Energy Companies

  • | | |

    Wheeling, WV Drilling Vote Delayed

    Intelligencer Wheeling News Register (Oct 7):
    Drill Vote Delayed

    Wheeling, WV city council members have delayed a vote to allow Chesapeake Appalachia (a subsidiary of Chesapeake Energy) to begin drilling on city-owned land. From the article:

    Though the Wheeling Park Commission has approved the lease allowing the company to drill on its property at Wheeling and Oglebay parks, city officials want to gain more information about the potential environmental impact of Chesapeake’s work before allowing the company to drill on city property.

    Council members want to visit some of Chesapeake’s other drilling sites first to see first-hand what they look like. No complaints here. Council members should satisfy themselves that it will be safe and beneficial to the local community (which it will be), and then move forward.

  • | | |

    Range Announces Management Additions and Bank Borrowing Base Reaffirmation

    Press Release from Range Resources (Oct 7):
    Range Announces Management Additions and Bank Borrowing Base Reaffirmation

    FORT WORTH, TEXAS – Range Resources Corporation announced today that it has hired Joseph H. Frantz, Jr. as Vice President of Engineering and K. Scott Roy as Vice President of Government and Regulatory Affairs for the Marcellus Shale Division located in Pittsburgh, Pennsylvania.

    Mr. Frantz brings more than 26 years of petroleum engineering experience with Texaco, S.A. Holditch & Associates and Schlumberger. Recently, Mr. Frantz led Schlumberger’s shale evaluation team for various emerging shale formations, including the Barnett, Fayetteville and Marcellus. Mr. Frantz has extensive experience working in the Appalachian Basin, and he has performed studies on topics ranging from reservoir simulations to hydraulic fracture optimization. He holds a bachelor’s degree in Petroleum and Natural Gas Engineering from Penn State University.

    Mr. Roy previously served as Executive Deputy Chief of Staff in the Office of the Governor of the Commonwealth of Pennsylvania. He has spent more than 17 years in public service in various positions, including key roles in both the Rendell and Ridge administrations and acting as the Governor’s liaison to various regulatory and environmental agencies. Mr. Roy earned his bachelor’s degree from Allegheny College and his juris doctorate from the Dickinson School of Law at Penn State University.

    Range also announced that at its regularly scheduled review, the Range bank group unanimously reaffirmed the Company’s $1.5 billion borrowing base effective September 30, 2009. Range elected to retain the existing $1.25 billion commitment amount, which provides in excess of $800 million in available liquidity. There were no changes to the interest rate, repayment terms or number of banks in the credit facility.

    Range’s Chairman and CEO, John H. Pinkerton, commented, “We are extremely pleased to announce these two new management additions to our Marcellus Shale team. Both Joe and Scott are Pennsylvania natives, who will report to Ray Walker in our Pittsburgh Marcellus Shale Division. Joe Frantz will head up our technical evaluation, not only of the Marcellus, but also for the other Appalachian shale formations. His extensive technical background in shale reservoir evaluations and optimized completion techniques is a key addition to our technical team. As the pioneer of the Marcellus Shale play, we fully understand the importance of forging a strong partnership among public, regulatory and industry interests to ensure that the development of the Marcellus Shale is accomplished in a responsible way. The addition of Scott Roy reflects Range’s commitment to being a good steward of Pennsylvania’s resources. Lastly, the unanimous affirmation of our borrowing base by our bank group reflects our low-cost structure, high-margin asset base and strong financial position. We are well positioned to continue to execute our plan of low-cost, consistent per share growth.”

  • | | | | |

    Top Rendell aide quits to join gas driller

    Philadelphia Inquirer (Oct 7):
    Top Rendell aide quits to join gas driller

    An interesting bit of news: A top aide to Gov. Ed Rendell is stepping down to take a job in the drilling industry:

    K. Scott Roy is stepping down as the $146,000-a-year executive deputy chief of staff to Rendell to become vice president for government relations and regulatory affairs for Range Resources Corp., a Texas-based company with a major drilling stake in Pennsylvania.

    And another bit of interesting news found in this article is that Gov. Rendell wants to forego an extraction tax–for now (although the Democrats in the legislature are still trying to get a tax passed for this year):

    [Rendell’s call for an extraction tax] changed Aug. 31. In a move that took even some of his top aides by surprise, Rendell said at a news briefing that he was giving up his push for the tax this year.

    He said he changed his mind after meeting with industry executives who convinced him that imposing the tax now would stunt the growth of drilling in the state.

    “We felt we should let the industry get off to a good start, and that surpasses our need for money,” Rendell said Aug. 31. He said he favored starting such a tax next year.

    The article is mostly quoting eco-nut groups moaning about a potential conflict of interest by Mr. Roy’s “sellout” to the drilling industry.

  • | | |

    CNX Gas Corp. chief: Slow down or stop gas drilling

    Pittsburgh Tribune-Review (Oct 3):
    CNX Gas Corp. chief: Slow down or stop gas drilling

    Gas prices are depressed right now. The question is, how long will it go on? While prices are low, CNX Gas CEO Nick DeIuliis says drillers have to remember to be good business people and slow down or stop drilling to reign in costs. What does that mean for landowners? Will drilling slow down or stop any time soon? Good questions to ponder. A good article to read to give you an update on gas prices on the commodities market and the overall drilling landscape.

  • | | | |

    Exxon Leases 19,400 Acres in Pennsylvania Marcellus Shale

    From a Reuters news story on the Financial 24 website:

    Exxon Mobil Corp, the world’s largest publicly traded company, has leases on 19,400 acres in the Marcellus Shale, a formation that is said to hold vast amounts of natural gas.

    In September, Exxon bid $85.2 million for 18 blocks in the Marcellus, a large shale formation that runs through parts of New York, Pennsylvania, Ohio and West Virginia.

    Exxon, based in Irving, Texas, was the high bidder on six Marcellus blocks, paying a total of $22.4 million for acreage in Tioga and Lycoming counties in Pennsylvania, company spokesman Patrick McGinn, said.

    Read the full article: Exxon has 19,400 acres in the Marcellus shale

  • | | |

    Breaking News: Dimock Gas Wells Pass DEP Test, Cabot Not at Fault

    On February 27, the Pennsylvania Department of Environmental Protection (DEP) served Cabot Oil & Gas with a “Notice of Violation” claiming Cabot’s drilling activities in the Carter Road area of Dimock Township, PA caused some local private water wells to be contaminated with methane (see the MDN article Cabot Oil & Gas Served with “Notice of Violation” in Dimock, PA). One month later, the DEP seems to have reversed its position.

    Buried in the Saturday, March 28 edition of the Scranton Times-Tribune we get the story that recent test results from the DEP show no indication of water contamination due to Cabot’s hydro-fracturing activities in the area. Yes, you read that right. Cabot’s Marcellus drilling activity is not to blame for methane (natural gas) water contamination in the Dimock area according to the PA State DEP.

    The DEP will continue testing and monitoring, and Cabot will continue providing water for four homes that it has been providing water to, due to elevated levels of methane in the water. But the DEP seems to have just reversed its position that Cabot is the cause of methane appearing in a few local water wells. Big news that deserves a big headline.

    What has the DEP tested for that might indicate hydrofacturing has caused contamination?

    Indicators could include total dissolved solids, chlorides, specific conductivity, pH, alkalinity, hardness, sodium, calcium, barium, iron, manganese, potassium and aluminum.

    The DEP is promising they will continue to be vigilant in Dimock:

    Residents “expressed concern to us that methane wasn’t the only thing impacting their groundwater, their wells,” DEP spokesman Mark Carmon said. “We’ll continue to look at both.”

    Cabot spokesman Ken Komoroski said the company is “pleased” that the department has found no indication of wells being tainted from gas well hydro-fracturing activity, and will continue to work with the DEP to ensure the safety and health of residents.

    MDN will continue to cover this story as it develops.

    Read the full article: Dimock gas wells pass DEP test

    Read the full DEP press release: PA DEP Continues to Analyze Dimock Water Supplies

  • | |

    Drilling Activity is Linked to the Price of Natural Gas

    I suppose the headline of this post may have you saying, “It doesn’t take a genius to figure that out.” But how, exactly, does the spot price for natural gas relate to drilling activity? Can we quantify it? Let’s try.

    In a recent article on an investment blog called Energy & Capital, author Keith Kohl offers some excellent insights into the natural gas marketplace from the perspective of those interested in investing in it. And along the way, he makes some observations well worth reading for landowners in the Marcellus. I encourage you to read the entire article.

    Here are just a few insights from his article:

    [N]atural gas has been treading water. After deteriorating more than 70% since July records, prices have fallen below $4/Mcf this week. That’s a level many people thought they’d never see. And to make matters worse, I’ve been hearing more and more people calling for natural gas to plummet below $2/Mcf and stay in that range for several months.

    …

    Developing…shale sources will be extremely difficult (or even nonexistent) if natural gas prices fall below $2/Mcf for a sustained period. The depreciation of natural gas prices since July has already caused companies across the board to slash exploration and production spending.

    Much like the oil industry, not a week passes that I don’t see another project being delayed or canceled. Furthermore, the number of active drilling rigs has been in serious decline. The latest numbers from Baker Hughes Inc. reported that the number of exploration rigs has dropped nearly 45%. And if prices continue to remain this low, you can bet we’ll see even more rigs going silent.

    That means production is headed one way—much lower.

    But his longer term prediction is not gloomy. He believes prices and production will start to improve in 2010 when an improving economy, more demand and less supply kick in. In the article he also offers his opinion on liquefied natural gas (LNG) imports, and his thoughts on which companies to invest in (EOG Resources is one of them). Read the whole article! It’s well worth it.

    Based on Mr. Kohl’s views and other sources, this is Marcellus Drilling News’ take: If natural gas prices stay at or above $4/Mcf ($4 per thousand cubic feet), drilling will continue and slowly expand. That price level is just above break even for energy companies. If the price goes higher at $5-$6/Mcf, happy days are here again. If the price drops to $2/Mcf and stays there, production all but stops because energy companies will lose money.

    Read the full article: The Inevitable Crunch in Natural Gas Supply… and How to Prepare Your Portfolio

  • | | |

    Three Jay Township Supervisors Reject Access to Water for EOG Resources

    Three Jay Township supervisors have voted to deny access to water to EOG Resources for drilling in Elk County, Pennsylvania. EOG had requested access to the Bennetts Branch of the Sinnemahoning Creek by driving across township-owned land, specifically near a ball field.

    According to the Courier-Express/Tri-County Sunday (DuBois) newspaper:

    During Thursday’s Jay Township Supervisors meeting, the supervisors said they would not give EOG permission to use township land to access the stream because they still have a lot of unanswered questions.

    EOG wants to withdraw the water for gas drilling in the Marcellus Shale, Supervisor Murray Lilley said.

    Since October or November 8, the township has received three requests to withdraw water from various streams in the township, Supervisor Bob Coppolo said.

    In each case, a letter was written by the supervisors to the Susquehanna River Basin Commission and copied to elected officials and the Department of Environmental Protection expressing concern.

    The township is concerned about having water trucks going in and out of a recreation area where youth gather and play.

    There are also questions of if the township would be liable if anything happens since it would be on township property.

    And this interesting comment:

    Asked by a resident if the township had to allow the company access to the stream, Coppolo said, “It’s our property.”

    Although it is a favorable time economically to have this type of work, it is also important to preserve the community and the beauty of the area, he said.

    Marcellus Drilling News thoughts: Hopefully Supervisor Coppolo means “our” as in the people of the township and not the private fifedom of he and his fellow supervisors. We encourage Supervisor Coppolo to talk with ALL of the people in the township, including landowners who have leased their property for drilling.

    Read the full article: Township denies request to access water

  • | | |

    Susquehanna River Basin Commission Approves 26 Applications for Water Use

    At a recent meeting of the Susquehanna River Basin Commission held in Scranton, PA, the group approved 26 applications to use water from the Susquehanna River watershed for drilling in the Marcellus Shale deposit. At the meeting, the Commission imposed new rules about posting signs at sites along rivers and creeks where water is drawn for use in drilling.

    Among the permits approved by the commission, according to the Susquehanna Independent Weekend, is permission for ALTA Operating “to draw up to 3 million gallons per day from the Susquehanna River and 99,000 gallons per day from Snake Creek, both in Susquehanna County.”

    Read the full article: New rules for gas drillers

  • | |

    Europe Invests Heavily in American Natural Gas Drilling in the Marcellus, Details of Chesapeake/StatoilHydro Deal

    The Fort Worth Business Press reports European companies are making major investments in American shale plays, including the Marcellus. The article reports the following details about Chesapeake Energy’s new partner Norwegian-based StatoilHydro:

    Norwegian state-controlled energy company StatoilHydro would pay $3.375 billion for a 32.5-percent stake in [Chesapeake’s] 1.8 million net acres of Marcellus Shale assets, according to a November 2008 agreement. StatoilHydro paid $1.25 billion in cash at closing, and the remaining $2.125 billion over the next three years “by funding 75 percent of Chesapeake’s 67.5 percent share of drilling and completion expenditures until the $2.125 billion obligation has been funded,” according to the Nov. 11 statement.

    “This deal adds a major building block to the gas value chain position we have established in the U.S., the world’s largest and most liquid gas market,” said StatoilHydro President and CEO Helge Lund in a statement. “This is a significant step in strengthening our U.S. gas position, building on our existing capacity rights for the Cove Point LNG terminal, our gas trading and marketing organization and the gas producing assets in the Gulf of Mexico.”

    Read the full article: Europeans see benefits in U.S. shale

  • | | | | |

    Gastar Exploration’s 42,000 Acres in the Marcellus – No Development Until a Partner is Found

    Energy company Gastar Exploration reports the following about their Marcellus commitment in a recent quarterly financial filing:

    In the Marcellus Shale we hold approximately 42,000 net acres in northern West Virginia and southwestern Pennsylvania. To date, we have drilled 10 shallow wells, which will allow us to hold the related leases with production. Currently, we are seeking a joint venture partner to help us further develop this play. We do not expect to drill additional shallow wells until we secure a joint venture partner or until natural gas prices improve. We will continue to maintain our leases through renewals, extensions and renegotiations of drilling commitments.

    Read the press release: Gastar Exploration Reports Fourth Quarter and Full Year 2008 Financial and Operational Results

  • | | |

    Range Resources Looks for Gas Deposits in Beaver County, PA

    The Beaver County & Allegheny Times Online news site reports Range Resources has hired Conquest Seismic Services to vibrate the ground around Hopewell and Independence Townships, located in Beaver County, Pennsylvania (near Pittsburgh).

    For now, Range is looking along Route 151, according to Dave Schieck, a geophysicist for Range Resources. But don’t look for production wells for quite a few years:

    “We’re looking here, and we’ll be looking in the northern part of Beaver County later on,” Schieck said of a stretch between Zelienople and the Beaver River. “It may be as much as a decade before any extraction takes place here, but I’d bet we’ll see some once the area is ready.”

    Read the full article: Company vibrating ground in search of natural gas

  • |

    Capital City Energy Group’s Hotwell Services Subsidiary Ramps up Activity in Marcellus Shale

    From a press release issued by Capital City Energy Group:

    COLUMBUS, Ohio–(March 10, 2009)–Capital City Energy Group (OTCBB: CETG) announced today that Hotwell Services, its wholly owned subsidiary and a provider of oil filed services in the Appalachian Basin, has significantly increased its cased hole service activity in the Marcellus Shale, one of the most active areas for natural gas exploration and production in the continental United States. More than 800 wells are expected to be drilled in the prolific Marcellus Shale in 2009, a projected increase of 400% from 2008. In this environment, the Company anticipates the opportunity to rapidly grow its business by increasing its presence in the basin and expanding its market share. Hotwell’s clients include many of the major independent producer’s active in the Marcellus Shale play.

    “Despite the significant decline in the price of natural gas, we continue to see strong activity in the Marcellus Shale. The reason for this increase may be from hedging and budgets that have already been approved and the overall project economics of the Marcellus Shale play. Hedged production ensures a strong pricing environment throughout 2009,” said Joseph Sites, President of Hotwell Services, Inc. “Through our extensive experience in servicing the major independents; we are well positioned to capitalize on the strong activity in the area. Clients have found that our equipment, personnel, service, quality, and safety processes provide a very high value and reliable wireline service”

    About Capital City Energy Group Inc.

    Based in Columbus, Ohio, Capital City is a diversified oil and natural gas company with three separate divisions. Capital City has evolved from being an innovative leader in the design, management and sponsorship of retail and institutional direct participation energy programs to become one of the few vertically integrated independent oil and natural gas companies, which is publicly-traded. Its strategy is to continue to grow a portfolio of core areas which provide growth opportunities through drilling, operating, oil field service companies, acquisitions and fund management.

  • | | |

    Westmoreland County, PA Supervisors Vote to Approve Drilling on County Land

    On Thursday, March 12, the board of supervisors for Westmoreland County (Pennsylvania) voted to let drilling commence on an area of county-owned land. According to the Valley News Dispatch:

    The board approved five natural gas wells to be drilled on Municipal Authority of Westmoreland County property near the Beaver Run Reservoir.

    James McKinstry of Dominion Exploration detailed plans for the wells to be drilled into the Marcellus Shale in an area bordered by Fox Road, Walker Road and Route 286.

    Resident John Doyle asked if drinking water in the reservoir will be protected, particularly from material such as disposable brine. McKinstry said waste, such as brine, will be trucked away. There is a site in Indiana County that accepts brine.

    McKinstry added that the state Department of Environmental Protection regulations must be followed.

    Supervisors unanimously granted the request, attaching conditions such as submitting a plot plan, posting 24-hour emergency numbers and keeping roads passable at all times.

    Dominion feels the wells can be built in about seven or eight months once approval is granted.

    Full article: Washington Township hopes for state sewerage dollars

  • | | |

    Times Leader Update on Dimock, PA Water Well Contamination

    The Wilkes-Barre Times Leader is following the story of the natural gas-contaminated water wells in Dimock, PA. Overall the article is pretty even-handed in its treatment of the issue and worth a read. In covering “both sides” of the issue, they reveal some of the facts in the case:

    The company [Cabot Oil & Gas] and DEP [PA Department of Environmental Protection] agree that the gas isn’t from Marcellus Shale, a pipeline leak or naturally occurring sources above ground. They also concur that the gas is likely from a gas-laden upper layer of underground Devonian shale, of which the Marcellus Shale is a component but thousands of feet deeper, [DEP spokesman Mark] Carmon said. Marcellus Shale is generally at least 5,000 feet underground, while DEP determined the gas contaminating the water wells came from a shale layer roughly between 1,500 feet and 2,000 feet deep, Carmon said.

    The company has cemented the upper Devonian shale layers of several wells, effectively extending the cement seals from the bottom of the water-bearing region, where the seals usually stop, to the bottom of the upper shale layers. The department has been trying to isolate the exact source of gas, seeing whether the extended seals produce a drop in water-contamination levels, Carmon said.

    Because the method of contamination hasn’t been determined, Carmon said it’s too early to tell if Cabot knowingly violated regulations. “I’m not aware of anything blatant or anything like that, but, again, we want to know how did it happen,” he said.

    Other news outlets would do well to follow the Times Leader’s example and get their facts straight before running stories about the Dimock situation.

    Read the full article: Consequences of gas drilling still unknown