3 Things to Know about Pavillion, Fracking & Water Contamination

building blocksThe Obama EPA has bungled a lot—chief among their bungles was their attempt to prove a connection between fracking and water contamination in Pavillion, Wyoming. The EPA hoped that Pavillion would be the smoking gun—the single, solitary case (any case!) they could use as an excuse to (illegally) start regulating oil and gas drilling through the back door of the federal Safe Drinking Water Act. But something happened on the way to the “we’ll take over regulating fracking from the states” ball: The wells the EPA used for their data in Pavillion were drilled by the EPA and the high levels of chemicals in the wells may have come from their own botched drilling job. Oops—maybe they ought to leave drilling to the experts. Lots of backpedaling ensued (see this MDN story).

Pavillion is in the news once again. The U.S. Geological Survey yesterday released a mother load of new data about the test wells (see their two reports embedded below). What do the new reports say? Neither those in favor of drilling nor those against drilling have weighed in yet—they’re now pouring over the data. Here’s three things you need to know about Pavillion and a possible link between fracking and water contamination:

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Mariner East Pipeline to Philly Refinery 100% Committed

Sunoco Logistics Partners announced yesterday the “open season” (the period of time when companies commit to pipeline capacity) for the Mariner East pipeline to deliver natural gas liquids to the Marcus Hook refinery near Philadelphia was a complete success with all existing planned pipeline capacity now spoken for. Mariner East will connect to the currently closed Marcus Hook refinery near Philly which will soon be reopened with a major new investment to convert the plant to refine propane and ethane from the Marcellus Shale in western PA. The processed propane and ethane from Marcus Hook will be sold domestically and exported internationally.

The open season was so successful, Sunoco is considering a second open season (building more pipeline capacity). In a related announcement, Range Resources said they are the anchor shipper for the pipeline (see this MDN story), as well as MarkWest Energy Partners (see this MDN story). From the Sunoco Logistics press release:

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Range Announces They’re Main Shipper for Mariner East Pipeline

In a follow-on announcement to Sunoco Logistics Partners (see this MDN story), Range Resources says it is the anchor shipper for the Mariner East Pipeline that will connect western Pennsylvania to the Marcus Hook refinery near Philadelphia. Range announced they’ve signed a 15-year agreement with Sunoco to ship Marcellus Shale natural gas liquids to the Philly refinery. They also announced they’ve signed a 15-year contract to export and sell ethane to INEOS Europe from the Marcus Hook refinery. Range plans to start selling 10,000 barrels per day beginning in 2015 and eventually double that to 20,000 bpd.

Here is the lengthy press release from Range announcing their deal with Sunoco Logistics and also listing other NGL sales agreements Range has negotiated:

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MarkWest Announces Commitment for Mariner East NGL Pipeline

Not only has Range Resources announced they will take capacity on the Mariner East natural gas liquids pipeline (see this MDN story), MarkWest Energy Partners also announced they are another one of the customers for the new pipeline. MarkWest intends to ship ethane and propane from their Houston, PA processing and fractionation plant to the newly revamped Sunoco Marcus Hook refinery near Philadelphia where it will be re-mixed and sold, both domestically and internationally (exported).

From the MarkWest press release:

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PA Towns Complain about PUC Act 13 Zoning Review

The Pennsylvania townships that sued the state over the newly enacted Act 13 shale drilling law are feeling a little picked on at the moment. The lawsuit brought by seven townships earlier this year is about to go before the PA Supreme Court in a few weeks (see this MDN story). The case revolves around the right of local municipalities to pass and enforce their own zoning laws with respect to oil and gas drilling within their borders. The new Act 13 law provides a consistent set of zoning rules for all townships, replacing and superseding local laws. Some towns in western PA didn’t like it and sued.

Under Act 13, the Public Utility Commission (PUC) is empowered to review and decide whether or not towns are living up to the provisions of Act 13. If they are in violation, the towns won’t receive money from the new impact fee collected under Act 13 (part of a $200 million pot for this year). The current bone of contention is that the PUC is moving forward with reviews of zoning law in select towns, including four of the seven towns that brought the lawsuit. And those towns don’t like it—not one little bit.

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New Marcellus Pipelines May Keep NatGas Prices Low

Is the commodity price of natural gas heading up? Heading down? Depends on who you ask. Lately, it seems the overwhelming consensus is the price will go higher starting early next year, and indeed prices have been up recently from their historic 10-year lows (right now the NYMEX price is $3.25 Mbtus, it was just $1.90 not long ago). Natural gas is a commodity, and like any commodity, price is determined by supply and demand. If there’s more supply with steady demand, that equals lower prices.

A new article by Bloomberg (a perennially anti-drilling news service) predicts prices will go lower again—soon—because new Marcellus pipelines are coming online by the end of this year that will add an additional 30% capacity to supplies in the marketplace. How low will they go? One analyst quoted says prices may head back to the $2 range:

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Ohio: $17.5B in Economic Activity from Drilling 2011-2014

Linda Woggon, executive vice president of the Ohio Chamber of Commerce and executive director of the Ohio Shale Coalition, said at a meeting yesterday that shale drilling in Ohio is on track to pump a total of $17.5 billion into the Ohio economy from 2011 to 2014 and generate 65,000 jobs. It will also bring in an additional $795 million in taxes over the same time period—with no increases on taxpayers.

Here’s a few of the highlights from her talk at a breakfast hosted by the Salem Area Chamber Area of Commerce on Wednesday:

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AP Takes Aim at NY State Oil & Gas Regulators

MDN wonders: Do organizations like the anti-drilling Earthworks and the Associated Press share the same office space so they can coordinate their attacks on the natural gas industry? Yesterday MDN told you about the shameful new “study” issued by Earthworks attacking the hard and diligent work of state regulators in overseeing oil and gas drilling (see this MDN story).

At the same time Earthworks was lobbing their bomb into the public discourse, a seemingly related media attack was launched by the AP aimed against New York’s oil and gas regulators at the Dept. of Environmental Conservation. The gist of the piece is that regulators are doing such a poor job of overseeing drilling now, how could they possibly handle new shale drilling should the governor (stupidly) allow it to begin. Here’s how the article starts:

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Magnum Hunter’s Explanation for Lack of Production

Everyone seems to be providing an update on what’s happening with their drilling operations in the Marcellus—all at once! And it’s not even time for quarterly updates. The latest announcement is from Magnum Hunter Resources—a statement as to why they aren’t producing more (must be investors are asking questions). Magnum Hunter reports that storms knocked a lot of their production offline in July, and currently, lack of processing capacity at a Dominion Transmission facility is holding them back.

Here’s Magnum Hunter’s explanation for lack of production:

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