace which will be most affected by this drilling, pro or con. Sorry boys, this is way it's supposed to work.

Click to expand...

Yes, it is the way this country was wet up by the founders. However, "the People" are supposed to be educated about issues. With todays media this no longer possible. Half truths, misinformation, bias, and outright lies can cause the "local" and entire nation to make wrong decisions. Most people don't have the time (trying to keep their heads above water,( live their lives)) to know the actual facts about whatever issue is in question. Relying on the media and they know only what the media wants them to know.
Prime example: N.J. Governor Christi is being hammered about the bridge thing yet Obama gets a pass on his many scandals. All because of media bias. I don't favor either of those guys BTW.

Oldwrench said:

their main goal was to prevent any kind of industrial activity, no matter how benign. ?

Click to expand...

In my area industry is being suppressed. We once had many industrial plants and the local "controllers" have run them from the area by tax and regulation. Gotta love the home rule taxing structure, ya know! Yet, they formed an enterprise area for industry and continue to tax and spend on these empty areas up-grading them with water supply, sewer, paved roads, utilities, etc. and no relief geared to induce industry into the area. Convenience stores, grocery, walmart, package hardware, and such low paying jobs with no future are favored by these genius' that plan the future of the area. Even the RR, which was once a major employee, has been decimated.
We are using tax moneys to build unneeded over-passes at RR crossings in town and also barring whistle at crossings because someone complained, I suppose. They will be complaining after crossing accidents pick up. One such bridge may be necessary and already is in operation, (built by out of area contractors, BTW) but the other two are not needed. It is less costly to pass an ordnance to make the RR make up trains at the other end of the yard. There is room and the RR once did just that. But then tax money the area does not have has to be spent. And names have to be assigned to the bridges to boast the idiots that pushed the deals through.

Krutch said:

In my area industry is being suppressed. We once had many industrial plants and the local "controllers" have run them from the area by tax and regulation...

Click to expand...

Here's another way to look at it: The controllers may think they "ran them off," but the companies who left were actually the proactive parties in that they are now somewhere else, out of the grasp, and prospering. The juggernaut of environmental and other regulations and taxes intended to destroy private enterprise is balanced by another one moving in the opposite direction.

I understand the OP can't Go Galt but plenty of others have been quietly doing so. Meanwhile the controllers pat themselves on the back for "creating" enterprise zones, which of course are doomed to remain empty without tax subsidies to lure business. If they hadn't had onerous taxes to begin with, existing industry wouldn't have left. But they are clueless. I see TV ads for the "New" New York State. Right, I'm gonna jump right on that and give them a call...NOT! Do they think business owners don't know the score?

Krutch said:

Relying on the media and they know only what the media wants them to know.
Prime example: N.J. Governor Christi is being hammered about the bridge thing yet Obama gets a pass on his many scandals. All because of media bias. I don't favor either of those guys BTW.

Click to expand...

Yet, and you have to admit it, if the proverbial shoe was on the other foot... and somehow Obamas' folk had caused the same gridlock to punish Christi for being a republican.... would you give him a pass?

I thought not....

Krutch said:

Instead of killing off the oil industry, tree hugger types ought to illegal! Between the EPA fascists and animal rights idiots our lubrication needs will be reduced to rendering "useless" humans for any slickem we need."

Click to expand...

Yeah, those tree hugging bastards there in Charleston West Virginia whining about a little licorice smell in their drinking water.... pfffftttt!