Industrywide Issues

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    OH Judge Says Filing Paperwork is Enough to Extend Lease

    Ohio landowners should be aware of an important court case just decided that says, in essence, filing paperwork is enough proof of a driller’s intent that a lease can be extended beyond the initial signing period. Several landowners in Jefferson County, OH signed a lease with Fortuna Energy in 2006 that was later sold to Chesapeake Energy (in 2010). The lease was for a 5-year period. Three days before the end of the lease Chesapeake filed a Declaration of Pooled Unit (DPU) with the Ohio Department of Natural Resources. That is, they told ODNR in essence “here’s a group of properties we intend to drill on soon” requesting permission to “pool” them together into a drilling unit. That simple act was enough proof, according to a U.S. District Court judge, to allow Chesapeake to extend the original lease beyond the original 5 years.

    And so now the landowners are stuck waiting for Chesapeake to actually do something other than file paperwork. Good luck with that…
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    Utica Shale Transient Workers in Ohio Crosshairs

    Calling OH Gov. John “foreigner hunter” Kasich: Ohio is being invaded by foreigners! Time for a dragnet to kick them out!! We refer, tongue-in-cheek, to Kasich’s disdain for non-Ohioans moving to Ohio to work in the Utica Shale drilling industry–doing nasty, hard jobs that often require someone who’s skilled at doing them–like pipefitting and welding, and man-handling equipment at rig sites (called a roustabout). Ohioans can certainly be trained, but often it takes people who have done it to show them how.

    The Columbus Dispatch has taken a decidedly anti-drilling stance recently with a flurry of articles that attack the Utica Shale industry. Their latest article takes aim at “transient” workers–people Kasich calls foreigners. It’s jingoistic and repugnant–but then prejudice and ignorance always are. Here’s the Dispatch waxing eloquent on “transients”…
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    Summit Midstream Closes Deal to Buy 40% Stake in Ohio Gathering

    Last December MDN told you that Summit Midstream was buying out Gulfport Energy’s share of the Ohio Gathering pipeline and processing system (see Summit Midstream Buys Gulfport’s Interest in Ohio Gathering). As we said at the time, the deal appears complicated on paper with multiple names (like Blackhawk Midstream), but the bottom line was/is that Summit will be the 40% owner and MarkWest Energy will remain the 60% owner of the Ohio Gathering system.

    Yesterday, in an announcement by Summit that’s equally dense with details (likely written by lawyers), Summit announced they’ve closed the Ohio Gathering deal. That’s the sum total of this announcement–that the deal is now done:
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    The Band is Back Together! Anti-Drillers to Visit Binghamton U

    The band is three-fourths back together. A group of radical anti-drilling organizations, including NYRAD (New York Residents Against Drilling), the League of [Liberal Democrat] Women Voters, NYPIRG, the Sierra Club and other lesser-known wacko organizations are sponsoring an “information” (i.e. propaganda) night at Binghamton University this Friday. And they’ve re-assembled most of the band, er, anti-drilling “experts” that visited Cornell University with their traveling road show/circus last October (see Latest Laughable NY Anti Tactic – Not Enough Gas, Just Move Along).

    Retired systems engineer for IBM and Lockheed Martin Jerry Acton will be there to induce death by PowerPoint. So too will retired Mobil Oil Executive Vice President Lou Allstadt (who’s already made his millions, so he doesn’t want any silly “farmers” to make money too, who the *$#@ do they think they are?). Oh, and Brian Brock, an anti-drilling retired geologist. Notice a theme here? All retired, all anti-drilling, with nothing to do. Road trip!…
    Read More “The Band is Back Together! Anti-Drillers to Visit Binghamton U”

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    Glow-in-the-Dark Bob Hagan: Shrill and Nutty

    Ever notice that when anti-drillers can’t seem to convince the public of their views, they get nuttier? They start spinning wild yarns, like all that fracking waste is radioactive and we’re going start glowing in the dark any day now. That’s the kind of wild tale being spun by Youngstown, OH Rep. Bob Hagan (Democrat).

    Because not enough Ohioans are turning against Utica Shale drilling, it’s time to ratchet up the rhetoric and old Bob is ready to pour it on. Here’s his latest glow-in-the-dark warning…
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    PwC: Marcellus, Other Shale Play M&A Deals Heat Up in 2013

    According to one of the top accounting/consulting firms in the world, PricewaterhouseCoopers (PwC), mergers & acquisitions (M&A) activity in the oil and gas sector in the U.S. heated up in 2013 and “included a strong uptick in the last three months of the year.” Overall there were 182 total deals accounting for $115.9 billion in total deal value for 2013. Also according to PwC, shale was an important part of that–in particular the Marcellus Shale.

    PwC tracks M&A deals worth $50 million or more. During 4Q13, there were four such deals in the Marcellus, totaling $1.1 billion. The Utica had two deals in 4Q13 worth $263 million. For all of 2013, there were 79 shale deals (across all shale plays) that contributed $53.2 billion–that is, shale deals represented half of all oil & gas M&A deals during 2013. Here’s the announcement and analysis from PwC (sorry, we couldn’t score a copy of the full report, just the summary):
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    Blue Racer: Natrium Plant Back Online, New Customers, Adds Barging

    Big news from Blue Racer Midstream. Last September there was an explosion and a fire “isolated to a small area” at the Blue Racer Natrium processing and fractionation facility in Marshall County, WV (see Explosion/Fire at Blue Racer’s Natrium, WV Processing Plant). The fire knocked the plant offline for customers needing to process wet gas. At least two (perhaps more) customers found other sources to process their wet gas (see Blue Racer’s Natrium Plant to Remain Offline Until Jan 2014). According to a single sentence buried in a press release issued yesterday, the Blue Racer Natrium plant is finally, after five long months, back online. No date was given for when it resumed operations–presumably yesterday or over the weekend. The statement says, “The Natrium I processing unit has recently returned to service following a temporary shutdown that occurred after a fire damaged the unit.”

    No mention of how long it was offline (five months!) or the work done to get it back online. Probably the lawyers telling them to keep their mouth shut. Anyway, we’re happy to see it back up and running. In addition to that very big news (which was decidedly downplayed in the press release), Blue Racer also announced yesterday they’ve picked up several new customers for an expansion at the Natrium processing/fractionation plant (see who below). Finally, Blue Racer announced that in addition to the current rail, truck and pipeline they use to move NGLs (natural gas liquids) from the plant, they’re adding barging down the Ohio River. Notwithstanding the downplayed reopening of the Natrium plant, this is one of the most enlightening press releases from a midstream company we’ve seen in some time…
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    Houston Investment Firm a True Believer in WV Cracker Plant

    A huge vote of confidence by an investment firm that the ethane cracker plant recently announced by Gov. Earl Ray Tomblin and planned for Parkersburg, WV will actually be built (see WV Announces Brazilian Company to Build Ethane Cracker Complex). Siltstone Capital, an investment and advisory firm with corporate offices in New York and Houston, bought the old Blue Cross and Blue Shield building in downtown Parkersburg–vacant since 2009–to set up offices for the company and to lease out space they don’t use themselves.

    Siltstone invests in companies in the energy sector: exploration and production, oil services, and midstream. If they weren’t totally convinced that the Odebrecht cracker plant would be built, you can be sure Siltstone would not have spent $475,000 on a vacant building in Parkersburg, WV (population 31,492)…
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    OH Company Doubles Jobs/Revenue by Targeting Utica Shale Drillers

    Dan Pottmeyer, president of Producers Service Corp located in Zanesville, OH, says his company is the only fracking company that’s “home-grown in Ohio.” (That’ll be good news for OH Gov. John “foreigner hunter” Kasich. He likes ’em home-grown.) Pottmeyer’s company used to send oilfield services crews into Ohio’s conventional oil and gas fields for low-volume fracking work. However, after purchasing new equipment and more than doubling the work force, Pottmeyer now sends his crews into the field to work on Utica Shale wells–competing with the likes of oilfield services titans like Halliburton and Baker Hughes. Although he doesn’t disclose figures for the privately-held company, Pottmeyer says revenue has more than doubled in the past couple of years.

    The Producers Service Corp story is a good story–an important story–of how local businesses can figure out how to plug in to the Marcellus and Utica Shale supply chain. Which is why we love to bring you stories like this one…
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    Williams Changes Up Leadership for Northeast Gathering Operation

    A reshuffling of leadership for Williams’ operations in the northeast Marcellus/Utica region. Previously, Frank Billings ran the show for the Northeast Gathering & Processing operating area. Billings has been reassigned/promoted to corporate HQ. Taking over for Billings as head of Northeast Gathering is Jim Scheel. What does it all mean? We don’t know–so we’re left to read between the lines.

    It seems from the statements by Williams’ CEO Alan Armstrong that Billings blazed the trail and got things rolling in the northeast, and now the northeast region has turned into more of an ongoing, operational kind of thing–and Scheel is an operations guy, good at focusing on the details of turning the northeast area into a well-oiled machine. At least that’s our read. What do you think? Here’s the announcement…
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    Blue State Blues: 6 New England States Want New Natgas Pipeline

    Wonders never cease. The governors of six New England states (5 Democrat governors, 1 Republican governor) have sent a letter, or more properly the heads of their state utility commissions have sent a letter, to ISO New England (the regional cooperative transmission organization), requesting that a new natural gas pipeline be built to get more Marcellus Shale gas into New England. Oh, and they want to charge electric customers to get it built. Why? Not enough pipeline capacity now. Electric generating plants are using more and more natural gas to produce electricity. Not enough supply of natural gas in New England means those generators are paying nosebleed rates to produce electricity, and consequently electric rate payers are paying out the nose to cover the cost. Eventually those rate payers will toss their overlords out of office is something isn’t done–so by golly they’re doing something.

    Even the fossil-fuel hating, tree hugging anti-frackers in New England have hit the brick wall of reality: so-called renewable sources of electricity can’t and won’t (for the foreseeable future) provide enough electricity to meet our needs. The remarkable request letter (embedded below) doesn’t specify how or where the pipeline should go, just that they need it and they need it in place by winter of 2017. Of course, that doesn’t stop some of the nuttier anti-drilling organizations from opposing the idea…
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    EPA Chief McCarthy Tells NRDC States Have Lead Role in Fracking

    Generally, Gina McCarthy, administrator of the federal Environmental Protection Agency, is ready to poke her nose into fracking whenever and wherever she wants. Apparently she doesn’t want to–at least for now. McCarthy has dialed back her fervor on regulating fracking and (lately) has been deferential to state regulators. That doesn’t sit well with unreasonable so-called environmentalist groups like the National Resources Defense Council (NRDC). In responding to a letter from the NRDC, McCarthy said, to her credit, that the states have the key/lead role in investigating concerns about fracking and potential pollution. That went over like a lead balloon at the NRDC.

    The NRDC, and other so-called environmentalist groups, want all oil and gas regulation under the thumb of the feds. They don’t like having to deal with that messy thing called the U.S. Constitution which says oil and gas regulation comes under the purview of the individual states. Statists don’t like that particular inconvenient truth and were hoping an Obama acolyte like McCarthy would be more statist in her approach, assuming authority not granted her under the Constitution. For now (thankfully) the EPA under McCarthy is stepping back from a more active role. At least until their “study” of fracking is completed sometime this year…
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    Ongoing Fallout from PA Supreme Court’s Wrong Act 13 Decision

    bozo mushroom cloudOne month ago Pennsylvania got the sad news that the state Supreme Court struck down important (and large) sections of the 2012 Act 13 Marcellus Shale drilling law (see PA Supreme Court Rules Against State/Drillers in Act 13 Case). The disappointing aspect of the decision is that Chief Justice Ron Castille, a Republican, joined three Democrats on the bench in deciding to use, for the first time, PA’s Environmental Rights Amendment to create new rights that didn’t exist before (drunk on their own power?). In fact the basis on which Castille made his poor judgment was based on his admitted prejudiced view that drilling and fracking is inherently harmful to the environment–which of course is not the case (see Industry Vet Points Out Error in PA Supreme Court Act 13 Ruling).

    One of the biggest problems with the PA Supreme Court decision is that the four justices agreeing to strike down zoning (and other) provisions in Act 13 could not agree on their reasons for doing so, weakening the decision’s usefulness in future cases. They also sent portions of the original case back to a lower court that, if those decisions go the wrong way, will totally wipe out the Act 13 law, sending PA back to the drilling stone ages again, without important environmental protections provided for under the law. Last week Penn State University law professor Ross Pifer analyzed the high court’s poor decision on a webinar call…
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    New Study: Conventional Gas Wells Produce 3X Wastewater as Shale

    Let’s frame this up so you have a proper understanding for the source of this information: A postdoctoral research associate dude at Duke University (a really smart student) teamed up with another smart student getting her master’s degree in environmental management at Duke, to study how much wastewater is produced by both conventional (or traditional) natural gas wells and unconventional horizontally-drilled shale wells in Pennsylvania. In essence they researched and wrote a term paper on the topic which will be published in the February issue of the journal Water Resources Research (see below). The postdoctoral dude has since left Duke and is now an assistant professor of biogeochemistry at Kent State. Hence, we have a “new study issued by Kent State and Duke University.” We’re not denigrating their accomplishments! Just giving you a proper understanding for how these “studies” are sometimes researched and how they’re reported about in the media.

    Anywho, the research from our two intrepid students shows that overall, because there are so many shale wells in PA, and because it takes a lot more water to frack a shale well than a conventional well, that (surprise!) shale wells produce more wastewater that conventional wells. The interesting aspect of their research–the finding that is worthy of putting their names in academic lights over–is that per unit of gas recovered, shale wells produce only 1/3 as much wastewater as conventional wells. Let’s put this startling discovery another way: If irrational anti-drillers banned all horizontal fracking of shale wells tomorrow in PA (whoops, the PA Democrat Party is trying to do just that!), and we went back to the days of only mining gas by conventional wells, in order to produce as much gas as we now produce today, we would produce three times as much wastewater to get it from conventional wells. We’d also have to sink way more holes in the ground to get it…
    Read More “New Study: Conventional Gas Wells Produce 3X Wastewater as Shale”

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    Glow in the Dark: Are We Being Irradiated by Frack Waste?

    radioactive zombiesThe fear-mongering continues by those who oppose shale drilling. One of the scare tactics used by anti-drillers is to say that frack wastewater and drill cuttings (leftover rock and dirt) are loaded with radiation and by disposing of it in landfills and via wastewater recycling facilities we’ll all end up irradiated, dying long slow deaths from cancer. Or worse yet, we’ll all become radioactive zombies. Hey, maybe someone could make a movie about that! (Unbelievably, they already have: see Friday Foibles: The Scientific Link Between Fracking and Zombies.)

    The Ohio EPA and Dept. of Natural Resources (ODNR) is not much impressed by all these radioactivity claims. Neither are we. One of the favorite drive-by media claims is that drill cuttings are setting off radiation alarms at landfills in record numbers (“hundreds” of times a year). Thing is, those same alarms go off when medical waste is hauled in too–they’re that sensitive that even radioactive dyes are picked up by them. It proves NOTHING. Yet you see that argument often used–fracking dirt contains radition! Whatever. Here’s the latest drive-by attempt to scare people with radioactive waste concerns, this one emitted by the Columbus Dispatch…

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    PA Dem Consultant Lectures Party to Avoid Marcellus Moratorium

    Every now and again the truth pokes through–even in publications like the Philadelphia Inquirer. We read with interest an op-ed in today’s Philly Inquirer that tells the truth about how the Marcellus Shale is responsible for creating 290,000 jobs in Pennsylvania over the past few years–a state with an unemployment rate stuck above 7%. Some 28,000 of those jobs are “core” industry jobs that pay on average $83,000 per year or more. The op-ed says the Marcellus has given Pennsylvania families a reason to be optimistic about their financial future.

    The fascinating thing to MDN is that the op-ed is written by Democrat consultant Mike Butler, current executive director of the Consumer Energy Alliance (Mid-Atlantic section). Mike is a former political consultant for Democrat Bob Casey for U.S. Senate (who sadly won), Dan Onorato for PA governor (who happily lost to Tom Corbett), and on the staff of former Democrat Congressman Jason Altmire. Huh. A Democrat singing the praises of the Marcellus shale, and at the close of his comments he warns the leaders of his party that the statewide moratorium they say they will enact if they regain political power in the state should be “avoided.” We’d use stronger words, but we’re happy to see at least one Democrat in the entire state hasn’t lost all of his marbles…
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