Penn State to Monitor 50 Water Wells to Measure Marcellus Drilling Affects on Water Supplies

Penn State will monitor water wells in Pennsylvania to see if they are affected by drilling activity. MDN applauds this effort:

Penn State’s School of Forest Resources along with several Penn State Cooperative Extension county offices have received funding from the Center for Rural Pennsylvania and the Pennsylvania Water Resources Research Center to conduct a research study on the potential impacts of Marcellus gas drilling on rural drinking water supplies.

The data collected from the study is for research purposes, Penn State officials said.

About 50 private water wells will be selected for free water testing of 15 water quality parameters. Water samples will be collected by trained Penn State researchers both before and after nearby Marcellus gas well drilling has occurred.

Interested residents of the southwest region of Pennsylvania can take the eligibility survey here, call Dana Rizzo at 724-837-1402 or e-mail.*

*Fayette Daily Courier (Apr 12) – Ongoing Penn State study planned on impact of gas drilling

Radiation Testing Shows Marcellus Shale Drill Cuttings are Safe for Chemung County, NY Landfill

Chemung County, NY officials have released a report they commissioned from an independent certified health physicist that show levels of radiation in the Marcellus Shale drill cuttings coming from Pennsylvania Marcellus drilling operations to the Chemung County landfill are “well below” U.S. Environmental Protection Agency standards for radiation.

The gist of the report is that the soil that the county landfill would accept from Marcellus Shale drilling poses no health threat from radiation, said County Executive Tom Santulli.

“These people are experts. They made it very clear that this material is less radioactive than the countertops in our houses and soil in our gardens,” Santulli said. “My message is simple—this stuff is not toxic. It’s no more radioactive than the soil in your garden and bricks on your house. All this testing verifies that. This is way below any EPA levels.

“This would be equivalent to taking dirt from your backyard and using it in landfill,” he said. “It can be used for cover. It’s that safe.”*

However, the debate still rages. Those opposed to drilling claim there is a significant threat to human health from the drill cuttings. County Executive Santulli says those opposed “have zero credibility” on the matter with no facts to back up their claims.

For more information on both positions, see the full article in the Star-Gazette.

*Elmira Star-Gazette (Apr 11) – County study says soil from gas drilling is safe

Joint Venture Between Reliance Industries and Atlas Energy Worth $3.5 Billion Over 10 Years

Indian energy giant Reliance Industries Limited (RIL) has entered a joint venture with Atlas Energy (based in Pittsburgh). MDN previously reported on the rumors of an impending deal between the two companies. Reliance, India’s largest energy company and one of the largest energy companies in the world, will get 40 percent (120,000 acres) of Atlas Energy’s Marcellus Shale leases as part of the deal. The terms are a bit complex, but in the end, this is the largest deal to date between energy companies in the Marcellus Shale with a value of $3.5 billion over 10 years:

Reliance will bear an acquisition cost of $339 million and pay an additional $1.36 billion as capital costs for the development programme over seven and a half years.

However, the investment would be scaled up to $3.5 billion over the next 10 years, RIL CFO Alok Agarwal said today in Mumbai.

The acreage will support the drilling of over 3,000 wells with a net resource potential of approximately 13.3 tcfe (5.3 tcfe net to RIL).*

From the Atlas press statement:

Atlas Energy, Inc. (“Atlas” or “the Company”) announces today its entry into a joint venture transaction with a wholly owned affiliate of Reliance Industries Limited (“Reliance”), the largest private sector company in India and a global energy leader, pursuant to which Atlas will transfer an interest in its Marcellus Shale position equal to 120,000 net acres in a transaction valued at $1.7 billion. Reliance will pay approximately $340 million in cash upon closing and an additional $1.36 billion in the form of a drilling carry. Atlas will serve as the development operator for the joint venture. Reliance will have the option to operate in certain project areas in the coming years outside of Atlas’ core operating areas of Fayette, Greene, Washington, and Westmoreland Counties in southwestern Pennsylvania.

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Range Resources Increases its Marcellus Output Estimates by 25 Percent

Range Resources, the very first horizontal driller in the Marcellus Shale, is even more bullish about the Marcellus Shale now than in the past. In a press statement released today, Range says due to the longer lateral wells they now use, the average potential gas that can be harvested from each well has gone from 3 to 4 billion cubic feet to 4 to 5 billion cubic feet, a 25 percent increase. Range estimates the total gas it can realize across all of it’s current lease holdings in the Marcellus Shale is 20 to 27 trillion cubic feet. According to Range CEO John Pinkerton, Marcellus Shale play economics are “extremely attractive even in a low gas price environment.”

From the Range press statement:

FORT WORTH, TEXAS, APRIL 12, 2010…Range Resource Corporation today provided an update of its Marcellus Shale operations. Range currently owns approximately 1.3 million net acres in the Marcellus Shale play, with approximately 900,000 net acres in the “fairway” of the play. Of the fairway acreage, approximately 600,000 net acres are located in the southwest portion of the play and 300,000 net acres are located in the northeast portion. Range had previously estimated that its horizontal wells in the southwest averaged 4.4 Bcfe per well at a development cost of $3.5 million. On average, these wells have lateral lengths of about 2,500 feet and eight stage completions.

In mid-2009, Range began drilling wells in the southwest using longer laterals and more completion stages. In 2009, Range drilled 17 horizontal wells with average lateral lengths of 3,056 feet with an average completion of ten stages. Based on the results to date, Range estimates the longer lateral wells have reserves of 5.0 Bcfe with an average development cost of $4.0 million per well. The impact of the longer lateral wells is very favorable as Range believes it will be able to recover more of the gas in place with fewer wells, while generating higher rates of return. Range is continuing to evaluate longer laterals and more completion stages to determine the optimal design. Like other shale plays, Range believes the optimal lateral length and optimal number of completion stages will vary depending on different areas of the play.

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