Vestal, NY Landowner Coalition Still Shopping for a Deal, Comes Down on Their Price

Binghamton Press & Sun-Bulletin (Feb 20)
Vestal Coalition gives broker an extension to get deal on Marcellus Shale drilling sites

A Vestal, NY landowner coalition with some 550 people has given their designated broker another few months to try and negotiate a lease on behalf of the group. According to the article:

Members of the group, called the Vestal Coalition, have agreed to settle for a minimum of $5,750 an acre, plus 20 percent royalties, for a five-year lease of mineral rights, and a three-year extension.

The opening offer was $7,500 an acre and 25 percent royalties. There were a few counter offers, but no deals for those terms.

Drilling companies, for now, are in a holding pattern for New York deals until the New York State Department of Environmental Conservation issues drilling guidelines. Once that happens, and once permits start to be issued, the Vestal Coalition expects to get a deal done.

New Marcellus Wastewater Treatment Plant Coming to Elk County, PA

DuBois Courier-Express/Tri-County (Feb 20)
Marcellus shale drilling water may be treated at local acid mine treatment site

Drillers in the Marcellus Shale in Pennsylvania will soon have a new plant to treat wastewater, called flowback, from drilling activities. The new plant will be located in Brandy Camp (Elk County), PA. From the article:

The project will be located at the existing Blue Valley acid mine drainage treatment and fish culture station in Brandy Camp, which is operated by the Toby Creek Watershed Association, according to a Friday news release.

The project, to be known as the Blue Valley Hydrofrac Plant, will be owned and operated by Flowback Wastewater Development Group, which has Frank Nickens as director of operations.

As for capacity of the plant:

The first phase will provide for treatment of up to 300,000 gallons per day of hydrofracture flowback and production brine wastewaters. The output will be 1.2 million gallons per day of recycled hydrofracture makeup water or 720,000 gallons per day of treated acid mine drainage water.

The second phase will add an additional 1.15 million gallons per day of treated acid mine drainage.

Chesapeake Withdraws Application to Store Millions of Gallons of Wastewater near Keuka Lake

Syracuse Post-Standard (Feb 21)
Plan to truck hydrofracking wastewater to Finger Lakes shelved, for now

Readers of Marcellus Drilling News know that we advocate for landowners, and that we support safe drilling. But, drilling companies sometimes do themselves no favors and deservedly receive suspicion and condemnation. Case in point: Chesapeake Energy, one of the largest drillers in the U.S., is looking for a place to store millions of gallons of wastewater from their drilling operations in Pennsylvania. They thought they may have found a spot in the Steuben County (New York) town of Pulteney, in an old gas well no longer in use. They wanted to store up to 663 million gallons of wastewater—called “flowback” in the drilling business—in the old gas well, and they filed an application to do so.

Flowback, which is water combined with sand and unspecified chemicals, is what’s leftover after it’s been pumped into the ground and brought back out again. The problem is, the chemicals used by drilling companies are a closely guarded trade secret—something that gives them an edge over competitors when drilling. So no one knows what, exactly, is in the flowback, nor in what proportions. This makes people uneasy when you want to store millions of gallons of it close to homes with water wells, and close to their vineyards. The old gas well sits next door to an active vineyard.

It’s also bone-headed of Chesapeake to want to store it in this particular abandoned gas well, as the location is just one mile away from Keuka Lake, one of the Finger Lakes in Central New York. The proposed underground storage by Chesapeake “would not be lined or contained.” If, by some unfortunate event, the stored flowback were to leak into Keuka Lake, the resulting contamination could be catastrophic. It appears to be a risk just not worth taking. Much better for Chesapeake to look for a facility that will treat the flowback and return it to them to be reused for more drilling.

Chesapeake has withdrawn its application for now. Although not a popular subject with drillers, if drilling companies were to disclose the chemicals used in the drilling process, it would go a long way to silencing the critics that there is no safe way to drill.

The article from the Syracuse Post-Standard is fair and balanced (more or less) with a video interview of a local landowner who lives across from the abandoned gas well. It’s worth your time to read the article and watch the video interview.

Cabot Oil & Gas Reports Increase in Production, New Wells Coming Online in 2010 in PA

PR Newswire (Feb 21)
Cabot Oil & Gas Provides Operations Update Current Marcellus Production Over 100 Mmcf per Day!

From a press release just issued by Cabot Oil & Gas, we get the following update on their Marcellus drilling activities (below is exact wording from the release):

During the third quarter call, Cabot announced its intent to complete one well per week through the end of the year in its Marcellus operation.  This effort was successful although weather at year-end and a stream-crossing delay slowed several wells from being turned in line.  During this period ten wells were completed with five wells flowing to sales and five wells waiting on pipeline.  "These five wells, that were turned in line, had an average 30 day production rate of 6 Mmcf per day," stated Dinges [Dan O. Dinges, Chairman, President and Chief Executive Officer].  "Included in this population was the Company’s first horizontal Purcell Limestone test that had a 30 day production rate of 7.3 Mmcf per day.  The Purcell is located between the Upper and Lower Marcellus under our acreage position in Susquehanna County, PA."  Dinges added, "This success potentially opens up additional locations and prospectivity."

In total for 2009, the Company drilled 30 horizontal wells with 14 being completed and turned in line.  The average initial production (IP) rate for these wells was 7.5 Mmcf per day with an average 30 day production rate of 6.9 Mmcf per day.  "Because of the production history and the consistency of results, we are now estimating ultimate reserves of 5.5 Bcf per well, up from our original disclosure of 4.5 Bcf per well," commented Dinges.

The enhanced pace of completions has carried through to 2010 with three more horizontal wells turned in line and gross production over 100 Mmcf per day as of February 19, 2010.  Since January 1, the range of 24-hour IP rates for the 2010 completions has been from 2.6 Mmcf to 16.1 Mmcf per day.  "We currently have 17 horizontal wells waiting on completion with five rigs running and two completions underway in Susquehanna County.  We also have a significant pipeline laying operation ongoing," said Dinges.  "One year ago in the Marcellus we were producing 16 Mmcf per day and now our rate is just above 100 Mmcf per day."

In terms of infrastructure, Cabot recently executed binding Agreements to anchor a new 20" high pressure gathering line.  Williams Partners L.P. (NYSE: WPZ) will construct and operate the 28-mile gathering line, which will run from Cabot’s Susquehanna County operating area south to Williams Partners’ Transco interstate gas pipeline.  The new line is expected to be in service by mid-summer 2011.  Cabot will be the majority capacity holder and this firm service will add additional flexibility to its current takeaway position. "This firm takeaway commitment goes a long way to providing the next wedge of needed capacity for the Company," stated Dinges.