Month: April 2010

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    Hess Net Marcellus Shale Acreage 80K, Mostly in Wayne County, PA – Will Drill 5-10 Test Wells in Second Half of 2010

    An update from Greg Hill, President, Worldwide Exploration and Production with Hess Corporation, about their activities in the Marcellus (from a recent earnings call):

    “We’re continuing to build our position in the Marcellus. We’re at about 80,000 net acres now in the Marcellus, primarily in Wayne County, Pennsylvania. About 50,000 of that is Hess operated and the balance is part of this joint venture we have with Newfield. Our plan this year are to drill five to 10 wells during the second half of 2010 in order to evaluate the resource potential on the acreage.”*

    *Seeking Alpha (Apr 29) – Hess Corp. Q1 2010 Earnings Call Transcript

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    Penn Virginia Marcellus Shale Acreage Stands at 35,000 – Looking to Invest $48 Million in 2010 to Add More

    We get the following details on Penn Virginia Corporation’s Marcellus drilling activities from their quarterly operational report:

    Marcellus Shale – [PVC spent] approximately $17 million, or six percent, to drill five (3.8 net) horizontal and vertical wells primarily to test our acreage position in Potter and Tioga Counties, Pennsylvania.

    During the first quarter of 2010, we drilled one (0.8 net) Marcellus Shale vertical exploratory well which was recently stimulated with approximately one million pounds of sand. The well is currently cleaning up and being evaluated. We continue to add to our acreage position in the Marcellus Shale, increasing our acreage position to approximately 35,000 net acres, and we expect to spend up to $48 million in 2010 to add leasehold acreage in our existing and new prospect areas.*

    *Penn Virginia Corporation Press Release – Penn Virginia Corporation Provides Operational Update (PDF file)

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    Marcellus Shale Companies in Pennsylvania Looking to Fill Jobs and Contract with Local Businesses

    Companies involved in drilling, processing and transporting Marcellus Shale gas in Pennsylvania are looking to contract with local businesses and hire local people to work for them. On the list are…

    • Contractors for:
      • clearing land
      • constructing well pads
      • setting up rigs
      • running wirelines
      • hauling waste
      • hauling dirt
      • mechanical work
      • civil work
      • electrical work
      • environmental surveyors
      • installers
    • Real estate/office space
    • Drilling crews
    • Frac crews
    • Right-of-way agents
    • Suppliers for:
      • drilling mud
      • frac fluid
      • steel pipes
      • valves and fittings
      • natural gas compressors
    • Engineering firms
    • Environmental firms
    • Professionals:
      • geologists
      • geophysicists
      • environmental engineers

    The companies looking to hire include:

    • East Resources
    • Chief Oil & Gas
    • Laurel Mountain Midstream
    • MarkWest Energy
    • Talisman Energy

    For more details, along with contact names and inside tips for submitting a bid or applying for a job, see the article linked below.

    *Pittsburgh Business Times (Apr 29) – The Marcellus Shale: How your company could get in on the action

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    CONSOL/CNX Gas Will Drill Two Dozen Horizontal Marcellus Gas Wells in 2010, Now Holds Leases on 760,000 Acres

    Highlights from the CONSOL Energy quarterly earnings report as it touches on their operations in the Marcellus Shale:

    On March 15, CONSOL Energy announced a $3.475 billion acquisition of the Appalachian gas exploration and production business of Dominion Resources. We expect to close the transaction tomorrow. The assets include approximately 1 trillion cubic feet of proved reserves and approximately 500,000 acres of Marcellus Shale. Additional assets include an overriding royalty interest from farm-outs, 300,000 acres of Huron Shale, and extensive Utica Shale acreage.

    On March 22, CONSOL Energy announced its intention to acquire the approximately 25 million shares of CNX Gas that it does not already own for $38.25 per share. We commenced the tender offer on April 28. As previously announced, T.Rowe Price has already agreed to tender the 9.47 million shares held for its investment advisory clients into the offer at the offer price of $38.25 per share.

    During the quarter, CNX Gas achieved record initial production from one of its latest Marcellus Shale wells. Well GH 2B CV, has averaged 5.0 MMcf per day for the first 47 days of production. It peaked at 5.7 MMcf per day. This well has a lateral of 2,300 feet.*

    Read More “CONSOL/CNX Gas Will Drill Two Dozen Horizontal Marcellus Gas Wells in 2010, Now Holds Leases on 760,000 Acres”

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    National Fuel Does Pipeline Deal with Statoil and East Resources to Move Marcellus Shale Gas to Canadian & Northeast US Markets

    National Fuel has struck a deal with Statoil and East Resources and is expanding two pipelines to handle Pennsylvania Marcellus Shale gas, sending it to markets in Canada and the Northeastern U.S. The announcement says National Fuel will build 16 miles of new pipeline from Corning, NY to Tioga County, PA, and construct a new interconnection with the Tennessee Gas Pipeline in Ontario County, NY, among other improvements.

    From the National Fuel press release:

    WILLIAMSVILLE, N.Y.–(BUSINESS WIRE)–National Fuel Gas Supply Corporation (“Supply”) and Empire Pipeline, Inc. (“Empire”), the companies that comprise the Pipeline and Storage segment of National Fuel Gas Company (NYSE: NFG) (“National Fuel”), have reached major milestones on two pipeline expansion projects that are the first in the industry designed to receive natural gas produced from the Marcellus Shale and transport it to key markets of Canada and the Northeast U.S. Supply has entered into a binding precedent agreement with Statoil Natural Gas LLC (“Statoil”) for 100 percent of the capacity on Supply’s “Northern Access” expansion project. Empire also has a binding precedent agreement in place with anchor shipper East Resources, Inc. (“East”) for Empire’s “Tioga County Extension” project, and is concluding negotiations for additional capacity with a second shipper. The precedent agreements provide for Statoil and East to sign, after satisfaction of conditions, firm transportation service agreements under which Supply and Empire will transport natural gas for Statoil and East.

    Read More “National Fuel Does Pipeline Deal with Statoil and East Resources to Move Marcellus Shale Gas to Canadian & Northeast US Markets”

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    NY DEC Message to Landowners in New York’s Watersheds: Forget About Drilling

    These are the bald facts of life for New York landowners who own land in either the New York City or Syracuse watershed areas and may want to lease their land for Marcellus Shale gas drilling: Forget it. That’s the loud and clear message from NY Department of Environmental Conservation (DEC) Commissioner Pete Grannis. After the DEC’s announcement of last week, no energy company in their right mind will be willing to drill in New York’s watersheds (although drilling companies currently drill safely in the Susquehanna River watershed in PA, and are trying to drill in the Delaware River watershed in PA).

    Reaction from landowners in New York has been mixed. While some believe watershed landowners are being unfairly penalized, others think this may speed up the process of drilling for everyone else by removing a key objection to drilling—that drilling may contaminate city water supplies.

    From a press release issued by the NY DEC last week:

    April 23 – New York State Department of Environmental Conservation (DEC) Commissioner Pete Grannis today announced that due to the unique issues related to the protection of New York City and Syracuse drinking water supplies, these watersheds will be excluded from the pending generic environmental review process for natural gas drilling using high-volume horizontal drilling in the Marcellus shale formation. Instead, applications to drill in these watersheds will require a case-by-case environmental review process to establish whether appropriate measures to mitigate potential impacts can be developed. There are 58 pending applications for horizontal drilling in the Marcellus shale; no applications are located in either the New York City or the Skaneateles Lake watersheds (Syracuse utilizes the Skaneateles watershed).

    Read More “NY DEC Message to Landowners in New York’s Watersheds: Forget About Drilling”

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    Joint Landowner’s Coalition of NY Makes Appeal to Landowners

    The Joint Landowner’s Coalition of NY has put out a plea for donations. Drilling in New York may not happen unless landowners can generate enough noise to break through the resistance in Albany. Here is the letter reproduced in full from the JLCNY:

    A Message from the JLCNY President Dan Fitzsimmons – April 27, 2010

    Fellow Landowners – I don’t have to tell you we have much at stake.  But I do need to sound an alarm:  the time for us to act is NOW.  We are organized.  We are prepared.  And although we have worked intensely over the last two plus years, we are outmanned, outspent, outmaneuvered.  We need to step up our game, and we have a plan to get it done.  But we desperately need your financial support.  Some of you have given generously financially.  Some of you have poured blood, sweat and tears into this effort.  And some of you will make your first donation right now.  We need as much as you can afford to give to fund our efforts to:

    • Hire professionals in Albany who can represent us and make sure our voices are not drowned out by the better-funded extremists.  These professionals can open doors, cut through clutter and red-tape for us and focus us on the most effective strategy for being heard where it counts.

    • Get the word out:  you’ve heard the same arguments I hear:  more people are against drilling than are for it.  We know that’s not true – but we have to erase that perception.  The best way to do that is to blanket our area with lawn signs, drown our airwaves with pro-drilling ads, promote speakers at public forums who can support our issues with facts, erect billboards with clear messages, etc.

    • Continue to support landowners.  In some respect, the work begins when the moratorium is lifted and leases are signed.  Who will advocate for landowners in their negotiations and relations with energy companies?  Who will be a watchdog with the regulatory agencies?  Who will make sure we have the best and latest information on and about the industry and the technology surrounding us?  Landowners will need the JLC more and more as time goes by and as the stakes continue to rise. We cannot sustain it without your support.

    We are seeking support from a number of channels:  from corporations and industry; from foundations and other organizations who may provide grants for our work; from local business and farm organizations.  But the most important support we need RIGHT NOW is from you.  Please give what you can today – $10, $20, $100, $500 or more.  See if your company has a matching donation program – or if you know of any other source you can approach for us – please do.  Use PAYPAL on our website: JLCNY.org or send a check to:

    PO Box 2839
    Binghamton, NY 13902

    Thank you from the bottom of my heart.  We will get there, but only if we stay together on this.

    Dan Fitzsimmons
    President JLCNY

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    EQT has Already Drilled 21 Wells in PA Marcellus Shale in 2010 – On Track for 100 Wells This Year

    Even though the price of natural gas worldwide is down, EQT Corp saw a big jump in net income (ie profits) largely due to their large increase in gas production in the Marcellus Shale formation in Pennsylvania. In a Pittsburgh Tribune-Review article we learn this about their drilling activities:

    EQT drilled 21 horizontal wells in the Marcellus formation in the first quarter, and plans to drill 100 such wells this year, at an average cost of $3.3 million to $3.5 million per well.*

    If EQT drills 100 wells in PA in 2010, that’s a $330-$350 million investment in PA with all of the jobs that kind of investment creates.

    *Pittsburgh Tribute-Review (Apr 28) – EQT tallies $88.1 million 1Q profit

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    Kinder Morgan Building New Marcellus Shale Pipeline from Pennsylvania to Michigan

    Kinder Morgan, a pipeline and energy storage company, will build a new 250-mile pipeline from Pennsylvania to the Cochin Pipeline in Michigan to move Marcellus Shale gas to processing facilities and markets in the Midwestern U.S. and Canada.

    From the Kinder Morgan press release:

    HOUSTON, April 20, 2010 – Kinder Morgan Energy Partners, L.P. today announced plans to modify and expand the existing Cochin Pipeline system to provide a solution for transporting natural gas liquids (NGL) from the Marcellus Shale Basin to fractionation plants and chemical markets near Sarnia, Ontario, and Chicago, Ill.

    Kinder Morgan plans to build approximately 250 miles of NGL pipeline from the Marcellus Shale Basin in southern Pennsylvania to the Cochin interconnect at Riga, Mich. From Riga, Kinder Morgan anticipates that product will be transported through the existing Cochin Pipeline system to Windsor, Ontario, and then through the Windsor-Sarnia Pipeline to Sarnia. Kinder Morgan also plans to reverse the eastern leg of its Cochin pipeline in order to move NGLs from Riga to the Chicago area, where it expects to build an additional pipeline to connect to existing fractionation facilities and chemical plants.

    “Our proposed pipeline and key existing infrastructure offers NGL producers the quickest and most efficient solution to get their product to the market,” said Don Lindley, vice president of business development for Kinder Morgan’s Products Pipeline group.

    The pipeline will be designed to transport mixed NGLs (Y-grade), as well as purity NGLs such as ethane, and will have an initial throughput capacity of 75,000 barrels per day and can be expanded to handle up to 175,000 barrels per day.

    The recent decision by Canada’s National Energy Board directing the reconnection of the Cochin Pipeline to the Windsor-Sarnia Pipeline will enable Cochin Pipeline shippers to have access to the Sarnia chemical complex. Kinder Morgan anticipates offering transportation from Marcellus to Sarnia for under 14 cents per gallon.

    Kinder Morgan expects to move forward with an open season in the second quarter of 2010.

    Kinder Morgan Press Release (Apr 20) – Kinder Morgan Offers Quick and Efficient Solution to Move Marcellus NGLs to Market

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    A New and Potentially Safer Way to Treat Marcellus Shale Wastewater

    A Pittsburgh startup company formed at the Pittsburgh Allegheny-Singer Research Institute believes it has developed a better solution than current alternatives for treating wastewater from drilling Marcellus Shale gas wells. Frac Biologics Inc. was founded by physicians, so it’s no surprise the technology comes from the medical community:

    “The idea for the company came from our work with biofilms, which are (cell) communities that we try to manipulate or get rid of to treat human disease,” said Christopher Post, a physician and CEO of the 3-month-old company. Other founders are physician William Costerton and Garth Ehrlich. All three are Allegheny-Singer directors.

    Allegheny-Singer researchers found the biofilms love to eat heavy metals, such as strontium, nickel, even uranium. The metals, in effect, fuel the biofilms, Post said.*

    Water used in drilling Marcellus wells often comes out of the well containing small quantities of heavy metals. One of the objections to hydraulic fracturing is that wastewater from drilling eventually needs to be returned to the environment, and if it’s laced with heavy metals it is not safe. If Frac Biologics is successful with their concept, perhaps some of those objections can be addressed.

    *Pittsburgh Tribute-Review (Apr 22) – New company says it can safely handle Marcellus wastewater

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    Atlas Energy/Reliance Industries Pay $192 Million for Leases on 42K Acres in PA Marcellus Shale

    The recently announced joint venture between Atlas Energy and Indian energy giant Reliance Industries (a deal worth $3.5 billion over 10 years) is already bearing fruit. Together they’ve just forked over $192 million to secure leases for more land in Pennsylvania.

    Independent oil and gas company Atlas Energy will buy 42,344 acres in the gas-rich Marcellus shale along with Reliance Industries Ltd (RIL), weeks after the two announced a joint venture.

    The companies will buy the acreage in Fayette, Washington, Indiana, Westmoreland, Armstrong and Clarion Counties of Pennsylvania at an average price of $4,532 per acre.

    Following Wednesday’s deal, the Atlas-RIL joint venture will control about 343,000 Marcellus Shale acres, of which about 206,000 acres are net to Atlas.*

    According to the Atlas Energy website:

    Substantially all of the acreage to be acquired is held by production and is either contiguous with the joint venture’s existing acreage or is in concentrated blocks of acreage. [Atlas] believes that it will be able to drill over 450 horizontal wells on this acquired acreage assuming 1,000 foot spacing between lateral wells.**

    *Hindustan Times/Reuters (Apr 22) – Atlas, RIL to buy more shale acreage for $4,532 per acre

    **Atlas Energy Press Release (Apr 21) – Atlas Energy, Inc. and Reliance Industries Jointly Acquire over 42,000 Additional Acres within Their Core Marcellus Shale Position

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    Speakers at Marcellus Midstream Conference: Infrastructure Critical to Future Success

    According to speakers at today’s Marcellus Midstream Conference and Exhibition in Pittsburgh, infrastructure will be play a key role, and if not ramped up quickly, may create problems for drillers in the Pennsylvania Marcellus Shale.

    “The opportunity for Marcellus Shale production growth can be overwhelmed by a lack of infrastructure,” said Scott Soler, managing director of Houston-based private equity firm Quantum Energy Partners.

    Soler said an estimated $10 billion must be spent on pipelines, processing and storage facilities within five years to keep up with projected production.*

    Bentek Energy, also presenting at the conference, said the industry has announced or already begun more than 30 pipeline projects, including new pipelines or expansion of existing pipelines.

    MDN recently reported on new processing, fractionation and storage facilities announced by both Dominion and MarkWest. Infrastructure will play a key role in drilling in the Marcellus for years to come.

    *Pittsburg Tribune-Review (Apr 21) – Marcellus Shale infrastructure inadequate, energy exec says

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    Encana Paying for Water Testing up to One Mile from Proposed Drilling Site in Luzerne County, PA

    To address concerns of area residents, Encana is paying for a baseline water study to be performed for any household up to one mile away from a proposed natural gas well Encana will start drilling in Luzerne County, PA this year:

    EnCana is attempting to establish a baseline for water quality and quantity conditions by requesting property owners participate in a water sampling assessment, which will be collected by Rettew Associates, a third-party environmental-testing firm based in Lancaster.

    Letters were mailed April 8 to landowners located within a mile radius of the well covering Lake and Lehman townships, and Harveys Lake borough.*

    Encana spoke to area residents at a recent meeting in the Lehman Township fire hall to describe the testing procedure and their desire to, “Take every safeguard to not impact your water.”

    *Wikes-Barre Times-Leader (Apr 21) – Residents worry about gas drillers contaminating water

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    Apartment Rentals, Commercial Property Leasing Benefits from Marcellus Drilling in Wellsboro, PA

    Depending on your viewpoint, one of the benefits (or drawbacks) of an increase in drilling activity is the rise in rental prices for apartments and houses. The borough of Wellsboro in Tioga  County, PA (population about 3,300) is experiencing a real estate boom due to drilling. Prices for apartments around Wellsboro have doubled:

    [Real Estate Agent Victoria] Costanzo says the average rental rate in Wellsboro use to range between $400 to $600 a month. But now with the natural gas companies moving their employees into local areas, they are willing to pay more and rents have doubled.

    The Wellsboro Mayor [Jim Daugherty] says people, who originally were going to sell their homes, are now opting to rent or lease their properties for higher prices.*

    Office space and garages to store equipment are also in high demand, and two area hotels have been sold to drilling companies to house workers.

    *WETM Channel 18 TV (Apr 21) – Rent Prices on Rise in Wellsboro

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    Dominion Expands Marcellus Shale Gas Processing Capacity, Plans to Convert & Expand Ohio-WV Pipeline

    Not to be outdone by MarkWest’s recent announcement about expanding their processing and fractionation facilities in the Marcellus Shale, Dominion has announced they too have big plans for expansion in the Marcellus Shale, including converting transmission pipeline TL-404—running through Ohio and West Virginia—into a “wet gas service” line. Dominion’s plans also include building new processing facilities in West Virginia.
    Read More “Dominion Expands Marcellus Shale Gas Processing Capacity, Plans to Convert & Expand Ohio-WV Pipeline”

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    Bad News for NY Landowners: DEC Says Drilling Won’t Begin Until Mid-2011

    NY DEC Comm. Pete Grannis MDN does not want to depress and demoralize the good citizen landowners (and drillers) of New York State, but we must share some disheartening news. It seems comments made today by New York Department of Environmental Conservation (DEC) Commissioner Pete Grannis, the man who heads the very agency working on new rules for drilling in New York, indicate drilling in New York State will not begin until spring or summer 2011.

    As part of an Earth Day speech at Onondaga Lake near Syracuse, Grannis made some revealing comments:

    Grannis predicted the DEC will finish drafting regulations that companies will have to follow to receive drilling permits by fall. He said he expects drilling to begin by spring or summer 2011.*

    Why is it bad for landowners and drillers? The longer we go without drilling, the more likely it simply won’t happen at all—ever. In addition, every month that passes with no drilling in New York means thousands of more jobs permanently relocated to other states in the Marcellus Shale, including Pennsylvania and West Virginia, where drilling is already happening. Once drilling companies decide on where to locate their headquarters and branch offices, and once other businesses like wastewater treatment plants and trucking firms get established, they almost never relocate. If those jobs and capital investments go to PA and WV, New York will never see them. A real shame.

    Finally, waiting until 2011 is bad because it means the next governor of New York, likely Andrew Cuomo, will have to sign off before drilling can begin. If Cuomo is elected, it’s not at all clear whether he would be favorable to drilling. In fact, it is likely he will be opposed.

    There’s still time. Landowners and concerned citizens who recognize just how important this is to New York’s future need to make their voices heard loud and clear to their elected representatives—and people like Cuomo need to understand elections may very well hinge on how they come down on the drilling debate.

    It’s time to turn up the heat on the DEC—they’ve had long enough. They are intentionally delaying and stalling for political reasons—not safety reasons.

    *Syracuse Post-Standard (Apr 20) – Environmental Conservation Commissioner Pete Grannis says hydrofracking likely to begin in New York in spring or summer 2011