Industrywide Issues

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    NY DEC Extends Comment Period on New Regulations by 30 Days

    Binghamton Press & Sun-Bulletin (Nov 4):
    Debate on drilling rules extended by DEC

    The New York Department of Environmental Conservation has caved to the anti-drillers who are screaming for more time to read the 800-page draft Supplemental Generic Environmental Impact Statement (dSGEIS)–the proposed new drilling regulations all drillers in New York would have to follow when drilling in the Marcellus Shale. So the DEC has added another 30 days to the “comment period” which is really nothing more than an extra 30 days for the anti-drillers to try and prevent drilling in New York. No worries, drilling is coming and they can’t stop it.

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    Feds Deny Private Landowers the Right to Drill in PA

    Kangaroo News Service (Nov 2):
    Local Citizens, Civic and Business Leaders Launch Petition to Resume Oil and Gas Development in the Allegheny National Forest

    This one should make every landowner shudder–with anger and fear. The Obama Administration has illegally shut down drilling on private land in Pennsylvania. Landowners who own land in the Allegheny National Forest are now denied access to drill and sell the natural gas under their own land by fiat from the U.S. Forest Service, part of the executive branch of the federal government (i.e., Obama). This naked and forceful grab of individuals’ rights by the federal government cannot go unanswered. Make your voices heard!!

    We have to go all the way to an Australian news service for this one folks:

    In a petition distributed by the Pennsylvania Oil & Gas Association (POGAM) and Allegheny Forest Alliance (AFA), nearly 2,000 citizens, and civic and business leaders from Elk, Forest, Warren and McKean counties have called for President Obama and the U.S. Department of Agriculture to lift a ban on oil and gas development by the U.S. Forest Service, which effectively has halted drilling on privately owned mineral lands underlying the Allegheny National Forest. The petition was also mailed to Pennsylvania Governor Ed Rendell to encourage a greater effort by the Commonwealth to support a critical element of northwestern Pennsylvania’s economy.

    In a historically unprecedented action, local and regional managers of the Allegheny National Forest have banned oil and natural gas exploration and barred mineral owners from accessing their property throughout the forest, effectively seizing the development rights to privately owned oil, gas and mineral resources. The ban has shut down oil and natural gas exploration and stymied production in the forest, where the industry has operated for decades in cooperation with the U.S. government. The petition maintains that the ban illegally violates Pennsylvania’s grant of consent to the United States in 1921 to acquire the forest and also violates the protection of private property rights in the federal law, the Weeks Act of 1911, under which it was acquired.

    “The behavior by the Forest Service is most irresponsible, and it amounts to the unlawful taking of private property,” said Stephen W. Rhoads, POGAM president. “State records show that fewer than 50 wells, all of them permitted prior to the drilling ban imposed on January 1, have been drilled in the Allegheny National Forest during 2009. The Forest Service has prevented the drilling of between 200-300 wells that would have otherwise occurred. These undrilled wells translate into private investment of nearly $100 million and jeopardize hundreds of good-paying jobs in the region. The action of the Forest Service amounts to a full-scale assault on the economic health of the families and communities living in and around the Allegheny National Forest.”

    Private oil and gas development within the Allegheny National Forest accounts for at least 20 percent of Pennsylvania’s oil production and as much as 10 percent of Pennsylvania’s natural gas production. It contributes tens of millions of dollars annually into the regional economy of northwest Pennsylvania and western New York.

    For decades, the U.S. Forest Service and the oil and natural gas industry have worked cooperatively to manage oil and gas development. The petition represents a strong consensus among citizens and local community leaders about the importance of this industry and the condemnation of the Forest Services’ current management practices to immobilize the region’s economic recovery and progress.

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    Six Regulators Police Drilling in Eastern Half of PA

    Wayne Independent (Nov 2):
    Few regulators in place for natural-gas drilling

    At a recent meeting in Preston Township (Pennsylvania), Department of Environmental Protection (DEP) officials talked about their role in inspecting gas drilling operations in the Marcellus Shale. The article attempts to make the case there are far too few inspectors for the growing number of drilling locations. In the eastern half of Pennslvania there are only six DEP officers whose job it is to monitor drilling activity and water supplies. The DEP is requesting three more, but with the recent state budget cuts, the additional positions are not assured.

    There was one bit of interesting information for landowners in Wayne and surrounding counties in the article:

    Although Wayne County has had only two natural gas wells drilled in the past two years, other areas in the region have experienced a rapid proliferation of production sites including in Susquehanna, Bradford, and Tioga counties. Hundreds of drill sites are expected to come online by the end of next year in the eastern office’s jurisdiction.

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    First NY DEC Meeting on Proposed Drilling Regulations Held in Sullivan County

    Middletown Times Herald-Record (Oct 29):
    300 folks pack Sullivan fracking forum

    The first scheduled meeting for public comments on the draft Supplemental Generic Environmental Impact Statement (SGEIS) held by the New York DEC happened yesterday in Sullivan County, NY. According to the Middletown Times Herald-Record:

    Most of the speakers in the standing-room-only, mostly anti-drilling crowd of more than 300 at Sullivan County Community College said the proposed Department of Environmental Conservation rules for drilling of the Marcellus shale fall short.

    The anti-drilling standard tactic is to delay drilling in hopes of building support to get it banned altogether. This was evidenced at the meeting. With regard to extending the DEC’s public comment period (which would further delay the start of drilling):

    Paul Rush, deputy commissioner of the New York City Department of Environmental Protection, called for 45 extra days.

    Joe DiPane of Callicoon called for six months, since the shale “has been formed underground for eons,” he said.

    There are two more scheduled meetings, Nov. 10 in New York City and Nov. 12 in the Binghamton area. A third meeting is yet to be arranged in the Elmira area. (See Public Hearings on the New York Draft SGEIS for Marcellus Shale Drilling for details.) Landowners need to attend and make their voices heard!

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    Make Your Voice Heard on the Proposed NY Drilling Regulations

    In addition to attending the hearings previously mentioned (see Public Hearings on the New York Draft SGEIS for Marcellus Shale Drilling), if you’re a landowner in New York, you can also make your voice heard about the new regulations in the following ways:

    (1) Leave a comment on the specially created form on the DEC website: www.dec.ny.gov/cfmx/extapps/SGEISComments/

    (2) Send an e-mail to: dmnsgeis@gw.dec.state.ny.us

    (3) Write a letter to:
    Attn: dSGEIS Comments
    Bureau of Oil & Gas Regulation
    NYSDEC Division of Mineral Resources
    625 Broadway, Third Floor
    Albany, NY 12233-6500

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    Public Hearings on the New York Draft SGEIS for Marcellus Shale Drilling

    New York Dept. of Environmental Conservation (Oct 13):
    Press Release: DEC Schedules Public Hearings on Marcellus Shale Drilling Draft SGEIS

    Landowners will want to attend the public hearings being held by the New York DEC on the draft regulations for drilling in the Marcellus Shale. The regulations are called the Supplemental Generic Environmental Impact Statement (SGEIS). Why attend? To educate yourself on the regulations, and (if you’re so inclined), to offer your comments of support. You can be sure the anti-drillers will be out and vocal–so you need to be out and vocal too if you’re interested in ever seeing drilling commence in New York State. Here are the dates for hearings so far:

    • Wednesday, Oct. 28, Sullivan County Community College, E Building, Seelig Theater, 112 College Rd., Loch Sheldrake, NY 12759.
    • Tuesday, Nov. 10, Stuyvesant High School, High School Auditorium, 345 Chambers Street, New York, NY 10282.
    • Thursday, Nov. 12, Chenango Valley High School, High School Auditorium, 221 Chenango Bridge Rd., Chenango Bridge, NY 13901.
    • Elmira – Corning, TBD.

    The doors will open at 6 p.m. for individual questions and speaker sign up (first come, first called for commenting on the record). The public comment session will start at 7 p.m. Check the DEC web site for possible changes in time or location.

    From the press release:

    DEC staff will be available prior to the start of each session to answer individual questions about the format and contents of the draft SGEIS. The following procedures will guide the public hearings:

    • To accommodate as many people as possible, there will be a five-minute limit on oral presentations.
    • Speakers may supplement their oral presentations with written comments. Written and oral comments receive equal consideration.
    • Formal presentations (PowerPoint, etc.) cannot be accommodated.
    • Individuals intending to speak will be required to sign-in upon arrival and will be called in the order registered.

    To view (or download) the 809-page draft SGEIS, go to this page: www.dec.ny.gov/energy/58440.html

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    Sen. Gillibrand Trying to Slow Down Drilling in New York

    Binghamton Press & Sun-Bulletin (Oct 15):
    Gillibrand urges N.Y. extend comment period on gas drill rules

    More delay tactics from the Democrats. Enough already! From the article:

    U.S. Sen. Kirsten Gillibrand, a member of the Senate Environment and Public Works Committee, on Thursday urged New York to extend the public comment period on proposed regulations governing development of the gas-rich Marcellus Shale.

    New York state released its environmental impact statement Sept. 30 and scheduled a series of public meetings, beginning on Oct. 28 . The state provided a 60-day period for public comment; Gillibrand, D-N.Y., recommended a 90-day public comment period, to Dec. 30.

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    Pennsylvania Budget Almost There – With No Drilling Tax

    Philadelphia Inquirer (Oct 9):
    Pa. budget pieces start to fall into place

    With a state budget still not adopted, and now over 100 days late, Pennsylvania is finally about there. The good news for drillers…no severance tax this year:

    Also not in the package is a tax that some lawmakers had wanted to impose on natural-gas drilling in the vast formation known as the Marcellus Shale.

    Republicans in the Senate – and later Rendell – opposed starting such a tax this year, arguing that it would stunt drillers in an industry still in its infancy in the state.

    Kudos to the Republican Senate for protecting landowners’ money.

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    Pro-drilling Editorial from Corning Leader

    Corning Leader (Oct 7):
    Gas drilling an important opportunity

    Well, what do you know? A positive editorial from a news outlet (for a change). This one from the Corning Leader says in part:

    [S]ometime next spring or summer we’ll see the beginning of what could be a drilling bonanza in the Southern Tier. Hundreds of wells have already been tapped in Pennsylvania and the same level of activity could happen here.

    Potentially, that could generate billions in new revenue for a sustained period of time. Gas companies, support companies, engineering firms and so on are expected to follow others that have already located in the Southern Tier to tap into the northern tip of the Marcellus Shale. Those companies will create jobs, pay taxes and have a beneficial ripple effect through other sectors that could revive one of the poorest areas of the country.

    Thank you for talking about the positive side of drilling!

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    More Work Ahead in New York Before Drilling Begins

    Binghamton Press & Sun-Bulletin (Oct 7):
    Much more work ahead

    An editorial in the Binghamton Press & Sun-Bulletin, no doubt written in part by Tom Wilbur, anti-drilling shill for the eco-nut groups. It acknowledges what MDN has already noted: The New York DEC is interested in pushing forward with responsible drilling in New York, eco-nut groups are not. The battle is only beginning. Landowners need to write and call and make their voices heard on the proposed drilling regulations.

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    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.

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    Natural gas quest: Technical report carving deep divisions between gas companies and industry critics

    Binghamton Press & Sun-Bulletin (Oct 4):
    Natural gas quest: Technical report carving deep divisions between gas companies and industry critics

    The eco-nuts are in a snit over the Department of Enviromental Conservation’s proposed new Supplemental Generic Environmental Impact Statement for drilling in the Marcellus Shale in New York State. As previously posted on Marcellus Drilling News, in a cursory glance at the proposed new rules for New York, I believe the rules are somewhat over-restrictive, but not as bad as they could be. It appears the eco-nuts read it the same way and this article, authored by eco-nut stenographer Tom Wilbur (who dutifully “reports” the anti-drilling side in every article he writes), chronicles the apoplexy going on inside the eco-nut movement. I am encouraged. Let’s hope the New York DEC quickly adopts the SGEIC so drilling can finally begin.

    Likewise, let’s hope Maurice Hinchey (Democrat Congressman from Upstate New York) is unsuccessful in passing a bill in Congress that would effectively bring control of all gas drilling under the jurisdiction of the rogue Environmental Protection Agency under the guise that the EPA is the only agency who can properly protect drinking water supplies. It is an attempt by the federal government to grab power away from the states. New York (and all states) must resist this legislation. Beat back the eco-nuts! Let the drilling begin.

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    New York State Releases Draft Rules for Drilling in the Marcellus Shale

    Originally run on RSSBinghamton.com on October 1st:

    The New York State Department of Environmental Conservation (DEC) has finally released its Supplemental Generic Environmental Impact Statement for drilling in the Marcellus Shale. Instead of making drilling companies do an environmental impact statement for each well they drill, the DEC decided to do one “generic” environmental impact statement that will apply to all drilling sites throughout the state. You can read the document for yourself here: //www.dec.ny.gov/energy/58440.html.

    I have not yet had a chance to fully digest the 500+ page document. I have reviewed some of it (a lot of it is technical). An article in the Press & Sun-Bulletin purports to cover some of the highlights. Read the P&SB article here: NY regulators propose pre-emptive checks of gas wells in Marcellus Shale. But let me warn you that Tom Wilber, the P&SB writer, shades all of his Marcellus drilling articles with anti-drilling sentiment. For example, he says:

    The DEC’s regulatory overhaul began after Southern Tier residents crowded into school auditoriums and town halls to attend public information sessions hosted by the agency in the summer of 2008. Those sessions often became heated, as regulators were unable to satisfactorily answer questions about water consumption, waste disposal, chemical handling and other aspects of large scale Marcellus drilling.

    Perhaps so Mr. Wilber. Maybe that’s why New York decided to do a complete review in the first place. But in the interests of being fair and balanced, why didn’t you also mention the rally held just recently (this past summer) in Afton, where thousands of landowners showed up to support drilling? There were more people in one location at one time to support drilling than there ever have been in any location who oppose it.

    He also asserts in the article:

    DEC officials have watched and learned from developments in Dimock Township, Pa., where Cabot Oil & Gas recently had to shut down some operations after repeated spills and environmental problems. Explosive levels of methane contaminated some drinking water supplies earlier this year. More recently, an 8,000 gallon spill of chemicals used to stimulate well production polluted a creek and wetland.

    Yes, Cabot has had problems and they are being appropriately spanked for it by the Pennsylvania Department of Environmental Protection (PA’s version of our DEC). The situation is being carefully monitored and handled. But again, the lingering sentiment from the paragraph seems to be that all drilling is unsafe and all drilling companies are out to screw the populace. What about the hundreds (thousands?) of other natural gas wells in PA that are doing just fine with their operations? No spills or contamination of anything. No mention of that.

    My very preliminary take on the new DEC proposed regulations: Likely overbearing and restrictive, but at least we’re moving again. After a public comment period until Nov. 30, the DEC will hopefully sew this thing up and drilling can finally begin in New York.

    Stay tuned as more will surely come out about the proposed new regulations as people have time to review them in detail.

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    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.

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    PA House budget unlikely to advance

    Pittsburgh Post-Gazette (Oct 3):
    House budget unlikely to advance

    Pennsylvania still has not adopted a budget for the new fiscal year. Part of the wrangling is how to raise taxes to meet the ever growing demand of government to transfer wealth from the producers of society to the non-producers. In PA, the Democrats want to tax natural gas drilling, which of course will take money out of the landowner’s pocket…make no mistake, any tax on drilling will be passed on as an “expense” by the energy companies, reducing royalties to landowners. The Republicans in the PA statehouse are trying to stop it. Make your voice heard if you’re in PA!

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    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