Belmont County | Energy Companies | EQT Corp | Industrywide Issues | Lease & Royalty Payments | Litigation | Ohio | Rice Energy
OH Lawsuit Filed Against Utica Fracker Accuses Subsurface Trespass
In a case initially filed last summer in Ohio, a Belmont County mineral rights owner alleges that Rice Drilling (now owned by EQT) drained natural gas from a rock layer it did not have the right to access according to the signed lease. Golden Eagle Resources says the lease allowed Rice to drill down only as far as the Utica Shale layer, which Rice did. However, Golden Eagle says fractures from Rice’s fracking of the Utica layer reached down into the adjacent Point Pleasant layer and drained some of the gas from the Point Pleasant too–and that’s a no-no according to the lease.
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The sharp analysts at RBN Energy have sifted through the announcements and “guidance” statements from 42 of the country’s major publicly-traded oil and natural gas drillers for 2023. Among them are 11 gas-focused drillers, nine of which have operations in the Marcellus/Utica region. Looking at the list of 11 gas-focused drillers, RBN finds production will be just about the same in 2023 as it was in 2022–projecting a dip of 1% this year. The analysis also finds collectively that the 11 gas-focused drillers will spend around 9% more on drilling this year due to Bidenflation. Spending more to produce the same–not a winning formula for a politician to run on.
New shale permits issued for Mar. 13-19 in the Marcellus/Utica rose by four from the prior week. There were 34 new permits issued in total last week, including 24 new permits for Pennsylvania, 4 new permits for Ohio, and 6 new permits in West Virginia. Last week the top receiver of new permits across PA and OH was Chesapeake Energy with 7 new permits spread across three PA counties: Bradford, Sullivan, and Wyoming. Range Resources received 6 new permits in Washington County, PA.
Back in January, three Marcellus/Utica companies–Chesapeake Energy, EQT, and Equitrans Midstream–launched what the three call the Appalachian Methane Initiative (AMI), a coalition committed to further enhancing methane monitoring throughout the Appalachia Basin, with an aim to reduce methane emissions throughout the region (see 
As we have been reporting, CERAWeek, the world’s premier energy conference, is happening all this week in Houston, Texas. On Tuesday, Bloomberg reporters filed a roundup/overview of happenings at the event. Below is the roundup from Day Two of CERAWeek, which includes a comment by EQT CEO Toby Rice, who said he believes the natural gas market will come back into balance in the “middle half” of this year as production adjusts (i.e., less drilling) following the recent precipitous collapse in prices.
The difference between the Susquehanna River Basin Commission (SRBC) and the Delaware River Basin Commission (DRBC) is stark. The former is well-run and rational, the latter is disorganized and irrational. At least with respect to fracking. Over the weekend, the SRBC published a notice in the Pennsylvania Bulletin to announce that during the month of January, the agency approved 38 requests for daily water use on shale well pads in the SRBC’s jurisdictional territory in Pennsylvania, totaling some 233.5 million gallons. Put another way, this is a handy list of where drilling will soon happen in northeastern PA.
EQT Corporation, the largest natural gas producer in the U.S. (completely focused on the Marcellus/Utica), issued its fourth quarter and full year 2022 update yesterday. Both revenue and production fell slightly in 4Q22 over 4Q21 due to issues with third-party providers. Production for the entire year was just about even. However, because of the high price of natgas for most of 2022, EQT raked in $1.8 billion in net income last year versus losing $1.1 billion the year before.
We suppose you can file this story under the category of “damned if you do, and damned if you don’t.” We’re referring to hedging–the practice of locking in prices to sell gas you will produce in the future for a specific price now. Last year natural gas producers, including most (if not all) of Marcellus/Utica producers, were caught flat-footed when the price of natgas skyrocketed and their hedges were locked in for much lower prices. So as the hedges “rolled off,” many producers either elected not to hedge again, or hedged very little of their future production. And now prices have crashed again, meaning those producers are not protected and must sell most (if not all) of their production at very low market prices.
The Ohio Court of Appeals recently issued a decision in a case involving lease language about a “depth severance clause” that is very important for both landowners and drillers to know about. In Tera LLC v. Rice Drilling D LLC, et al., a landowner in Belmont County, OH, signed a lease with language that leases both the Marcellus and Utica shale layers, but all other formations were “reserved to the lessor” (i.e. the landowner). However, the driller, Rice (now EQT), drilled into and produced hydrocarbons from the Point Pleasant layer that sits immediately below the Utica. According to the lease (and the decision by the court), that was a no-no.
The CEO of the largest natural gas driller/producer in the U.S., EQT’s Toby Rice, is currently attending the Atlantic Conference in Abu Dhabi, the capital of the United Arab Emirates. He spoke with Bloomberg reporters about what he sees ahead for U.S. natural gas production coming this year and, more broadly, about the problems he sees in general. Rice said, “The gas markets in the US are broken.” Why? Lack of pipeline infrastructure and the inability to build new ones.