William Zagorski, geologist and musician, is credited as being the “Father of the Marcellus Shale.” It’s an interesting story how he convinced Range Resources to try drilling in the Marcellus using hydraulic fracturing. Mr. Zagorski even has a music CD! Read the story of the beginning of drilling in the Marcellus Shale and about the man who pioneered it:
PA Observer-Reporter (Mar 7) – Riding high on the range, the ‘Father of the Marcellus Shale’ leading a busy life these days
George Phillips, a Republican candidate for the 22nd Congressional District in New York State, penned a viewpoint article in today’s Binghamton Press & Sun-Bulletin on the topic of drilling in the Marcellus Shale. In short, Mr. Phillips is pro-drilling while the man who currently holds that office, Maurice Hinchey (Democrat) is anti-drilling and supports federal government interference. While the article takes political aim at his opponent, Mr. Phillips makes strong arguments on why drilling should commence—now.
He closes his article with this:
But the window of opportunity may be closing. As more areas of the country move forward with plans to develop these types of resources, prices naturally fall as supply increases. This leaves our residents waiting, watching potential profits and opportunities evaporate as others reap these benefits while our government dithers.*
Ah yes, the dithering officials in Albany. Albany needs to move forward now. Other shale plays are becoming active, and the Pennsylvania Marcellus is red hot. If Albany drags on much longer with their obstruction of drilling, landowners will be the ones who suffer.
We also hope, along with Mr. Phillips, that the federal government (and Mr. Hinchey) stay out of states’ business.
*Binghamton Press & Sun Bulletin (Mar 8th) – Clear way for drilling
West Virginia Marcellus Shale is getting hot. From an article* in the Steubenville (OH) Herald-Star, we get a mountain of good intelligence on what energy companies have and are paying in the West Virginia panhandle:
- AB Resources is paying the New Vrindaban Hare Krishna Community in Marshall County $2,500 per acre for approximately 4,000 acres, and 18.75 percent production royalties. That works out to $10 million in lease payments.
- Chesapeake paid $750 per acre and 14 percent royalties to the Wheeling Park Commission for leases in the Oglebay and Wheeling Parks in 2009. The park commissioner is not happy that Chesapeake is planning to pay more this year to lease public lands in neighboring Ohio County.
- Chesapeake paid $2,800 per acre and 18.75 percent production royalties last month to the Marshall County Board of Education for rights to 177 acres in Sherrard.
- Chesapeake has 11,000 acres under lease in Ohio County, and 45,000 acres (with 26 wells drilled) in Marshall County.
- Trans Energy owns and operates 300 active wells in Marshall, Wetzel and Marion counties, with 40,000 acres under lease.
Also, according to the article:
Current lease contracts range from as low as $5 per acre to as high as $2,800 per acre, with production royalties ranging from 12.5 percent to 18.75 percent. Landowners are being urged to think carefully before signing any contract.*
*Steubenville Herald-Star (Mar 8th) – Steubenville Herald-Star – Natural gas could bring riches to Panhandle
Jim on March 8, 2010 | Filed Under AB Resources, Chesapeake Energy, Energy Companies, Lease & Royalty Paments, Marion County, Marshall County, Ohio County, Trans Energy, West Virginia, Wetzel County | Leave a Comment
Kudos to the Skaneateles High School Environmental Club for the public meeting they held on hydraulic fracturing on January 23rd at the High School auditorium. Yes, the members of the club are no doubt anti-drilling and they had several speakers who presented the anti-drilling viewpoint. And yes, they showed the biased anti-drilling “documentary” Split Estate.
But to their credit, the Environmental Club also balanced it with someone who presented the pro-drilling side of the argument. That person was David Palmerton, a geologist and environmental consultant, and someone who’s actually developed oil and gas wells.
With regard to the likelihood that chemicals used in hydraulic fracturing will pollute water aquifers, Mr. Palmerton said:
“I can tell you as a geologist that putting water in 7,000 feet down, which is some 6,500 feet below any possible water supply, is not going to reach that water supply,” Palmerton said. “It’s trapped by the pressure of the rock.”
A question was also raised about what is done with the “frack fluid” once it is reclaimed.
Palmerton agreed with [Onondaga Nation General Counsel Joseph] Heath’s earlier point that there were not enough facilities to treat the wastewater.
“But, once it’s clear that oil and gas development can proceed, companies will come in, will develop those facilities,” he said. “There’s a lot of money that’s out there that’s ready to be invested in those facilities.”*
Some common sense words. Let’s hope the young members of the Environmental Club were listening. Hats off to them for airing both sides.
*Skaneateles Press (Mar 8th) – Fracking finds supporters, opponents at SHS
Chesapeake Appalachia, a subsidiary of Chesapeake Energy, has received clearance from two townships in Washington County, Pennsylvania, to move forward with plans to drill five gas wells. Three of the wells will be drilled in Robinson Township, and two in North Fayette Township. Supervisors in both townships voted unanimously (3-0) to allow drilling to begin. The PA Department of Environmental Protection will still need to approve permits, but all systems appear to be “go” for drilling to begin.
Each well will take approximately three weeks to drill with drilling activity scheduled seven days a week, 24 hours a day. The approvals were granted contingent on certain guarantees and conditions about safety.
For full details, see: Pittsburgh Post-Gazette (Mar 4) – Officials OK plan to drill Marcellus shale for natural gas
Nolan Hart, an author who also works in the horizontal drilling industry, wrote an interesting viewpoint piece on whether, and when, we might see “peak natural gas.” He explains there are many in the drilling industry who believe we have already reached “peak oil,” meaning all of the easily gotten oil has already been extracted and every barrel we extract now is harder to get, involving more elaborate methods to get it.
But on the subject of peak natural gas, Mr. Hart says this:
The natural gas paradox is this: In the past decade a technology called horizontal drilling was perfected and now shale rock, which was never before seen as a reservoir of natural gas or oil, is being exploited all across the country. This revolution is going full swing in the United States with areas like the vast Marcellus shale in the Northeast and the Haynesville shale in Louisiana, proving to hold trillions of cubic feet of natural gas. Even the die hard prophets of peak oil doom are finally waking up to the fact that we have many more years worth of this resource left.
We suddenly have over a one hundred year supply of natural gas at current consumption rates and that number has been growing by about one decade more each year since 2005. New discoveries such as the Eagle Ford shale in south Texas are adding trillions more cubic feet to the natural gas inventory. So, peak oil, yes. Peak natural gas, no way.*
Mr. Hart also details how natural gas is a low carbon fossil fuel, producing 1/3 to 2/3 less carbon dioxide than oil or coal when burned. He makes a strong case for switching to natural gas—now.
We encourage you to read his well written article:
*Xomba (Mar 3) – How Long Until Peak Natural Gas?
From a Q4 2009 earnings call* held on Feb. 26, we learn the following about Southwestern Energy’s involvement in the Marcellus Shale:
At December 31, 2009, we had approximately 149,000 net acres in Pennsylvania prospective for the Marcellus Shale. Our undeveloped acreage position as of December 31, 2009 had an average remaining lease term of five years, an average royalty interest of 13%, and was obtained at an average cost of $594 per acre.
During 2009, we invested $40 million in Pennsylvania, almost all of which was for acquisition of acreage, including approximately 22,800 net acres in Lycoming County that was purchased for $8.7 million, or $382 per acre.
We are currently drilling our first horizontal well since 2008 in Pennsylvania. The Heckman Camp #1 well is located in Bradford County, and first gas production is expected in the area in the second quarter of 2010.
Later in the call was this exchange between Jeff Hayden, an analyst with Rodman & Renshaw, and Steve Mueller, CEO of Southwestern Energy:
Jeff Hayden: Okay, appreciate that. And then, jumping up to the Marcellus really quickly, I just wonder if you could give us an update kind of how you’re looking at the drilling program for 2010 in terms of where you’re going to spot the wells, whether it’s Bradford, Susquehanna, Lycoming, et cetera. And then, kind of building on that, sort of an update on the takeaway capacity that you’re looking at and how you’re going to manage that.
Steve Mueller: Well, the rig that we’re running, we’ll drill between 20 and 24 wells this year. It is going to be all in Bradford County. It’s right on top of–I want to say right on top or within a mile or two of the Stagecoach Pipeline. And we have firm on that pipeline today of 20 million cubic foot and we’re building that going forward. And that’s the reason we’re drilling where we’re at, because we do have the capacity on that line to be able to do that. We’ll participate probably in another 20 wells. Most of those will probably be–a little bit maybe in the Bradford, but most will be in Susquehanna. And we’ll have a minority in those wells. And whatever the operator there is will have the takeaway, so we don’t have to worry about that portion.
Over the next year, we’ll keep one rig running, and then you’ll see us build that activity into the future. We’ll say the one area that will have the less drilling over the next couple of years will be in Lycoming County. That’s more 2012 and beyond before you see much drilling there.
*Southwestern Energy (Mar 1) – SWN 4Q 2009 Earnings Teleconference Transcript (PDF)
The severance tax, like a bad penny, keeps turning up. Pennsylvanians (and eventually New Yorkers) will have to stay vigilant against greedy politicians who can’t help themselves when there’s something nearby that can be taxed. Tax revenues equal money flowing through politicians’ hands, and that equals power. The latest example:
State Sen. Andy Dinniman, D-19th, of West Whiteland, has introduced legislation that would impose a tax on Marcellus Shale natural gas extraction and use the revenues from that tax to give Pennsylvania homeowners property tax rebates.
Dinniman said a 5 percent tax on the natural gas from the state’s Marcellus Shale reserves would, by 2014, provide the average homeowner $148 each year in property tax relief.
“Every election, all the politicians stand up and say, ‘We understand your pain. We understand what’s going on. We will bring property tax reform. We will lower your property taxes,’” Dinniman said. “Well, the answer is beneath our feet. It’s a mile down, but it’s beneath our feet.”
The tax, referred to as a severance tax, would be assessed per cubic foot of gas that is extracted, Dinniman said.*
It is a bald-faced lie that the money will go for property tax relief. Hopefully the good citizens of PA know that by now. After having been lied to for a generation (lottery money goes to schools, Social Security money stays in its own trust fund, etc.), I am hopeful that people are starting to wise up. A severance tax, if instituted, will go to Harrisburg where it will disappear into politicians’ hands to be used for other “urgent” needs. And everyone knows it.
Landowners are encouraged to continue to oppose the severance tax, which ultimately comes out of their own royalty checks.
*The Delaware County Daily Times (Mar 3) – Chesco pol proposes tax on Marcellus Shale gas reserves
The Independent Oil and Gas Association of New York today issued a press release encouraging landowners to sign their online petition to New York’s governmental leaders to encourage them to move forward—now—with allowing drilling in the Marcellus Shale in New York. Already, more than 4,300 have signed. Landowners who want to add their signatures to the petition can do so here: www.petitiononline.com/YESngNY/petition.html
—–
From the press release*:
Proponents of natural gas exploration petitioned the governor, lawmakers and regulatory agencies and lawmakers to allow drilling to be expanded in New York’s Southern Tier and Western Catskills.
More than 4,300 people have so far signed an online petition already, which reminds elected officials and regulators that harvesting clean-burning natural gas in New York will heat our homes, spur our economy, reduce our dependence on foreign oil for decades to come and bring thousands of job and billions of dollars to New York.
The petition, sponsored by the Independent Oil & Gas Association of New York, will remain open to those interested in urging decision-makers to form objective and scientific opinions on whether expanded natural gas exploration is right for New York. It is available at www.marcellusfacts.com.
“We are very pleased that many so right-minded New Yorkers have spoken up.” said Brad Gill, IOGA of NY executive director. “New York’s leaders have to focus on this tremendous opportunity for our communities and our state, instead being distracted by bad science and misinformation being spread by obstructionists who don’t actually understand our work and history of environmental stewardship.”
The petition follows a Jan. 25 outdoor rally in Albany, where 700 landowners and supporters raised their voices in support of natural gas extraction through a process known as hydraulic fracturing – or “fracking.” The delegation represented 23 landowner groups and 17,500 families.
The fracking process will help release natural gas locked in the Marcellus Shale formation by injecting pressurized water, sand chemicals and other ingredients to shatter the rock. It occurs deep underground and far from groundwater and surface water, and it has been performed safely in New York and nationwide for decades.
IOGA-NY was founded in 1980 to protect, foster and advance the common interests of oil and gas producers, as well as professionals and related industries in the State of New York.
*readMedia (Mar 3) – More than 4,000 New Yorkers Petition the State to Allow Expanded Natural Gas Exploration
East Resources, an independent oil and gas drilling company with a big stake in Tioga County, Pennsylvania, has just donated $50,000 to the Tioga County 4-H.
East Resources, Inc. today signed an agreement with Penn State’s Cooperative Extension Service to create a new 4-H endowment fund for Tioga County. East created the endowment with an initial principal investment of $50,000. The fund will be used to supplement financial support for the Tioga County 4-H program and may include educational awards for 4-H members.
“East Resources has a major stake in Tioga County’s future through its oil and gas interests, and our contribution to this endowment reflects East’s commitment to help sustain that future,” says Bob Long, the company’s executive vice president. “Tioga County’s young men and women are the key to the long-term health of our communities, and we appreciate the significant role that the county 4-H program plays in helping them grow into productive, self-directed citizens.”*
Non-profits are always looking for new funding sources. Given that East Resources plans to drill upward of 6,000-7,000 gas wells in Tioga in the next few years (see this story), it’s nice to see them “giving back” to the community in this gesture of goodwill.
*The Wellsboro Gazette (Mar 3) – East gives $50,000 to 4-H
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