National Fuel has struck a deal with Statoil and East Resources and is expanding two pipelines to handle Pennsylvania Marcellus Shale gas, sending it to markets in Canada and the Northeastern U.S. The announcement says National Fuel will build 16 miles of new pipeline from Corning, NY to Tioga County, PA, and construct a new interconnection with the Tennessee Gas Pipeline in Ontario County, NY, among other improvements.
From the National Fuel press release:
WILLIAMSVILLE, N.Y.–(BUSINESS WIRE)–National Fuel Gas Supply Corporation (“Supply”) and Empire Pipeline, Inc. (“Empire”), the companies that comprise the Pipeline and Storage segment of National Fuel Gas Company (NYSE: NFG) (“National Fuel”), have reached major milestones on two pipeline expansion projects that are the first in the industry designed to receive natural gas produced from the Marcellus Shale and transport it to key markets of Canada and the Northeast U.S. Supply has entered into a binding precedent agreement with Statoil Natural Gas LLC (“Statoil”) for 100 percent of the capacity on Supply’s “Northern Access” expansion project. Empire also has a binding precedent agreement in place with anchor shipper East Resources, Inc. (“East”) for Empire’s “Tioga County Extension” project, and is concluding negotiations for additional capacity with a second shipper. The precedent agreements provide for Statoil and East to sign, after satisfaction of conditions, firm transportation service agreements under which Supply and Empire will transport natural gas for Statoil and East.
These are the bald facts of life for New York landowners who own land in either the New York City or Syracuse watershed areas and may want to lease their land for Marcellus Shale gas drilling: Forget it. That’s the loud and clear message from NY Department of Environmental Conservation (DEC) Commissioner Pete Grannis. After the DEC’s announcement of last week, no energy company
in their right mind will be willing to drill in New York’s watersheds (although drilling companies currently drill safely in the Susquehanna River watershed in PA, and are trying to drill in the Delaware River watershed in PA).
Reaction from landowners in New York has been mixed. While some believe watershed landowners are being unfairly penalized, others think this may speed up the process of drilling for everyone else by removing a key objection to drilling—that drilling may contaminate city water supplies.
From a press release issued by the NY DEC last week:
April 23 – New York State Department of Environmental Conservation (DEC) Commissioner Pete Grannis today announced that due to the unique issues related to the protection of New York City and Syracuse drinking water supplies, these watersheds will be excluded from the pending generic environmental review process for natural gas drilling using high-volume horizontal drilling in the Marcellus shale formation. Instead, applications to drill in these watersheds will require a case-by-case environmental review process to establish whether appropriate measures to mitigate potential impacts can be developed. There are 58 pending applications for horizontal drilling in the Marcellus shale; no applications are located in either the New York City or the Skaneateles Lake watersheds (Syracuse utilizes the Skaneateles watershed).
The Joint Landowner’s Coalition of NY has put out a plea for donations. Drilling in New York may not happen unless landowners can generate enough noise to break through the resistance in Albany. Here is the letter reproduced in full from the JLCNY:
A Message from the JLCNY President Dan Fitzsimmons – April 27, 2010
Fellow Landowners – I don’t have to tell you we have much at stake. But I do need to sound an alarm: the time for us to act is NOW. We are organized. We are prepared. And although we have worked intensely over the last two plus years, we are outmanned, outspent, outmaneuvered. We need to step up our game, and we have a plan to get it done. But we desperately need your financial support. Some of you have given generously financially. Some of you have poured blood, sweat and tears into this effort. And some of you will make your first donation right now. We need as much as you can afford to give to fund our efforts to:
Hire professionals in Albany who can represent us and make sure our voices are not drowned out by the better-funded extremists. These professionals can open doors, cut through clutter and red-tape for us and focus us on the most effective strategy for being heard where it counts.
Get the word out: you’ve heard the same arguments I hear: more people are against drilling than are for it. We know that’s not true – but we have to erase that perception. The best way to do that is to blanket our area with lawn signs, drown our airwaves with pro-drilling ads, promote speakers at public forums who can support our issues with facts, erect billboards with clear messages, etc.
Continue to support landowners. In some respect, the work begins when the moratorium is lifted and leases are signed. Who will advocate for landowners in their negotiations and relations with energy companies? Who will be a watchdog with the regulatory agencies? Who will make sure we have the best and latest information on and about the industry and the technology surrounding us? Landowners will need the JLC more and more as time goes by and as the stakes continue to rise. We cannot sustain it without your support.
We are seeking support from a number of channels: from corporations and industry; from foundations and other organizations who may provide grants for our work; from local business and farm organizations. But the most important support we need RIGHT NOW is from you. Please give what you can today – $10, $20, $100, $500 or more. See if your company has a matching donation program – or if you know of any other source you can approach for us – please do. Use PAYPAL on our website: JLCNY.org or send a check to:
PO Box 2839
Binghamton, NY 13902
Thank you from the bottom of my heart. We will get there, but only if we stay together on this.
Even though the price of natural gas worldwide is down, EQT Corp saw a big jump in net income (ie profits) largely due to their large increase in gas production in the Marcellus Shale formation in Pennsylvania. In a Pittsburgh Tribune-Review article we learn this about their drilling activities:
EQT drilled 21 horizontal wells in the Marcellus formation in the first quarter, and plans to drill 100 such wells this year, at an average cost of $3.3 million to $3.5 million per well.*
If EQT drills 100 wells in PA in 2010, that’s a $330-$350 million investment in PA with all of the jobs that kind of investment creates.
*Pittsburgh Tribute-Review (Apr 28) – EQT tallies $88.1 million 1Q profit