Ohio Gov. John Kasich released his budget for fiscal years 2014 & 2015 yesterday, and along with it, he resurrected the same plan he first introduced a year ago to increase severance tax on oil and gas production in the Utica Shale (see Details on Ohio Gov. Kasich’s New Tax on Shale Drilling). The plan in a nutshell: Hike the severance tax on Utica Shale drilling, then spread the new-found wealth around to buy votes to get re-elected.
Here’s a summary of the coming changes (and make no mistake, the plan will pass this time):
At the end of 2011, MarkWest Energy and The Energy & Minerals Group (EMG) announced that MarkWest was buying out EMG’s share in a 3-year-old joint venture deal in the wet gas portion of the Marcellus Shale called MarkWest Liberty Midstream. EMG owned a 49% stake in that JV (see MarkWest Pays $1.8B to Buy Out JV Partner in Liberty Midstream). At the time of the buyout, the two companies announced they would form a new JV to build midstream infrastructure in the Utica Shale starting in 2012.
The new Utica JV (called MarkWest Utica EMG) ramped up in early 2012 as the pair set out to duplicate their success in building out the Marcellus in the fledgling Utica. The strategy? “Creating a large network of processing complexes connected through an extensive NGL gathering system,” which they immediately began to do by beginning construction on two new processing complexes in Harrison and Monroe counties in Ohio (see MarkWest to Expand/Build NGL Plants on New Agreements). Just one tiny problem: the Utica JV is now running short on cash…
Landowners in New York State wait with bated breath for next Wednesday, Feb. 13 (one week from today), to see if the Dept. of Environmental Conservation publishes a final version of new fracking regulations. If the DEC misses the deadline next Wednesday, the new rules will almost certainly not be released on Feb. 27, which is the final deadline to release those rules or… or the process restarts. More public comments. More posturing by environmental extremists. More everything. If the deadline next Wednesday is missed, all bets are off on whether New York will ever see fracking in our opinion.
What does “the industry” think? Perhaps the best barometer of what drillers are thinking comes from Brad Gill, the executive director of the Independent Oil & Gas Association of New York (IOGA of NY). He was in Albany yesterday to meet with lawmakers. Here’s what he said:
The numbers keep racking up for Utica Shale permits and wells drilled in Ohio. According to the latest report from the Ohio Dept. of Natural Resources, Ohio has now approved 512 permits for Utica Shale drilling and the state has 27 drilling rigs busy at work in the Utica right now. So the numbers will continue to rapidly rise for the foreseeable future.
Here’s the particulars of where permits and drilling are taking place, including two helpful interactive maps:
The regional quasi-governmental organization in charge of “protecting” the Delaware River Basin—the Delaware River Basin Commission—has just reversed a decision about whether or not they have the right or power to review (i.e. regulate) two newly completed natural gas pipelines that run through DRBC’s territory. Yes, both pipelines are now completed (barn door…horse?).
It appears the DRBC is kowtowing to anti-drilling environmental organizations like Delaware Riverkeeper Network by going after these two pipeline companies…
Being the sole person in charge of a pot of investments worth $150 billion is an awesome responsibility—and invests that person with an enormous amount of power. Power which can (and is) abused. New York State Comptroller Thomas P. DiNapoli is the sole person in charge of the New York State Common Retirement Fund and he regularly throws his weight around with the companies the fund invests in to strong-arm them into doing things they typically don’t want to do. Call it bullying (because that’s what it is).
The latest example: DiNapoli, himself an anti-driller, is crowing that he forced Cabot Oil & Gas, one of the companies the Fund invests in ($35.8 million), to “publicly disclose its policy and procedures for eliminating or minimizing the use of toxic substances in its hydraulic fracturing fluids.” Never mind that Cabot already lists the components of its fracking fluids in the FracFocus.org Chemical Disclosure Registry. Let’s not let facts get in the way of a good PR campaign.