Marcellus & Utica Shale Story Links: Mon, Nov 25, 2013

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading:

New York

Gov. Cuomo Treats Upstate Like Oz, But Is No Wizard
Shale Gas Now
New York’s tortured decision-making on shale drilling stands alone among the 32 states with the ability to commercially develop natural gas from shale rock. Despite a consensus of academic studies, a wealth of experience and recent statements from the heads of the Energy Department, Interior Department and the EPA that focus on the science to conclude that hydraulic fracturing has been and can continue to be conducted safely, the process is still banned in New York. Given the governor’s penchant for Hollywood-style theatrics rather than real science, an analogy to “The Wizard of Oz” seems appropriate. Our story opens with Dorothy dreaming in depression-era Kansas (with a striking semblance to current day upstate) of a better life over the rainbow, presumably with more yogurt farms and casinos to rescue a reeling upstate economy.


Utica Shale Ohio, Charts & Graphs
Utica Shale
Visual representations of Ohio Utica Shale wells, as of November 26, 2013 This pie chart immediately below shows that there are a significant number of wells (drilled and not yet producing) that should be coming online and into production in the coming months. Also note the large number of wells that are “permitted” only. In the last three months alone (comparing November 16, 2013 Ohio DNR report to the August 17, 2013 report, producing wells went from 125 to 184. Drilled wells (not yet producing) went from 301 to 338. Wells classified as permitted only, went from 335 to 382. Total wells went from 840 to 988.

Carrizo Oil & Gas: Oil-Focused Portfolio With Assets In All The Right Places
Seeking Alpha/Richard Zeits
Carrizo’s Utica acreage, despite its relatively small size, is located mostly within the play’s premium high condensate window and in close proximity to some of the strongest wells drilled by Antero (AR), PDC Energy (PDCE) and Gulfport (GPOR) and represents an intriguing, oily asset. Carrizo now has 21,700 net acres in the play and continues to lease in the eastern Guernsey County and northern Noble County areas. The company estimates that the position may yield about 120 potential drill sites in the core of the play at 150-acre spacing, equating to net resource potential of 134 million Boe. It is clearly premature to try to put a value on Carrizo’s Utica position (any estimate would be speculative). However, despite all the infrastructure challenges in the play and limited production data, there is enough evidence from the wells drilled by the industry that Carrizo’s Utica position has a good chance to evolve into a very valuable asset.

Ohio Oil and Gas Association says ‘bunk’ to new study that pooh-poohs Utica shale economic impact
Columbus Business First
The oil and natural gas industry and its supporters are being accused of exaggerating the number of jobs being created by development of the Marcellus and Utica shale plays across six states, including Ohio. The claims are made in a new study from the Multi-State Shale Research Collaborative, a group of research organizations that includes Policy Matters Ohio in Cleveland. The study said industry supporters have overstated the jobs impact of shale development to minimize or avoid taxation, regulation or even a careful examination of shale drilling. But Ohio Oil and Gas Association spokesman Mike Chadsey called that accusation “bunk” and questioned the credibility of the study because one of its funders was the Park Foundation, which advocates for the environment.


The New Pennsylvania, Thanks to Shale Gas and a Few Good Men
Natural Gas Now
Pennsylvania was lucky to have Mike Krancer as DEP Secretary…damned lucky. It’s rare to find practical visionaries, especially in government, but Pennsylvania is riding a wave of economic development from shale gas that’s only beginning to take form. A large part of the credit goes to the far-sighted, yet realistic, guy who lead the Commonwealth’s Department of Environmental Protection for two years, Mike Krancer. Now back in private practice with Blank Rome, a long-established and well-connected Pennsylvania law firm, Krancer led a one-day conference yesterday in Harrisburg on the subject of environmental issues surrounding mid-stream and downstream development of natural gas. The issues have a lot less to do with the industry than those who would destroy it, but Krancer was relentlessly optimistic about what shale gas was doing for Pennsylvania and where we’re headed.

Oil and gas enlist GOP cheerleaders
Pittsburgh Post-Gazette
Mr. Bush was the headliner Nov. 14 at the David L. Lawrence Convention Center, drawing almost a dozen laughs during his “fireside chat” with Mr. Mason. He talked for almost an hour about issues such as Iraq, Afghanistan, the bank bailout, immigration overhaul, life after the presidency and his newfound love of painting. The former oil executive spent less than three minutes talking about energy policy, though his listeners paid $995 a head for the two-day convention to learn about the newest technological advancements and regulations that could affect their investments. But Mr. Bush’s job was not to add another technical presentation in an already long day. His was to be “the funny guy,” to give convention delegates an hour of recess during a long day of school. And at an estimated $150,000 per appearance, his work doesn’t come cheap.

Pennsylvania oil producers face new challenge
Erie Times-News
A report from the Pennsylvania Grade Crude Oil Coalition, released Sept. 1, says the state “(Department of Environmental Protection) has developed, proposed and finalized a variety of policies, permits and forms within the past 12 months that have hampered and will continue to hamper the conventional oil and gas industry, often with unclear environmental benefit.” Gary Clark, a spokesman for the DEP, said no new inspectors have been added and that small oil producers are not generally covered by Act 13. Hovis spoke last week about new rules that could be on the way as he walked among a few of his 25 oil wells, some marked by small pump jacks. In the heyday of these wells, perhaps 90 years ago, the best of them might have produced 15 or 20 barrels of oil a day, Hovis said. But those days are long passed. “We’re not talking about barrels. We’re talking about gallons,” Hovis said. “This well might make 8 gallons a day and that one might make 6.”

Companies planning to invest significantly in midstream infrastructure
SNL Financial
A recent report by the Deloitte Center for Energy Solutions said a new wave of midstream sector investment is coming. And at the 2013 DUG East conference in Pittsburgh, several midstream companies offered a glimpse into exactly how badly that investment is needed. According to the Deloitte report, more than $200 billion in midstream infrastructure investment may be needed by 2035 to keep pace with U.S. natural gas production growth. Deloitte said that in 2012 domestic production was at its highest level in 16 years. And, based on discussions with its clients, Deloitte said that areas of production that were blossoming did not have the necessary infrastructure to keep up.

Exec: Gas industry made mistakes in Marcellus Shale, but ‘we’re not all villains’
SNL Financial
While the DUG East attendees gathered inside the David L. Lawrence Convention Center, SNL Energy held its own panel discussion on the shale gas revolution in Pennsylvania, a conversation that looked beyond initial production rates and estimated ultimate recovery from wells. Participants addressed the pros and cons of shale gas drilling and whether the industry has been unfairly demonized. Roundtable participants included Doug Shields, a former member of the Pittsburgh City Council, where he served from 2004 to 2012. Shields served as council president from 2006 to 2010, and was instrumental in getting an anti-fracking ordinance passed. Tom Lopus, senior vice president of oil and gas for Pardee Resources Co. and a founding board member of the Marcellus Shale Coalition also participated in the roundtable discussion, as did Kirsi Jansa, a Pittsburgh-based independent journalist and filmmaker who made a series of documentaries on shale gas drilling in Pennsylvania called “Gas Rush Stories.”

A Lesson in How NGOs Are Plotting to Steal Our Future
Natural Gas Now
Lex Luthor, readers will recall, was the power-hungry business magnate of immense wealth who served as Superman’s foil in all those comics and movies. The power craving madman of wealth has been a staple for movies of all sorts, in fact. The fictional figures also have their counterparts in the writings of conspiracy theorists who like to suppose the Koch brothers or George Soros are sealed away in some castle frantically pulling the levers of some machine to take out enemies on the left or right until they finally have control of the whole world. The truth is a much more nuanced, as trendy folks like to say. It’s not evil madmen who threaten civil society but non-governmental organization or NGOs. These NGOs have become the tool by which wealthy elitists and their progeny attempt to reshape the world. There is a great example in the William Penn Foundation.


A Promising Sign for U.S. LNG Exports
The Motley Fool
Just last week, the U.S. Department of Energy authorized the Freeport LNG project to export more LNG from its facility in Quintana Island, Texas, signaling further government support for LNG exports. Let’s take a closer look at Freeport and other projects that have received DOE approval and what their cumulative impact might be on domestic natural gas prices.

Is Chesapeake Still A Turnaround Story?
Seeking Alpha
Is Chesapeake still a turnaround company? Or are we finally in growth mode? Not too long ago, investors saw Chesapeake Energy as an over-levered, asset hoarding, oil and gas company. Things got worse when it came to light that former CEO and founder, Aubrey McClendon, was conducting some questionable management practices. However, in a short year, the company is very different. It’s now looking to focus on unlocking value from its massive asset base. The transformation started back in 2012 when billionaire activist Carl Icahn got involved. Since then, McClendon has retired as CEO and Chesapeake has officially moved from its “growth by acquisition” strategy to “growth by development.” Notice that CHK is up nearly 50% over the last three years. The steady, up and to the right trend, began in mid-2012.

Colorado releases draft rules that may make it the first state to regulate methane from oil and gas drilling
Penn State Marcellus Shale Law Blog
On November 18, Colorado released proposed rules that would directly regulate the detection and reduction of methane emissions associated with oil and gas drilling. The rules are basically expanding the current provisions for reducing emissions that apply only in “non-attainment areas” to all areas that have been shown to have air quality worse than the national average. The Air Quality Control Commission will be seeking additional input as the process continues but it appears that they already have the support of petroleum companies in the state. Several petroleum companies operating in Colorado released a joint statement in support the proposal, saying that it is a “The process and increased accountability established by the proposal will provide transparency and build public trust.”

Commissioner Doyle’s remarks to the National Lieutenant Governors Association Executive Committee
Federal Maritime Commission
I am going to comment on whether the Panama Canal Expansion will be a game changer. Next, I will discuss what the Administration has done and plans to do for nationwide ports, how Liquefied Natural Gas and Natural Gas Liquids exports may benefit, and other transportation and economic impacts. First, the expansion of the Panama Canal may be a game changer. Ports in the United States are preparing for increased cargo volumes from larger ships that will transit the Canal. If utilized to its fullest potential, the Canal would allow the United States the opportunity to compete in the global energy market with products manufactured and produced in America.

BLM: Natural gas drilling not linked to Pinedale area groundwater contamination
Wyoming Star-Tribune
Natural gas operations are not linked to groundwater contamination in the Pinedale area, according to a new Bureau of Land Management report. But that finding did not quell the concerns of some local environmentalists, who said the study failed to explain groundwater contamination in the region. The report, released Wednesday, said low levels of hydrocarbons detected in groundwater wells in what’s known as the Pinedale Anticline Production Area were largely attributable to natural processes. It found there was no widespread evidence linking those chemicals to spills, leaks or other byproducts of natural gas development. And it concluded no further mitigation efforts were needed to address water pollution in the area. The study was developed in response to concerns about water quality in a region that is home of the Jonah field, one of Wyoming’s largest natural gas developments.