Cate Street Capital

A private equity firm has withdrawn from a study to build a natural gas drilling wastewater facility at the Wyoming Valley Sanitary Authority grounds in Hanover Township, to many residents' relief.

Portsmouth, N.H.-based Cate Street Capital had a nonbinding agreement to look at whether a new facility to be built and run by the company could successfully treat water from hydraulic fracturing.

"We exist to bring environmentally sensitive and sustainable businesses to life, and this project would do that. However, we have listened to the community and heard its concerns. We respect our neighbors in Hanover Township, and have decided to pass on this opportunity at this time," Cate Street Capital Senior Vice President Richard Cyr said in a prepared statement Friday.

Numerous residents were loud in opposing the proposed treatment facility, with concerns ranging from heavy tanker truck traffic to the potential for a wastewater spill in their neighborhood.

"I would say that I am personally extremely happy. I think the residents of Hanover Township will be extremely happy," said LeeAnn Wallace, who lives near the WVSA plant and heads the Hanover Area Citizens Coalition. "It's nice to see that the voices of the people were heard, at least by the outside business, and they took our concerns to heart."

Hydraulic fracturing or "fracking" involves blasting millions of gallons of chemical-treated water deep underground to open cracks in the shale and release the natural gas.

"Our engineering study has determined that our proprietary technology is capable of cleaning the water to appropriate standards at a price which is in line with current costs," Cyr said.

Cate Street Capital developed what Cyr called "a groundbreaking chemical-free, low-cost technology" that cleans chemical-laden, salty fracking water to federal Environmental Protection Agency standards so it can be reused for gas drilling.

WVSA Board Chairman James Hankey of Edwardsville said the authority had been planning to withdraw from the study.

"We were feeling the same way," he said. "But we signed an agreement with them for the project, and I thought we should see it through to the end."

In doing research and looking over the report, Hankey said authority officials didn't know what kind of money it would generate: "There was no guarantee there would be one dollar."

"The reason from day one we got into this was looking for a source of revenue," he said.

John Minora of PA Northeast Aqua Resources, consultant to the WVSA, said while he understood it was an emotional issue, "We never got a fair shake on that. Everybody said this was a done deal. … I said many times, no, it isn't."

He said, "I think there was a lot of unfair criticism of the board. They certainly have a duty to investigate and explore any project that could save the taxpayers money and generate $4 million or $5 million in revenue for them annually."

Hanover Township commissioners sent the WVSA a letter on Thursday, stating their "vehement opposition" to the project "after considering the environmental, industrial, traffic and quality of life implications" and promising to "use any resources within our municipal power to fight the process of bringing such an industry to Hanover Township."

That plans were withdrawn is "great news," Commissioner Chairman Albert J. Bagusky said.

"We're really proud of our residents. They stood up for what they believed in," he said. "We were ready to help them any way we could."

State Rep. Gerald Mullery, D-Newport Township, has a town hall meeting planned for Thursday, but said he will decide Monday whether or not to hold it.

"I'm elated. I had concerns about this project from day one. I was concerned about the amount of truck traffic that would be coming through a residential area," he said. "A larger concern was the number of trucks that would be crossing over several tributaries and two of our reservoirs, potentially affecting the drinking water of the Wyoming Valley."

Won't pursue it right now

Gas Drilling Awareness Coalition member Scott Cannon said it was a long fight, but the people won.

"I just hope this is the end, and they don't try to find another group to come in and build another facility, but we won't know that until the sanitary authority says it's over," he said.

The contract with Minora is over, and the board isn't going to hire another consultant, nor does it plan to actively pursue finding another company to build a frack water facility, according to Hankey.

"But on the other hand, if someone knocks on the door six months, a year down the road, I wouldn't be opposed to looking at a proposal," he said.

The authority has about $15 million in upgrades, and must eliminate combined sewer overflows, Hankey said. Revenue from the Cate Street project could have reduced or even eliminated rate increases.

"We haven't raised the rates in five or six years, and we don't want to. That's why we were looking at this," Hankey said.

The WVSA originally explored treating frack water in its existing facility, but dropped the idea in April 2010 because state Department of Environmental Protection regulations were too restrictive to allow it.

After attorneys told the board a public-private partnership wouldn't work, the authority put out a request for proposals for a company to finance, design, build and operate a treatment plant. Aqua Environmental Solutions LLC and Cate Street Capital/Red Desert applied in January. The board chose Cate Street and signed the agreement at the March 16 meeting.

In order to supply natural gas companies with treated wastewater, the WVSA needs to receive approval from the Susquehanna River Basin Commission.

The commission's Web site does not show the WVSA among the list of permitted water providers, and commission spokeswoman Susan Obleski confirmed the authority has not submitted an application.

Asked if the authority might consider selling treated water to gas companies for fracking, Hankey said, "That's always a possibility."

He added, "But my opinion is, at this point we aren't pursuing anything in the future. That's only my opinion; I'm one of 16 people."