Guest Post: Susquehanna County’s Astonishing Resource Potential

Chris Acker The following article was written by MDN friend and prolific contributor of links and story ideas, Chris Acker. Chris splits his time between Montrose, PA (in Susquehanna County) and Savannah, GA. Here is his biography from the Seeking Alpha website:

Christopher Acker, Geological Engineer with an MBA, grew up in the oil fields of Venezuela where his father, a petroleum engineer, was a drilling contractor for all the major players, onshore and off. Chris’ interest in energy economics and policy found him working for Exxon, Petroleum Industry Research Associates and Petroleos de Venezuela. He bought a parcel of land in the PA countryside twenty-five years ago and later semi-retired to work on antique pianos. See www.PianoGrands.com. A few years ago, it was established that Chris’ property in Susquehanna County sits atop one of the Marcellus shale’s most prolific areas. He is now happily engaged once again in energy economics, with emphasis, naturally, on gas.

Here is Chris’ thoroughly researched, extensively footnoted, superb analysis of Susquehanna County’s potential Marcellus Shale natural gas yield…

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District Court Judge Asks WV Supremes to Rule in Surface Rights Case

Waaaay back in July 2011 MDN told you about an interesting legal case in West Virginia in which a surface rights landowner was suing XTO because XTO is (in the opinion of the landowner) abusing the right to set up a well pad on his surface in order to get gas not only under the surface of his property, but also from his neighbors’ property (see WV Marcellus Legal Battle over Well Pads: Surface Rights Owners v. Mineral Rights Owners). The surface landowner, Richard Cain, acknowledges law and precedent allows XTO to set up a well on his land in order to get the gas under his land—but Cain maintains XTO isn’t really all that interested in getting it from under his land, but simply wants to use his convenient location to reach other nearby properties. Cain gets all of the headaches and none of the royalty money. Kind of a raw deal, from his perspective. Can’t blame him.

There is a new development in the case. The judge presiding over the case, U.S. District Judge Irene Keeley, has formally asked the WV Supreme Court to rule on the key question in the case since it will set a precedent (and has far-reaching consequences) for the entire state…

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New Report: Reasons for U.S. Dramatic Increase in O&G Production

Robert Bryce, an author for more than two decades and a senior fellow at the Manhattan Institute’s Center for Energy Policy and the Environment has just released an important new report titled, “New Technology for Old Fuels: Innovation in Oil and Natural Gas Production Assures Future Supplies” (full copy embedded below). In the opening of the report, Bryce shares a startling fact: “In 2012, U.S. oil production rose by 790,000 barrels per day, the biggest annual increase since U.S. oil production began in 1859. In 2013, the Energy Information Administration expects production to rise yet again, by 815,000 barrels per day, which would set another record. Domestic natural gas production is also at record levels.”

How and why has production increased so dramatically in the past few years? The obvious (to us) answer is shale, but it’s not that simple. Bryce’s report delves into the confluence of reasons for why oil and gas production has gone up, and will continue to increase for the foreseeable future. His reasons include better technology and better methods of drilling. Here’s the executive summary of the report, which includes his key findings:

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Ultimate Supply Chain Challenge: Sell Your Whole Company to Shell

Listen up start-up technology companies with products and services in the oil and gas space: Shell is ready to invest “several hundred million dollars” in emerging tech companies—everything from gas production and conversion technologies to geophysical mapping to “big data.” To find out if your company fits the profile, and for details on how to contact Shell with a proposal, read the press release below:

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REV LNG, 11 Others Finalists in Shale Gas Innovation Contest

A shout-out and big congratulations to REV LNG (headquartered near Rochester, NY), one of 12 finalists in this year’s Ben Franklin Shale Gas Innovation Contest. Each year the Ben Franklin Shale Gas Innovation and Commercialization Center conducts a contest looking for the “best shale gas-oriented innovations, new product ideas, or service concepts that are either in the development stage or recently launched.” They are awarding three $25,000 prizes this year.

Through his work with Shale Daily, MDN editor Jim Willis has had the pleasure of working with, and learning about, the unique technology REV LNG has developed. The company is one of the very few in the United States that buys, transports and sets up “mobile filling stations” (at drill pad sites) so drillers can use liquefied natural gas (LNG) to power their equipment. REV LNG’s uniqueness is that it’s a turn-key service. Customers just pay a “per gallon” fee to fill it up, and REV LNG takes care of the rest. We wish them well in the competition!

Here’s the press release and full list of all the very worthy companies selected to be in the final 12:

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Back to Kindergarten: UGI Explains NatGas Gate Stations

Northeastern PA utility company UGI is in a strange position. Geographically the company and it’s natural gas distribution network sit in or near some of the richest deposits of natural gas known to exist in the United States—the Marcellus Shale. All UGI has to do is install some new pipelines here and there, and a compressor station here and there, to bring that low-cost gas to its customers. Currently the gas being delivered to households in the Scranton/Wilkes-Barre area mostly comes from the Gulf Coast! Why not use gas produced locally, which is far cheaper.

Why not? Because of dullards who oppose installing the new pipelines and compressor stations. Anything to do with natural gas has gotten so divisive and politically charged, that UGI now has to explain (“dumb it down”) to people why lowly gate stations (pipeline connectors) are safe:

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Westminster College Takes a Pass on Seismic Survey & Drilling

Seismic surveying is coming to New Wilmington (Lawrence County), PA—and when surveys come, it’s usually not too long until permits and then drilling follow. Which is great news for local landowners.

However, the largest landowner in town, Westminster College, has sadly decided to disqualify themselves from the survey and from realizing the benefits of fracking. Westminster won’t allow seismic surveying and is bogged down in the “study it to death” routine being pushed by anti-drillers when it comes to potential drilling under college land:

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Supporters, Detractors Meet on Proposed NatGas Power Plant in PA

If the crowd that turned out last night for a public hearing on a proposed new natural gas-powered electrical generating plant in Lawrence County, PA is any indicator, the community is split about evenly between those who support the new plant, and those who don’t. Area residents filled the North Beaver Volunteer Fire Department to listen to and express their opinions about the new plant before representatives of the PA Dept. of Environmental Protection.

The bottom line is that the plant, according to LS Power (which is building it), is desperately needed. Some 3,000 megawatts of generating capacity will disappear from the region in the next several years as plants using coal to generate electricity retire. The Lawrence County plant will generate 900 MW—less than one-third of what will be needed to replace it. That is, it’s desperately needed unless residents who oppose the plant want to volunteer to participate in rolling blackouts…

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Magnun Hunter Resources – Delays in the Marcellus/Utica

What’s going on with Magnum Hunter Resources (MHR)? That’s the question asked and answered by Seeking Alpha blogger Mike Maher in an article posted today. The article is a mea culpa and explanation as to why he was wrong about MHR’s stock price. Back in November he predicted the stock, then at $3.92 per share, would soon take off. Today? It’s trading almost exactly at the same $3.92. So what happened?

MDN is not an investment blog, although a number of individual investors and investment firms do subscribe and read. Our interest in Maher’s article is not about MHR’s stock performance, but rather his discussion of MHR’s operations in the Marcellus and Utica Shale. He brings some good new information to light—a brief status report about MHR’s activities (or lack thereof) in our neck of the woods…

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One Year Later: NatGas Inventories & Rig Counts Down, Price Up 2X

MDN’s favorite Seeking Alpha blogger and energy analyst, Richard Zeits, has posted a top-notch analysis about the price of natural gas and where he believes it’s headed—and why. The article is extensive and well worth the time to read it if you care about the price of natural gas. He points out “what a difference a year makes,” noting that in just one year natural gas inventory surpluses are gone (even contracting), rig counts are at their lowest numbers in decades, and the price of natural gas has doubled from a low of $2 MMBtu to near $4 MMBtu. Surprisingly, he notes that recent supply numbers for natural gas show a slight contraction overall, despite the huge expansion of production in the Marcellus, Utica and Bakken.

Zeits says the fundaments for natural gas trading look very good. He makes the following points in the article:

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PA PUC Launches New Interactive Website with Impact Fee Details

The Pennsylvania Public Utility Commission, charged under Act 13 with the assessment and collection of shale drilling “impact fees,” released a new interactive website yesterday that “allows users to better examine information related to the collection and distribution of the state’s unconventional gas well Impact Fee.” MDN checked it out and is impressed. Lots of useful charts and graphs detailing who drilled the most, who paid the most, and where/how the money from impact fees has been spent.

Here’s the press release announcing the site and it’s purpose:

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NAPE Takes Shape – Speakers Announced for April 10 Program

For anyone in the orbit of Pittsburgh, or for those already planning to attend, MDN editor Jim Willis will attend the North American Prospect Expo (NAPE) in Pittsburgh next week, April 10-12. This is the first time NAPE has come to Pittsburgh—the big annual event is held in Houston each year. The Pittsburgh event is called NAPE East and promises to be a great show. Please stop by the Shale Daily booth (# 205) and say hello to Jim!

Yesterday, NAPE released their lineup of “distinguished speakers and panelists” speaking during the Business Conference portion of the event, held on the first day, April 10 (see below). Here’s the press release about next week’s event and list of speakers for the first day:

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Winners Announced for Northeast Oil & Gas Awards 2012

Launched in 2012, Oil & Gas Awards has just held its first regional awards for the northeastern United States, the “Northeast Oil & Gas Awards” ceremony, held in Pittsburgh on March 14 at the Westin Convention Center. Outgoing PA DEP Secretary Michael Krancer was the guest of honor.

In all, 19 different awards were handed out in categories ranging from law firm of the year to drilling & well services company of the year (and many others). Here’s the complete list of winners, and more information about the awards:

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