Month: May 2010

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    Gas Drilling & Compressor Plants in DISH, TX Not Poisoning Local Population

    Since February of this year, Mayor Calvin Tillman from DISH, Texas has visited—several times—the Marcellus Shale regions of New York and Pennsylvania, sponsored by groups like Shaleshock and other anti-drilling organizations. Mayor Tillman claims that his small town in Texas, north of the Dallas-Fort Worth metroplex area, has been contaminated by shale gas drilling. DISH is located in the Barnett Shale deposit. Some of the drilled gas wells are within the city limits, and others sit just outside of town. MDN attended one of Mayor Tillman’s presentations back in February and you can read about my impressions here. It’s a fair statement that Mayor Tillman has been a popular speaker for those opposed to drilling in the Marcellus Shale, drawing sizable crowds.

    One of the claims made by Mayor Tillman in his talks is that either local gas wells, or the compressor plants used to pressurize shale gas for area pipelines, or both is polluting DISH and its citizens. DISH is unusual in that there are 11 large pipelines in the DISH area, far more than normally found in a single location (the most in one area for shale gas that MDN is aware of). Odors are coming from the compressor plants, so it’s certainly not a stretch to think that if you can smell it, it may be polluting or causing harm. That was Mayor Tillman’s suspicion, so he used city funds to conduct environmental testing in the DISH area, and separately another organization performed a health “survey” of current and former DISH residents (for free). Problem is, both the environmental testing and the health survey were flawed in their methodologies, which casts doubt on the findings. So the Texas Department of State Health Services stepped in to do a scientific health study using blood and tissue samples.

    Agency officials collected biological samples from 28 Dish residents in late January to see whether levels of volatile organic compounds (VOCs) in their blood were higher than those in the broader population. “We were looking to see whether a single contaminant or a handful of contaminants were notably elevated in many or all of the people we tested,” said Dr. Carrie Bradford, the toxicologist who led the investigation.*

    And what was the conclusion of the Department of State Health?

    Texas health officials found no connection between pollution from a natural gas compressor station in Dish, Texas and levels of toxins in the blood of people living nearby.*

    The new report from the Department of State Health Services says levels of benzene and other contaminants was no higher in Dish residents than in the nation’s population in general.**

    MDN wonders if the now less than credible Mayor Tillman will still be such a large draw when he comes calling again?

    *Elimra Star-Gazette (May 26) – Texas gas study finds no pattern of elevated toxins near compressor
    **Dallas Fort Worth – Channel 33 News (May 12) – DISH Report: No evidence gas well hurting residents of Dish, Texas

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    New Website Resource for Marcellus Shale Workers Coming to PA

    Marcellus Shale drilling in Pennsylvania continues to bring business, and people, to the state. Now there’s a new website to assist out-of-staters who need a place to stay:

    STATE COLLEGE, Pa.—Workers traveling to the Marcellus Shale natural gas deposit in Pennsylvania now have a valuable online travel guide dedicated to helping find accommodations in Pennsylvania’s Marcellus Shale region.

    MarcellusShaleHotels.com offers those coming to stay in the area information on hotels with short and long-term stay options. All the hotels featured on the site offer special rates to those coming to work on the Marcellus Shale.

    Michael Szczesny is the Director of Operations at the State College hotels featured on the resource site. He’s eager to assist Marcellus Shale companies with their lodging needs.

    “All our State College properties are either adjacent to or within walking distance to restaurants such as Outback Steakhouse, Olive Garden, Otto’s Microbrewery and Texas Roadhouse,” Szczesny said. “We are offering both short and long-term stays to accommodate the requirements of each company.”

    Each of the hotels featured on the site is just minutes away from various locations in Pennsylvania’s Marcellus Shale region and offers amenities designed to accommodate every guest.

    Locations of properties on the site range from Lock Haven to State College and down to Pittsburgh. To learn more about hotels in the Marcellus Shale region of Pennsylvania, visit MarcellusShaleHotels.com today.*

    *Business Wire (May 26) – Marcellus Shale Website a Resource to Those Traveling to Work Pennsylvania’s Gas Field

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    PA Gas Driller Bonds Will Skyrocket from $2,500 to $150,000 per Marcellus Gas Well Under Proposed Legislation

    Pennsylvania lawmakers, both Democrat and Republican, agree that bonds posted by drillers need to increase—dramatically. The bonds are used to cover the costs of plugging or closing natural gas wells. The current bond requirements date back to 1984.

    Drillers are required to post a $2,500 bond for a single well and $25,000 blanket bond to cover any number of wells under current law. A measure sponsored by Rep. Camille George, D-74, Houtzdale, would require a $150,000-per-well bond for any well in the Marcellus Shale formation and $12,000 bond on other oil and gas wells. George, chairman of the House Environmental Resources and Energy Committee, also proposes setting a $240,000 blanket bond, while prohibiting blanket bonds for wells in the Marcellus Shale formation. He suggested those amounts would cover the actual costs of decommissioning.

    *Hazelton Standard Speaker (May 23) – Marcellus drilling spurs calls for higher bonds

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    The “Father of the Marcellus Shale” Predicts Marcellus is Only the Beginning – Other Layers Rich with Shale Gas Too

    William Zagorski, Range Resources Vice President of geology in Appalachia and the man known as “the father of the Marcellus Shale” is making some new predictions about the potential for natural gas in the Appalachian (eastern) region of the U.S.

    Zagorski said two new shale formations – the Utica Shale deeper below the surface and the shallower Upper Devonian Shale – were “in the same ballpark” as the [production potential of the] Marcellus.*

    Zagorski is not the only one looking beyond the Marcellus Shale:

    Cabot Oil & Gas Corp., a Houston company, disclosed to analysts last year that it had drilled a successful horizontal well through the Purcell Limestone in its Marcellus acreage in Susquehanna County north of Scranton. The Purcell Limestone is an intermediate stratum sandwiched between two layers of the Marcellus Shale.*

    Cabot is thinking they may be able to run pairs of horizontal wells at different depths from the same bore hole. And all of the infrastructure being built for Marcellus Shale gas can also be used for shale gas from other layers.

    A few months ago at a meeting in Binghamton, NY, James Ladlee from Penn State Cooperative Extension made the prediction that we are only at the beginning of the natural gas boom in the northeast, and it will last for the next 80-100 years. With shale gas being discovered in other layers, it’s easy to see why Mr. Ladlee and others are bullish on the prospects for natural gas in the Marcellus and beyond.

    *Philadelphia Inquirer (May 23) – Firms find more gas beyond the Marcellus field

  • Is Methane Migration from Marcellus Gas Drilling Causing Deaths?

    The May 23 Sunday edition of the Binghamton Press & Sun-Bulletin (PSB) ran an article titled, “Pa. seeks stronger drilling rules to combat methane migration.” At least the headline is accurate. Pennsylvania is indeed attempting to prevent a recurrence of the situation at Dimock, PA which was a failure to properly case a well that led to methane (natural gas) migration into local groundwater supplies. Nothing wrong with good oversight and slapping the offending driller with fines to make sure it doesn’t happen again. But the PSB started their latest anti-drilling narrative with this opening paragraph:

    Methane migration related to natural gas drilling has caused death, injuries and property damage in Pennsylvania, leading to plans for stronger regulations and enforcement efforts.*

    There you have it—methane migration is causing death. The proof that drilling causes death offered by the PSB? They cite the case of a house explosion in Jefferson County, PA in 2004 due to methane migration that killed three people. That case is a tragedy to be sure and not to be trivialized. But the problem is, it wasn’t due to a horizontally drilled Marcellus Shale gas well like we have today. Horizontally drilled wells did not start to happen until 2006 (with Range Resources). So while it may have been a gas well in Jefferson County that led to an explosion in a nearby house, it was not a horizontally drilled Marcellus gas well. The implied meaning is that the drilling happening today is unsafe and leads to deaths—which is untrue.

    The latest apples and oranges comparison is to equate the tragedy of the oil platform in the Gulf of Mexico and BP’s response with drilling on land for a different fuel—natural gas—and try to infer that all energy companies are greedy and all drilling of any kind is unsafe. “Better to wait until we know more. Better to wait until it’s 100 percent safe. The gas has been there for jillions of years and isn’t going anywhere.” Bunkum.

    Let’s talk about risk

    If you’re alive, you are at risk. Every day you live you experience risk of some type. Risk of getting in a car accident. Risk that lightning will strike you. Risk of a heart attack. How do you deal with it? Minimize the risk if you can, and if you can’t, don’t stress over it. Life is a risk. Here’s the reality: If you drill 10,000 gas wells, one of them will have a problem of some kind. Methane migration, flowback spillage, a truck with chemicals runs off the road and spills something, a worker gets killed. Of all the Marcellus wells drilled, accidents have been very few in number—but they do happen. It’s life. We can ban all drilling, but how would you like to pay double or triple for your energy? How would you like to be cold in the winter? How would you like the government to tell you how many miles you can drive in a day because there isn’t enough energy (oil, gas, natural gas) to meet demand? Or what if the Middle Eastern countries suddenly stopped sending us oil? If that were to happen, there would be far more deaths due to severe energy shortages than you’ll ever have from Marcellus gas drilling. It’s a tradeoff. You don’t simply ban drilling because there will be an accident somewhere, someday.

    A second example: One in every 10,000 bridges will fail. No idea if that’s the real number…again, this is an example. So because one in 10,000 (or 5,000, or 15,000) fails, does that mean we should stop building bridges? Because someone dies, tragically, from a bridge failure, or because there is property damage from a bridge failure, should we immediately cease and perhaps even ban traffic over bridges? Try going one mile from your own home without crossing a bridge—you can’t do it! It’s nonsense. But it’s no more nonsense than what is being peddled by anti-drillers whose aim to ban all drilling.

    No industry, including natural gas drilling, oil drilling and bridge building, can be subjected to a standard of perfection, no matter how much we strive for it and want it. Don’t fall for Chicken Little arguments that the sky is falling.

    *Binghamton Press & Sun-Bulletin (May 23) – Pa. seeks stronger drilling rules to combat methane migration

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    PA DEP Secretary Hanger Summons Marcellus Shale Drillers to Meeting, Asks Them to Comply with Unratified New Drilling Rules

    After the PA Secretary for the Department of Environmental Protection, John Hanger, summoned Marcellus Shale drilling companies to a meeting, he proceeded to “challenge” them to comply with new drilling rules that likely won’t be adopted until this fall. Talk about arrogant.

    “I urged the industry to implement the stronger standards immediately and not wait for the rule to be finalized,” Mr. Hanger said. “I challenged the industry to set a world-class example.”

    The summit came ahead of action by the state Environmental Quality Board on Monday on several proposed regulations to require that oil field-grade cement be used in Marcellus Shale wells, to delineate responsibility and notification procedures for gas migration problems and to strengthen requirements for treating drilling wastewater and limiting sediment erosion from wells. Mr. Hanger expects the rules to be adopted by fall.*

    Certainly nothing wrong with new rules to help prevent a repeat of the situation in Dimock, PA from recurring, which supposedly the new rules will help guard against. However, MDN continues to notice that Hanger’s tone is increasingly confrontational rather than collaborative.

    *Scranton Times Tribune (May 14) – DEP head asks gas drillers to comply with new rules

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    Bradford County, PA Experiencing a Job Boom, Leads Entire State in Net Job Growth

    Bradford County, PA Little, rural Bradford County located in northeastern Pennsylvania is seeing a boom in new jobs:

    According to the Pennsylvania Department of Labor and Industry and the Center for Workforce Information and Analysis, Bradford County led the Commonwealth of Pennsylvania in net job growth from March of 2009 to March 2010.

    According to the Northern Tier Regional Planning & Development Commission (NTRPDC), the 2,000 jobs gained represented a 7.2 percent increase while most counties suffered losses in employment. Bradford County saw the unemployment rate drop from 10 percent a year ago to 7.4 percent now.*

    And also this:

    Tioga County [PA] gained 800 jobs, the third-best improvement of the Commonwealth’s 67 counties.*

    How can that be? Simple: Both counties have very active Marcellus Shale drilling.

    *Wyalusing Rocket-Courier (May 13) – Bradford County Leads Commonwealth in Job Growth

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    Steuben County, NY May Accept Marcellus Drill Cuttings in County Landfill

    Like neighboring Chemung County, NY, officials in Steuben County, NY are actively considering accepting Marcellus drill cuttings (leftover dirt and rock from drilling gas wells) in the county landfill. Drillers over the border in Pennsylvania are looking for a location to dump the cuttings. The debate over whether to accept drill cuttings always centers on whether there is radioactivity in the cuttings and if it will become a problem down the road when liquids leach from the landfill into groundwater supplies. Chemung County has done extensive research and finds the radioactivity levels to be very low—and safe. Chemung County currently accepts drill cuttings, and now Steuben County is considering it too.

    “Right now, we’re just talking about relatively small amounts we would bring in, if we brought it in. We want to be sure of ourselves though,” said Steuben County public works commissioner Vince Spagnoletti.*

    As with Chemung County, economics is driving the decision for Steuben County as well:

    Spagnoletti says bringing in around 10,000 tons per year of the drill cuttings could raise around $300,000 to the operational budget of the landfill.*

    That’s a potential $300,000 that taxpayers would not have to pony up.

    *YNN Your News Now (May 11) – Steuben County may allow Marcellus shale debris to be dumped in landfill

  • New York Times Talks About the Rising Importance of Shale Gas Worldwide

    The New York Times recently ran an article talking about the emerging importance of natural gas from shale around the world. The article focuses on Poland and Europe, who have a desire to cut their energy dependence on Russia. But the article also includes these statements about the importance of shale gas in the United States:

    The attraction of shale gas is already well known in the United States, where diversification is an advanced theme in energy policy. With the discovery of big shale deposits several years ago, shale gas now accounts for nearly a fifth of the U.S. natural gas supply, compared with just 1 percent in 2000, according to a recent study by IHS CERA, an independent energy research center in Cambridge, Massachusetts.

    Shale gas “ranks as the most significant energy innovation so far this century,” IHS CERA said in a recent report. “It has the potential at least to cause a paradigm shift in the fueling of North America’s energy future.”*

    *New York Times (May 11) – Eastern Europe, Seeking Energy Security, Turns to Shale Gas

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    Marcellus Drilling May Begin in Rockingham County, Virginia

    You don’t hear much about Marcellus drilling in Virginia, so a recent story caught the attention of MDN. Carrizo Oil and Gas, operating under its subsidiary name of Carrizo Marcellus Oil and Gas, has applied for a permit to drill a Marcellus gas well in Bergton, VA (Rockingham County). The permit was discussed at a recent Harrisonburg City Council meeting. A few members of the community addressed the Council with concerns about potential drilling. Ultimately, the Rockingham County Board of Supervisors will make a final decision on the permit.

    The interesting thing about this particular story? The location where Carrizo intends to drill is considerably east from the “recognized” Marcellus fairway in West Virginia.

    *WHSV-TV3 (May 12) – Drilling Proposal Draws Criticism at Council Meeting

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    EQT Chairman Murry Gerber Speaks Bluntly About the Marcellus Shale and America’s Energy Future

    EQT Corp is a large energy company with 500,000 net acres of land leased in the Marcellus Shale. Having drilled 21 Marcellus gas wells in 2010 already, and with plans to drill 100 wells total this year, EQT is a major player in the Marcellus. So when the Chairman and former CEO of EQT, Murry Gerber, delivers a speech in Pittsburgh at the Rivers Club, he’s someone to listen closely to. Among his choice comments at the Rivers Club:

    “The Marcellus Shale will be more important to this region than the blast furnace ever was … as long as we don’t screw it up.”

    “America needs to move with a position of more independence to its energy needs. (No country has) survived without the energy to fuel its manufacturing. We are dangerously close to achieving that status.”*

    Read more about his talk by following the link below.

    *Pittsburgh Business Times (May 11) – EQT’s Murry Gerber speaks of Marcellus Shale’s importance

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    MarkWest Request to Expand Gas Compressor Facilities in Washington County, PA Denied

    As MDN has previously reported (see this story), MarkWest Energy operates more than 100 gas compressor facilities, including two in Mount Pleasant Township in Washington County, PA—the location of the very first horizontally drilled Marcellus Shale gas well. There has been tension between area residents and MarkWest about the facilities over issues of noise, lights and odors coming from the facilities. A few months ago MarkWest made application to expand the facilities but the Mt. Pleasant Township Zoning board has just turned them down:

    The board denied a request from Mark West Liberty Midstream to expand its Fulton and Stewart compressing stations.

    The company had made the request to add two engines at each site and expand the steel structures. The company processes gas for Range Resources.*

    MDN doubts this will be the end of this story. There is an ongoing debate about just who has authority to regulate pipelines and compressor facilities, and the matter is far from settled. Does regulation for these types of facilities lie with local governments? Or is it a “utility” that is/should be regulated by the state rather than local authorities? Stay tuned.

    *Washington Observer-Reporter (May 12) – Board nixes expansion for gas compressing stations in Mt. Pleasant Township

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    Chesapeake Energy’s Marcellus Shale Strategy Changes – 20% of Their Leases Now For Sale

    Seems there’s been a strategy change at Chesapeake Energy with respect to Marcellus Shale drilling. Chesapeake is the largest player in the Marcellus with some 1.5 million net acres under lease. As recently as last week (see this MDN story) they boasted of having 24 drilling rigs (expanding this year to 31) in operation, and plans to drill 170 Marcellus shale gas wells in 2010. But that was last week. This week they’re looking to sell off 20 percent of their Marcellus leases to help raise $5 billion to pay down debt and invest in other ventures. No, they certainly aren’t abandoning the Marcellus—not by a long shot. But it is quite a strategy shift from upper management. From their recent press release:

    Chesapeake Energy Corporation today announced a strategic and financial plan designed to increase shareholder value, reduce debt and ultimately achieve an investment grade rating for the company’s debt securities. Through a series of transactions over the next 24 months, including the preferred stock placement announced today, the company is planning to raise up to $5.0 billion in order to repay up to $3.5 billion of senior indebtedness and increase its investment in liquids-rich plays by up to $1.5 billion. Chesapeake is in various stages of implementing its strategic and financial plan, several steps of which are outlined below.

    The company is planning to sell up to a 20% equity interest in its subsidiary, Chesapeake Appalachia, L.L.C., which includes its Marcellus Shale operations, to private and/or public investors within the next 3-12 months. Chesapeake is one of the largest producers, the largest leasehold owner with 1.5 million net acres and the most active driller with 24 operated rigs in the Marcellus Shale play.*

    *Chesapeake Press Release (May 10) – Chesapeake Energy Corporation Announces Strategic and Financial Plan to Increase Shareholder Value and Reduce Debt

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    Mesa Energy is Using Hydraulic Fracturing on Two Wells in Western New York – Right Now

    From the “continues to be interesting” department: Mesa Energy, new owner of the Java Field in Western New York State, has started hydraulic fracturing of two Marcellus Shale wells in the Java Field. Yes, you read that right. Fracking is happening NOW. In New York State. The catch? They’re both vertical wells. Since fracking horizontally drilled wells is still on hold in New York, Mesa can’t drill horizontally. But they have received permission from the New York Department of Environmental Conservation to frack vertically on two of their wells—and they are doing it.

    Mesa press release issued today:

    DALLAS—Mesa Energy Holdings, Inc. (the “Company”), an exploration stage oil and gas exploration and production company with a focus on the Marcellus Shale in western New York, provides an update on its re-completion of the Reisdorf Unit #1 well in its Java Field prospect located in Wyoming County, New York.

    The Reisdorf Unit #1 in the northern portion of the Java Field has been successfully re-completed and fracked in the Marcellus Shale. The well was perforated at a depth of 1,368’ to 1,389’ and fracked with 74,000 gallons of slick water and 105,000 lbs. of proppant (sand) combined with Nitrogen assist. Flow-back of the frac water is continuing according to plan. Although there is not yet sufficient data to accurately quantify the gas flow, there is clear indication of strong gas presence in the Marcellus zone. Planning for the re-completion and fracking of the Ludwig #1 is underway.

    “We are very encouraged by the early data and believe that the performance of the well to date clearly supports our ongoing efforts in the Marcellus Shale,” said Randy M. Griffin, CEO of Mesa Energy Holdings, Inc. “We will continue to provide updates as new information warrants.”*

    *Mesa Press Release/Business Wire (May 12) – Mesa Energy Holdings, Inc. Provides Reisdorf Unit #1 Update

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    Will PA Landowners Pay Higher Property Taxes When Drilling Begins? Maybe

    Landowners in Pennsylvania have gotten property tax relief in recent years from a PA law known as “Clean and Green.” If landowners keep their property use as agricultural, open space or forest-land, they are taxed at a lower rate (for those uses) rather than the higher fair market value the land might bring for other uses. But there’s a catch—if a landowner starts using the land for another non-agricultural use, they not only start paying higher taxes on it now, they also have to pay the difference in the tax rate between Clean and Green and fair market value going back up to seven years—as a penalty.

    The intent of the program, which is administered through county government, is to encourage property owners to retain their land in agricultural, open-space or forest-land use by providing real estate tax relief.

    Property owners benefit through lower taxes as long as their land isn’t used for housing developments or other uses inconsistent with agricultural production, open-space or forest-land use.

    If a property owner decided to use the land for a purpose inconsistent with the program, the landowner would have to pay “rollback taxes” – the difference between fair market value and use value of the land – for as many years as the property had been designated Clean and Green, up to a maximum of seven years.*

    So the million dollar question: If landowners allow drilling on their land, is that land disqualified from the Clean and Green lower tax rate? Right now, as things stand, each county will interpret the law the way they see fit. There is a bill that has passed the PA Senate and is now before for the House for consideration that would allow gas drilling on Clean and Green land without penalty.

    Landowners who have signed leases where drilling will soon begin (or has already begun) need to monitor this situation. Landowners in PA who have not yet signed a lease would do well to be sure there is a clause requiring the driller to pay the difference in taxes should the bill not get signed into law.

    *Wilkes-Barre Times Leader (May 11) – Drilling’s effect on ‘Clean and Green’ land uncertain