Susquehanna River Basin Commission Monitors Waterways for Contamination

WETM-18 TV (Feb 15)
Gas Drilling Prompts More Water Quality Monitoring

Due to concerns over drilling in the Marcellus and discharge of wastewater from drilling operations into area waterways that ultimately find their way to Susquehanna River, the Susquehanna River Basin Commission has placed monitoring devices in the Twin Tiers area of New York (Binghamton and Elmira). So far 10 monitoring devices have been installed, with another 20 to be installed by June.

Marcellus Drilling News applauds the efforts of the SRBC to ensure local waterways remain contamination-free from drilling activities. Everyone wins when there is vigilance and monitoring.

Ultra Petroleum Expands Marcellus Leases to 486,000 Acres and 110 Active Wells in 2010

Ultra Petroleum News Release (Feb 12)
Ultra Petroleum Reports Strong Financial and Operating Results and Record Production for 2009

A portion of the release relating to its operations in the Marcellus in PA is extracted below:

During 2009, Ultra drilled 37 gross (22.5 net) wells in Pennsylvania. The company’s first production in the Marcellus program began in July 2009, and by year-end 13 wells were producing. Initial production (IP) rates for the producing wells average 7,500 Mcf per day with an average lateral length of just over 3,800 feet. Preliminary estimated ultimate recoveries affirm Ultra’s 3.75 Bcfe type-curve, with some preliminary EURs exceeding 6.0 Bcfe. The cost to drill and complete a horizontal Marcellus well during 2009 was $3.5 million.

The company’s four pipeline interconnects to major interstate pipelines remain well ahead of the drilling campaign. By mid-year, this interconnect capacity is expected to exceed 560 MMcf per day.

The company began 2009 with 288,000 gross (152,000 net) acres in the Marcellus. Through a combination of land acquisitions, trades and swaps, Ultra increased its holdings to 326,000 gross (169,000 net) acres by year-end. On December 21, 2009, Ultra announced that it had signed a purchase and sale agreement to acquire approximately 160,000 gross (80,000 net) acres in the Marcellus Shale. Upon closing of the acquisition in late February 2010, the company will hold approximately 486,000 gross (249,000 net) acres. With the acquisition, the company’s core position in Tioga, Bradford, Lycoming, and Potter counties in north-central Pennsylvania will expand to include the adjacent counties of Clinton and Centre.

In 2009, we initiated our horizontal Marcellus activity with above expectation results. Accordingly, we believe that we have substantially de-risked our Marcellus acreage due to these results. Well performance is improving along with our returns. Of the horizontal wells that we have completed so far, IP rates have ranged from over 3,400 Mcf per day to 10,400 Mcf per day, including two wells that are producing over 7,500 Mcf per day after 30 days. Examining our early wells, the first six have 30-day production averaging over 3,000 Mcf per day with the next seven wells averaging over 5,700 Mcf per day. In 2010, our Marcellus development program will expand with a drilling program exceeding 110 wells.

Heckmann and Energy Transfer Partners to Bring Wastewater Treatment Plants to the Marcellus

BusinessWire (Feb 9)
Heckmann Corporation and Energy Transfer Partners, L.P. Sign Agreement to Provide Turnkey Solutions for Water Flows Created by Oil and Gas Drilling

Heckmann Corporation and Energy Transfer Partners have entered into a 50/50 joint venture to deliver solutions for:

“transportation and treatment solutions for supply, drilling, flow back, produced, and other types of discharged waters generated in the Marcellus and Haynesville Shale natural gas development areas.”

Also according to the joint press release:

“Heckmann and ETP have identified several potential projects and have begun the engineering and preliminary permitting necessary to proceed with construction of water pipelines, treatment, and other related facilities.”

The press release does not comment on where said projects and proposed facilities will be located. Handling waste water is one of the hot-button issues with drilling. Stay tuned.

Anadarko Takes on Mitsui as Partner in Marcellus Drilling

Anadarko Press Release (Feb 16)
Anadarko Announces Joint Venture with Mitsui in the Marcellus Shale

The full text of the press release from Anadarko is below. It announces they have taken on a partner for their Marcellus drilling interests, mostly in north-central Pennsylvania.

Anadarko Petroleum Corporation (NYSE:APC) today announced a joint-venture agreement with Mitsui E&P USA LLC, an affiliate of Mitsui & Co., Ltd. (NSDQ: MITSY), whereby Mitsui will participate with Anadarko as a 32.5-percent partner in Anadarko’s Marcellus Shale assets, primarily located in north-central Pennsylvania, for approximately $1.4 billion. Mitsui will earn approximately 100,000 net acres in exchange for funding 100 percent of Anadarko’s share of development costs in 2010, and 90 percent of these costs thereafter, with an estimated completion of all obligations by 2013. In addition, Mitsui will have the opportunity to purchase a 32.5-percent share of Anadarko’s existing wells and additional acreage acquisitions by reimbursing a proportionate share of Anadarko’s prior expenditures, currently estimated to be approximately $100 million.

"We are very pleased to have Mitsui as a partner in the Marcellus Shale," Anadarko Chairman and CEO Jim Hackett said. "This transaction reflects the significant value of Anadarko’s fairway position in the Marcellus Shale, which has a gross unrisked resource potential of more than 30 Tcf (trillion cubic feet) of natural gas and spans more than 715,000 gross acres. We continue to ramp up our activities in the Marcellus and anticipate drilling more than 4,500 wells over the coming years. We have successfully partnered with Mitsui in other parts of the world and look forward to working with them and our other partners in the Marcellus, as we continue to develop and deliver these domestically produced, clean-burning natural gas resources to American consumers."

The joint-venture agreement is effective Jan. 1, 2010. Closing of the transaction is subject to applicable regulatory approvals and other contractual conditions, and is anticipated on March 15, 2010.

A map of Anadarko’s Marcellus Shale acreage, primarily located in north-central Pennsylvania, will be available under the "Media Center/Anadarko News" tab at //www.anadarko.com.

Anadarko Petroleum Corporation’s mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world’s health and welfare. As of year-end 2009, the company had approximately 2.3 billion barrels-equivalent of proved reserves, making it one of the world’s largest independent exploration and production companies. For more information about Anadarko, please visit //www.anadarko.com.

Youngstown, OH Gets 350 New Jobs Due to Marcellus Drilling

The Vindicator (Feb 16)
V&M delivers plant, 350 jobs

Youngstown, Ohio is getting a new $650 million pipe mill and 350 new jobs due to Marcellus Shale drilling. V&M Star Steel has just announced they are building a new plant in Youngstown because of its proximity to the Marcellus Shale deposit. The new mill will manufacture pipes used in drilling in the Marcellus, according to V&M president, Roger Lindgren. The mill is expected to start operations in 2011, and be up to full capacity in 2012. Although this is a new plant and new construction, it is an expansion of V&M’s existing operation in Youngstown, built on property next to their current facility.

Cornell University Owns 4% of Tompkins County Land, May Allow Drilling

The Cornell Daily Sun (Feb 16)
University Denies Conflict of Interest

In an article about a potential conflict of interest for the Chairman of the Cornell Board of Trustees, Peter Meinig, we learn that Cornell is a major landowner in Tompkins County, NY, with some 11,000 acres—which is 4% of the land in the county. They also control the mineral rights to some 420,000 acres across the country, no doubt donated to the university by wealthy benefactors.

The question is, will Cornell decide to lease it’s land? No one knows. The Board of Trustees and the President have decided to wait on making any decisions about leasing until the New York State Department of Environmental Conservation finalizes the Supplemental Generic Environmental Impact Statement—the set of rules that will be used for all Marcellus drilling operations in the state.

The controversy is this: Mr. Meinig is the previous chairman of Williams Companies, a huge natural gas company that transports 12% of all natural gas in the U.S. Detractors say there is a built-in conflict of interest with Mr. Meinig voting or advising on the issue, even though he has no shares in Williams now. It will be interesting to see how this plays out.

Seems to Marcellus Drilling News that having an expert on the board advising the board, as long as there truly is no conflict of interest, would be a good thing.