OH Supreme Court Strikes Down Home Rule in Gas Drilling Case

court gavelCases before the high courts of both New York and Pennsylvania in the past year have ruled that local municipalities can control oil and gas drilling within their borders–so-called “home rule” statutes. In the case of NY the high court went berserk and said towns can actually ban such drilling, which of course strips away private property rights guaranteed under the U.S. Constitution. In PA it was a little better, but not much. PA’s high court gutted provisions in the state’s Act 13 law making for a crazy-quilt patchwork of local zoning regulations that PA’s drillers must now navigate through. One state’s high court, however, has gotten it right. Yesterday the Ohio Supreme Court issued its long awaited ruling in the Munroe Falls v Beck Energy case (for background, see Beck Energy & Munroe Falls Go to Court – Again). In a 4-3 ruling, the OH Supremes said the City of Munroe Falls cannot stop Beck Energy from drilling a well that was properly permitted by the Ohio Dept. of Natural Resources (ODNR)…
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PA Production in 2H14 Soars to New Record; 4 Tcf in 2014

The Pennsylvania Dept. of Environmental Protection (DEP) published its semi-annual (every 6 months) production report yesterday for Marcellus/Utica Shale gas production. The big news is that once again PA has shattered another record. In the second half of 2014 PA produced 2 trillion cubic feet (Tcf) of natural gas, making it ~4 Tcf for the entire year. That works out to be around 16% of all gas used throughout the United States–coming from a single state. Chesapeake Energy produced the most gas in 2H14 (with 712 producing wells), followed by Cabot Oil & Gas (340 producing wells). Below we have some more stats and facts about PA’s production for 2014…
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PA Gov Wolf Turns Bully, Threatens Ban on Drilling Absent New Tax

no bullyingSomehow in the flurry of news last week when Pennsylvania Gov. Tom Wolf released his so-called proposal to tax the Marcellus Shale industry (see PA Gov Wolf Proposes Marcellus-Killing 7.5% Severance Tax), we missed the fact that Wolf threatened the entire Marcellus Shale industry with a ban on drilling if the industry doesn’t fall into line and support his tax. Sure sounds like good old Philly-style break-their-kneecaps talk from the kinder, gentler and oh-so-much-smarter than everyone else Tom Wolf. His precise words: “…the alternative is not really no tax, the alternative is no drilling, a ban as in the case of New York.” Our collective jaws hit the ground. How can anyone not see this man for what he is? For what he’s trying to do (end drilling)? Like an old-style mob boss–you pay him or you get hurt–and hurt real bad. Fortunately, some groups like the Pennsylvania Independent Oil and Gas Association (PIOGA) isn’t taking Wolf’s threat lying down. They’re in the mood to fight…
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Why did PA DEP Acting Sec Quigley Mass Fire Gas Advisory Board?

Even though he’s still only “acting” Secretary of the Dept. of Environmental Protection (DEP), John Quigley is cleaning house at the DEP–installing his own yes-men and women in important positions–and doing it just prior to issuing important new drilling regulations. For some time politicians and old-line mom and pop conventional (non-shale) drillers have been making a fuss that the rules that apply to shale drillers should not apply to non-shale drillers. Fair enough. There are some major differences. But the timing for creating a new Conventional Oil and Gas Advisory Committee in addition to the Oil and Gas Technical Advisory Board (OGTAB)–and mass firing the members of the OGTAB (as Quigley has done) seems darned peculiar in light of the fact they have to publish new drilling regulations this year or what has been a 3-year process will need to be restarted all over again…
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First Cloud Appears for Odebrect WV Ethane Cracker Plant Project

Hmmm. Is there a cloud on the horizon over the Odebrecht ethane cracker project proposed for Parkersburg, WV? Until now every single thing we’ve read or heard (or discussions we’ve had with David Peebles from Odebrecht) have indicated the WV ethane cracker project is full speed ahead, pedal to the metal. It was only at the tail end of 2013 that the project was announced (see WV Announces Brazilian Company to Build Ethane Cracker Complex). The $4 billion project will construct not only an ethane cracker, but several petrochemical plants as well (see Odebrect Cracker Aims to Attract Chemical/Plastics Manufacturing). In fairness, Odebrecht has said a final decision won’t be made until later this year (see Odebrecht WV Cracker Plant Decision “By End of 2015?). And until now, it certainly seemed like this project, even more than the Shell cracker in Pennsylvania, has had the momentum. Then we read this…
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Rice Energy Trims 2015 Budget 19%, Production Soars 61% in 4Q14

Yesterday Rice Energy, a small but rapidly growing driller in the Marcellus and Utica Shale, issued a recap of 2014 along with “guidance” (or projections) for what they plan to do in 2015. The disappointing but understandable news is that Rice plans to spend less money drilling in 2015 than they did in 2014–$890 million for 2015 compared with $1.1 billion in 2014–a 19% reduction. That’s not nearly as deep a cut as many Marcellus/Utica drillers. For 2015, Rice plans to drill 61 new wells using that $890 million, and bring 36 new wells online. Production for Rice soared in 4Q14–up 61% from the previous quarter! Below are a pair of announcements from yesterday with loads of details…
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Magnum Hunter Slashes Drilling Budget by 75% for 2015

In 2014 Magnum Hunter’s capital budget for drilling (most of it in the Marcellus and Utica) was $400 million (see Magnum Hunter 2014 CapEx: Utica/Marcellus). We recently warned you that MH was planning to quit drilling in 2015, at least until they get a 40% discount from oilfield services companies (see Magnum Hunter CEO: No New Marcellus/Utica Drilling in 2015). Indeed that seems to be the case. Yesterday MH released their 2015 budget. It contains $100 million (down 75% from 2014), which is mostly tidying up wells already under way and drilling perhaps one or two new wells, along with some change for more acreage acquisitions…
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Panda Power Building 3rd Marcellus-Fired Electric Plant in PA

MDN has previously told you about Panda Power Funds, a private equity firm located in Dallas, TX that’s building two 829-megawatt electric generating plants in Pennsylvania (see Plugging in to Panda Power’s Electric Generation Supply Chain). Panda Liberty is located in Towanda, and Panda Patriot in Williamsport. Both will be fed by abundant, cheap and clean-burning Marcellus Shale gas. You can now add a third such project to the Panda portfolio. Yesterday Panda announced a joint venture with Sunbury Generation to build a whopping 1,000-megawatt plant on the site of a recently retired coal-fired plant near Shamokin Dam in Snyder County, PA…
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UGI Building 35-Mile Pipeline for Panda Power Electric Plant

Panda Power announced yesterday that they will build a new 1,000-megawatt electric generating plant powered by Marcellus Shale gas in Snyder County, PA (see today’s companion story). In order to get Marcellus gas to the plant site, a 35-mile pipeline is needed. Enter UGI, one of Pennsylvania’s largest utility companies with a midstream subsidiary that builds pipelines. UGI has committed $160 million to build the 20-inch pipeline needed to supply the plant…
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