NY High Court Decision Creates Toxic Environment for O&G Companies

court gavelA court case decided earlier this week by New York’s Court of Appeals (NY’s highest court), will, in our opinion, have a profoundly negative effect on oil and gas development in the state, forever. Or until another court case overturns it (which seems very unlikely). The case, as its core, is about the question of whether or not state action or inaction constitutes an extraordinary action, in essence an Act of God outside of the control of parties who sign a contract. Years ago landowners signed leases to allow oil and gas drilling, often for a few bucks and acre, long before Marcellus and fracking were common, household words. Then came delay after delay in New York–from the governor–and eventually a more or less semi-permanent ban on fracking. Energy companies argued that the leases they had signed could be extended until the day they are allowed to drill in the Marcellus because of “force majeure”–the concept that due to circumstances beyond our control we could not drill as we intended during the original term of the lease, usually five years. The NY Court of Appeals on Tuesday decided that the state preventing drilling does not qualify as force majeure after the original five-year period of a lease (full copy of the decision below). If the original lease was extended for some reason and then the driller was prevented from drilling during the extended time due to state laws preventing it, it’s not force majeure in the eyes of the “wise” justices in Albany…
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CONSOL Begins Fracking at Pittsburgh Airport, Using New Tech

Yesterday CONSOL Energy began fracking operations on Pad #2 at the Pittsburgh International Airport. That’s a pretty big deal in and of itself–the fact that fracking has begun under airport property. You may recall that CONSOL paid the airport a $50 million signing bonus and when everything is done, they will drill 47 wells on 6 pads (see CONSOL Energy Reveals Drilling Plan for Pittsburgh Airport). After royalties come in, the airport says it will make upward of a staggering $1 billion in revenue from the deal. This is a high profile project for CONSOL, so they’re pushing the technology to ensure environmental impacts are as absolutely minimal as they can be–including air emissions. The big news coming from yesterday, aside from the fact they’ve begun to frack, is HOW they’re doing the fracking. CONSOL is using oilfield services company Halliburton (cue sinister sounding music and flash a picture of Dick Cheney with horns). Halliburton is using brand new equipment to perform the fracking that is “fully compliant with the Environmental Protection Agency’s 2015 Tier 4F emissions standard for non-road, high-horsepower engines.” That is, it’s really really efficient and low-emissions equipment that will reduce air pollution from the operation by an estimated 36%…
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Sexy New Marcellus Maps & Info from EIA

The number-crunching wizards at our favorite government agency, the U.S. Energy Information Administration (EIA), have constructed yet another superb report. Using well data provided by various state agencies, EIA wizards have constructed a series of new maps showing the extent and structure of the Marcellus Shale–where its productive and prospectively productive regions are located. Here’s some sexy new maps and important information to go along with them from our friends at the EIA…
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PA’s First Monthly O&G Production Report Goes Live

Pennsylvania has now moved to the head of Marcellus pack when it comes to production reporting. Previously drillers in the state were required to file production numbers with the Dept. of Environmental Protection (DEP) every six months, but last October the Republican state legislature passed a bill that Republican Tom Corbett signed into law moving reporting from every six months to every month (see 2 Bills on PA Gov’s Desk: Monthly Production #s, Lease Termination). The first monthly production report, for January 2015, is now available. The DEP says 80% of drillers filed on time (representing 99.5% of shale wells in the state). What do the numbers show?…
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Judge Rules Royalty Lawsuit Against Chesapeake in PA Continues

Last June MDN told you about a class action lawsuit filed by the Suessenbach Family Limited Partnership. Using a Wilkes-Barre, PA law firm, Suessenbach launched a “sprawling class action” lawsuit against Chesapeake Energy and Access Midstream accusing the two companies of a $5 billion scheme to defraud landowners out of royalties rightfully due to them (see 2nd PA Class Action Lawsuit Against Chesapeake re Royalty Fraud). MDN previously covered how the Chesapeake/Access scheme worked (see Chesapeake Shafting Landowners out of Royalties Mess Gets Messier). In December, another class action lawsuit was settled (see Chesapeake’s PA Royalty Settlement Affects Some, Not All Landowners). However, Suessenbach soldiered on with their lawsuit. Chesapeake tried to have the Suessenbach lawsuit tossed, but a federal judge earlier this week denied that motion and has ruled there’s enough of a case for Suessenbach to continue…
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PA Dem Seeks Severance Tax Break for 2 P&G Wells in His District

One of the unsung hero stories we’ve told a few times on MDN is about the only Proctor & Gamble manufacturing plant in the world that is 100% energy self-sufficient. It’s located in Wyoming County, PA (see PA P&G Plant: 100% Energy Self-Sufficient from Marcellus Gas and P&G Plant in NEPA Adds Marcellus CNG Filling Station). The reason the P&G plant is energy self-sufficient and in fact the reason it sells energy back to the local power utility is because it drilled and operates two Marcellus Shale wells on company property. The gas from those wells feeds an electric generating plant that produces more electricity than P&G can use at the plant. It’s a very cool story. But now, here comes Democrat Gov. Tom Wolf who wants to tax the shale gas industry into oblivion. The severance tax he’s proposing would apply to the two wells on P&G’s property–even though they don’t sell the gas for a profit. So local PA Rep. Mike Carroll, a Democrat from Avoca (who supports Wolf’s tax and spend policies), is trying to carve out an exception for the two P&G shale wells because…well because P&G is in his district employing lots of Carroll’s voters and no doubt a big contributor to his campaign coffers, either directly or via the salaries P&G pays to people who work at the plant and contribute to Carroll…
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FERC Will Not Oversee UTOPIA NGL Pipeline Project in Ohio

In December 2013, MDN told you about Kinder Morgan’s new NGL (natural gas liquids) pipeline cleverly named UTOPIA (Utica To Ontario Pipeline Access). UTOPIA is a $500 million, 210-mile, 10-inch pipeline from Harrison County, Ohio to Riga, Michigan and from there connecting with another pipeline heading into Windsor, Ontario (see UTOPIA is Coming! The UTOPIA Pipeline, that is…). Kinder has held an open season and in January 2016 they will file a full application and target November 2016 to begin construction. What we didn’t know, or realize (until today) is that all of the new pipeline that needs to be constructed for the project will happen within Ohio. No new pipeline is needed in Michigan or indeed into Ontario. Why is that important? Because newly constructed pipeline doesn’t cross state lines, the Federal Energy Regulatory Commission (FERC) will not be involved with approving or overseeing construction for the project. Because it’s all within Ohio, the lead agency for approval and oversight will be the U.S. Army Corps of Engineers, with an assist from the Ohio Dept. of Natural Resources, the Ohio Environmental Protection Agency and the U.S. Fish and Wildlife Service (an agency drunk on its own power)…
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Hilcorp to Build New Gathering Pipeline in NWPA

Hilcorp remains very active in northwestern PA. The company has filed paperwork and plans to build several new pipelines in Lawrence and Mercer counties. They will build a buried gathering line (what they call the Weiser-Varano pipeline), a buried “fluids pipeline” and an above-ground temporary water pipeline. The details as we know them…
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Syracuse U Divests from Fossil Fuels, NYU Says “Irresponsible”

Silly (and frankly stupid) “green” students at universities who apparently don’t have enough homework to keep them busy have lately been protesting and attempting to get the schools their parents pay so much money to, to divest from any stock holdings in evil, filthy, nasty fossil fuel companies. No, we’re not making this up. These idiots, who believe in global warming fairy tales, are demanding, like the petulant undisciplined children they are, that universities pull out a gun and just shoot themselves in the head financially. And you know what? Syracuse University has just done it. They’ve just committed financial suicide by bowing to pressure from children and divesting any fossil fuel stocks from their $1.2 billion endowment. Forcing Coach Jim Boeheim to retire, and now divesting from fossil fuels? We’re officially no longer Orange basketball fans. Meanwhile, the divest from fossil fuels issue was extensively studied by New York University–and they concluded to do such a thing is nuts…
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