NY Frack Ban Regs “at Printer”; Is There a Potential Loophole?

Art of the LoopholeNew York State’s anti-drilling Dept. of Environmental Conservation Commissioner, Joe Martens, is doing his best to concoct a litigation-proof Supplemental Generic Environmental Impact Statement (SGEIS). The SGEIS is the document that will find too many “troubling” aspects of fracking to allow it in New York. Except there’s potentially a loophole coming in the SGEIS, if press reports can be believed. Fracking WILL be allowed IF it uses under 300,000 gallons of “liquid”–the liquid most likely being water. (A typical well takes 5-8 million gallons of water to frack.) The NY loophole of using up to 300,000 gallons of liquid leads pro-drillers like MDN to muse: Is there an alternative liquid, other than water, that can be used to frack a well economically at under 300K gallons? What if the substance is foam and not liquid–is foam exempt from the 300K gallon cap? Or how about this: Can a driller use 299,999 gallons of water to frack a well and get enough gas out of it to break even and wait until the idiot we have in office now (Gov. Andrew Cuomo) is gone and go back later and re-frack the same well once the 300K gallon restriction is lifted? Hey, it’s fun to speculate. We’re not trying to foster false hope, but we do wonder if there’s a loophole in the SGEIS that can be exploited so landowners and drillers (the good guys) can beat extremist environmentalists like Cuomo, Martens and Yoko Ono (the bad guys)…
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New Marcellus/Utica Driller in WV: Standard Oil Co.

A 16 year-old company, Standard Oil Co of West Virginia, has just purchased the assets of Mountain Country Partners for an undisclosed amount of money for 12,750 acres in Roane County, along with interests in about 395 oil and gas wells in Roane and Gilmer counties. Standard bought out Mountain Country Partners in bankruptcy court. With the new acreage, Standard now owns more than 30,000 acres in WV, OH and KY, with the majority of it in WV. According to Standard’s CEO Andrew Zelnar, the company has “substantial Marcellus and Utica shale leases” that it intends to begin drilling after the company floats an initial public offering to raise cash…
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Cabot Continues to Lower Cost/Mcf, Plans for Constitution in 2016

Last Friday the Cabot Oil & Gas management team held an analyst call to discuss first quarter 2015 results–and look forward to the rest of 2015. There is a lot of good stuff to read in the transcript from the call. We can’t include it all (much as we would like to). Two things really stood out to us as we scanned through the prepared remarks by Cabot personnel and in the question and answers that followed. (1) Cabot’s direct cost to drill and extra natural gas (and oil) continues to drop thanks to their diligence. That cost is now $1.22 per thousand cubic feet equivalent. That number does not (we assume) include the cost to transport and process the natural gas. What it means is that even at somewhere around $1.75-$2.00 per Mcf (our estimate), Cabot is at break even and starts to make money. (2) The Constitution Pipeline is still on track and Cabot predicts it will be operational in mid-2016. Cabot CEO Dan Dinges had some interesting things to say about the Constitution and whether or not they intend to send current production through it–or bring online new production to help fill the Constitution…
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Southwestern Energy 1Q15: Record Production, but Profit Dives 78%

Southwestern Energy, one of the largest Marcellus Shale drillers, released their first quarter update last Thursday. Among the highlights: Record production for the company, including 113 billion cubic feet equivalent (Bcfe) in the Marcellus (83 Bcf in the northeast and 30 Bcf in the southwest). Similar to Cabot and other operators, Southwestern had record revenues in 1Q15–but income (profit) was way down due to low gas prices. Southwestern’s operating income for 1Q15 was $78 million, compared with $352 million in 1Q14–a 78% drop year over year. Southwestern placed 22 new wells online in production in the Marcellus during 1Q15. Below is the full update…
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Southwestern Energy’s Plan to Save $1M Per Well on Water Costs

Southwestern Energy held an analyst call last week to discuss their latest update for first quarter 2015. As with the Cabot transcript which we highlighted today, the Southwestern transcript is just jam-packed with details that will be of keen interest for investors, landowners–really anyone with an interest in Marcellus drilling in PA and WV and drilling done by Southwestern. We can’t bring you the whole transcript–so what we’ve done is highlight something that caught our interest: How Southwestern is driving down costs in their water operations, including an interesting twist on gathering lines…
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UMH Pays $5.3M for 2 Trailer Parks in W PA for Marcellus/Utica

We’ve talked about a New Jersey-based real estate investment company, UMH Properties, Inc., a couple of times before. Why? Because they keep buying trailer parks in the Marcellus/Utica with the express hope that drilling activity in the region will lead to high occupancy rates. In July 2014 UMH bought four “manufactured homes communities” in the Pittsburgh area (see More Housing for Marcellus/Utica on the Way in Pittsburgh Region). In January of this year, UMH bought another trailer park–this one in Erie, PA (see Quirky Friday: What’s the Main Selling Point of Erie, PA Trailer Park?). UMH is back–they’ve just purchased two more trailer parks in western PA for $5.3 million…
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EIA List of Top 100 Oil & Gas Fields – Shale has Changed the Picture

In 2009 the number one oil producing formation in the United States was Prudhoe Bay in Alaska. Six years later Prudhoe Bay has fallen to #3 in the list, surpassed by both the Eagle Ford (#1) and Permian Basin (#2), both shale plays in Texas. In 2009 the mighty Marcellus was in the bottom half of the list of the top 100 producing formations. Today? It’s #1, thanks to the miracle of fracking shale. Last week the U.S. Energy Information Administration released an updated list of the top 100 U.S. oil and natural gas fields. Below we have that report, showing the top 100 oil fields and the top 100 natural gas fields. Shale has literally changed the landscape of the oil and gas industry in our country…
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USGS Updates Models for Determining Earthquakes from Injection Wells

The U.S. Geological Survey (USGS) issued an update yesterday into how they evaluate whether or not earthquakes are being caused by deep injection wells–wells that are disposing frack wastewater. USGS says, “Significant strides in science have been made to better understand potential ground shaking from induced earthquakes, which are earthquakes triggered by man-made practices.” And so they’ve issued a report that “outlines a preliminary set of models to forecast how hazardous ground shaking could be in the areas where sharp increases in seismicity have been recorded.” Translation: We’ve updated our best guesses about how this works. The new report is titled “Incorporating Induced Seismicity in the 2014 United States National Seismic Hazard Model–Results of 2014 Workshop and Sensitivity Studies” (full copy below). USGS concludes that it is almost always injection wells–over faults–that are the cause of induced earthquakes, and NOT fracking itself. The USGS says, “Many questions have been raised about whether hydraulic fracturing—commonly referred to as “fracking”—is responsible for the recent increase of earthquakes. USGS’s studies suggest that the actual hydraulic fracturing process is only occasionally the direct cause of felt earthquakes.” The word “occasionally” translates to this: you can count on one hand the number of times fracking (over a fault) has led to an earthquake…
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Anti Protesters Who Disrupted Wolf Inauguration Appeal Conviction

More than 100 anti-drilling, anti-fossil fuel protesters spoiled PA Gov. Tom Wolf’s otherwise nicey nice inauguration in January (see Anti-Fracking Protesters Spoil PA Governor Inauguration Ceremony). Of the 100 or so loud mouths at the inauguration who tried to spoil it for everyone else, eight of them were arrested and charged with disorderly conduct. They were all convicted. Now, two of the eight are appealing their convictions. It seems they don’t want to be held accountable for their lawless actions…
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