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Market Enhancement Case Nixes Most PA Post-Production Deductions

A court case decided in late April in Pennsylvania Superior Court appears (to us) to have significant ramifications for landowners and drillers with respect to deducting post-production expenses. The case is Dressler Family, LP v. PennEnergy Resources, LLC (copy of the decision below), and it addresses “market enhancement” royalty clauses found in many PA leases. Market enhancement clauses typically prohibit the deduction of post-production costs that are incurred when transforming gas into a marketable form. Some drillers ignore such clauses and deduct all “post-production costs” from the landowner’s royalty based on the drillers’ incorrect assumption that gas is “marketable” at the wellhead. This case and decision helped clear up definitions of what is and is not marketable gas.
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30 New Shale Well Permits Issued for PA-OH-WV Sep 19-25

Last week the three states with active Marcellus/Utica drilling, Pennsylvania, Ohio, and West Virginia, issued a collective 30 new drilling permits, up from the 21 permits issued the week before. It was a reversal of what we typically see. Last week PA only issued four new permits, while WV issued 17 permits and OH issued nine permits. Usually, PA issues the most permits.
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30 New Shale Well Permits Issued for PA-OH-WV Sep 5-11

Last week the three states with active Marcellus/Utica drilling, Pennsylvania, Ohio, and West Virginia, issued a collective 30 new drilling permits, down from the 40 permits issued the week before. PA roared back to life by issuing 21 of the 30 permits, with OH issuing just three and WV issuing six.
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40 New Shale Well Permits Issued for PA-OH-WV Aug 29-Sep 4

Last week the three states with active Marcellus/Utica drilling, Pennsylvania, Ohio, and West Virginia, issued a collective 40 new drilling permits, way up from the 19 permits issued the week before. But there was a shocker. PA only issued nine new permits, while OH issued 14 new permits and WV issued a record high 17 new permits.
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Williams to Market PennEnergy’s “Next Gen” Responsible Gas

PennEnergy Resources LLC, which according to the Pittsburgh Business Times is the 11th largest shale driller in Pennsylvania (with 405 active shale wells), achieved responsibly sourced natural gas certification from Project Canary on nearly all of its wells in January of this year (see PennEnergy Receives “Responsibly Sourced Gas” Rating for Most Wells). Project Canary issued its top “Gold” and “Platinum” ratings on 375 of PennEnergy’s wells. Pipeline giant Williams issued an announcement this morning to say it has entered into an agreement with PennEnergy to market and deliver, via its pipelines, PennEnergy’s blessed-by-Canary natural gas to customers eager to buy it.
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47 New Shale Well Permits Issued for PA-OH-WV Jul 11-17

For the week of July 11-17, the three Marcellus/Utica states issued 47 permits to drill new shale wells, up 10 from the prior week. Pennsylvania issued the lion’s share with 35 new permits. CNX grabbed seven of those permits in Washington County, and Olympus Energy received six in Westmoreland County. Ohio issued 11 new permits, with four going to Ascent Resources in Jefferson County, and four to Hilcorp Energy in Columbiana County. West Virginia issued a paltry one new permit, which went to Southwestern Energy in Ohio County.
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29 New Shale Well Permits Issued for PA-OH-WV Jun 20-26

Last week, for June 20-26, the number of new permits issued to drill in the Marcellus/Utica decreased just a bit to 29 (from 34 the week prior). Pennsylvania issued 15 new permits, all but one in southwestern PA. Five of PA’s permits went to PennEnergy Resources in Butler County, four to Range Resources in Washington County, and three to Apex Energy in Westmoreland County. Ohio issued 10 new permits with five going to Encino Energy (EAP) in Carroll County and three going to Ascent Resources in Belmont County. Finally, West Virginia issued four new permits, all of them to Tug Hill Operating. In each case the permits were for multiple wells on single well pads.
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PennEnergy Creek Water Request Now “Complete” – PA DEP Reviewing

PennEnergy Resources recently reapplied (for a second time) for a permit to draw water from Big Sewickley Creek–but this time the request is cut in half, to just 1.5 million gallons of water a day (see PennEnergy Reapplies to Use SWPA Creek Water for Fracking Ops). In March PennEnergy submitted its water management plan amendment application for proposed water withdrawals from Big Sewickley Creek in Economy Borough, located in Beaver County. As before, the request is to use the water for shale well fracking. This second application proposes a lower allocation request of 1.5 million gallons per day. After an initial delay, the DEP is now actively reviewing PennEnergy’s application.
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Decision Nears, Antis Still Oppose PennEnergy Creek Water Request

PennEnergy Resources recently reapplied (for a second time) for a permit to draw water from Big Sewickley Creek–but this time the request is cut in half, to just 1.5 million gallons of water a day (see PennEnergy Reapplies to Use SWPA Creek Water for Fracking Ops). In March PennEnergy submitted its water management plan amendment application for proposed water withdrawals from Big Sewickley Creek in Economy Borough, located in Beaver County. As before, the request is to use the water for shale well fracking (the company just received permits to drill seven new wells in Beaver County, PA, see today’s permit report). This application proposes a lower allocation request of 1.5 million gallons per day. As a decision by the state Dept. of Environmental Protection (DEP) nears, antis and local Democrat politicians still oppose the modified request. No surprise there.
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21 New Shale Well Permits Issued for PA-OH-WV Jun 6-12

The Marcellus/Utica is still struggling to get permit numbers into higher brackets. Three weeks ago a pathetically low six new permits were issued to drill shale wells across Pennsylvania, Ohio, and West Virginia (see 6 New Shale Well Permits Issued for PA-OH-WV May 23-29). Two weeks ago the number improved–with 20 new permits issued (see 20 New Shale Well Permits Issued for PA-OH-WV May 30-Jun 5). Last week, for June 6-12, the number increased by one, to 21 new permits issued. Anemic, but improving.
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Project Canary Intros Freshwater Usage Metric in NatGas Cert

Project Canary is one of three major “responsible gas” certification schemes. Project Canary has its TrustWell Certification program, Equitable Origin has its EO100 certification, and MiQ has its own self-named standard too. The TrustWell Certification assesses data points in 24 operational categories, ranging from water management to well integrity. Project Canary announced earlier this month that one its metrics for measuring and mitigating the effects of operations on local water resources has been peer-reviewed and published (as a study) by a third-party assessor in a leading industry journal. Several Marcellus/Utica drillers have achieved Project Canary’s Freshwater Verified Attribute as part of their TrustWell certification.
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Dem PA Lawmaker Continues to Oppose PennEnergy Creek Water Request

Big Sewickley Creek Watershed (click for larger version)

In July 2021, a Pennsylvania Democrat lawmaker from Beaver County (southwestern PA) who professes to support the Marcellus industry, Rep. Rob Matzie, wrote a letter to Dept. of Environmental Protection (DEP) Secretary Pat McDonnell (a fellow Dem) asking him to deny a request by PennEnergy Resources to withdraw as much as 3 million gallons of water a day from Big Sewickley Creek and one of its tributaries for shale fracking (see Dem PA Lawmaker Wants to Block Use of Creek Water for Fracking). McDonnell honored his fellow Dem’s request and blocked PennEnergy’s request to use creek water in October (see PA DEP Blocks Use of SWPA Creek Water for Fracking). Matzie is back, this time to oppose a second request by PennEnergy to withdraw half the amount of water from Big Sewickley Creek.
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PennEnergy Reapplies to Use SWPA Creek Water for Fracking Ops

Big Sewickley Creek Watershed (click for larger version)

In July 2021, a Pennsylvania Democrat lawmaker from Beaver County (southwestern PA) who professes to support the Marcellus industry, Rep. Rob Matzie, wrote a letter to Dept. of Environmental Protection (DEP) Secretary Pat McDonnell (a fellow Dem) asking him to deny a request by PennEnergy Resources to withdraw as much as 3 million gallons of water a day from Big Sewickley Creek and one of its tributaries for shale fracking (see Dem PA Lawmaker Wants to Block Use of Creek Water for Fracking). McDonnell honored his fellow Dem’s request and blocked PennEnergy’s request to use creek water in October (see PA DEP Blocks Use of SWPA Creek Water for Fracking). In an MDN exclusive, we have discovered (thanks to a tip from a sharp reader) that PennEnergy recently reapplied for a permit to draw water from Big Sewickley Creek–but this time the request is cut in half, to just 1.5 million gallons of water a day.
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31 New Shale Well Permits Issued for PA-OH-WV Mar 21-27

Last week Pennsylvania issued 21 new shale well permits, with Snyder Brothers grabbing seven, PennEnergy Resources getting six, and Coterra Energy (formerly Cabot Oil & Gas) receiving five. In each case, the permits for each company were for a single well pad. Ohio issued just three new permits last week, two for Ascent Resources and one for Southwestern Energy. West Virginia finally came back to life, issuing seven new shale permits last week. Six of the WV permits were for Antero Resources, one for Southwestern Energy.
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20 New Shale Well Permits Issued for PA-OH-WV Mar 14-20

We’re back to covering just a single week of new permits issued. The good news is that the PA DEP’s reporting site was still up and online over the past week, so we have numbers! In Pennsylvania, 11 new permits were issued last week, with Coterra Energy (formerly Cabot Oil & Gas) getting the lion’s share (nine permits), all of them in Susquehanna County on two well pads. Ohio issued seven new permits last week, with Gulfport Energy scoring four of the seven, all on the same pad. West Virginia issued just two new permits, one to Antero Resources and the other to Tug Hill Operating.
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6 New Shale Well Permits Issued for PA-OH-WV Feb 21-27

The good news is that the Pennsylvania Dept. of Environmental Protection’s online reporting site is back online and we were able to retrieve new shale drilling permits for two weeks ago (Feb. 21-27). The bad news is that there was a paltry four permits issued during that week. Perhaps the DEP site/system is not yet fully populated with permits issued during that time? Ohio issued two permits during the same week. And West Virginia issued (gasp) zero during that week. This has to be the lowest number of permits issued during a single week we can remember–ever.
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