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MDN is Called Out by the Huffington Post [Free Access]
August 3, 2012August 3, 2012

Hey, it’s not every day you get prominently mentioned in a Huffington Post article, so we thought we would bring it to your attention: A ‘War on Shale Gas’?

MDN editor Jim Willis has long admired the HuffPo and its founder Arianna Huffington. Certainly not for her (or its) political positions! But because Arianna had the moxie to pioneer a new form of media at a time when it was not easy to do so. We love free speech, we love a plucky attitude, and we love that the HuffPo has kicked the venerable New York Times’ derriere. The HuffPo passed the NYT in both traffic and revenue (for their web properties) a long time ago.

So when a contributor to the HuffPo takes a shot at MDN, you may find it weird or unusual that MDN would respond with accolades for the HuffPo. You shouldn’t. We just keep it honest and if you read this blog for any amount of time you already know that.

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Energy Companies | Halcon Resources | Lease & Royalty Payments | Mahoning County | NCL Appalachian Partners | Ohio | Trumbull County

Halcon Resources Pays $194M for Old Leases in Trumbull County, OH
August 3, 2012August 3, 2012

Bombshell: Halcon Resources Corp. is paying NCL Appalachian Partners $194 million (over $6,000 per acre) to take over land leases for drilling on 31,000 acres mostly in Trumbull County, OH (and about 3,000 acres in Mahoning County, OH). This is not money going to landowners but to the leaseholder, NCL. And it’s for old leases dating back to the 1960s.

By comparison, mass transfer of lease deals done by Chesapeake and others have been in the $1,000-$2,000 per acre range. But there is a difference: the lower-priced deals include a one or two percent royalty on anything produced going to the original leaseholder. Again, this is not landowner royalties, but leaseholder. It’s hard to follow the bouncing ball on this story.

The leases purchased by Halcon are not without potential problems (for Halcon) and opportunities (for landowners):

Read More “Halcon Resources Pays $194M for Old Leases in Trumbull County, OH”
Energy Companies | Southwestern Energy

Southwestern Energy 2Q12 Update IDs Cost to Produce Shale Gas
August 3, 2012August 3, 2012

Southwestern Energy released its second quarter earnings and operations update yesterday. The company lost $488 million dollars largely because of the low cost of natural gas. Interestingly, they report that their “all-in cash operating costs” for drilling shale gas wells averages $1.20 per 1,000 cubic feet equivalent (or Mcfe). One Mcfe is equivalent to one MMBtu, or “one million Btus”—the unit of measurement used to sell natural gas. The going price for natural gas on the NYMEX as of this morning is $2.90 MMBtu (or $2.90 Mcfe). Theoretically, Southwestern produces the gas for $1.20 per unit, and can sell it for $2.90 per unit (leaving hedging out of the equation). A bit simplistic, but useful nonetheless.

We learn from the update that so far Southwestern has drilled 120 wells in the Marcellus, 41 of which are currently producing. The holdup on many of the ones not producing? Lack of gathering pipelines—a recurring theme in a number of company quarterly updates for 2Q12.

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Chesapeake Energy | Economic Impact | Energy Companies | Industrywide Issues | Ohio | Statewide OH | Taxation | Utica Shale

AP Questions OH Gov’s Mathematical Skills on Utica Shale
August 3, 2012August 3, 2012

Ohio Gov. John Kasich has stated that an energy company executive told him (in 2010) that they would eventually recover $1 trillion worth of oil and gas from Ohio’s Utica Shale. Kasich has repeated that remark many times since then—using it as a justification for his plan to increase severance taxes in the state to spread some of that wealth around to all Ohioans.

The Associated Press takes aim at the $1 trillion claim (and at Kasich) with a new story saying Kasich and the unnamed energy exec are way off base:

Read More “AP Questions OH Gov’s Mathematical Skills on Utica Shale”
Energy Companies | Gordy Oil | Monroe County | West Virginia

Gordy Oil Abandons Monroe County, WV (For Now)
August 3, 2012August 3, 2012

Over a year ago, MDN pointed out a unique spirit of cooperation and partnership between Monroe County, WV and driller Gordy Oil (see this MDN story). It is the story of a driller being responsive to local concerns about a special underground geologic formation called a karst, a system of underground system of caves and streams. Local residents were concerned drilling may foul the water table in the area, and Gordy spent time listening and making adjustments to their plans.

Unfortunately, the opposition has continued, and Gordy Oil is now nowhere to be found in Monroe County. Is it because of the low price of oil? Or because of the drumbeat of opposition?

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Beaver County | Energy Companies | Industrywide Issues | Pennsylvania | Processing Plants | Shell | Statewide PA

PA Gov. Corbett Goes to Beaver County to Talk Cracker Plants
August 3, 2012August 3, 2012

Pennsylvania Gov. Tom Corbett went to Monaca in Beaver County, PA yesterday to talk about a planned ethane cracker plant that Shell says it wants to build there. He was joined by a number of officials—bipartisan in makeup. Corbett’s message? “We’re not there yet.” He said that although a great deal has been done, more will need to be done before Shell pulls the trigger and builds the plant.

The press release from the governor’s office talking about his trip to Monaca:

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Alcoa | Economic Impact | Energy Companies | Energy Services | Industrywide Issues | Pennsylvania | Pennsylvania General Energy | Statewide PA

Alcoa Enters Marcellus Drilling – Supplies Drill Pipe to PGE
August 3, 2012August 3, 2012

Alcoa (once upon a time known as the Aluminum Company of America), the world’s third largest producer of aluminum, is getting into the shale drilling industry by producing special pipe for gas drilling in the Marcellus Shale. Yesterday Alcoa announced a contract to provide driller Pennsylvania General Energy (PGE) with aluminum alloy drill pipe.

From the Aloca press release:

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Energy Companies | WPX Energy

WPX Energy 2Q12 Results – Marcellus Production Up 21%
August 2, 2012August 2, 2012

WPX Energy, the former upstream drilling arm of Williams spun out into its own company last year, has just reported their second quarter financial and operating results. WPX reports second quarter gas production from the Marcellus Shale is up 21% from the first quarter and continues to rise, although many of their drilled wells in the Marcellus are currently not producing because they’re waiting to be hooked up to pipelines.

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Energy Companies | PDC Mountaineer

PDC Energy 2Q12 Results – Drilling in Marcellus & Utica
August 2, 2012August 2, 2012

Drilling company PDC Energy has released its second quarter operating and financial results. The company reports completing three wells in the Marcellus in West Virginia during the first half of this year, as well as two Utica Shale wells in Ohio. They are now drilling their first Guernsey County, OH Utica well.

Read More “PDC Energy 2Q12 Results – Drilling in Marcellus & Utica”
Energy Companies | Hydraulic Fracturing | Industrywide Issues | Lenape Resources | Litigation | Livingston County | New York | Regulation

NY Driller Threatens DEC with Lawsuit over Town Bans
August 1, 2012August 1, 2012

In the misguided attempt to ban hydraulic fracturing in New York, one town took their ban vote too far. MDN reported about the bone-headed vote by the Town of Avon (Livingston County, NY) on June 28 to ban drilling activity in the town with a broadly worded zoning ordinance (see this MDN story).

A local driller with wells in Avon, Lenape Resources, warned Avon that the broad language they intended to use in their zoning ordinance would cause Lenape to shut down 16 existing conventional (vertical-only) gas wells they operate in the town along with a gas pipeline. Avon town board members didn’t listen and passed the new ordinance. Lenape president John Holko promptly shut down all of his wells in the town, ending free gas for some local residents, and low cost gas for the town itself. A really dumb move on the part of Avon.

There is a new development in this ongoing situation.

Read More “NY Driller Threatens DEC with Lawsuit over Town Bans”
Chesapeake Energy | Columbiana County | Energy Companies | Lease & Royalty Payments | Mahoning County | Ohio | Statewide OH | Trumbull County | Utica Shale

Chesapeake Buys 28K Acres of OH Leases from Everflow
August 1, 2012August 1, 2012

MDN reported on Monday that Chesapeake Energy had purchased the rights to leases and had transferred ownership of those leases for more than 14,000 acres from two counties in Ohio—Trumbull and Mahoning (see this MDN story). We now know that’s only half of the number of acres they transferred. We now also know who they bought the rights from and how much they paid for those rights.

Read More “Chesapeake Buys 28K Acres of OH Leases from Everflow”
Butler County | Energy Companies | Energy Services | Industrywide Issues | MarkWest Energy | NGLs | Pennsylvania | Pipelines | Processing Plants | XTO

MarkWest Signs Deal with XTO to Process NGLs in PA
August 1, 2012August 1, 2012

MarkWest has just signed a deal with XTO Energy (XTO is a wholly-owned subsidiary of Exxon Mobil) to extend MarkWest’s natural gas liquids (NGLs) gathering pipeline in Butler County, PA to XTO’s processing plant. Previously MarkWest announced plans to extend the same pipeline from its Houston, PA complex to the Bluestone complex in Butler County. With this announcement, MarkWest will further extend the pipeline from Bluestone to XTO’s plant.

This deal will grant MarkWest the right to fractionate and market NGLs from XTO. Adding this new pipeline to other recently announced pipelines by MarkWest, when everything is built and running, MarkWest will have 3 billion cubic feet of gas processing capacity and 270,000 barrels per day of fractionation capacity throughout the Marcellus and Utica Shale.

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Energy Companies | EXCO Resources

EXCO’s 2Q12 Results: Continues Commitment to the Marcellus
August 1, 2012August 1, 2012

EXCO Resources reported their second quarter results yesterday. Current production in the Marcellus for EXCO was 146 million cubic feet of gas per day, a 28% increase since the end of 2011. Their 2012 plan is to drill a total of 49 wells in the Marcellus, the majority of them in Lycoming County, PA where EXCO says it is “realizing our best returns in the Marcellus shale.” EXCO is currently using only one rig for Marcellus drilling.

Below are the Marcellus-related portions of yesterday’s announcement:

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Encore Energy | Energy Companies | Ohio | Statewide OH | Utica Shale

Encore Energy Shopping 175K Utica Shale Acres in OH
July 31, 2012July 31, 2012

Encore Energy, a drilling company formed just last year and headquartered in Bowling Green, Kentucky, is acting as a leasing agent and shopping 175,000 Utica Shale acres in Ohio to larger drillers, trying to catch their interest in drilling for wet gas and oil.

Encore issued the following press release yesterday:

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Blue Ridge Mtn Res/Magnum Hunter | Energy Companies

Magnum Hunter 2Q12 Operation Update for Marcellus/Utica
July 31, 2012July 31, 2012

Second quarter earnings and operations reports keep rolling in. Magnum Hunter, a driller with operations across the U.S. including in the Marcellus and Utica Shale region, released their second quarter operations update this morning. Magnum reports they drilled four new Marcellus wells in the first half of 2012. The completed one of the wells for testing purposes, and the other three are waiting for completion until the end of this year when the MarkWest Mobley processing plant will become operational.

Here are the relevant sections from their update dealing with the Marcellus and Utica Shale:

Read More “Magnum Hunter 2Q12 Operation Update for Marcellus/Utica”
Chesapeake Energy | Energy Companies | Forced Pooling | Industrywide Issues | Ohio | Portage County | Stark County

Chesapeake Forces Landowners in OH to Allow Fracking
July 30, 2012July 30, 2012

MDN has written a number of times on the issue of “forced pooling,” which is the concept that a property owner can be forced to allow fracking under their land if a majority of their neighbors have signed leases and a driller wants to drill in a “unit” (usually one square mile or 640 acres) where the reticent landowner owns property.

If there’s a single landowner, or a few landowners in the middle of the unit with a small number of acres who doesn’t want drilling, it can scuttle the deal for neighboring landowners. Most states, including Ohio, have a forced pooling provision. In Ohio it’s called “unitization.” No matter what you call it, MDN (in a departure with industry), believes it’s just plain wrong.

Read More “Chesapeake Forces Landowners in OH to Allow Fracking”