Sugar Hollow Water Services, L.L.C.
As the price of natural gas drops and production slows, Governor Tom Wolf’s severance tax proposal could not have come at a worse time.
The quaint town of Tunkhannock became an exciting place to live and work in 2009. Everyone was talking about the abundance of natural gas directly beneath the ground in Wyoming and surrounding counties. My family quickly became aware this was not only a great thing for the Commonwealth of Pennsylvania but, possibly, for our livelihood as well. There had to be some way to get involved.
We had always been business people and entrepreneurs. We owned and operated stone quarries, logged our farm, built a development with nine houses, owned rental properties and had a small excavation company. Therefore, it was apparent to us that, if we kept our eyes open, something would present itself in this new industry that was taking the area by storm.
One thing quickly visible was the demand for large quantities of water for fracking and trucks to carry water. This is when we had our ‘lightbulb’ moment; this is an opportunity for us!
As luck would have it, we happened to own a piece of property right along Rt. 29 bordering Bowmans Creek. We were approached by a gas company to lease our land for a water withdrawal. We were not able to reach an agreement at the time, prompting us to ask the question “Why can’t we develop the land for water withdrawal?” This was our land, our local resource; why couldn’t we capitalize?
We soon began doing research and contacted the Susquehanna River Basin Commission. This organization permitted, tracked and policed all fresh water usage in the basins. It was common then that only the gas companies obtained permission to withdraw fresh water for fracking. This did not dissuade us; rather we decided to push ahead. After some initial push back, we were granted a docket, otherwise known as a permit.
The next logical investment in our pursuit was a water truck. Trucking was already in our ‘wheelhouse,’ our family being in the excavation business. Sugar Hollow Water Services, L.L.C. was created. The name was chosen from the name of the area where our family farm was located. We created a management team consisting of my mother, father brother and me.
It was very challenging, at first, to convince customers to use our site and trucks. Through perseverance and diligence, though, we gradually got gas companies to partner with Sugar Hollow Water Services and the growth of the business began. We also conservatively began expanding our fleet, and presence, within the natural gas industry.
Following the success of the initial water withdrawal, we quickly began to set our sights on an additional withdrawal on the Susquehanna River. This withdrawal serviced gas companies with much larger capacity. The growth of our water truck fleet followed next.
One thing we felt was going to be really important to our business was maximizing this opportunity. We began to look to diversify within the industry. Having an excavation background, we explored offering those skills to our customers. This led to providing erosion and sediment control services. This is basically a landscaping service for the actual gas pads, ensuring the soil is protected. This was slowly grown into a large percentage of our business.
As the business grew, our needs grew. A fully equipped shop was built to maintain our truck fleet. The office needed to be upgraded from the job trailer we were working from, so an office building was purchased that came with 25 storage units which we rent out. We are in the process of building an additional building to store equipment.
Sticking with our diversification strategy, we looked to do some things that didn’t directly depend on the natural gas industry, but certainly were a part of it. We own property in Tunkhannock and are currently in the process of going through the approval steps to have it sub-divided for a housing development. We plan on building and selling nine small family homes.
I have told this story many times, not only because I am very proud of what our family has accomplished, but also because I feel it is a lesson in persistence, determination, gumption, self-confidence, entrepreneurship and opportunity. It is also a direct result of what the industry has to offer in the way of a multiplier effect.
We were able to recognize the natural gas industry was about to provide us the chance to capitalize on the natural resources of our home. We were then able to act on that opportunity and build a sustainable business.
We employed 35 local people at our peak, all of them from Wyoming and the surrounding counties. The majority are truck drivers, who are able to provide a comfortable living for their families. The business is able to provide healthcare to all our employees, of which we are very proud. We have labors and operators for the erosion and sediment control. There are water withdrawal attendants, full time mechanic, shop manager and office personnel.
Our truck fleet grew to 12 water trucks, one dump truck and eight pickup trucks. We added equipment; three excavators, two skid loaders, one hay blower, a track dump vehicle, bull dozer and five trailers to move all this equipment, as well as all other necessary tools to support.
The industry landscape has recently changed, though. The price of natural gas has dipped and production has decreased. We understand it is cyclical industry and we are well prepared for the downturn.
We have cut down our labor force considerably. Our drivers are working far less hours, and some have had to look for work elsewhere. The shop was not seeing the same volume of work and the shop manager had to be laid off. Some office staff had to be cut to part time.
Now, at the worst possible time, our new governor has proposed a severance tax. The price of natural gas is compromising the gas companies’ ability to produce at the same capacity.
The governor has clearly chosen the natural gas industry as a vehicle to implement an agenda built on his ability to get elected. An “accomplished” businessman as himself should be easily able to recognize the foolishness of imposing an additional tax on an industry that has done some much for our state.
As far as we are concerned, a tax on the natural gas industry is a tax on us. If the gas companies do not have confidence in their ability to operate at a reasonable cost in this state, we cannot have confidence to invest in our business. This, in turn, will result in fewer jobs we are able to provide to the local community.
So, here we are now, a once thriving business, not only being hurt by market conditions but a governor who seems intent on ruining a good thing. Not just a good thing for us personally, but our state and country.
It is easy to say the gas isn’t going anywhere, but there are other shale deposits across the world. We were forced to lay off employees and scale back on investing in our company. We are very proud of what the industry has allowed us to accomplish, but we are worried it could come swiftly to an end.