PA Marcellus Property Sold as High as $16,700/Acre at Auction

toot your own hornThis has to be a record for the Marcellus… The Pennsylvania court had ordered an auction of various parcels of land in Susquehanna and Bradford counties (in the prolifically productive northeastern “dry gas” portion of the Marcellus). There were 222 acres of land in total located in prime Marcellus drilling country. An auction was held on Oct. 30 in Wysox, PA and the land was all sold–to various buyers from across the country. Here’s the kicker: Some of the land sold for $16,700 per acre! This is rural farm land folks, not prime real estate in the middle of downtown. The money paid was not for a gas lease but the new owners get mineral rights with the land. You know the land was purchased in hopes of turning around and leasing it for Marcellus drilling. We don’t know for sure, but some of the land may even have been purchased by drilling companies (time will tell).

If we might immodestly say so, the ad agency that helped promote the auction wisely sought out and purchased advertising on MDN. You may have recalled seeing the ads during October? Looks like that proved to be a wise decision! Here’s the “let us toot our own horn” press release issued by United Country Real Estate–the company appointed by the court to list and sell the property:
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Antero Resources 3Q13: Stars Aligned, More Marcellus/Utica

Antero Resources continues to focus on the Marcellus and increasingly the Utica Shale. Antero claims to be the most active driller in the Marcellus with 15 active drilling rigs–we don’t doubt it. Earlier this week as part of their third quarter update, Antero announced they will add a fifth drilling rig in the Ohio Utica where they’ve already drilled 12 wells (now online and producing) and with another 12 wells currently in process of being drilled. Antero loves the Utica.

The stars certainly seem to be in alignment for Antero. A month ago the company went public and their stock price soared (see Antero’s Stock Climbs 18% on First Day of Trading). The day the company went public it was valued at $11 billion. As of this morning, a month later, it’s worth $14 billion. Yow! Antero can also boast of having the Utica Shale’s #1 producing well (see Antero Resources Utica Well Produces Stratospheric 38.9 Mmcf/d). Lot’s of good things happening for Antero, especially in the Utica. Here’s what they say about the last 3 months, and what they think lies ahead…
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Milestone: 600 Wells Now Drilled in OH Utica Shale

Another milestone reached in the Ohio Utica Shale: 600 horizontal shale wells have now officially been drilled in the Utica Shale. There are 963 permits approved and active. Of the 600 drilled, 174 are in production as of November 2nd.

Here’s the latest report from the Ohio Dept. of Natural Resources with details for each and every well permitted and/or drilled:
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MarkWest Open Season for “Little” Ethane Pipeline

MarkWest Energy yesterday announced an open season for a “little” ethane pipeline in Pennsylvania. The little pipeline, which we now have a name for–MarkWest Liberty Ethane Pipeline–will run from Majorsville, PA to Houston, PA, about 30 miles. It is a pipeline to other pipelines. The MarkWest plant in Houston will provide access for the incoming ethane to be pipelined out of the area via the Mariner West pipeline (to Sarnia, Canada, going operational later this month), the Mariner East pipeline to the Marcus Hook refinery near Philadelphia (not ready until 2015), and the ATEX ethane pipeline to the Gulf Coast (ready sometime in 1Q14).

The open season begins today and runs through Dec. 9th. The announcement from MarkWest, along an explanation from MDN about why this is important news:
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Crestwood Midstream 3Q13: Merger Done, Pedal to Marcellus Metal

In early October, Crestwood Midstream and Inergy Midstream completed their mega-billion-dollar merger (see Crestwood/Inergy Complete Their Merger Today, Worth $8B). Yesterday the newly merged company which kept the Crestwood Midstream name, issued their third quarter operations and financial update. Robert G. Phillips, Chairman, President and CEO said with the merger now behind them, it’s (our words) pedal to the metal, full speed ahead. Phillips is really excited about the company’s prospects for growth in the Marcellus Shale and said so yesterday.

Phillips said by the end of 2013 Crestwood gathering capacity in the Marcellus will hit 500 million cubic feet per day (Mmcf/d), which is a 25% increase from the end of 2012. By the end of 2014, he expects their Marcellus gathering capacity to grow to 750 Mmcf/d, up another 50%. Yes indeed, Crestwood is high on the Marcellus!…
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Atlas Resource 3Q13: Production Up, Losses (Way) Up Too

Atlas Resource Partners is a Pittsburgh-based exploration and production (E&P) company with active drilling operations not only in the Marcellus/Utica region but another four resource plays as well. Production for the company has gone up–way up–in 3Q13 thanks to newly acquired acreage and operations, but also due to more wells going online in the Marcellus/Utica. However, the company’s financials continue to be troubled. They show a net loss of $39.7 million for 3Q13–which is almost 4x the loss for the same period last year.

Revenue was up for Atlas in 3Q13 (that’s a good thing), but costs and expenses rose even more (that’s a bad thing). Selected portions of the Atlas 3Q13 update:
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MarkWest to Build 5th Cryo Plant in WV Courtesy Antero Resources

MarkWest Energy continues its Marcellus/Utica infrastructure expansion. In an announcement yesterday, MarkWest said they will build a fifth (!) 200 million cubic feet per day cryogenic gas processing plant at its Sherwood (Doddridge County), WV facility. In the latest edition of the Marcellus and Utica Shale Databook (2013 Volume 2), MDN lists all of the projects announced by MarkWest and others (111 projects in all). This one is brand new and would be 112. MDN estimates this new cryogenic processing plant along with two others currently under construction at the Sherwood complex cost in the neighborhood of $200 million each to build.

Cryogenic plants separate natural gas liquids (NGLs, or “wet gas”) from methane (“dry gas”). Why a fifth plant at the same facility? It’s being built at the request of Antero Resources. MarkWest signed a deal with Antero to provide them with wet gas processing capacity at the plant. MarkWest says the new plant will be built and online by third quarter of 2014. When it goes online, the total processing capacity at the Sherwood complex will be 1 billion cubic feet of natural gas per day–a really astonishing number. Here’s the MarkWest announcement:
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PA DEP Sec. Abruzzo Announces Winners of $3M in CNG Grants

Part of the Pennsylvania Act 13 law, passed in early 2012, is a provision called an “impact fee” collected from Marcellus drillers (ultimately from landowners, because fees and taxes are always passed down the line). The first year the fee was collected it brought in over $200 million. The so-called fee is really 60% fee and 40% tax, as we’ve written about many times before. Why? Because 60% of the money collected stays in the communities impacted by drilling–for use with first responders, roads, etc. The other 40% is what MDN calls “walking around money”–money that’s spent by politicians in Harrisburg to curry favor with voters (i.e. vote buying). A lot of that money goes to southeastern PA (Philly area) where there is no drilling–but such was the sleazy political price to be paid in order to pass the legislation. Yes it stinks–but it is what it is.

If there’s any good use for a teeny tiny sliver of the 40% walking around money, it happened yesterday in Scranton, PA, where the PA Dept. of Environmental Protection (DEP) Sec. Chris Abruzzo was on hand at the Cabot Oil & Gas’ “CNG Celebration” event at Johnson College (see our companion story today about the event). Abruzzo was there to announce the list of grant winners who will share in $3 million of Act 13 money to purchase, refit or supply filling stations for vehicles to run on compressed natural gas (CNG). By handing out this seed money, Gov. Tom Corbett hopes to encourage more companies and organizations to switch to cheaper and much less polluting natural gas as a power source. Below is the DEP announcement and list of winners of this year’s grant. The DEP will be back next year with even more money to award. They start accepting applications on Saturday…
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Cabot’s Big CNG Celebration at Johnson College in Scranton, PA

Yesterday Cabot Oil & Gas held a “CNG Celebration” at Johnson College in Scranton, PA. Unfortunately MDN could not be on hand to help celebrate. However, we do have a couple of stories to bring you from that event.

The purpose of the event was several-fold: announce Johnson College’s curriculum expansion with new courses in compressed natural gas (CNG) technology and eventually a certification (with financial and technical assistance from Cabot); PA DEP Sec. Chris Abruzzo was on hand to announce $3 million in grants to businesses and organizations to purchase or retrofit vehicles to run CNG (see our companion story today); welcome the Marcellus Shale Coalition’s new executive director, David Spigelmyer; and show off some impressive big trucks and other vehicles running CNG. “Celebration” is an appropriate word that about covers it!…
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