Gastar Deal to Lease Under the Ohio River in WV Falls Apart

Remember the brouhaha over energy companies bidding to drill on land underneath the Ohio River in West Virginia? We told you about one such lease–Gastar won a bid on a 232-acre tract underlying the river at the border of Marshall and Wetzel counties. They paid $3,500 per acre as a signing bonus and 20% royalties in their winning bid (see Gastar Wins Lease to Drill Under Ohio River in WV). There were just a few minor details to settle before the deal closed. Guess what? Gastar never closed the deal. Since October 2014 the price of natural gas has crashed, making it uneconomical to drill in many (most?) locations, and Gastar didn’t want to part with its precious capital–so no deal was never finalized. And now the West Virginia Division of Natural Resources is about to call the deal dead and shop it again. Problem is, it’s now a buyer’s market for leases, not a seller’s market as it was in October 2014. WV won’t get anywhere near the same terms this time around, of that we’re sure…
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Actor James Cromwell Arrested Protesting NY Power Plant Site

James Cromwell as Zefram Cochrane

James Cromwell as Zefram Cochrane

Hollywood actor James Cromwell was born in Manhattan (NYC) and maintains a summer home in upstate–in Orange County, NY. Cromwell played Zefram Cochrane (mythical creator of the warp engine) in the 1996 movie Star Trek: First Contact (one of our favs). It was distressing to learn that Cromwell is the latest Hollywood know-nothing to oppose natural gas. Cromwell opposes a clean-burning natural gas-fired electric plant being built near his summer home in Orange County, because, well, because it’s being built near his summer home (see Star Trek Actor with Upstate NY Home Speaks Against Power Plant). In September Cromwell and other area anti-fossil fuelers sued to stop the Competitive Power Ventures $900 million project–perhaps they prefer dilithium crystals to natgas? The frivolous lawsuit was tossed out (see Orange County, NY Marcellus-Fired Electric Plant OK’d by Judge). Well, what’s a spoiled rich kid from Manhattan who wants to keep upstate pristine as his own private playground going to do? Get a bunch of easily-impressed neighbors to stage a sit-in and illegally block construction at the site. That’s what Cromwell and some of his homies did last Friday–they got arrested and carted away to the klink…
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IOGAWV Rep Says Marcellus/Utica Can Support “8 or 9 Crackers”

The president and CEO of Eagle Manufacturing in Wellsburg, WV is Joe Eddy. During a recent meeting in Oglebay Park, Eddy represnted the WV Indpendent Oil and Gas Association. He had some interesting things to say. Among them: the Marcellus/Utica region could right now support “eight or nine crackers.” He also spoke out against three ethane pipelines that transport northeast ethane to other regions…
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Dela. Riverkeeper Attempts to Discredit PA DEP Shale Radiation Report

Stay tuned for five feet of snow. No, it’s not a weather report, it’s the snow job THE Delaware Riverkeeper (i.e. Maya van Rossum) is attempting with respect to a research report issued by the Pennsylvania Dept. of Environmental Protection (DEP). In January 2015, the DEP filed a report following two years of intense study to determine whether/if/how much radiation exposure is an issue in shale drilling. While the DEP found there is sometimes some low levels of radiation, the report concluded there is “little harm” from radiation in shale drilling (for the study results, see PA DEP Completes Fracking Radiation Study, Concludes “Little Harm”). When real science is published that contradicts the political science of global warming advocates like Maya van Rossum, the real science must go. And so van Rossum hired a discredited scientist to produce a review of the January 2015 report by the DEP, calling it “inaccurate and incomplete.” Van Rossum dragged out Dr. Marvin Resnikoff, who was humiliatingly slapped down by none other than the U.S. Geological Survey in 2012 (see Radon Debate: USGS Responds to Marvin Resnikoff Accusation). Resnikoff is the scientist-for-hire van Rossum used in concocting the latest snow job coming from her outfit…
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Canada Approves Marc/Utica NEXUS Pipeline to Dawn Hub in Ontario

Everybody always talks about the Henry Hub, which is the natural gas delivery point where more physical natural gas is bought and sold than any other single location in North America. However, do you know what the second largest physically traded gas hub in North America is? We just learned this interesting factoid ourselves. The #2 location for trading natural gas, after the Henry Hub, is the Dawn Hub in southwestern Ontario (Canada)–not far from the border of Michigan. The Dawn Hub is in the news because of the NEXUS Gas Transmission pipeline project. Last week the Ontario Energy Board approved applications from Union Gas Limited and Enbridge Gas Distribution to move gas along the NEXUS, once its built, to the Dawn Hub. In other words, Canada has just approved the Canadian portion of the NEXUS project. We’re glad Canada isn’t holding grudges against the U.S after the Obama Administration obtusely rejected the Keystone XL pipeline project, a Canadian pipeline coming through the U.S. Here’s the good news from Spectra Energy on Canada’s approval of NEXUS…
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Moxie Marcellus-Powered Electric Plant Breaks Ground in NEPA

Groundbreaking! Really great news from Salem Township in Luzerne County, PA. The Moxie Freedom Marcellus gas-powered electric plant broke ground last week. The $800 million, 1050-watt facility was approved by the PA Dept. of Environmental Protection in September (see Moxie’s NEPA Marcellus-Powered Electric Plant Gets DEP Approval). Just last month Gemma Power announced they were selected to build the plant for Moxie (see Gemma Power Gets Contract to Build Moxie Freedom Electric Plant). Here’s the good news that the first shovel hit the dirt last week…
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Judge Rules Yes, Mariner East Pipe IS a Public Utility After All

In June we told you that Sunoco Logistics Partners had sued two different families/landowners in Washington County, PA using eminent domain to complete a pipeline part of the Mariner East project (see Mariner East Invokes Eminent Domain Against 2 SWPA Landowners). As we said at the time, nobody wins when it comes to using eminent domain for pipelines. In the case of the Mariner East pipeline, the ongoing legal question/issue has been whether or not the pipeline qualifies as a public utility with the right to invoke eminent domain. Last week a Washington County judge ruled that yes, Mariner East is a public utility and that the state of Pennsylvania controls permitting for the pipeline, not the Federal Energy Regulatory Commission (FERC). The Washington County landowners who sued have lost their appeal of the eminent domain case against Sunoco, and the pipeline will now cut through their property…
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Scottish Company Buys OH Construction Co for Utica/Marcellus Work

Wood Group, a $7 billion energy services company headquartered in Aberdeen, Scotland, announced this morning they are purchasing Kelchner Inc., a privately-owned construction firm. Kelchner is located in Ohio and concentrates on providing civil engineering and construction services for midstream and upstream companies in the Marcellus/Utica. Terms of the deal were not disclosed, but Kelchner generated sales of $93 million last year and Wood just got done buying a similar company along the Texas Gulf Coast by the name of Infinity Group for $150 million. So it wouldn’t surprise us if they paid a similar amount for Kelchner…
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Moody’s: Fed Interest Rate Hike Hurts the Oil & Gas Industry

Moody’s Investors Service, one of the biggest and most respected ratings services on the planet, issued a statement last week after the Federal Reserve voted to raise interest rates from zero to a quarter point (0.25%). Moody’s offered their opinion of how the interest rate increase will affect U.S. companies. Their conclusion? Companies with good credit quality will be able to absorb the higher interest rate no problem. But companies that are, shall we say, “credit challenged” will have a tougher time. Among those most credit challenged? Yep, the oil and gas sector…
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Calendar of Events for Dec 21 – Mar 20 (90 Days)

Below are upcoming events for the next three months (90 days). To see the full list of future events, visit this page: http://marcellusdrilling.com/calendar/.

NOTE: To have an item included, please email it to: [email protected].
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Marcellus & Utica Shale Story Links: Mon, Dec 21, 2015

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Another bankruptcy in the oil patch; Cove Point Hail Mary; NY frack ban sentencing upstate to poverty; NY landowners demand Cuomo approve Constitution Pipeline; natgas pipeline in southern NJ makes progress; $30 crude leads to $6 natgas; is ETE in financial trouble?; shale gas drilling in UK close to reality; and more!
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PA DEP Admits No Radiation in Ten Mile Creek, Closes Investigation

rest of the storyHere’s a story most of the Democrat anti-drilling media won’t tell you–but we will. In 2014 Pennsylvania anti-drillers from a local chapter of the Izaak Walton League, a so-called conservation organization, attempted a smear job on the Marcellus Shale industry. They alleged that shale drillers were illegally dumping frack wastewater in an abandoned coal mine, the Clyde Mine, which sits near the Ten Mile Creek where the creek joins the Monongahela River. According to the smearmeisters, the illegally dumped wastewater was leaking out of the mine and into Ten Mile Creek (see Is Shale Wastewater Causing Radiation Spike in Ten Mile Creek?). They claimed testing they had done showed high levels of radioactivity that could not come from just acid mine drainage, that it is radioactivity typically seen in shale wastewater. Of course the allegations got a lot of media attention. The Pennsylvania Dept. of Environmental Protection (DEP) investigated and echoed their concerns with initial tests also showing high radioactivity. Except the testing done by the DEP, and the testing done by the Izaak Walton League, WAS THE WRONG TYPE OF TEST. They blew it. Researchers from West Virginia University came in and tested using the appropriate type of test and found no elevated radioactivity (see PA DEP Screws Up Water Test at Ten Mile Creek – Egg on Face). The DEP has just concluded six months of their own tests–the right type of tests–and guess what? They’ve also found there IS NO elevated radioactivity in Ten Mile Creek nor anywhere else in the area…
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PA DEP Fines CNX Gas $450K for Drawing Too Much Water Too Often

Turns out drawing “free” water from a reservoir in Pennsylvania can cost you quite a bit. CNX Gas, the drilling division/subsidiary of CONSOL Energy, didn’t follow an agreed-upon plan for how much, and how often they withdrew water from a reservoir in North Franklin Township (Washington County), PA. The water withdrawal violations went on between 2011 and 2014 and because of it, CNX will now pay a whopping $450,750 fine. Three-fourths of the fine goes to the Dept. of Environmental Protection (DEP), and the other one-fourth goes to the PA Fish and Boat Commission (PFBC). Here’s the details from the DEP…
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Hilcorp is to Northern Utica as Cabot is to Eastern Marcellus

We’re always fascinated how some companies, like Cabot Oil & Gas, make money even in the lowest of low price environments with their Marcellus wells in Susquehanna County, PA (northeastern part of the state), while another driller right down the road, like WPX Energy, can’t make money and end up selling all of their wells and leases. What does Cabot do right that WPX doesn’t do? That’s the gajillion dollar question. We’ve observed a similar situation in the Utica Shale region of western PA/eastern OH. Hilcorp Energy is drilling Utica wells in Lawrence County, PA. In fact, Hilcorp is the “dominant active prospector” in the northern tier area of the Utica Shale–an area including Columbiana, Mahoning and Trumbull counties in OH and Lawrence and Mercer counties in PA. Hilcorp is strong and steady–and they’re making money. They’re also producing gas–lots of it. Lawrence County, PA produces almost as much natural gas as the far-more-drilled Columbiana County (OH). And it’s nearly all Hilcorp gas in Lawrence County. So if Hilcorp is like the Cabot of the Utica, who’s the WPX of the Utica? That would be Halcon Resources, with 140,000 acres in the northern Utica. Back in 2013 Halcon CEO Floyd Wilson famously said he wouldn’t drill any more “crappy” wells in the Utica (see Halcon CEO Says No More S***** Wells in Northern OH Utica). Halcon is desperately trying to stay afloat, Hilcorp is flourishing. Here’s more about Hilcorp and their success in the northern Utica…
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2 Democrat Commissioners Ban Injection Wells in Fayette County, WV

In the end it was just two people who decided to outlaw a legally operating wastewater injection well in Fayette County, WV. Two county commissioners, Denise Scalph and Matt Wender (both Democrats), voted to end the right of Danny Webb Construction to operate an injection well in the county, as it has done for over a decade (perhaps longer, we’re not sure). Aided by a rabidly leftist group called the Mountain Party (left of Vlad Putin), the so-called county commission attorney, Larry Harrah, crafted the state’s first “screw ’em royally” ordinance that he believes is lawsuit-proof. We’ll see just how lawsuit-proof it is when it gets tested, as it surely will…
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Platts Says LNG Heading to Japan & Korea Fetching $7.40/Mcf

Platts Japan/Korea Marker (JKM) LNG service issued an update yesterday that caught our eye. The JKM service says that LNG (liquefied natural gas) for delivery to northeast Asia (Japan and Korea) will average $7.397 per million British thermal units (MMBtu) for January delivery. Converted, that’s $7.40/Mcf (thousand cubic feet). That number is down 26.5% year-over-year. But hey, if our drillers were getting $7.40/Mcf for their gas? We’d be singing, “We’re in the money…” The problem is, of course, we don’t (yet) export our natural gas via LNG to any other countries. That’s about to change in January when Cheniere Energy’s Sabine Pass LNG facility begins shipping (see Genscape: Sabine Pass LNG Export Began Accepting Natgas on Dec 10). It’s not likely any gas will head to Asia from our shores until the Cove Point LNG export facility in Maryland is completed in the next few years. Until then, we can only watch and hope that some day our gas will be sold for $7+ per Mcf…
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