Marcellus & Utica Shale Story Links: Thu, Jan 23, 2014

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

New York

Anti-fracking activists to protest Cuomo’s Los Angeles fundraiser
Albany Watch
It wouldn’t be a high-profile fundraiser for Gov. Andrew Cuomo without an appearance from anti-fracking protesters. Even if that fundraiser happens to be in Los Angeles. Cuomo will travel to California today to attend a big-money fundraiser for his re-election campaign, which will be hosted by a number of A-list Hollywood executives and held at the home of Fox Filmed Entertainment Chairman and CEO Jim Gianopulos. Tickets run from $5,000 to $25,000 per person. Food & Water Watch, a Washington D.C.-based group active in both New York and California, is organizing a group of anti-fracking protesters to hold signs along Sunset Boulevard before marching to Gianopulos’ home at the start of the fundraiser. “As Governor Cuomo seeks to raise his political profile—as well as his account balances—beyond New York state, it’s important that he realize how strong opposition to fracking is becoming across the nation,” said Seth Gladstone, communications manager for Food & Water Watch. “It’s important he see that if he bans fracking here, he’d be a hero not just to New Yorkers, but to Americans from coast to coast.”

New York State’s Current Quest For a Frack-Agnostic State Geologist
NY Shale Gas Now!
Embedded below is a screen shot of the official job announcement showing New York State’s Education Department is currently reviewing candidates to fill the now year-old vacancy of State Geologist, a very specialized official appointment initiated as far back as 1836, when Governor William L. Marcy ordered the state’s first geological survey. If you’re potentially qualified, but late to this job opening, I am sorry about that; applications closed Dec. 27, 2013 for the job, which pays $82K per year. But there does lurk a problem — the fracking problem. State Ed’s problem with professional geologists and fracking is that they go together all too well. Virtually all educated, experienced geologists are going to hold to the sober, professional view that the technological feat of producing oil and gas from tight shales has now been established as a do-able proposition.

No Joy In Mudville for Drilling and Fracking Opponents
Natural Gas Now/Ken Kamlet
The first setback to opponents of gas drilling came as the newly-elected Mayor of Binghamton, Rich David, directed lawyers for the City (special counsel David and Helen Slottje of the Ithaca-based Community Environmental Defense Council) to withdraw the City’s appeal of a 2012 Broome County Supreme Court decision invalidating a two-year moratorium on gas drilling and various support activities. The second setback to opponents came in a Delaware County Supreme Court decision (dated January 8, 2014 and entered on January 9th) invalidating a one-year gas drilling moratorium enacted by the Sidney Town Board on February 14, 2013. The Court denied a motion to dismiss by the Town’s special counsel (David and Helen Slottje) and granted the cross-motion for summary judgment by the petitioner/plaintiff (Inge Grafe-Kieklak), declaring Town of Sidney Local Law Number 1 of 2013 “invalid.”


Ohio has 692 completed Utica wells and 291 in production
Akron Beacon Journal
The latest report from the Ohio Department of Natural Resources shows Ohio has approved 1,048 Utica shale permits, as of Jan. 18. Of that total, 692 wells have been completed and 291 are in production. A total of 41 rigs are drilling in Ohio. The six latest permits cover four in Carroll County and two in Monroe County.

Halcón Resources: East Texas Eagle Ford Going Strong
Seeking Alpha/Richard Zeits
As Halcón Resources (HK) is striving to deliver a sizeable increase in production and EBITDA next year – which are a must to justify the stock’s valuation and repair credit metrics – the company will have to limit its resources almost exclusively to those areas where capital spending can yield sure and immediate returns in the form of production growth. As came clear from management’s discussion on the latest earnings call, the company has narrowed down its operating focus to essentially two core development areas: the Bakken and East Texas Eagle Ford (El Halcón). The less proven and infrastructure-constrained Utica appears to be a distant third on the operating priority list in the near term, with a modest amount of capital allocated to it in 2014 and focus limited mostly to Trumbull and Mahoning Counties.

Ohio Trial Courts Issue Additional Rulings on the Dormant Mineral Act
Two Ohio trial courts issued new decisions on Ohio’s Dormant Mineral Act (“DMA”) addressing an unsettled issue of law concerning whether the 1989 or 2006 version of the DMA should apply to current disputes over the ownership of severed mineral rights. Both trial court decisions held that the 2006 version of the DMA applies to current disputes, which indicates a further reversal of the trend favoring claims made by surface owners that severed mineral interests “automatically vest” under the 1989 DMA. This blog previously reported on Dahlgren v. Brown Farm Properties, which was one of the first trial court decisions to apply the 2006 DMA and provided a short background of the two versions of the law. The blog post is available here…

The Ohio Dormant Minerals Act: Part 4
Oil & Gas Law Report
In the previous three parts of this series (read part 1, part 2 and part 3), we reviewed the Ohio Marketable Title Act (MTA), its application to severed minerals, and the experience of neighboring states, all of which played a role in the development of the Ohio Dormant Minerals Act (DMA). To summarize:


Former Pa. DEP chief Krancer discusses court decision on gas drilling
E&E TV (Energywire)
Following last month’s Pennsylvania Supreme Court decision overturning sections of the state’s gas drilling law, how much authority do municipalities now have over drilling practices? During today’s OnPoint, Michael Krancer, former secretary of the Pennsylvania Department of Environmental Protection and now chairman of Blank Rome’s energy, petrochemical and natural resources practice, discusses the ruling and its implications for Marcellus Shale operations. He also weighs in on the impact of this year’s Pennsylvania gubernatorial race on the future of fracking.

Christian fellowship ministers to oil and gas workers
Pittsburgh Post-Gazette
As about two dozen people finished their buffet lunches in a basement dining room at Tambellini’s restaurant in Bridgeville recently, Ron Handley stood and recounted a life story far more dramatic than the modest series of notecards he was holding would suggest. Mr. Handley recently retired after decades of work in directional drilling for oil, gas, potash and steam. From the Canadian wilderness to the Arabian desert to Japan and Texas, he was a firsthand witness and participant in some of the dramatic breakthroughs in drilling, scooping, steaming and hydraulic fracturing. Such extraction technologies have stoked North America’s oil and gas resurgence — and drawn industry veterans like himself to the booming production fields of southwestern Pennsylvania. But Mr. Handley’s story was more about life direction than drill direction — a testimony of how the Alberta, Canada, native repeatedly drifted from and returned to his Christian faith, with plenty of wild living and brushes with death in between, before finally making a firm commitment to Jesus Christ.

Life of a well documented by Susquehanna County’s Janice Gavern
Cabot Oil & Gas Well Said
You may have seen today’s article in the Scranton Times Tribune – Susquehanna County resident documents gas well in 8,000 photos over 1 year. If not, we encourage you to read it. It tells the story of how Janice Gavern took photos of an active Cabot well pad for a year to document the progress on her neighbor’s land. Ms. Gavern ended up taking roughly 8,000 photos of the development on her neighbor’s property over the course of a year. She took about 650 of those pictures and create an e-book (available here on Amazon) called “Photojournal of a Pennsylvania Natural Gas Well.” The e-book is available for purchase for $9.99 regularly but today (January 21, 2014) it is FREE to download, which is really awesome.

Why Southwestern Energy’s position in the Marcellus Shale is key
Yahoo! Finance
Over the past several years, Southwestern Energy has also grown its total production and reserves in the Marcellus Shale, although the play makes up a much smaller proportion of overall company production than the Fayetteville Shale. The company currently has 337,000 net acres in the Northeast Pennsylvania area of the Marcellus Shale. As of September 30, 2013, the company was producing ~611 million cubic feet per day of natural gas from 151 wells (about 33% of total company production). This represents a roughly threefold increase over Southwestern’s Marcellus production a year ago.

West Virginia

Charleston To See Opening of First CNG Vehicle Fueling Station
IGS CNG Services, in conjunction with other partners and Governor Tomblin’s office, announced that the grand opening of Charleston, West Virginia’s first compressed natural gas fueling station for vehicles will be held on January 28, 2014. The fueling station is located at 10 Spring Street in Charleston.

Federal Circuit Court Rules In Favor of Oil and Gas Producer
The Sixth Circuit Court of Appeals ruled that unitizing a property can be sufficient to extend a lease beyond its primary term. In Henry v. Chesapeake Appalachia, the dispositive issue concerned whether “operations” were conducted on the landowner’s property prior to the lease’s expiration. The lease permitted Chesapeake to pool or unitize the landowner’s property with other land to create one or more drilling units. Chesapeake filed a Declaration and Notice of a Pooled Unit (“DPU”) which included the landowner’s property in a drilling unit and specified that production would be allocated to the lease. The Court held that the filing of the DPU was an act incidental to the endeavor to obtain production of oil and gas from the landowner’s property and constituted “operations” as defined by the lease. The Court ruled in Chesapeake’s favor finding that the lease had been extended beyond its primary term.


“Access” to Higher Income is Right Around the Corner
The Motley Fool
How would you like to pocket at least 4% annually over the next 20 years, regardless of where the stock market goes? In order for this company to let you access such a safe yield, it had to build and acquire 6,800 miles of pipelines and other midstream assets in high growth shale plays. Access Midstream Partners has done a tremendous job investing in each of the major shale plays in the United States. With assets in the Marcellus, Utica, Eagle Ford, and Niobrara that all have a fixed-fee cost structure, Access Midstream Partners can provide growth and stability through a wide range of operations. The Utica shale is an emerging play with promising well results coming from various E&P plays, Including the CONSOL Energy/ Hess joint venture. In order to get out in front of the future drilling bonanza prompted by +50% liquids production mix, Access Midstream Partners has teamed up with EV Energy Partners and M3 Midstream. To drive earnings higher, the trio will build four gas processing plants. Each plant will have the ability to process 200 MM cubic feet per day of natural gas, which is a much needed service. The group is also going to build out 135,000 barrels per day of fractionation capacity (for natural gas liquids), to be supplemented by an additional 870,000 barrels of NGL storage.

Energy Outlook: What’s Hot in 2014
Investors who want to know how the energy sector will be doing in the coming year are, in my opinion, asking the wrong question. There really is no such thing as “the energy sector,” because the performance of the different resources-from oil and gas, to uranium, to coal, to renewables-can vary dramatically. Case in point: while unconventional oil exploration and production have seen a huge upswing in recent years, thanks to the vast success of the Bakken and other oil-rich shale formations, at the same time natural gas has taken a nosedive, due to a supply glut that still hasn’t found its balancing point. To find out which investments will deliver the greatest profits for well-positioned investors in 2014, my team and I have identified three trends that are hot. and may become even hotter in the course of this year.

National Transportation Safety Board Identifies Pipeline Safety as Key Issue
The National Transportation Safety Board (NTSB) has included “enhancing pipeline safety” on its 2014 Most Wanted List, which identifies its top 10 priorities for the year. The NTSB warns that although “[p]ipelines remain one of the safest and most efficient means of transporting vital commodities . . . the consequences can be tragic when safe operational practices are not employed and standards are not implemented.” Hydrostatic pressure testing, remote controlled and automatic shutoff valves and improved communications between pipeline operators and emergency responders are among the suggested improvements to promote safe operation of pipelines. Recent pipeline incidents like the rupture of a natural gas transmission pipeline near Interstate 77 in Sissonville, West Virginia, on December 11, 2012, have contributed to the NTSB naming pipeline safety as one of its top priorities for 2014.

Drilling Productivity Report – Jan 2014 Edition
U.S. Energy Information Administration
The Drilling Productivity Report uses recent data on the total number of drilling rigs in operation along with estimates of drilling productivity and estimated changes in production from existing oil and natural gas wells to provide estimated changes in oil and natural gas production for six key fields. EIA’s approach does not distinguish between oil-directed rigs and gas-directed rigs because once a well is completed it may produce both oil and gas; more than half of the wells produce both. While shale resources and production are found in many U.S. regions, at this time EIA is focusing on the six most prolific areas, which are located in the Lower 48 states. These six regions accounted for nearly 90% of domestic oil production growth and virtually all domestic natural gas production growth during 2011-12.


Fracking opponents are being irrational, says David Cameron
UK Guardian
Shale gas has the potential to meet all UK gas needs for 30 years, David Cameron said as he accused some opponents of fracking of being irrational and “religious” in their opposition. The prime minister was appearing before the liaison committee of select committee chairs, where questions focused on the environment and women. He told the committee he favoured individual households being paid compensation for the inconvenience of a gas well in their locality. The government this week announced plans to allow local authorities to retain 100% of any business rates from shale gas developments, as part of a package to allay resistance to fracking. Local communities are also set to be offered £100,000 when a well is dug, along with 1% of revenues over its lifetime – potentially £7m-£10m.

Shale Gas Revolution Changing Everything, Everywhere
Natural Gas Now/Daniel Markind
Slowly but surely, it is dawning on countries around the world that hydraulic fracturing might not be the international bogeyman being portrayed. The biggest change may come from the European Union. According to the BBC, EU policies limiting greenhouse gases, together with Germany’s moves away from nuclear energy following the Fukushima disaster in Japan, have caused European energy prices to skyrocket. This is bad news for the European consumer, makes European industry less competitive, and makes Europe more dependent on Russia and the Middle East for its energy. In response, Germany’s Der Spiegel reports that the policy-making European Commission is seeking to forego environmental protection goals and pave the way for fracking. “At the request of Commission President José Manuel Barroso, EU member states are no longer to receive specific guidelines for the development of renewable energy. As of 2020 at the latest — when the current commitment to further increase the share of green energy expires — climate protection in the EU will apparently be pursued on a voluntary basis.”