Drilling in the Monongahela National Forest Put on Hold

Recently the U.S. Bureau of Land Management stopped a proposed auction for new oil and gas leases in the Monongahela National Forest (W. Va.) after protests from the Friends of Blackwater Canyon and The Wilderness Society. However, just because the auction is canceled for now, it doesn’t mean there won’t be an auction in the future, according to Bureau spokesman Terry Lewis. An article in The Charleston Gazette reports:

There are an estimated 280 billion cubic feet of federally owned natural gas beneath the forest. When combined with privately held resources, there could be as much as 860 billion cubic feet, according to the forest’s latest land and resource management plan.

Forest officials say there are 17 production wells on forest property, 16 of them tapping federally owned gas deposits.

For the past 50 years, drilling has focused on the Oriskany and other formations. It’s unknown how much gas is held in the Marcellus shale, which stretches from New York to West Virginia and is thought to hold trillions of cubic feet of natural gas. There are no Marcellus wells in the forest.

Read the full article: Monongahela drilling debate continues

Capital City Energy Group’s Hotwell Services Subsidiary Ramps up Activity in Marcellus Shale

From a press release issued by Capital City Energy Group:

COLUMBUS, Ohio–(March 10, 2009)–Capital City Energy Group (OTCBB: CETG) announced today that Hotwell Services, its wholly owned subsidiary and a provider of oil filed services in the Appalachian Basin, has significantly increased its cased hole service activity in the Marcellus Shale, one of the most active areas for natural gas exploration and production in the continental United States. More than 800 wells are expected to be drilled in the prolific Marcellus Shale in 2009, a projected increase of 400% from 2008. In this environment, the Company anticipates the opportunity to rapidly grow its business by increasing its presence in the basin and expanding its market share. Hotwell’s clients include many of the major independent producer’s active in the Marcellus Shale play.

“Despite the significant decline in the price of natural gas, we continue to see strong activity in the Marcellus Shale. The reason for this increase may be from hedging and budgets that have already been approved and the overall project economics of the Marcellus Shale play. Hedged production ensures a strong pricing environment throughout 2009,” said Joseph Sites, President of Hotwell Services, Inc. “Through our extensive experience in servicing the major independents; we are well positioned to capitalize on the strong activity in the area. Clients have found that our equipment, personnel, service, quality, and safety processes provide a very high value and reliable wireline service”

About Capital City Energy Group Inc.

Based in Columbus, Ohio, Capital City is a diversified oil and natural gas company with three separate divisions. Capital City has evolved from being an innovative leader in the design, management and sponsorship of retail and institutional direct participation energy programs to become one of the few vertically integrated independent oil and natural gas companies, which is publicly-traded. Its strategy is to continue to grow a portfolio of core areas which provide growth opportunities through drilling, operating, oil field service companies, acquisitions and fund management.

Will the U.S. Become Addicted to Imported Natural Gas Like We Have Imported Oil?

An interesting article recently ran in the Fort Worth Weekly (Texas), discussing the looming competition that is about to arrive from imported liquefied natural gas (LNG). The context of the article is mostly about how an increase in imports will affect energy companies and workers in the Barnett Shale play in Texas. However, the coming competition will affect all natural gas plays in the U.S., including the Marcellus.

The United States has imported natural gas for decades — it’s already the fourth largest importer of natural gas in the world, buying mostly from Canada and Mexico. This country has also been importing LNG for about 20 years, primarily from Algeria and the Caribbean nation of Trinidad and Tobago.

In the last few years, however, several factors have combined to make LNG importing much easier. The three new LNG terminals and 15 more in the planning or construction stages — on the East, West, and Gulf coasts — will triple the United States’ capacity for handling such imports. The prices of building LNG carrier ships has dropped sharply in the last decade, and the newest ships use much less fuel to get across the ocean than the older generation of such tankers, leading to a tripling of the worldwide LNG fleet. For those reasons and others, bigger players have entered the game: Egypt, Nigeria, and Qatar — home to the world’s largest natural gas field — have also begun selling to the United States. And they are delivering LNG at rates competitive with what it costs to produce the gas domestically.

The author of the article concludes this situation is good for consumers (lower prices), but potentially bad for those in the industry. But is continued dependency on foreign sources for our domestic energy needs really good for consumers–indeed all Americans? The beauty of horizontal drilling and plays like the Marcellus are to get us away from our energy dependence on potentially hostile foreign countries. In this author’s opinion, it would be a tragedy to repeat the same mistakes with natural gas that we have with oil.

Read the full article: Cool Competition: A new wave of imports could undercut Barnett Shale drillers

Westmoreland County, PA Supervisors Vote to Approve Drilling on County Land

On Thursday, March 12, the board of supervisors for Westmoreland County (Pennsylvania) voted to let drilling commence on an area of county-owned land. According to the Valley News Dispatch:

The board approved five natural gas wells to be drilled on Municipal Authority of Westmoreland County property near the Beaver Run Reservoir.

James McKinstry of Dominion Exploration detailed plans for the wells to be drilled into the Marcellus Shale in an area bordered by Fox Road, Walker Road and Route 286.

Resident John Doyle asked if drinking water in the reservoir will be protected, particularly from material such as disposable brine. McKinstry said waste, such as brine, will be trucked away. There is a site in Indiana County that accepts brine.

McKinstry added that the state Department of Environmental Protection regulations must be followed.

Supervisors unanimously granted the request, attaching conditions such as submitting a plot plan, posting 24-hour emergency numbers and keeping roads passable at all times.

Dominion feels the wells can be built in about seven or eight months once approval is granted.

Full article: Washington Township hopes for state sewerage dollars