Carrizo Oil and Gas had every reason to believe this rustic town in the foothills of the Blue Ridge Mountains was an ideal place to build Virginia’s first well to explore for natural gas in the state’s Marcellus Shale.
Carrizo liked Bergton’s location — eight miles from the West Virginia border, not far from where other operations are extracting gas. Carrizo bet that gas was locked in the shale under the town and put up tens of thousands of dollars for landowner leases as collateral.
All it needed to start the job was a special land-use permit from the four Republicans and one Democrat on Rockingham County’s Board of Supervisors.
Carrizo didn’t even come close. Concerned about controversial drilling methods, the supervisors never voted on the permit, and recently the company shelved its application following a two-year pursuit, ending its immediate hopes of exploring for gas.
The rejection in Rockingham County was yet another hard knock against companies trying to extract natural gas from the Marcellus Shale closest to Washington. Negative publicity about water contamination at drilling sites in the Chesapeake Bay region and out west in Texas, Wyoming and Oklahoma is raising concern even among those who support gas exploration.
Virginia has 7,700 natural gas wells in operation, but none extracts gas from the rich Marcellus — a prehistoric shale formation that runs from Ohio to lower Virginia and entombs one of the most bountiful gas reserves in the world, according to the Energy Information Administration. No other company has approached Virginia since Carrizo abandoned its permit application.
Maryland has also slammed the brakes on gas exploration. Last March, the O’Malley administration put off decisions on two permit applications to search for gas in the Marcellus under Garrett County until the completion of an exhaustive study next year. The state wants to know if a hydraulic fracturing process known as fracking, which uses high pressure blasts of water mixed with a chemical cocktail to break the rock and unlock the gas, is safe.
Rockingham County’s opposition to Carrizo was led by one man, Pablo Cuevas, a Republican supervisor whose district covers Bergton. The county already has about 20 gas wells, so residents are familiar with drilling operations. But alarmed by reports of chemical water contamination from hydraulic fracturing for natural gas in New York, West Virginia and Pennsylvania, Cuevas investigated Carrizo and Marcellus drilling in those states with a pit bull’s determination.
Cuevas learned what the Marcellus Shale Coalition of companies that support drilling says all the time. Drilling in shale has an upside, bringing in billions of dollars in tax revenue and jobs, along with lease payments and gas royalties from companies to property owners.
But he also encountered a downside: Some residents complain of well water contamination and the strong stench of chemicals from fracking. Others say mechanical noise from the operation of the well persists through the night. Motorists complain of massive truck convoys that ruin roads.
Cuevas wanted no part of that. Virginia just spent $5 million building a new road into Bergton and trucks from a well operation would likely destroy it, he said.
And if chemicals used by Carrizo somehow contaminated the groundwater that area farmers rely on, the law only required the company to put aside $25,000 to cover the damage, Cuevas said.
In meetings, he peppered company representatives with questions and demanded far more money than the company was willing to pay to cover the cost of potential mishaps.
At first, landowners who granted leases to Carrizo in return for rent payments and royalties were upset with Cuevas. But after public hearings in which environmentalists and landowners in other states testified, their opinions slowly changed.
“I’d just as soon not have the well up there because of the water contamination,” said Roger Smith, a retired postmaster who leased 53 acres in 2008. “It’s 80 or 90 percent that it’s going to cause something.”
Susan Brown, owner of Bergton Grocery, said workers building a well would likely buy the cheeseburgers and other sandwiches she sells at the store, much needed money for her shrinking revenue.
“They’ve drilled wells ever since I can remember, and they don’t seem to bother anything,” she said. After a pause, she added. Cuevas is “very thorough at what he does, checking all sides of the issue. Yes, I’m very confident in his opinion.”
Everett May Jr., who raises angus cattle on a farm, said Cuevas traveled to West Virginia and Pennsylvania to examine hydraulic fracturing operations before making a decision.
“Pablo made the right decision” to oppose drilling, said May, who leased more than 1,000 acres and gets $1,400 yearly from Carrizo. Later May learned that Carrizo could renew the lease after five years even if he no longer wanted it, and they could sell its rights to another company.
Sometimes betting on a town is good; sometimes not, said Richard Hunter, vice president of investor relations for Carrizo, a Houston-based company that exploits gas in four types of shale nationwide using controversial drilling techniques that go deep and horizontal.
He called the time and money spent in pursuit of a permit “almost a fishing expedition.” Even if Carrizo had gotten the permit, it was unlikely to drill a well in the near future because a nationwide glut of exploration has depressed the price of gas, he said. Hunter said Carrizo will hold onto its leases and wait, perhaps to follow a bigger oil company with the resources to be more persuasive in the county.
At one meeting, the state lobbied on Carrizo’s behalf, telling Cuevas not to worry. Carrizo was trying to operate a vertical well similar to those that have operated in Virginia since the 1930s, said Rick Cooper, director of the Division of Gas and Oil in the Department of Mines, Mineral and Energy. A hydraulic fracturing operation with heavy chemicals was not in its plans.
But Cuevas wasn’t persuaded. If Carrizo struck gas, their methods could change, he said, “and I’ve already given them permission to drill. They don’t have to come back to me for any more permission.”
In the end, Cooper realized the process wouldn’t go forward. The bad news from fracking operations “has had an impact,” he said. “To what level I’m not sure.”
But Cooper was already at a major disadvantage. Cuevas and other county officials saw the state as Carrizo’s ally.
“Their role is to promote the drilling of gas,” Cuevas said of state officials. Cooper responded: “We promote the industry as long as drilling can be done in a safe, environmentally sound manner. The Division of Oil and Gas has nothing to hide.”
In meetings, Cuevas went on the offensive against Cooper’s department. Did you ask the Department of Environmental Quality to study the impact a well would have on the water, the fish, the wildlife? Did you ask the Virginia Department of Transportation to determine whether the roads will hold up under heavy truck traffic? Shouldn’t Carrizo’s liability be more than $25,000 if something goes wrong?
“I don’t think they did a very good job of working with some of the state agencies that regulate this kind of operation,” Cuevas said recently while driving his sport-utility vehicle beside a clear gurgling stream that runs through Bergton. “If this was going to be the first well in the Marcellus Shale in Virginia, I want you to go out of your way,” he said.
Carrizo abandoned its proposal in December. “We tested the waters, and they’re not warm,” Hunter said.