Aqua America to Supply Susquehanna Basin Water to Gas Drillers

BrynMawr, PA-based Aqua America is one of the nation’s largest water and wastewater treatment companies, serving over 3 million customers across 12 states. Their largest water customer is Exelon Energy. Soon, though, Marcellus Shale gas drillers may provide an even larger revenue stream. Aqua will see tidy profits selling the Susquehanna River Basin water it pulls in Lycoming county to gas drillers in Pennsylvania’s Northern Tier. It’s simply good business to accommodate them by laying 18-miles of 12-inch pipe.

At least that’s the thinking behind Aqua’s new joint venture with Penn Virginia Resource Partners, L.P. of nearby Radnor, PA. The $12 million private water pipeline they are building together is scheduled to be completed by the end of this year. Penn Virginia is the perfect partner because they already own the physical rights of way. The project will be owned and managed by the newest Aqua subsidiary (there are many) called PVR Water Services, LLC. Their first big customer, Range Resources LLC, will “anchor” the new pipeline by receiving the water at their new impoundment facility, also in Lycoming county. PVR is currently negotiating fresh water capacity contracts with other shale gas drillers.

It’s true, the new pipeline and impoundment facility will help mitigate heavy truck traffic and the ensuing air pollution, and it will reduce the likelihood of severe over-withdrawals, especially in times of drought. “Managing the supply from confirmed reliable sources reduces the potential for over withdrawal from those same streams,” says Chairman and CEO Nicholas DeBenedictis in a September 20 press release announcing the new partnership.

What makes me uneasy is that it’s Aqua executives alone who decide which “reliable sources” to exploit, and what they will disclose about the multiple, large water withdrawals to consumers. And, naturally, I’m skeptical of the fact that the public had little or no input. I’ve been Googling Aqua for months and I’m not even sure if there was any prior public knowledge. Plus, I worry that we’ve been conditioned in general to accept news effecting our precious water supply like any other PR item – as a fait accompli. According to DeBenedictis, “God gives us the water for free, it’s our job to deliver it.” God or Mother Nature? I’m not one to say, but it seems that the company who delivers the water determines who gets it. And I wonder, is the Delaware River Basin next?

Also, not be a bitch about it, but $12 million seems like a very small investment for a corporation as large as Aqua, which had a net cash generation of $160 million in the first half of 2011, who’s already spent $134 million this year and has budgeted $325 million overall. [Source: The] In the spirit of full disclosure, Aqua replaced the aging main under our street last summer, and I did appreciate that. I just want to know, will subsequent Marcellus water pipeline investments even be considered newsworthy?

As writer Anne Minicozzi suggests in Wellsboro and MainLine Connected By More Than Water, which appeared in Wednesday’s MainLineMediaNews, this is something we all need to think about:

“…it ought to be of some concern that Aqua America Inc. of Bryn Mawr announced Sept. 21 it will work together with Penn Virginia Resource Partners, L.P. of Radnor to build an 18-mile pipeline along Penn Virginia’s rights of way to deliver water to drilling operations of another company, forming yet a new company to deliver same called PVR Water Services, L.L.C. (Philadelphia Inquirer, p. A14)… Although Lycoming County and not Main Line water will be siphoned off “Rango”-style for the benefit and profit of certain private Marcellus-shale drilling companies, this is being arranged by companies close to home, right here on the Main Line. If the Delaware River is not deemed important to protect and the drilling moratorium currently in effect in New Jersey is lifted, as soon as Oct. 21, perhaps it will be part of our drinking water that will be siphoned away next.”

Okay, the good news, while there’s increased risk of severe drought in the state overall, as hundreds of millions of gallons of fresh water will now be supplying this burgeoning, new industry, there’s also a better chance that Aqua will be able to manage water supplies through the more regularly occurring, short-term droughts we now experience. Need more polish on that silver lining? Aqua is hiring, again. And while Texas-based Range Resources has a longer (and spottier) violations record than most, they’re practically seasoned veterans by now. In fact, they’re the original hydro-frackers, credited with having invented the horizontal hydraulic slick water frack all the way back in 2004. Additionally, Range is among a handful of gas drillers who voluntarily disclose the chemicals they use for every well completed. The bad news, here’s the list:

Hydrochloric Acid
Propargyl Alcohol
4, 4-Dimethyloxazolidine
Formaldehyde Amine

More About Penn Virginia
Penn Virginia Resource Partners, L.P. (NYSE: PVR) is a publicly traded limited partnership which owns and manages coal and natural resource properties and related assets, and owns and operates midstream natural gas gathering and processing businesses. We own approximately 900 million tons of proven coal reserves in Northern and Central Appalachia, and the Illinois and San Juan Basins; our midstream natural gas assets are located principally in Texas, Oklahoma and Pennsylvania and include more than 4,200 miles of natural gas gathering pipelines and 7 processing systems with approximately 420 million cubic feet per day of capacity.  [Source:]

Range Resources: Position on Marcellus Shale Gas Drilling
“The Marcellus now appears to be the second or third largest natural gas play ever discovered in the world.  With the benefit of a large, liquids-rich window in southwestern Pennsylvania, the Marcellus offers the best economics of any large-scale, repeatable play in the country.  A significant portion of Range’s acreage also offers the benefit of natural gas potential from the Upper Devonian and Utica shale formations that lie above and below the Marcellus.  In 201l, Range is directing 86% of its capital budget toward development drilling in the region.  Clearly, Range expects the Marcellus division to be a value driver for Range for many years to come.”  [Source:]

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One Response to “Aqua America to Supply Susquehanna Basin Water to Gas Drillers”

  1. Jonathan Pool Says:

    Thank you for this information. My foundation has some of its assets invested in Aqua America, on the advice of an investment advisor that uses criteria of social responsibility to select stocks. Your entry leaves the impression that Aqua’s decision to organize this line of business has both pro-environmental and anti-environmental effects. As a shareholder, I want my company to show me an evaluation of those effects leading to its decision, not just issue a press release citing the pro-environmental effects and vaguely referring to “challenges”.

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