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Chesapeake Investing in New 70-Mile Ohio Pipeline

Chesapeake Energy, American Electric Power and Spectra Energy are joining forces to build 70 miles of new pipeline in Ohio that will connect Utica and Marcellus gas wells in eastern Ohio to Spectra’s Texas Eastern pipeline system, which runs from Texas to New York. The new joint project is called the Ohio Pipeline Energy Network (OPEN). The estimated cost for the project is $500 million according to Spectra Energy.

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Chesapeake Real Estate Purchases in Ohio Signal Expansion

Chesapeake Energy has just paid $630,000 for two pieces of real estate in Belmont County, Ohio—ground zero for Utica Shale drilling in eastern Ohio. Chesapeake will not officially comment on the purchases, but there’s little doubt they will build a new satellite office at one location for their Ohio drilling operations, and perhaps use the other parcel (land and warehouse) for storage and operations. It shows the serious commitment Chesapeake is making in Ohio and signals their further expansion in the area.

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Sullivan County NY Probably Won’t See Marcellus Gas Drilling

Sullivan County, NY, which has seen a lot of opposition to Marcellus gas drilling, may not have anything to worry about after all. According to those in the industry, the geology for most of Sullivan County just isn’t worth drilling, even if it were to be allowed:

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Is Chesapeake’s Ethane Pipeline Deal a Negotiating Tactic?

Last week, MDN reported that officials in West Virginia were angry with Chesapeake Energy over their decision to sign a contract to ship ethane out of the Marcellus region for processing in the Gulf Coast (see this MDN story). Specifically, state Commerce Secretary Keith Burdette said the deal may jeopardize the state’s chances of attracting a cracker plant—a facility that processes ethane into ethylene, the raw material used to make plastics. The chief complaint was that Chesapeake has been part of negotiations to bring such a plant to the region but at the same time were silent about their impending deal with Enterprise Products Partners to lease a pipeline to move ethane out of the area.

Chesapeake has responded to the criticism and says its deal with Enterprise has been “misunderstood.” A recent statement from Chesapeake seems to indicate the deal to ship ethane via pipeline is a negotiating tactic to get the best price for their ethane. Other industry sources are sticking up for Chesapeake and say the deal is certainly not a “cracker killer.”

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WV Officials Angry with Chesapeake Over Ethane Pipeline Deal

gas pipeline constructionState officials in West Virginia are angry with Chesapeake Energy over the announcement that Chesapeake has signed a deal to ship ethane out of the Marcellus region via pipeline to the Gulf Coast for processing. A quick petrochemical lesson: Some of what comes out of the ground when drilling for natural gas is the chemical compound ethane—especially found in “wet gas” areas of the Marcellus like West Virginia. Ethane can be processed into ethylene, which is the raw material used to make plastics.

West Virginia and Pennsylvania have been heavily courting Shell and at least one other unnamed company to build a “cracker plant” to process the ethane (crack it) into ethylene. Building a cracker plant in the region would attract thousands of jobs and billions of initial investment, and billions in revenue from associated plastics industries that would sprout up around the plant. It’s like winning the biggest imaginable lottery jackpot when it comes to jobs, money and tax revenue.

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Chesapeake Creates Hands-On Rig Training Center in Bradford PA

Chesapeake Oilfield Services has just launched a hands-on training program at its Eastern Housing Center and Training Facility in Athens Township (Bradford County), PA. They’ve installed a working drilling rig at the facility to give new hires real-world, hands-on training. The primary aim of the facility is to teach new workers safe work habits while learning how to handle rig equipment. In addition to the rig, a water transfer system has also been installed to teach workers how to safely and efficiently deliver water from its source to the drilling site, especially in sub-freezing temperature.

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Mystery Company Invests $2.14B in Chesapeake Utica Shale JV

The Utica Shale in eastern Ohio, and Chesapeake Energy’s discovery that it contains oil and wet gas in addition to methane, is paying off big-time for the company. Yesterday, Chesapeake announced a major cash infusion from a new joint venture with a mystery/unnamed “international major energy company” to the tune of $2.14 billion. Some $640 million of that will be paid when the deal officially closes, and the balance of $1.5 billion will be paid by the end of 2014.

A third company in the joint venture is EnerVest. The joint venture values the land leased by Chesapeake and EnerVest at $15,000 per net acre. The previous highest deal for Utica Shale leases was Hess—for $8,000 per net acre. The overall deal between Chesapeake, EnerVest and the unnamed company is a bit complicated (see the press release below), but the gist of the matter is that Chesapeake will get enough money to fully fund their Utica Shale drilling program in Ohio, and the overall value of the joint venture means Chesapeake will eventually receive $3.4 billion.

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Chesapeake First Customer for Ethane Pipeline to Gulf Coast

Looks like Enterprise Products’ plan to build an ethane pipeline from the Marcellus and Utica Shales to the Gulf Coast (see this MDN story) is already paying off. Chesapeake Energy is the first company to commit to using the pipeline, which is due to be completed and in service by 2014.

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Who’s the Biggest Fracker in the World?

head silhouetteIf you’ve been around the shale gas drilling debate for long, you know that most of the opposition to drilling focuses on a little-understood, decades-old technology called hydraulic fracturing, or “fracking” for short. If you’re a science fiction fan, you may also recognize the word fracking from the Battlestar Galactica television series. The word is used as a curse word substitute for another “f” word to avoid being censored.

Fracking’s closeness in spelling, and sound, to the other “f” word has not gone unnoticed by those who oppose drilling. They’ve used the word fracking in all sorts of double entendres with signs like like “Don’t Frack Me” and hundreds of other variations. Just attend a protest meeting and you’ll see what we mean.

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Top 7 Marcellus Shale Gas Producers in PA

Who are the biggest producers of Marcellus shale gas in Pennsylvania so far this year? Below is the list of the top seven as compiled from production numbers by the Pittsburgh Business Times.

The following are production numbers for January to June 2011 in Pennsylvania.

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Chesapeake’s New Utica Shale Wells Producing “Very Strong”

Utica Shale OhioYesterday, Chesapeake Energy reported initial horizontal well drilling results in the wet gas and dry gas phases of the Utica Shale play in eastern Ohio and western Pennsylvania and CEO Aubrey McClendon said the early results are “very strong.”

Chesapeake says they currently have five drilling rigs in the Utica Shale play and will double that to ten by the end of this year. Further, they plan to have 20 rigs running by the end of 2012, and up to 40 drilling rigs running in the Utica Shale by the end of 2014—truly a massive buildup.

From the Chesapeake press release:

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65 Marcellus Well Casing Violations in PA So Far in 2011

Recently released data on drilling violations from the PA Department of Environmental Protection show that problems continue with the cemented steel casings that are designed to protect groundwater from methane and the fluids used to frack wells. The violations do not mean methane or fluids escaped into local groundwater aquifers—but the potential exists when a well is not cased properly. So far in 2011, 65 wells have been cited for faulty casing and cementing. Out of the many thousands of wells drilled and fracked each year in Pennsylvania, that’s not a bad ratio, but it’s certainly nowhere near acceptable. As DEP Secretary Michael Krancer has said, “One case of methane migration or well contamination is one case too many.” The industry needs to do better.

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