Marcellus & Utica Shale Story Links: Thu, Dec 19, 2013

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

New York

Science Doesn’t Back the Methane Blame Game
Energy in Depth
The accusations that shale development has been responsible for flaming faucets have proliferated since the Marcellus Shale became a household name just a few years ago. At the same time, many stories have also been shared of this phenomenon occurring for years in areas rich with methane gas – and long before any natural gas development. We’ve covered a few of these in the past, like Robert Sandell of Guilford, N.Y., who appeared in Truthland and told everyone, “Don’t smoke in the shower.” Or Allen Coy of Franklin Township, Pa., who described a fire call about a blown up toilet years before the first natural gas rigs moved into the area. SCountylightwaterIn Susquehanna County, Pa., where activists regularly flock to places like Dimock and Franklin Township, residents even wear shirts with the phrase, “Lighting our water on fire since 1795” – the year it was first recorded that people could light the water at nearby Salt Springs State Park. In recent years, scientific research has also started to back these stories of family parlor tricks conducted at the kitchen sink.

Cuomo Acknowledges Natural Gas Benefits While Missing the Bigger Picture
Energy in Depth
New York Governor Andrew Cuomo has found yet another way to reap some of the benefits of natural gas development across the border in Pennsylvania, all while continuing to delay making a decision on his own state’s moratorium on hydraulic fracturing. The governor announced two days ago there has been a $150 million agreement reached with the city of Dunkirk to repower and expand the Dunkirk Power Plant by converting it to a 435 megawatt natural gas facility. Why would they do this? According to Cuomo himself, it “will result in a larger, cleaner power plant at Dunkirk that will meet reliability needs, reduce costs for consumers, create jobs and stabilize the local property tax base.” The lack of awareness is stunning. Does Governor Cuomo realize how the natural gas that will fuel this expansion was produced? Two words: hydraulic fracturing.

Try-It unveils fleet of trucks powered by compressed natural gas
Buffalo News
With new CNG trucks and a new filling station, Try-It Distributing Co., will make the switch from diesel fuel to compressed natural gas in January. The company unveiled 43 CNG-powered trucks and a new public filling station Wednesday on its Lancaster site during a ribbon-cutting ceremony. With the CNG fleet, the company looks to reduce it greenhouse emissions and fueling costs. Company officials said the move will also relieve dependence on foreign oil. “There are many benefits,” said Jeff Gicewicz, vice president of corporate holdings for the company. “It’s a very economical way to deliver our product.” Furthermore, he said the environmental benefits are significant. “It means a reduction of 390 tons of carbon emissions annually, that’s the equivalent of taking 80 cars off the road,” he said. Try-It’s switch is further confirmation the CNG movement is afoot in Western New York.

Cuomo sued over fracking report
New York Post
Norse Energy has followed through on its threat — filing suit against Gov. Cuomo and two state agencies to force them to finalize their fracking report. The suit, filed by Thomas West of the West Law Firm in Albany County Supreme Court, seeks a public review of all conversations from and to the governor regarding the fracking study. Norse alleges the state legislature in July 2008 voted to allow fracking, and then-Gov. David Paterson ordered a Department of Environmental Conservation study that was scheduled to be completed in the summer of 2009. “This deadline has long passed and there is no end in sight,” the suit states.


Ohio has 636 Utica wells drilled, 250 wells in production
Akron Beacon Journal
Ohio has approved 1,024 Utica shale permits, as of Dec. 14. Of that total, 636 wells have been drilled and 250 are in production, says the Ohio Department of Natural resources’ Division of Oil & Gas Resources Management. A total of 39 drilling works are working in Ohio. Nine new permits were approved: four in Belmont County, two in Carroll County and three in Monroe County.

Pennsylvania’s the Babe Ruth of natural gas, and Ohio’s still a rookie
Columbus Business First
Natural gas production was up in Ohio last year, but it still has far to go to be in the same league as big-boy energy states such as Texas, Louisiana and Pennsylvania. That’s clear when you look at the production numbers in the Natural Gas Annual for 2012 released last week by the U.S. Energy Information Administration. The report shows Ohio marketed natural gas production in Ohio rose to 84.5 billion cubic feet in 2012, an increase of 7 percent compared with the prior year. Of that total, 12.8 billion cubic feet came from shale gas wells whose production was five times higher than in 2011 as drilling rose in the Utica shale play in eastern Ohio.

Sales Tax Revenue Continues to Climb in Ohio’s Shale Country
Energy in Depth
Since Utica Shale development took off in 2011, companies have been investing a tremendous amount of capital in eastern Ohio. Billions of dollars are being spent to create much-needed infrastructure, developing well sites, and constructing regional headquarters for service companies. In addition, landowners have benefited from lease payments, businesses have seen an uptick in sales activity, and counties are having their roads improved on behalf of the companies operating in their communities. This kind of investment translates to another often-unappreciated benefit: a significant increase in sales tax revenues. Going through the Ohio Department of Taxation’s sales tax distribution website, the true impact of that increased revenue is revealed: Over the past two years, counties with Utica Shale activity have all experienced remarkable increases in sales tax apportionment.

ODNR Triples Regulatory Staff to Oversee Gas and Oil Industry
Alliance Review
The Ohio Department of Natural Resources wants the public to know while they want to see the gas and oil industry succeed in Ohio, they don’t want it to be at the expense of the environment or the citizens of the state. “That is our mission,” said James Zehringer, director of ODNR. Zehringer, in conjunction with Rick Simmer, chief of the ODNR’s Division of Oil and Gas Resources, presented information on gas and oil exploration and production in Ohio during the talk, held Monday morning at Malone University. The event was organized by the Canton Regional Chamber of Commerce. Zehringer pointed out there has been a shift to southern Ohio recently, in Noble and Belmont counties in particular, in terms of oil and gas exploration and production, and he said there has been some pretty staggering results. Also, a new well in Monroe County is breaking records for oil and gas production, grossing $1 million per week. “That is just one well, and most wells don’t gross anywhere near that amount,” said Zehringer.

McClendon may face same conflicts in seeking new investors
Akron Beacon Journal
Wildcatter Aubrey McClendon, ousted from Chesapeake Energy Corp. (CHK) amid investigations into possible conflicts of interest, is seeking investors for a new oil and gas venture that may present some of the same kind of potential conflicts. American Energy Capital Partners LP is pursuing as much as $2 billion in a blind pool investment, a speculative vehicle with no assets or profits that gives investors a chance to help fund potential oil and gas developments, according to a Dec. 13 prospectus. Blind pools attract investors with an appetite for risk who are eager to put their money behind a well-known personality such as McClendon, who built Chesapeake into what was once the most prolific natural gas driller in the nation.

Marathon Petroleum selects new vice president
Akron Beacon Journal
Marathon Petroleum Corporation today announced the appointment of Pamela K. M. Beall as senior vice president, Corporate Planning, Government and Public Affairs, effective Jan. 1, 2014. “Pam’s extensive background in finance, business development and global procurement provides a tremendous foundation for these additional responsibilities in the company,” said Gary R. Heminger, MPC’s president and CEO. “Since MPC became an independent company in 2011, she has provided strong leadership in establishing a positive relationship with the investor and analyst community.”


Why Is Pennsylvania Still in the DRBC? Time to Starve the Beast.
Natural Gas Now
Seriously. Why is Pennsylvania still in the Delaware River Basin Commission (DRBC), a joint unit of government that mocks the Commonwealth’s interests while taking its money? The residents of Wayne County have been waiting five long years for this incompetent agency to deliver gas drilling regulations already in place in the Susquehanna River basin for the entire time. Worse, two of those years have expired with draft regulations sitting on the shelf as the agency has refused to vote. Meanwhile, the Commonwealth keeps feeding the beast, cooperates with its other endeavors, participates in the activities used by the others to justify delay and lets the other members slap it around without consequence. It’s time for Pennsylvania to pull all funding and effectively disband the agency.

PA Environmental Council Interview With DCNR Secretary Ellen Ferretti
FORUM: How is DCNR assessing the impacts of natural gas drilling in Pennsylvania’s state forests? FERRETTI: Pennsylvania’s rich conservation legacy emerged from lessons learned during past eras of natural resource development. Conservation action oriented toward protecting wild places and producing a sustainable supply of resources for people is a complementary approach undertaken by DCNR each day.Since the arrival of Marcellus Shale development, DCNR’s focus has been on the development of guidelines and procedures that are consistent with its ecosystem management approach. As the infrastructure is built, monitoring is necessary to document both positive and negative changes.Our monitoring efforts focus on plants, wildlife, water resources, social and recreational values. The monitoring team in our Bureau of Forestry is looking to detect changes, track activities, reporting on the findings and modify practices where applicable. We are currently finalizing our first monitoring report and anticipate releasing it in the first quarter of 2014.

State Legislatures Finally Recognizing New Drilling Technology
State Legislatures and Courts, especially in the Appalachian Basin, have not kept pace with the technology. The current well permitting process was designed to regulate vertical wells, and compliance with regulations was monitored by a limited number of oil and gas inspectors who occasionally visited well sites. Now, the Marcellus Shale and Utica Shale boom has prompted action by both Pennsylvania and West Virginia. The Pennsylvania Legislature recently passed a reformulated version of the Oil and Gas Lease Act of July 20, 1979. Under this Act, old leases are automatically held to have pooling or unitization clauses; that allows operators to develop contiguous leases without re-negotiating with landowners. This law prevents the “holdout” phenomenon, where one or more landowners either refuse to allow their leases to be put into a larger unit or demand outrageous sums of money to do so. In Pennsylvania, operators are now free to develop shale plays continuously for miles, as long as they have the leasehold rights, unless the lease expressly prohibits pooling; then permission must be obtained.

Susquehanna County proposes tax decrease
Susquehanna Independent Weekender
Property owners in Susquehanna County can expect to see a two mill savings in their 2014 tax bills. The final county budget is expected to be adopted at the Thursday, Dec. 26 commissioners’ meeting. Act 13 funds received by the county are being used to finance the tax credit. While the overall tax bills will be lowered, the reduction is technically not a reduction in the overall millage. In Susquehanna County, one tax mill brings in about $1.6 million to the county coffers.

West Virginia

Mark Sadd: Who owns the land in W.Va.?
Charleston Daily Mail
EVERY 17 years or so, like the arrival of buzzing cicadas, some group pops up to announce a comprehensive update of Who Owns West Virginia. This is the state and county-by-county compilation of the top landowners in West Virginia. The hoary Who Owns West Virginia enterprise, nearly 40 years old, should be trademarked, with residuals going to its originator, a now-retired Huntington newspaper reporter. (Just who owns the Who Owns West Virginia franchise?) To compile these rankings takes a lot of poring through county assessor records, for sure. The vast expenditure of time is about all that distinguishes the resulting lists in importance from the National League standings or the adjusted cost of buying the gifts itemized in the Twelve Days of Christmas. (Four colly birds will run you about $45 plus tax.)


One of the Most Notable Stories of the Year: Energy Renaissance in the U.S.A.
As we come to the end of 2013, it’s a good time to reflect on some of the biggest resources stories of the year. One that immediately comes to mind is the U.S. energy resurgence and its tremendous effect on oil and gas. Only a few years ago, we were contemplating the supply constraints facing the petroleum industry, as many major oil fields around the world were declining in production. Now, with the disruptive technology in shale oil and gas, we may be looking forward to decades of drilling. Two charts clearly illustrate the incredible growth in oil and gas. While there are many shale areas around the U.S., there are a few notable hot beds of activity.

Weak Gas Prices Force Nucor, Encana to Temporarily Suspend Drilling
NGI’s Shale Daily
Steel manufacturer Nucor Corp. and its drilling partner, Encana Corp., have agreed to temporarily suspend drilling new natural gas wells, citing weak gas prices. Charlotte, NC-based Nucor also said it expects lower earnings in 4Q2013 compared to the preceding quarter and the previous fourth quarter. Earnings were affected by several factors, including the collapse of a dome used to store iron ore pellets in September. “This joint decision is being made due to the current weak natural gas pricing environment,” Nucor said. “This pause demonstrates the flexibility of our partnership with Encana to react to market conditions to the mutual benefit of both parties while still allowing us to better manage our exposure to natural gas pricing volatility at our operating divisions that consume natural gas.”

NiSource executive VP and group CEO is retiring
Akron Beacon Journal
NiSource Inc. today announced that Jimmy D. Staton, executive vice president and group CEO for the company’s Columbia Pipeline Group (CPG) business unit, has elected to retire from the company, effective March 31, 2014. Staton’s retirement comes following six intense years of effort that spanned three NiSource business units and involved initiatives and operations across the company’s 16-state footprint. During his time with NiSource, Staton led strategic business reviews that addressed legacy issues, enhanced customer focus, improved stakeholder relationships and helped establish robust, sustainable platforms for long-term growth. With the company’s natural gas pipeline, storage and midstream strategies well established, and skilled, execution-focused teams in place, Staton said this became a logical point to consider a change.

Kinder Morgan Energy Partners: Planning For Long-Term Growth
Seeking Alpha
Kinder Morgan is expanding its capacity from the Marcellus shale to Niagra, which will then service eastern Canada (press release here). This project is relatively small at $29 million, though it will be online November 2015. I view this project as a stepping-stone for KMP as it looks to build a more comprehensive pipeline network out of Marcellus to Canada and the Gulf Coast. Kinder Morgan Energy Partners has been focused on the long term since its inception, and by doing so, it has generated superb returns for long term investors. The company continues to invest in long term projects and is appropriately refocusing in high growth areas of U.S. production like the Utica and Marcellus shale. These projects may not boost next quarter’s distribution. Instead, they will boost distributions in 2016, 2017, 2018, and beyond.

A Glitter-Covered Banner Got These Protesters Arrested for Staging a Bioterror Hoax
Mother Jones
It’s not uncommon for environmental protesters to face arrest, but here’s an apparent first: On Friday, Oklahoma City police charged a pair of environmental activists with staging a “terrorism hoax” after they unfurled a pair of banners covered in glitter—a substance local cops considered evidence of a faux biochemical assault. Stefan Warner and Moriah Stephenson, members of the environmental group Great Plains Tar Sands Resistance, were part of a group of about a dozen activists demonstrating at Devon Tower, the headquarters of fossil fuel giant Devon Energy. They activists were protesting the company’s use of fracking, its role in mining of Canada’s tar sands, and its ties to TransCanada, the energy company planning to construct the Keystone XL pipeline. As other activists blocked the building’s revolving door, Warner and Stephenson hung two banners—one a cranberry-colored sheet emblazoned with The Hunger Games “mockingjay” symbol and the words “The odds are never in our favor” in gold letters—from the second floor of the Devon Tower’s atrium.


Canaport weighs LNG imports
The Quoddy Tides
The only liquefied natural gas (LNG) import terminal that has been built in the Bay of Fundy is continuing to explore how the facility can remain viable, following the rapid growth in the amount of natural gas being extracted from shale rock in the northeastern U.S. The Canaport LNG import terminal in Saint John recently received approval from the provincial Department of Environment and Local Government to reload LNG back onto ships, along with a short-term order from the National Energy Board to export LNG. Canaport has not yet set a date for when it might begin exporting LNG, says Canaport LNG media contact Kate Shannon. She explains, “Our terminal has the necessary equipment to load LNG onto LNG tankers. The process will remain the same, but in reverse. We will use existing equipment, and all existing safety processes will remain in place.”

Driving off Russian aggression with U.S. natural gas
Washington Times
The power struggle between Russia and its Eastern European neighbors is playing out again on the heels of the European Union’s Eastern Partnership summit. The United States can change the political dynamic between Russia and its Central and Eastern European neighbors. The possibility of U.S. liquefied natural gas (LNG) coming onto the world market could markedly change the balance of power in European energy markets and have significant strategic consequences. Currently, Russia holds a tight grasp on Eastern European energy supplies, and it hasn’t been shy about using that supply as a way of wielding additional leverage in its relations with its neighbors from the former Soviet Union and Warsaw Pact. An example of this is the deal struck between Russia and Ukraine over $15 billion in loans and natural-gas subsidies this week, which is a tactical victory for Russia just as thousands of Ukrainian protesters are asking their government to move closer to the European Union.

Daniel Yergin: Behind Mexico’s Oil Revolution
Wall Street Journal
The “undoable” in Mexico has now been done. With passage of constitutional amendments by its Congress last week, Mexico has overturned the 1938 nationalization of its oil industry and opened its energy sector to outside investment. Notably, the political party that led the reforms—the Revolutionary Party (PRI)—is the one that nationalized the industry 75 years ago. The reforms will rejuvenate Mexico’s energy sector, stimulate economic growth and job creation, bolster the country’s new position as a global manufacturing platform, and in time bring substantial new resources to the world oil market. While the need for opening Mexico’s energy resources to private development has been evident for many years, the politics seemed impossible. But pressing economic reality—and a sense of new opportunity—finally trumped history and vested interests.