Surprise Move: ODNR Releases 3Q13 Utica Shale Production Report

surpriseJust as MDN went into hiatus for a few days for the holidays, on New Year’s Eve the Ohio Dept. of Natural Resources (ODNR) issued a major announcement: they published their first-ever quarterly production report for the Utica Shale. As MDN previously reported, the Ohio legislature passed a law that requires quarterly reporting (see Ohio Moves One Step Closer to Quarterly O&G Production Reports). However, last word we had was that the reporting would not be required by drillers until “starting” January 2014 (see Ohio Moves to Quarterly Production Reports Starting Jan 2014). Obviously our (and everyone else’s) understanding was wrong. The ODNR has been quietly requiring drillers to start reporting quarterly in 2013, not 2014, and the first such report–for the third quarter of 2013–was released on New Year’s Eve.

We’re certainly not complaining! Just surprised. What does the report show? It shows that the OH Utica produced 33.6 billion cubic feet (Bcf) of natural gas in just 3Q13. For context, the OH Utica produced just 12.8 Bcf of natural gas for all of 2012. It means that 2013 will shape up to be an extraordinary production year in the Utica Shale, proving the naysayers wrong and validating the Utica Shale as one of the most important shale plays in the country. We provide the ODNR announcement below, which crowns two Gulfport wells as most productive (one for oil and one for gas) for 3Q13. We also include analysis of the numbers by our friends at the Akron Beacon Journal. Finally, below is a full copy of the report, in handy PDF format (7 pages long) for you to download or print for your own use.
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ODNR Chief Says Utica Shale is “Real Deal” & Feds Should Stay Out

James Zehringer, director of the Ohio Department of Natural Resources (ODNR) recently said that the Utica Shale “is the real deal.” By which he meant the Utica is here to stay and a serious shale play, getting a lot of attention (and development). It was only 15 months ago that there was plenty of angst about the Utica because it wasn’t as “oily” as some had hoped. In fact, at the time, Reuters pronounced the Utica a bust (see Reuters Says Utica Shale Boom is Really a Secret Bust). My oh my how wrong they were!

Just in case there’s any lingering doubt (for people like Reuters reporters), Zehringer set out to dispel the naysayers. In his recent remarks, Zehringer also said the feds should mind their own business and leave oil and gas regulation to the states, where it belongs…
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RBN Energy’s 2014 Predictions & the Marcellus Connection

RBN Energy, headed by energy industry luminary Rusty Braziel (formerly an executive with Bentek and veteran of several large oil and gas companies), recently proffered its Top Ten Energy Prognostications for 2014. RBN is based in Houston, but a number of this year’s predictions from RBN are either directly or indirectly related to the Marcellus and Utica Shale, which tells you the stunning impact our northeast energy market is having on the world energy market.

Below is the abbreviated list of RBN’s “top 10” predictions for 2014–the Chinese Year of the Horse. Bear in mind what Rusty says, even as a prognostication, most (including MDN) believe as the gospel truth…
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PA Marcellus Health Study by Geisinger Turns into Data Warehouse

In August 2012 two major health system networks announced, to much fanfare, that they would partner to launch a multi-year study of the health impacts on residents living near Marcellus Shale drilling sites (see Health Care Systems Partner to Study Marcellus Impacts). To which we said, great! It’s about time some real science is done instead of pseudo-scientific fantasies spun by people like professors Howarth and Ingraffea at Cornell University. But we quickly learned that Geisinger Health Systems and the other participants in this new study were not willing to fund it themselves–they have their hands out and want someone else to foot the bill. So we’ve had some enjoyment over the past year and a half, poking fun at the non-study study (see PA Marcellus Health Study Still No Pulse – Needs Extra $24M).

Time for an update from the AP on the non-study study. The short version: The comprehensive “study” of health impacts has now morphed into a “data warehouse” for researchers as Geisinger and the other partners continue to putter. Oh, and they still have their hands out…
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PA’s Impact Fee in Jeopardy from Supreme Court’s Act 13 Decision

The decision of the PA Supreme Court to invalidate large portions of the 2012 Act 13 Marcellus drilling law, particularly those portions dealing with zoning, have left much of the law–perhaps the entire law–in doubt. The court’s decision was like an explosion, and we’re just now seeing the mushroom cloud but haven’t felt the fallout just yet. Did the Supremes just destroy shale drilling in PA? Is their decision really no big deal? It all depends on whom you ask.

One thing that appears to be in jeopardy is the impact fee/tax that’s already raised over $400 million in the last two years. A lot of that fee gets distributed to the places impacted by drilling, hence its name. It’s a sensible fee notwithstanding our objection that 40% of it goes to politicians to spend in non-drilling parts of the state. However, high court’s decision throws the future of the impact fee into doubt. Last week Gov. Tom Corbett’s administration asked the Supreme Court to reconsider its decision and further clarify some issues in hopes the impact fee (among other things) can be retained…
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PA Drill Equipment Company Predicts Diesel Rigs Gone in 5 Years

For some time now MDN has written about Marcellus drillers who now use dual-fuel drilling rigs–rigs whose big engines are powered by a blend of diesel fuel and natural gas, with some drillers using 100% natural gas-powered engines (see this list of MDN stories). Three weeks ago, CONSOL Energy announced a first–they will use electric motors for drilling near the Pittsburgh Airport (see CONSOL to Use Electric Motors for Drilling at Pittsburgh Airport).

One of the primary suppliers of drilling equipment for Marcellus and Utica drillers, Keystone Drill Services in Somerset County, PA, recently made this startling prediction: Within five years diesel-powered engines will be gone from drill sites. Keystone should know since they’re creating the future now at their Somerset facility…
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Top 10 Marcellus Anti-Drilling Stories of 2013, Courtesy NPR

MDN and RBN Energy weren’t the only blog sites to do a top 10. Our post was, in our humble opinion, a serious analysis and “think piece” to give those concerned with Marcellus and Utica Shale drilling perspective on the big issues of last year (see MDN’s Top 10 Most Important Stories of 2013 – Our View). RBN Energy’s top 10 looked at the entire country (see today’s story of RBN’s top 10 2014 predictions). MDN and RBN were not alone.

It seems everyone and their sister was doing top 10 pieces last week, including the reliably anti-drilling StateImpact Pennsylvania–which is a couple of NPR reporters who hate fossil fuels writing about energy and about those evil, nasty Republicans that support shale drilling in PA. We found their top 10 list rather amusing and thought you might too…
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Final Chapter in GPX Saga of Using Illegals in PA Marcellus

We thought the final chapter had been written about GPX, a Texas-based seismic surveying company doing work in Pennsylvania for the oil and gas industry that was caught using illegal aliens to work on their surveying crews. Last March we told you the company admitted to the scheme and agreed to pay out some big money (see GPX Pleads Guilty in Using Illegal Aliens for PA Marcellus Work).

It’s taken 10 long months, but on Thursday in a federal courtroom in Harrisburg, PA the final chapter really will be written:
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Chesapeake Energy Jan 2014 IR Update Focuses on Utica/Marcellus

Corporate raider Carl Icahn will be happy. Chesapeake Energy, the company where Icahn pulls all the strings, released an investor’s report (IR) on Jan. 2 that shows capital expenses year over year have dropped an astonishing 48%, thanks to Doug Lawler (Icahn’s toady) firing 1,200 Chesapeake employees in 2013 (see The Great Chesapeake Massacre: Lawler Fires 800 People in One Day). The company reports net income for 2013 is forecast to be up 150%, and profits will be up 33%. However, overall production for the company is only up a minuscule 3%, largely because Chesapeake sold off so many assets in order to “right” the financial ship–or so they say.

Below is a good analysis of the Jan. 2 IR by a Seeking Alpha contributor, along with a copy of the Jan. 2 IR (embedded below). Interesting to MDN: Although the Chesapeake report contains a map showing 10 shale plays where Chesapeake remains active (slide #5), management chose to highlight just three of those 10 plays by providing detailed information in the Jan 2 report. Two of the three are the Utica and Marcellus (slides #14 & #15)…
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AP Drive-By Article Says Drilling Pollutes Water Wells

A classic example of mainstream media’s drive-by murder of the truth has happened yet again–at the hands of the Associated Press (hitman: Kevin Begos). The introduction to the most recent hit piece (read it below) is that the AP has done extensive “research” (which is, of course, laughable) into all of these numerous cases of potential water contamination by oil and gas drilling and by golly some of those cases are true–oil and gas drilling polluted some people’s well water. Never mind what kind of pollution, the water was polluted and that’s all you need to know.

Near the end of the article the mountain of evidence is offered–and what do we find? A statistically infinitesimally small number of complaints about well water contamination, very few of which were proven to be true. So the opening paragraphs are a clever deception, but most people don’t bother to read down to the point where the truth is revealed–and some may not even grasp the truth when they do read it. This one story, written by a reporter with an anti-drilling agenda, is reprinted ad nauseum in hundreds of local newspapers across the country that never bother to question its veracity or attempt to verify the facts. Welcome to Propaganda 101…
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OH County Engineer Speaks Truth to (Utica Taxation) Power

It takes a “lowly” county engineer in an Ohio Utica Shale county–Columbiana–to have the guts to stand up and say if Republican politicians are going to cave and raise taxes on Utica Shale drilling, they ought to at least allocate some of the new-found money to the places that are actually impacted by drilling, instead of giving all the money away to people who had nothing to do with it! So we pin a medal on Columbiana County Engineer Bert Dawson for having the guts to stand up and say (in essence) “the Kasich emperor has no clothes” when it comes to this insane tax increase he keeps pushing…
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Third Time the Charm? Youngstown Anti-Drillers Try Again for Ban

The crazies are back in Youngstown, OH–or more properly, they never left. Anti-drillers couldn’t get the good citizens of Youngstown to vote in favor of a frack ban twice in a row, but that doesn’t stop zealots like members of FrackFree Mahoning Valley from trying again. They’re back at it, circulating a petition that–for a third time–asks residents to put the same tired old “ban fracking” measure on the ballot for a vote. After twice being voted down in large numbers. The nutters call it a “Bill of Rights” hoping to fool people. Call the measure what you want–its effect would be to shut down Youngstown from the drilling industry and deny residents the multitude of benefits they now get from Utica drilling (jobs and business tax revenue).

But hey, it’s (still) America where fruitcakes have the freedom to do what they want–including pestering their neighbors to sign a petition circulated twice before. Our advice: If one of the FrackFree Mahoning fruitcakes comes knocking on your door–hand them the fruitcake you got for Christmas and still haven’t eaten, and send them packing…
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