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Mississippi River Barge Operators: Economy at Risk (USA)

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The American Waterways Operators, National Waterways Conference, Waterways Council, Inc., and 15 other national organizations submitted a letter to President Obama and the Federal Emergency Management Agency requesting a presidential declaration of emergency and seeking “immediate assistance in averting an economic catastrophe in the heartland of the United States.”

The request was made pursuant to section 501(b) of the Stafford Act.

The letter calls attention to the worsening situation on the Mississippi River which has already seen near historic low water levels that have restricted barge traffic on the nation’s critical water transportation artery since this summer. The existing crisis has been heightened even further as the U.S. Army Corps of Engineers has begun the reduction of water to the Mississippi River from dams on the upper Missouri River.

Alarmed that as the effects of reduced flows from the Missouri River are felt downstream and rock pinnacles are exposed near Thebes and Grand Tower, Illinois, significantly impairing the flow of commerce by mid-December, the groups are requesting that the President declare an emergency and direct the U.S. Army Corps of Engineers to immediately remove the rock pinnacles and release such water from the Missouri River reservoirs as is necessary to preserve a nine-foot channel on the Mississippi River to sustain commercial navigation.

The groups warn that the economic impacts of a Mississippi River closure would be dire, placing $7 billion in key products such as corn, grain, coal, petroleum, chemicals and other products at risk in December and January alone, including:

– Over 7 million tons of agricultural products worth $2.3 billion;

– Over 1.7 million tons of chemical products worth $1.8 billion;

– 1.3 million tons of petroleum products worth over $1.3 billion;

– Over 700,000 tons of crude oil worth $534 million; and

– 3.8 million tons of coal worth $192 million.

Recognizing the importance of the Mississippi River as a critical national transportation artery and economic cornerstone, Missouri Governor Jay Nixon, Illinois Governor Pat Quinn, and Iowa Governor Terry Branstad, as well as 15 U.S. Senators and 62 members of the U.S. House of Representatives, have written the Administration calling attention to the severity of the situation and urging action to keep the river open to navigation.

The time for action is now, because once the water levels on the Mississippi drop, this will be an even harder problem to solve,” said Tom Allegretti, AWO’s President & CEO. “An emergency declaration is needed now to allow the swift removal of the rock pinnacles and assurance of sufficient flows from the Missouri River while the rock removal work is taking place, both needed measures to ensure the Mississippi River can remain open at a sufficient depth to keep waterborne commerce flowing.”

“Understanding the consequences of further impairment, or certainly cessation of Mississippi River navigation during the critical winter months, this situation necessitates immediate action,” said Amy Larson, NWC President & CEO. “This can be done in a balanced and measured manner respecting other river interests, but it simply must be done.”

The ripple effect of failing to efficiently move $7 billion in key commodities would be staggering,” said Mike Toohey, President and CEO of WCI. “The most immediate effects would be felt up and down the river, but would spread quickly from those that work on the river to those that ship on the river to manufacturing workers and eventually to all of us as consumers. This is an economic disaster in the making and the Administration needs to act now to stop it.”

Dredging Today – Mississippi River Barge Operators: Economy at Risk (USA).

Pennsylvania County’s Dreams of Wealth Didn’t Work Out

By Roben Farzad on June 07, 2012

Four years ago, as the economy was entering a devastating recession, swaths of rural Pennsylvania were booming.

Energy companies were using hydraulic fracturing, better known as fracking, to tap the vast natural gas reserves of the Marcellus Shale underlying much of the Keystone State. In Wayne County, these corporations offered struggling farmers lucrative leases for mineral rights.

“Land here became a whole different asset class,” says Tim Meagher, a real-estate broker whose family settled in the area in the 1840s.

Today there is no drilling in Wayne County, Bloomberg Businessweek reports in its June 11 issue. The Delaware River Basin Commission, a regional regulatory agency, has declared a moratorium while it studies the environmental impact. Gas companies have invoked force majeure clauses to put their contracts with property owners on hold.

Investors who bought farmland are stuck, and farmers who expected to retire on gas royalties are back to eking out a living from agriculture.

Meanwhile, fracking opponents are brandishing the example of Wayne County as they fight shale energy exploration across the country.

The number of drilling permits issued in Pennsylvania soared from 122 in 2007 to 3,337 in 2011, according to the Marcellus Center for Outreach and Research at Penn State University. Much of the activity was concentrated in the western and central parts of the state, which have a history of energy exploration and geology conducive to gas production.

Fresh Land

As the price of gas climbed, drillers looking for fresh land started eyeing the verdant, rolling pastures of Wayne County in (26452MF) the northeastern part of the state.

Companies such as Hess, Chesapeake Energy (CHK) (CHK), and Cabot Oil & Gas (COG) (COG) dispatched “land men” to go door to door to persuade homeowners to sign mineral leases. Farmers were getting $250 to more than $3,000 an acre to allow drilling on their property, says Meagher. Land that sold for $2,000 to $3,000 an acre in 2004 was going for as much as $10,000 an acre by 2009. Meagher says he often got calls from prospective investors in Manhattan, Boston, and beyond. To encourage more, he put property ads in the New York Post, New York Times, and the Wall Street Journal.

“I wanted to get my clients here the highest possible bid,” he says.

By the summer of 2009, a joint venture of Hess and Newfield Exploration (NFX) (NFX) had secured leases for 80,000 acres with the Northern Wayne Property Owners Alliance, a group of 1,500 landowners formed to negotiate with the gas companies.

’People Here Struggle’

“It’s the biggest thing ever happened around here, in my lifetime at least,” says Alliance member Bob Rutledge, a dairy and beef farmer whose family has been in Wayne for 170 years. “People here struggle. The economy here sucks when it’s good. The farms are dying.” Spokesmen for Hess, Chesapeake, Cabot, and Newfield declined to comment.

Honesdale, the county seat, last saw a boom like this in the 1820s, when it was the starting point for the new Delaware & Hudson Canal. In March 2009, Leonard Schwartz, recently retired as chief executive officer of chemical company Aceto, reopened Honesdale’s 182-year-old Hotel Wayne. He gutted and redecorated its rooms and upgraded its restaurant and bar to accommodate out-of-town speculators and energy company officials with expense accounts.

“The gas companies were giving out money,” says Schwartz. “People were buying tractors, eating out. You felt it.”

Opposition Builds

As fracking fever spread, opposition to gas exploitation was building. In the spring of 2008, a gas company offered Josh Fox’s family almost $100,000 to drill on its Wayne County property, inspiring Fox, a filmmaker, to make the anti-fracking documentary “Gasland.”

The Oscar-nominated film, which shows water from a faucet catching fire, was shown on HBO and helped foment broader opposition to fracking. Fox and an alliance of conservation groups called on the Delaware River Basin Commission to ban the practice in Wayne County. They argued that the drilling technology, which involves injecting high-pressure jets of water and chemicals into underground rock formations, would pollute the river’s 14,000-square-mile basin, a source of drinking water for 15 million people.

Permits Ordered

In May 2009 the commission, which includes the governors of Pennsylvania, New Jersey, Delaware, and New York as well as a representative from the U.S. Army Corps of Engineers, declared that gas companies wanting to drill in Wayne County would need a permit from the DRBC as well as from the state of Pennsylvania.

Land men started pulling out of Wayne, according to local townspeople. A year later the commission announced that it would not issue permits and would study the impact of fracking.

The decision caught farmers and investors off guard.

“I had never even heard of this out-of-state commission,” says Jim Stracka, a contractor from Scranton, Pennsylvania, who joined with two New Jersey businessmen to form a company called Gasaholics to invest in Wayne County.

In 2008, Gasaholics paid $900,000 in cash for a 96-acre farm in northeastern Wayne. Stracka says he expected to lease his mineral rights for at least $3,000 an acre and hoped a producing well might generate as much as $50,000 a day in royalties.

“We went on that premise,” he says. “Then, the moratorium comes out of left field and the leases stop. Now we’re just sitting on it.”

The property remains vacant. A local farmer stops by on occasion to cut the land’s overgrowth for hay.

No Royalties

Rutledge fared better. Hess-Newbridge paid him $300,000 for the right to drill on his farm. Even so, he’s bitter at the prospect of not receiving royalties. He says his farm can’t compete with corporate operations, and that he’s been selling timber from his land, as well as portions of a century-old stone wall.

“The DRBC,” he says, “isn’t writing me a check. They’re just basically saying ‘screw you.’”

Drilling is not officially dead in Wayne County. In February 2011 the DRBC held 18 hours of public hearings at three locations to take testimony on draft regulations and received 69,000 submissions during a two-month public comment period, according to spokesmen Clarke Rupert and Kate O’Hara.

The commission scheduled a hearing for Nov. 21, 2011. Fox showed up with 2,000 protesters, but the meeting was canceled and has yet to be rescheduled.

‘Technical’ Meetings

A statement on the commission’s website says that as of May the commissioners are “convening meetings with their respective technical staff” as they consider rules for drilling.

As fracking continues in most of Pennsylvania, Wayne County residents are recognizing that public-works improvements tied to a gas boom aren’t going to happen.

“We expected better roads,” says Myron Uretsky, a retired New York University professor who owns a house in the town of Damascus, Pennsylvania. “We have no fire hydrants -— the gas companies were going to put them in.”

While many residents blame Fox for their troubles, he says they were naive to think drilling would ever be allowed in such an environmentally critical area. He faults the gas companies for dangling money in front of farmers without warning them of the potential problems.

“It was all sweetness and light,” he says. “‘You’ll make so much money.’ That’s exploitation, not prosperity. This was a bubble.”

To contact the reporter on this story: Roben Farzad in New York at rfarzad@bloomberg.net

To contact the editor responsible for this story: Josh Tyrangiel at jtyrangiel@bloomberg.net

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