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HICKORY, Penn. (Reuters) - On a snowy hillside in rural southwest Pennsylvania, Larry Grimm drives his truck up a steep gravel track to a hilltop reservoir surrounded by orange plastic fencing and "keep out" signs.
The pond supplies water pumped from a local creek to the natural gas wells that are springing up throughout Mount Pleasant Township, where Grimm is the municipal supervisor.
Range Resources Corp, the Texas company that has drilled 68 wells in the township, needs millions of gallons of water for "hydrofracking," a process that forces a chemical-laden solution deep into the rock, allowing natural gas to be released.
The technique is being repeated at hundreds of other sites in Pennsylvania and parts of surrounding states as energy companies scramble to exploit the Marcellus Shale, one of America's biggest natural gas formations, which some geologists believe contains enough recoverable gas to meet total U.S. needs for a decade or more.
At a time when America is stepping up efforts to reduce its dependence on foreign energy, the Marcellus appears to offer an abundant alternative close to America's biggest natural gas market, the northeast.
But Grimm and others in Hickory say they have already paid a high price for the development of their quiet community from the noise of drills and compressors, heavy truck traffic damaging local roads, and air pollution from flaring or escaping gas.
They also say that Range, one of the biggest players in Marcellus drilling, appears determined to tap the vast reserve regardless of local concerns.
"They have lied to us so much," Grimm told Reuters. He said the company has exceeded the promised number of workers on its drill sites, and flared, or burned, excess gas when it said it wouldn't.
"This was almost a pristine township. They have taken the innocence off it," he said.
Grimm said he has no evidence that drilling is contaminating groundwater, but is aware of concerns that the "fracking" fluid may escape -- either above or below ground -- and that the chemicals in it have the potential to cause cancer, damage human immune and reproductive systems, and trigger other illnesses.
Ron Gulla, another township resident, blames drilling on his land for the death of vegetation and fish in his pond.
According to the Endocrine Disruption Exchange, a research organization in Paonia, Colorado, 30 percent of 54 tested chemicals used in the fluid are carcinogenic; 74 percent can cause respiratory damage, and 54 percent pose a danger to the blood and cardiovascular systems.
The group tested soil and water after spills in Colorado and Wyoming where gas drilling is more advanced than in the Marcellus.
In northeastern Pennsylvania, drilling also threatens the Delaware River watershed, the source of water for 15 million people living in New York, Pennsylvania and New Jersey, according to Damascus Citizens for Sustainability, a group that opposes the development.
According to the organization, 245 chemicals including methanol, benzene, glycol ethers and biocides are used in the fluid.
Matt Pitzarella, a spokesman for Range Resources, said the fracking chemicals could be dangerous in high concentrations but are heavily diluted and so pose no threat to human health. Wells have several layers of steel and concrete to stop the fluid escaping into aquifers where they could contaminate drinking water, he said.
About 80 percent of the fracking fluid remains about a mile underground -- thousands of feet below drinking-water aquifers -- where it "dissipates" into the rock after drilling, Pitzarella said. The remainder is treated on the surface and then returned to local water sources.
Scott Anderson, a senior policy adviser with the nonprofit Environmental Defense Fund, agreed with Range's assertion that the fracking chemicals are sufficiently diluted not to pose an immediate threat to health, and he said energy companies have improved safeguards against spills.
But Anderson said he is concerned about the safe disposal of fracking concentrate that is separated from waste water after drilling, and says there is still a risk that the original fluid may be spilled before it is put in the ground. "Dilution isn't the solution to pollution," he said.
Joyce Mitchell, owner of a 133-acre (54-hectare) farm near Hickory, said she has "mixed feelings" about having leased her land to Range Resources for gas drilling. Although she has welcomed the extra income from the lease and production royalties, she complains about a constant smell of gas, and no longer drinks the water from her well because she is concerned about its safety.
Mitchell said Range took over more of her land than she expected, and though she was advised by her lawyer that the company was within its leasing rights to do so, she found the company's attitude overbearing. "They are arrogant," she said.
Now Mitchell has asked an independent testing company to make sure her water is safe. "I do feel the compulsion to make sure this operation does not do horrible things to us," she said.
Editing by Eric Walsh