Study: Do PA Towns Spend Impact Fee Revenue on Stated Purpose?
One of the lasting, positive legacies of Pennsylvania Gov. Tom Corbett, predecessor to the current disaster of a governor, Tom Wolf, is signing into law Act 13, which updated PA’s laws for Marcellus Shale drilling. Among the provisions of Act 13 is something called an impact fee–far better and more fair than a so-called severance tax. As we wrote at the time, the impact fee is really 60% fee and 40% tax. Most of the revenue raised, 60% of it, stays local in the communities impacted (hence the name) by drilling. Those communities have higher expenses for first responders, water and sewer, and other government expenses, due to an increase in drilling activity. But in order to get the deal done in Harrisburg, Corbett and the Republicans had to agree to grease the palms of bureaucrats with 40% of the revenue raised from the fee, to be spread around to various agencies (see PA’s New Tax on Drilling (er Sorry, Impact Fee)). Whatever. At least 60% of the money stays local. The question is, are the local towns and communities receiving their portion of the money using it for what it was intended? A pair of University of Pittsburgh at Bradford professors received a grant to study that very question. The resulting report, “Analysis of Act 13 Spending by Pennsylvania Municipalities and Counties” (full copy of 68-page report below) was published in July. What did it find?…
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Each month the U.S. Dept. of Energy’s Office of Fossil Energy issues a report on LNG exports and imports. We check in on the report from time to time. This month’s report (with data through September) is particularly interesting. It shows the rapid scale-up of Cheniere’s Sabine Pass export facility on the coast of Louisiana. Sabine Pass is exporting U.S. shale gas, including some Marcellus/Utica gas, which is why we are interested in the LNG story. November is predicted to set a new record on the export of U.S. shale gas from Sabine. The LNG import picture, increasingly small, is also interesting and instructive. All of the LNG coming into the U.S. (via ship, not via pipeline from Canada) this year has come from one country: Trinidad. And there is a single import terminal that receives almost all incoming, non-pipeline LNG: Everett, MA (near Boston). Which is why GDF Suez, the operator, has been agitating against new pipelines to New England (shame on them)…
Another week, another so-called research paper that purports to show a link between fracking and earthquakes. Two researchers at the University of Calgary looked at drilling and fracking of shale wells in Canada’s Duvernay Shale (western part of the country), looking for clues that might indicate fracking itself–if done near an underground fault–can lead to low-level earthquakes. The researchers claim they have found such a link–which is the first such study to make a connection between fracking and earthquakes. The researchers have just published “Fault activation by hydraulic fracturing in western Canada” (full copy below), in the journal Science. We have repeatedly reported, based on studies and observable facts, that disposing of high volumes of wastewater in injection wells near underground faults (large cracks in the rock layer) can lead to earthquakes. We’ve also chronicled that fracking directly over a fault can also lead to an earthquake–which has been documented to happen perhaps half a dozen times, ever, out of the hundreds of thousands of times wells have been drilled and fracked. Statistically zero. But this study claims there is a link and the inference is that fracking leads to more earthquakes that you may think. Should we be worried?…
It seems old Mom Earth has a major case of flatulence (i.e. farting). Researchers who have been mapping the ocean floor have discovered “an active strip of seafloor called the Cascadia Subduction Zone is bubbling methane like mad” off the coast of Washington, Oregon and California. [Quick, somebody call Cornell prof Bob Howarth! There’s fugitive methane escaping!!] Big Green advocates get their knickers in a twist over fugitive methane because, ‘ya know, it causes global warming. But this time mankind is nowhere to be found as the cause. This massive methane leak off the West Coast is Mom Earth, all by herself, farting away and killing herself without even knowing it. How tragic. And how funny!…
MDN’s favorite government agency, the U.S. Energy Information Administration, has just published a brief article denoting a milestone: the amount of natural gas in storage has reached a new, record high of 4.017 trillion cubic feet (Tcf). Our country does not use as much natural gas as we produce during the months of April through October–which is the time when we store the extra gas in (mostly) underground salt caverns. From November to March, when it’s cold, we withdraw gas from storage because we’re using more than we produce. Over the past few years we have produced, and stored, far more gas than we can use–leading to a crash in natgas prices. A buildup in storage is a signal to the market that once again we have too much supply and not enough demand. Which furthermore is a signal that the recent rise in prices for natgas (over $3/Mcf) isn’t likely to last. In fact, the price of gas over the past month has gone from $3.25/Mcf to (today) $2.75/Mcf–a $0.50 drop. Storage is a big part of the reason why. Here’s what the EIA had to say…
In March we highlighted the issue of abandoned oil and natural gas wells in Pennsylvania (see 
While the worldwide Baker Hughes rig count slide back a bit in October, from 934 in September to 920 in October, the rig count in the U.S. once again, for the fourth month in a row, went up. The average U.S. rig count for October was 544, up 35 from the 509 counted in September. However, the rig count was down 247 from the 791 counted in October 2015–so we still have a long ways to go. The Marcellus/Utica rig count was up for the third month running. In October the M/U rig count went up by 4 with 3 additions in PA (now 25 rigs) and 1 in WV (now 10 rigs). OH stayed even running with an average of 14 rigs…
IHS Markit, an information and analytics company that keeps a close eye on the energy industry, says its analysis shows natural gas production in the U.S. went down “nearly 2%” in October from September. It doesn’t sound like much, but it’s a big deal. Production levels in South Texas and the Northeast, according to VP Jack Weixel, “fell off a combined 1.3 Bcf/d from September to October.” That is the largest regional month over month decline IHS Markit has seen since it began tracking these numbers. What does it mean? Typically it means higher prices are coming–less supply, the same or increasing demand equals higher prices (classic economics 101 stuff). However, there are so many complex and contributing factors, it’s not as simple as less supply = higher prices. Not anymore! Here’s what IHS Markit is saying…
The U.S. Chamber of Commerce recently launched a “What If…?” series to counter the radical “keep it in the ground” movement–a movement that irrationally hates the use of fossil fuels. In August the Chamber released their first such report, titled “What If…Energy Production was Banned on Federal Lands and Waters?” (see 
As we near the end of this year, analysts and consultants inevitably turn their attention to next year, 2017. Will oil and gas drillers spend more money next year on their drilling programs? The consensus appears to be a resounding “Yes!” The question is, how much more? Anyone’s guess. But analysts like to guess. One those analyst firms is Evercore ISI, an investment banking advisory firm founded in 1995. Evercore’s smarties are predicting drillers will spend 25% more next year than they did this year on drilling–with a total collective spend across the industry of ~$110 billion. Here’s their thinking…
MDN editor Jim Willis recently had the pleasure of addressing the Petroleum Club at the University of Pittsburgh’s Bradford, PA campus. Not in person, but via Skype video. When Jim asked the group, most of them in their second year of a two-year petroleum technology program about future job prospects, he got the impression they are concerned. The Marcellus industry has not been immune to layoffs. Graduating with a degree in an industry that’s seen 300,000+ layoffs over the past two years might make some question the wisdom of entering the program in the first place. Jim’s message to these eager young people bursting with potential? Don’t give up–and be encouraged. At the recent Shale Insight event and Benposium East event (both held in September), Jim had a number of conversations with those who either work in or invest in the o&g industry. His conclusion after speaking with industry insiders? Things are beginning to turn around. In fact, we can’t count the number of stories that talk about the coming shortage of good workers in the o&g industry. Today we spotted a press release from Energent Group promoting new research and wanted to highlight some of the information in that release–information that may be helpful to our new young friends at Pitt-Bradford, and for others in the industry looking for work. The research highlights the fact there are many drilled but uncompleted wells (DUCs), in all shale plays–but particularly in the oily Permian and Eagle Ford shale plays. According to the Energent research, workers probably stand the best chance of getting a job with a frac crew–because companies will first work on completing the already-drilled wells by fracking them. Makes sense to us!…