Marcellus & Utica Shale Story Links: Thu, Feb 13, 2014

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

New York

Quietly Re-Routed: Kinder Morgan’s Tennessee Gas Pipeline Northeast Expansion
NY Shale Gas Now!
Interesting situation here: Between late 2012 and early 2014, the proposed routing of a major new natural gas pipeline requiring ground in New York State can be shown to have been quietly and fairly radically altered. But nobody noticed…

Moratorium or not, NY begins to feel fracking’s impact Outcome rests with future of consumption, production
Shale Gas Review
While New York’s governor Andrew Cuomo has officially tabled a decision over the politically explosive issue of fracking until sometime after elections, his state’s energy dilemma continues to simmer. For worse or better, the Empire State will continue to feel impacts of the fracking boom for the next decade or more. The question is how big those impacts will be. The answer, to a large degree, rests with the governor, who can direct policy encouraging or discouraging both production and consumption of natural gas, and/or alternatives. Even with no decision to allow shale gas wells to be permitted within the state, fracked natural gas and oil are flowing into or passing through New York at an accelerated rate as the on-shore drilling boom continues to ramp up nationwide.

Guest Viewpoint: Cuomo obstructs progress on energy
Binghamton Press & Sun-Bulletin
New Yorkers pay the second-highest rate for electricity and the second highest price for gasoline in the nation, despite the presence of a diverse wealth of untapped, low-cost local energy. Gov. Andrew Cuomo has spent in excess of $100 million of taxpayer money on ads claiming that New York is “open for business,” while at the same time placing a stranglehold on clean energy production and manufacturing in upstate counties. The future of New York’s energy production lies buried beneath 18,750 square miles of the Marcellus Shale, which contains approximately 141 trillion cubic feet of natural gas. But Cuomo is intimidated by environmental Luddites and hiding behind his own state Health Commissioner Dr. Nirav Shah, a well-trained administration lapdog who has stated that scientific studies should be conducted in a “sacred place” that doesn’t include the public sphere.

Owego Incident Provides Some Schooling on Methane Migration
Natural Gas Now/Tom Shepstone
Imagine, if you will, you received this mailer from a local environmental group, say someone such as the Catskill Mountainkeeper: Why is New York State still allowing the development of unsafe geothermal energy systems? There are definitive signs geothermal energy development is an extremely risky enterprise prone to cause explosions and ground water contamination. An incident that took place yesterday in Owego, Tioga County, New York destroyed property and endangered the welfare of elementary school children causing students to have to be dismissed early because of the danger involved. Isn’t it time we called a halt to this dangerous and destructive process? You can help by donating to our Stop All Geothermal (SAG) Fund.” The letter is fictional but the methane migration incident on which it is based actually took place.

No Science, Just Fracking Politics for New York
Natural Gas Now/Daniel B. Markind, Esq.
Anyone still believing that New York State truly was undertaking a methodical process to determine whether it would permit hydraulic fracturing in unconventional wells was disabused of that position last week. This was following appearances by Department of Health Commissioner Nirav Shah and Department of Environmental Conservation Commissioner Joseph Martens during budgetary hearings before joint legislative fiscal committees of the New York State Assembly and Senate. Commissioner Martens, citing the continuing delay in the Health Department study, stated that he had no plans to issue any permits during the coming fiscal year, which runs through March 31, 2015. Martens was followed by Dr. Shah, who was given the task of studying the health effects after the DEC in effect has decided to move forward with hydraulic fracturing permits, reiterated that there would be no timetable in which his report would be released. Brushing aside concerns that the Health Department “study” has not been transparent, Dr. Shah responded that science “needs to be done in a sacred place” to protect its objectivity. He would not provide any details on how many studies his Department had reviewed or initiated, how many people were working on the studies or when they might be completed.


Location set for shale charter school
Warren Tribune Chronicle
A charter school geared toward teaching students skills for the oil and gas industry is one step closer to fruition after Southern Local’s Board of Education approved a location for the school Monday night. The board motioned to enter into an “indemnification and release agreement” with the Jefferson County Educational Service Center (ESC) and the governing authority of the Utica Shale Academy of Ohio that will locate the school on the Southern Local campus. The ESC and the governing authority of the Utica Shale Academy of Ohio are essentially one in the same, as the ESC is both the “fiscal representative” and “sponsor” of the charter school, explained Superintendent Wilson. Specifically, the agreement says that the charter school will use room F112 of the Southern Local facility. Wilson said the room is not being utilized by the district. He says the shale academy will only be using one room for now, but he hopes to see it grow in the future. “We’re all about expansion,” said Wilson. As for the number of students looking to attend the school, Wilson says that will not be known until the website for the academy is up and running. At that time the parents of prospective students can express their interest using the site’s online forum.

Chesapeake’s Big Opportunity in the Utica Shale
The Motley Fool
After discovering the play back in 2010, Chesapeake was one of the first companies to recognize its potential. Today, it is the most active driller and largest leasehold owner in the Utica, with approximately 1 million net acres under its belt. According to recent data from Ohio’s Department of Natural Resources, the comapny produced 372,212 barrels of oil, and 10.1 million mcf of natural gas from the play last year, and lay claim to five of the top 10 producing Utica oil wells in the third quarter. Not surprisingly, Chesapeake’s third-quarter net Utica production surged 91% year over year to average approximately 164 million cubic feet of natural gas equivalent per day. While that’s a truly impressive rate of growth by any measure, it could have been even higher. One of the main impediments to the company’s production growth in the Utica has been infrastructure constraints. For instance, the company reported that it still had a total of 208 wells that were in various stages of completion as of the end of the third quarter, with many awaiting a pipeline connection.

Major round of re-leasing unlikely in Ohio
Kent State Public Radio WKSU
Oil and natural gas drilling leases often terminate or are renegotiated if there’s no progress toward creating producing wells on the property during the lease term—typically three or four years. For economic and other reasons millions of acres in Ohio’s Utica Shale play remain undeveloped — with leases coming due. WKSU’s Tim Rudell reports on whether that means another big payday for Ohio landowners, or something else. Billions of dollars worth of oil and gas leases have been signed in Ohio since 2009. And, expiration dates are rolling up on many early ones — where there’s been no drilling. Re-leasing is an option for energy companies, but that could be expensive. And they may not need to. A lot of locations have proven non-viable for drilling so they don’t want those anyway. Then there’s a move some companies are making of filing papers at the last minute saying a property is being folded into a development unit where drilling is taking place—that in, legal terms, will “hold the lease by production.” And, in our part of Ohio, attorney Alan Wenger says there’s another wrinkle. “A large portion in the northern counties were already leased for conventional wells. And the horizontal drilling companies took the assignment of deep rights from those older leases, already ‘held by production’ by the conventional wells.So they go on and on and on, as long as the conventional well is here.” So a wave of new lease payments across the state is unlikely. But new lease filings are reportedly brisk in the counties just south of our area.


PennDOT: Shell wants to move highway for Pa. plant
AP/Harrisburg WHTM Channel 27
The state Department of Transportation says Shell Chemical LP wants to relocate a state highway as part of its proposed plans to build a multibillion-dollar petrochemical plant on the site of a former zinc plant in western Pennsylvania. PennDOT spokesman Dan Cessna says Shell would pay for the changes, which include moving a section of Route 18 in Beaver County about 950 feet farther from the Ohio River, and upgrading an interchange with Interstate 376. Route 18 would be widened to six lanes to accommodate truck traffic during the plant’s construction, then changed back to four lanes afterward. Shell spokeswoman Kimberly Windon says Shell notified PennDOT in July of its proposal to change the highway. Shell has not formally committed to building the plant, but has extended an option on the Potter Township site and begun demolition there.

Lengthy investigation ahead in Marcellus Shale well explosion
Washington (PA) Observer-Reporter
State regulators expect it will take months to determine what caused the “surface explosion” at a Marcellus Shale well site in Greene County that injured one worker and left another one missing Tuesday morning. State Department of Environmental Protection spokesman John Poister said the agency is continuing to monitor the situation with multiple employees near the scene, but could not begin even a preliminary investigation until the well was brought under control. “Right now we’re just observing,” Poister said as the well fire continued to rage Tuesday afternoon. “The real investigation will occur after the fire is extinguished. We can’t make any judgments until we have a chance to investigate.” Wild Well Control, a specialized crew from Houston, Texas, trained in fighting well fires, arrived in Pittsburgh about 1 p.m. Tuesday after being contracted by Chevron to handle the situation. However, the process to control the well could take days and it was not known how soon investigators could enter the area. “An (explosion) of this fiery size is extremely uncommon,” Poister said.

Bradford County officials plan rally about gas royalties
Binghamton Press & Sun-Bulletin
Bradford County’s commissioners are inviting all county landowners to the steps of the county courthouse in Towanda on Friday for a rally to support the rights of property owners with natural gas drilling agreements. Specifically, the rally is being organized to show support for House bill 1684, legislation that seeks to protect the interest of landowners with royalty agreements, and seeks to clarify state law regarding the minimum royalty payment for landowners who are receiving less than the guaranteed minimum of 12.5 percent. In the past few months, some natural gas companies have attempted to reduce royalties below the statutory minimum by transferring post-product costs to property owners, according to the county commissioners. “These deductions are unfair to the landowners and are costing our county and our state millions of dollars that are not only leaving our county and our state but are going to foreign countries,” the commissioners said in a letter to residents. “This practice will be experienced across the state as the Marcellus shale continues to be developed.” Friday’s rally is scheduled for 11 a.m.


EPA Issues Advisory Concerning Design of Newly Constructed Natural Gas Processing Plants
The U.S. Environmental Protection Agency (EPA) recently issued an Interim Chemical Accident Prevention Advisory concerning the design of liquefied petroleum gas (LPG) installations at natural gas processing plants. EPA has found that some existing plants were constructed in accordance with National Fire Protection Association 58, Liquefied Petroleum Gas Code (NFPA 58). EPA notes in the advisory announcement that NFPA 58 does not apply to natural gas processing plants and that more specific industry standards would apply in determining compliance with the requirements of the risk management provisions of Section 112(r) of the Clean Air Act, and the Chemical Accident Prevention Provisions of 40 CFR Part 68. EPA has suggested that American Petroleum Institute 2510, Design and Construction of Liquefied Petroleum Gas (LPG) Installations (API 2510) and its companion document API 2510A, Fire Protection Considerations for the Design and Operation of LPG Storage Facilities (API 2510A), are more widely recognized standards for the design of LPG installations at natural gas power plants. EPA is accepting comments on this interim advisory until July 31, 2014.

The Fossil Fuels Phobia of Certain Newspapers
Natural Gas Now/Steve Fountain
The fossil fuels phobia of some newspapers is more than puzzling, given the heavy use of fossil fuels throughout the life cycle of a newspaper. I never walked the hallowed halls of the New York Times or Washington Post during my 20 years in the journalism field. As an editor with a small Gannett-owned site, I adversely affected my career path when, upon getting off a bus and seeing our company’s new glass-faced Virginia corporate office, I commented about that old saying about people who live in glass houses. I offer this for perspective. I walked in the world of newspaper elite, but I wasn’t ever one of them. If the big papers are the major leagues, I made it to AA ball. In my four-plus years as a civilian, I have been blessed with a perspective shift from a producer of news to a consumer of news. As such, the hypocrisy of my former world has become clearer.

EIA Drilling Productivity Report – Feb 10, 2014
US 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.

Coal Burns Brighter as Utilities Switch From Natural Gas
Predictions of coal’s demise in the U.S. may be greatly exaggerated. Natural gas prices at a four-year high have utilities shifting to coal to generate 4.519 million megawatt-hours a day, the most since 2011, government data show. Within three years, coal’s share of power production could climb to 40.3 percent from about 39 percent last year, while gas’s share will probably drop to 27 percent from 27.5, the U.S. Energy Information Administration said. An arctic blast has helped put the U.S. on pace for the coldest winter in more than 30 years through January, prompting utilities to burn more of the less expensive coal. The U.S. is poised to emit the most carbon dioxide in three years, undermining President Barack Obama’s efforts to reduce pollution and steer utilities away from the fossil fuel. “The idea of coal disappearing is not an effective climate change policy,” said John Thompson, an analyst at the Boston-based Clean Air Task Force. “Coal use is growing.”