Plugging Orphan Wells in OH, PA More Complicated Than Just Money
In the fall of 2021, President Biden signed into law the so-called Infrastructure Bill, some $1.2 trillion in pork barrel spending, passed with the help of turncoat Republicans (see Biden So-Called $1.2T Infrastructure Bill Passes Thanks to RINOs). Only about 9% of the $1.2 trillion will go to actual infrastructure projects like roads and bridges. One of the line items in the bill (so small it’s a rounding error) is money to plug orphaned and abandoned oil and gas wells. A small amount of money was distributed last fall, a year after the bill became law (see PA DEP Solicits Bids to Plug First 50 Orphaned Wells Using Fed $$). Finally, after two years of waiting, the Bidenistas issued the next round of money in July — some $660 million in total, of which $163 million (or 25%) went to Ohio, Pennsylvania, and West Virginia (see Bidenistas Dispense $163 Million to Plug Old O&G Wells in OH-PA-WV). It turns out that just throwing money at the problem doesn’t fix it. There is a long list of challenges before an old well gets plugged.
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Two weeks ago, the U.S. rig count erased a couple of weeks of anemic gains by dropping 11 rigs from the total, sinking to 630 active rigs, the lowest count since February of 2022 (see 
New shale permits issued for Sep 18 – 24 in the Marcellus/Utica were roughly the same as the prior week. There were 21 new permits issued last week, down 1 from permits issued two weeks ago. Last week’s permit tally included 11 new permits in Pennsylvania, 4 new permits in Ohio, and 6 new permits in West Virginia. Three companies tied for top permittee last week: PennEnergy Resources with 5 permits in Butler County, PA; CNX Resources with 5 permits in Washington County, PA; and Southwestern Energy with 5 permits spread between Wetzel and Ohio counties in WV.
An important decision was recently issued in a federal court case (in Ohio) that has the potential to affect landowners and drillers with shale leases throughout the Marcellus/Utica. At least, we believe it has broader implications. The case is known as Grissoms et al. v. Antero Resources Corporation. The case revolves around the issue of a “market enhancement” royalty clause (MEC), which is common in many shale leases throughout the M-U. An MEC lease typically prohibits the deduction of any post-production costs incurred in transforming raw gas into a marketable product. The question is, when is the gas marketable? At the wellhead or later on, after it has been cleaned up? The judge in the Grissoms case ruled in favor of the landowner and said the gas is NOT “marketable” in its raw form at the wellhead.
Folks new to the Marcellus/Utica may not know this, but Chesapeake Energy’s then-CEO Aubrey McClendon first “discovered” the Ohio Utica about 15 years ago. Under McClendon, Chesapeake spent over $2 billion acquiring rights to drill 1.3 million acres in Ohio — or roughly 5% of the state’s land area. McClendon pegged the value of the Utica for Ohio at half a trillion dollars. He famously said the Ohio Utica is “the biggest thing economically to hit Ohio, since maybe the plow.” While McClendon rightly deserves credit for launching the development of the Utica, he guessed wrong on the best places to drill in the Utica.
Two weeks ago, the U.S. rotary rig count rose nine after rising by one the week before that (see 
Have we finally turned a corner? Hit rock bottom and have begun a rebound? We are referring to the Baker Hughes U.S. rig count. Last Monday, we reported the weekly rig count had finally gained a rig–the first time since June (see 
The Ohio Dept. of Natural Resources (ODNR) has “temporarily” suspended the operations of four fracking waste injection wells in Athens County. ODNR says the wells present an “imminent danger” to health and the environment. One of the wells, owned by Reliable Enterprises LLC, is located in Rome Township. The other three are owned by K&H Partners and located in Torch.
For the first time since June, the national active U.S. rig count added rigs–a single rig–last week. The new active U.S. rig count is 632, up from 631 the previous week. Unfortunately, the Marcellus/Utica lost yet another rig, sinking to 39 active rigs. Once again, West Virginia was the unlucky state that lost a rig, now running just 8 shale rigs. The rig counts for both Pennsylvania and Ohio stayed the same last week.
Gulfport Energy, the third-largest driller in the Ohio Utica Shale (by the number of wells drilled), emerged from bankruptcy in May 2021 with a new board and top management. In January of this year, the company appointed a new CEO, John Reinhart, the former President and CEO of M-U driller Montage Resources Corporation before that company was gobbled up by Southwestern Energy (see 
The transient workers in the Ohio Utica Shale field must stay somewhere. That somewhere is typically a hotel or motel. Belmont County, one of the hotbeds of Utica drilling, has many such transient workers. Their overnight stays at area hotels and motels create a big pile of lodging tax revenue, which is used to help fund the Belmont County Tourism Council. And the Council is thankful for it!
Quick! Apply pressure to the wound before the patient (in this case, the Marcellus/Utica) bleeds out. Another week, another lost rig in the Marcellus. We can’t seem to stem the flow of rigs leaving. The national rig count also lost one rig overall. For the eighth week in a row and the 17th of the last 18 weeks, the U.S. active rig count lost rigs. The total is now down to 631 active rigs across both oil and gas (down from 632 last week). At least the loss is slowing. West Virginia dropped one rig after adding one last week. The rig counts for both Pennsylvania and Ohio stayed the same last week.