Seneca Resources

Seneca Resources

Type	Methane gas drilling and oil
Founded	1976
Headquarters	Houston, Texas
Number of locations	Cheektowaga, NY; Buffalo, NY; Erie, PA; Jamestown, NY; Oil City, PA
Revenue	$1.76 billion

Seneca Resources is a Texas-based oil and gas company. It is involved in the controversial practice of fracking for methane gas in the Northeastern U.S. in the Marcellus Shale region. Seneca Resources owns 730,000 acres in the Marcellus Shale region of the Northeast U.S., as of 2010. Though lauded as an environmentally-friendly alternative to coal, fracking for gas has been linked to depleting drinking water resources of local communities and polluting the wells of the people living around drill sites. According to a 2010 article in Vanity Fair, "as use of the technique (fracking) has spread, it has been followed by incidents of water contamination and environmental degradation, and even devastating health problems." And according to data released to the EPA, Halliburton, a major supplier of fracking fluid, admitted using 807,000 gallons of diesel-based chemicals in its fluids, in violation of an agreement drillers had with the EPA.

Executive Summary

Seneca Resources is the methane drilling subsidiary of the National Fuel Gas Co. It works mostly in the Gulf Coast Region of Texas and Louisiana, the Appalachian Region including the Marcellus Shale, the Southwest and California. The company operates 2,900 wells located in New York and Pennsylvania. National Fuel Gas Corp. and its subsidiaries have been reporting annual revenues of between $1.76 billion and $2.24 billion a year over the past five years. Its CEO is one of the highest paid executives in the U.S., with and annual compensation of $8.6 million. Seneca Resources has been accused of numerous safety violations, including polluting rivers and spoiling drinking water by contaminating it with methane gas. Seneca Resources and its executives have also been very active in making partisan political donations, predominantly in favor of Republicans who support pro-fracking legislature. This company, headquartered in Texas and New York, has invested significant funds in elections in Pennsylvania, a state with large shale deposits, and its PAC was a major spender in the election of the new governor of Pennsylvania, Tom Corbett and Seneca's CEO, David Smith, plans to spend $1.3 billion digging 365 new wells in the Marcellus area over the next three years."

Partisan Political Activity

Although Seneca Resources has donated to campaigns on both sides of the aisle since it began drilling in the Marcellus Shale area, the majority of its political donations has gone to pro-fracking Republicans. 2010 was the biggest year in gas and oil political contributions by corporations hoping to encourage lawmakers to continue with the lax restrictions surrounding methane gas drilling. Nowhere is this seen more than in Pennsylvania, where the majority of the Macellus Shale area lies.

Marcellus Money documents that Seneca Resources has given $214,876.05 since 1999 to candidates, PACs and parties who influence decisions pertaining to the Marcellus region and fracking. Tom Corbett, the pro-fracking Governor of Pennsylvania, was given $26,550. Corbett's rival, Democrat Don Onorato, who was in favor of taxing methane gas drilling companies in Pennsylvania, was given $0.

Corporate Political Action Committee

Since the creation of Seneca's PAC during the 2000 election season, it has spent over $91,000 on candidates, PACs and political parties. The PAC's recipients have been National Fuel Gas' PAC, the Independent Petroleum Association of America, Phil English (R-PA), Joe Barton (R-TX), Mary Landrieu (D-LA) and Neil Abercrombie (D-HI).

Political Donations by Company Execs

Board members and senior management have donated large amounts of money to Seneca Resources PAC. Seneca Resources employees have given $8,468 since 1999. When searching for "National Gas Fuel" instead of "Seneca Resources", the total jumps to $27,026.

• President and CEO David Smith: $5,862
• Senior Vice President and President of Seneca Resources Matthew D. Cabell: $2,721
• Senior Vice President of Seneca Resources and Secretary Barry L. McMahan: $1,763
• Treasurer and CFO David P. Bauer: $1,566
• President and COO Ronald J. Tanski: $1,445

Lobbying

According to Open Secrets, National Fuel Gas Corp. spent $780,000 on lobbying in 2007 (the latest year with data) with the firm Alpine Group. $320,000 was spent in 2006 with the same lobbying firm.

Front Groups

Seneca Resources is a supporter of several special interest groups that push for expanded drilling rights and limited or no regulation of fracking.

Seneca Resources is a member of: The American Gas Association (David Smith was a former Board member), Pipeline Research Council, Interstate Natural Gas Association of America, American Gas Foundation, Gas Technology Institute, Buffalo Niagra Enterprise, The Pennsylvania Independent Oil and Gas Association (Michael Donovan is on the Board), The Independent Oil and Gas Association of New York (Michael Donovan is on the Board), Marcellus Shale Coalition, Responsible Drilling Alliance and Energy In Depth.

Claimed Violations of Safety Rules or Other Laws

Health and Safety Violations Alleged

The Pennsylvania DEP Web site reports that Seneca Resources had 57 violations between 2009 - 2010. Most of these were in Tioga County, Pennsylvania, where Seneca and COG have a joint venture. Violations were administrative and health and environmental safety related. Here is a list of some of the most frequent: "Failure to notify DEP of pollution incident"; "Pit and tanks not constructed with sufficient capacity to contain pollutional substances"; Discharge of pollutional material to the waters of the Commonwealth".

A similar search was done for New York's DEP, but the Web site does not list Marcellus Shale violations or fines.

2010: The Pennsylvania Department of Environmental Protection fined Seneca Resources $40,000 and ordered it to correct multiple violations after discovering that the company illegally built an impoundment on wetlands in Tioga State Forest. "The DEP inspected the Bloss Township, Tioga County, site in March 2010 and found that Seneca Resources Corp. of Brookville, Pennsylvania had filled nearly one acre of “exceptional value” wetland without authorization, improperly built an impoundment, and caused sediment runoff by failing to institute erosion control best management practices." The unauthorized fill in a wetland and sediment runoff are violations of the Pennsylvania Clean Streams Law and the Dam Safety and Encroachments Act.

2008: "Two families in Gibbs Hill, Pennsylvania reported contamination of drinking water after hydraulic fracturing of a nearby fracking well owned by Seneca Resources Corporation. Their water had strong fumes, caused burning in lungs and sinuses after showering, and caused burning in the mouth immediately upon drinking." The DEP ordered Seneca to install new wells for the families. No lawsuit has been filed as of 2011.

Lawsuits

2009: "A lawsuit, filed by Forest Service Employees for Environmental Ethics, Allegheny Defense Project, and Sierra Club, cited the Pennsylvania Forest Service’s failure to comply with federal environmental regulations requiring detailed environmental analysis and public participation before approving oil and gas drilling projects. In April 2009, the Forest Service settled with FSEEE, ADP, and Sierra Club. Pursuant to the settlement agreement, approximately 585 oil and gas wells were permitted to be drilled without additional environmental review but all future proposed oil and gas wells would have to undergo environmental analysis and public participation requirements pursuant to the National Environmental Policy Act (NEPA). A lawsuit filed by Seneca Resources, is also moving forward. Both ADP and the Sierra Club have intervened in this case as well to defend the Forest Service’s authority to regulate oil and gas drilling. The estimated loss for Seneca Resources was approximately $7.3 million for being unable to drill on the ANF in 2009 and 2010. The administrative record in the Catalyst Energy case has just been filed and summary judgment is pending in the Seneca Resources case."

2009: James Hughes has filed a civil lawsuit against Seneca Resources Inc, claiming $50,000 in damages for polluting his drinking water and for having four well sites operating on his farm after Seneca starting drilling operations in 2006, polluting his pond and drying up his private water supply. "Seneca Resources provided Hughes bottled, and nonpotable water, and 45 days later dug him a permanent well. The test well they initially dug caught fire, sending flames high into the air, and had to be capped off. The new well had to burn off natural gas for several months before it could be used, Hughes said. The civil trial is expected to take place next May."

Here is a court record of a lawsuit brought against Seneca Resources, but no additional information was found: Seneca Resources Lawsuit

Revenue and Profits

As a wholly owned subsidiary of National Fuel Gas Company, Seneca Resources does not have their own publicized annual earnings. Below is the financial data for National Fuel Gas.

2010
Total Revenue: $1.76 billion
Gross Profit: $2.81 billion

2009
Total Revenue: $2.1 billion
Gross Profit: $3.5 billion

2008
Total Revenue: $2.4 billion
Gross Profit: $1.2 billion

2007
Total Revenue: $2.04 billion
Gross Profit: $1.02 billion

2006
Total Revenue: $2.24 billion
Gross Profit: $9.3 million

Executives and Annual Compensation

• Chairman of the Board and CEO David F. Smith: $8.6 million
• President and COO Ronald J. Tanski: $5.6 million
• Treasurer and CFO David P. Bauer: $543,372
• Senior Vice President and President of Seneca Resources Matthew D. Cabell: $3.03 million
• President of Distribution Corporation Anna Marie Cellino: $2.6 million
• President of Supply Corporation John R. Pustulka: $1.6 million

Senior Executives

• David F. Smith: Chairman of the Board and CEO - Smith has been Chairman of the Board of the Company since March 2010 and CEO since February 2008. "He has been Chairman of National Fuel Gas Distribution Corporation and National Fuel Gas Supply Corporation since March of 2008, and Chairman of Empire Pipeline, Inc. and Seneca Resources Corporation since April 2008. He was previously President from February 2006 to June 30, 2010 and Vice President from April 2005 to February 2006. Smith is a Board member of the American Gas Association (Executive Committee), American Gas Foundation, Gas Technology Institute (Executive Committee), the Business Council of New York State (Executive Committee), the Buffalo Niagara Enterprise (Chairman) and the Buffalo Niagara Partnership (Executive Committee). Smith has been a Company director since 2007."
• Ronald J. Tanski: President and COO - "Tanski has been the Treasurer and Principal Financial Officer since April 2004 and the President of Supply Corporation since July 2008. He previously served as President of Distribution Corporation from February 2006 through June 2008; Treasurer of Distribution Corporation from April 2004 through September 2008; Controller of the Company from February 2003 through March 2004; Senior Vice President of Distribution Corporation from July 2001 through January 2006; and Controller of Distribution Corporation from February 1997 through March 2004.
• David P. Bauer: Treasurer and CFO - Bauer has been Treasurer and CFO since 2010. "He has served as Treasurer of Supply Corporation and Treasurer of Empire Pipeline, Inc. (Empire Pipeline) since June 2007. He has served as Assistant Treasurer of Distribution Corporation since April 2004. Bauer joined National Fuel in 2001 after 10 years at what is now PricewaterhouseCoopers LLP.
• Matthew D. Cabell: Senior Vice President; President of Seneca Resources Corp - Cabell has been "Senior Vice President of the Company since July 2010 and President of Seneca since December 2006. Prior to joining Seneca, Cabell served as Executive Vice President and General Manager of Marubeni Oil & Gas (USA) Inc. and Texaco."
• Anna Marie Cellino: President of Distribution Corporation - Cellino has been President of Distribution Corporation since July 2008. "She previously served as Secretary of the Company from October 1995 through June 2008; Secretary of Distribution Corporation from September 1999 through September 2008; and Senior Vice President of Distribution Corporation from July 2001 through June 2008."
• John R. Pustulka: President of Supply Corporation - Pustulka has been the President of Supply Corporation since July 2010. He previously served as Senior Vice President of Supply Corporation from July 2001 through June 2010. "Pustulka has been Senior Vice President of Horizon Energy Development, Inc., a business segment of National Fuel Gas Company since July 2001 and served as its Vice President from April 1993 to July 2001. He served as Senior Vice President of National Fuel Gas Supply Corp., a segment of National Fuel Gas Co. from July 2001 to June 2010. He serves on the Board of Directors of the Pipeline Research Council International, Inc. and the Interstate Natural Gas Association of America Foundation, Inc."
• Barry L. McMahan: Senior Vice President of Seneca Resources and Secretary - McMahan was the Senior Vice President of Operations for National Fuel Gas. "He joined Seneca as a Production Superintendent for California in 1988. He was promoted to Operations Manager in 1994 and to Vice President of Seneca - West Coast Division in 1998. As Vice President, he successfully integrated the three acquisitions Seneca completed during 1998 into Seneca's efficient West Coast operations. McMahan has more than 25 years of experience in oil and gas production and management."
• John P. McGinnis: Senior Vice President - "McGinnis has 22 years experience in oil and gas exploration, including a position as General Manager, Exploration and Production (Eastern U.S.) for Dominion Resources, where he was responsible for leading the business unit's strategy to explore for reserves in Appalachia and other Eastern U.S. regions. McGinnis was also Vice President of Exploration for Nuevo Energy and Division Explorationist for Amerada Hess Corporation.
• Michael (Mike) Donovan: Land Manager - East Division at Seneca Resources Corporation - On the board of the Pennsylvania Independent Oil and Gas Association and the Independent Oil and Gas Association of New York.

Contact Information

Texas Headquarters
Seneca Resources Corporation
1201 Louisiana, Suite 400
Houston, TX, USA 77002
Phone: 713-654-2600

BUFFALO
409 Main St.
Buffalo, NY 14203

CHEEKTOWAGA
AppleTree Business Park
2875 Union Rd. Suite 44
Cheektowaga, NY 14227

ERIE
1100 State St.
Erie, PA 16501

OIL CITY
1 Relief St.
Oil City, PA 16301

JAMESTOWN
1384 Peck Settlement Rd.
Jamestown, NY 14701

National Fuel Gas Corp. Seneca Web site

Articles & Sources

External Resources

• Marcellus Money.com
• Campaign Money.com
• Marcellus Shale.us
• Common Cause
• Propublica
• Pennsylvania Political Contributions
• State Public Records Lookup
• Pennsylvania DEP Marcellus Web site

Related SourceWatch Articles

Source Watch has a special clearinghouse on fracking, Fracking for Gas

External Resources

• Homepage"
• Board of Directors"