Lycoming County

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    New Water Pipeline Coming for Drillers in Northeast PA

    Aqua America Inc. and Penn Virginia Resource Partners (PVR) announced they have formed a joint venture, Aqua – PVR Water Services, to construct and operate a private pipeline system to supply fresh water to natural gas producers drilling in the Marcellus Shale in north-central Pennsylvania. The 12-inch diameter steel pipeline will largely parallel the trunkline of PVR’s gathering system in Lycoming County and will share PVR’s existing rights-of-way.

    Read More “New Water Pipeline Coming for Drillers in Northeast PA”

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    Two New Gas Powered Electrical Plants on the Way in PA – $1.6 Billion Investment

    Marcellus Shale gas in Pennsylvania is having an effect on electricity generation. Instead of building coal-fired plants to generate electricity, natural gas powered plants are now in the works. Specifically, two new plants will be built in the next few years—one in Lycoming County and another in Bradford County. Not only does it mean a $1.6 billion investment, it also means hundreds of construction jobs, a cleaner way of producing electricity, and ultimately lower electricity costs for 1.4 million PA residents.

    Read More “Two New Gas Powered Electrical Plants on the Way in PA – $1.6 Billion Investment”

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    Marcellus Shale Drilling Saves the Williamsport, PA Airport

    In 2004, US Airways stopped flying from Williamsport, PA to Pittsburgh, leaving only flights to Philadelphia to tie the Williamsport airport with the rest of the world. And in 2008, US Airways announced they would even stop those flights. Things looked pretty bleak for the airport. Then it all changed.

    Read More “Marcellus Shale Drilling Saves the Williamsport, PA Airport”

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    The Two (Drilling) Faces of PA Gov. Ed Rendell

    Is Pennsylvania Gov. Ed Rendell pro- or anti-drilling? Darned if I can tell. In some ways he has encouraged and allowed drilling to flourish in PA under his watch, something PA landowners should be thankful for. But it seems he has to keep some in his own party appeased, so he often talks down drilling. In typical politician fashion, he talks out of both sides of his mouth. The latest example is today. One headline trumpets that Rendell has signed a deal with Anadarko for $120 million (Anadarko to pay Pennsylvania $120 mln for drilling – Reuters) to allow drilling on an additional 33K acres. But another headline says Rendell backs a stop to further leasing of PA public lands (Rendell backs halt to gas leasing in public lands – CBS/Channel 21), as if he’s champion of the anti-drillers. What gives?

    Well, it’s the same Ed Rendell on the same day walking a tightrope. He did indeed sign a deal with Anadarko to lease land that is supposedly surrounded by other public land already leased for drilling and so, as the thinking goes, the newly leased land won’t be “disturbed” all that much since most of the drilling operations will be from adjacent land. But now that he’s got his fist-full of $120 million, he immediately announces he’s now on board with no further leasing (after today, of course). Methinks he’s not going to make either side happy—but then he’s not running for re-election. What a strange character, that Gov. Rendell.

    Press release from Gov. Rendell’s office putting the master spin on today’s high-wire act:

    Harrisburg – Governor Edward G. Rendell announced today that the Department of Conservation and Natural Resources has finalized a responsible natural gas lease agreement by which Pennsylvania will meet its need for revenue from drilling next year, while also fulfilling its obligation to protect Pennsylvania’s natural resources.

    Under the agreement, Anadarko Petroleum Corp. has paid the commonwealth $120 million to access 32,896 acres that are surrounded by tracts of land for which drilling companies already hold lease agreements. Because these newly leased tracts can largely be accessed by gas operations on the adjacent tracts, the amount of new state forest surface area that must be disturbed is minimized.

    Other than the agreement, the commonwealth will not have to make any additional state forest land available to reach its revenue goals for natural gas drilling in the 2010-11 fiscal year.

    Read More “The Two (Drilling) Faces of PA Gov. Ed Rendell”

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    Anadarko Now Operating Four Drilling Rigs in Marcellus, Drilled First Lycoming County, PA Well in 1Q 2010

    An update on Anadarko’s Marcellus drilling activities from a recent operations report released to investors:

    Anadarko entered into a joint venture with Mitsui E&P USA LLC. Under the terms of the agreement, Mitsui will participate with Anadarko as a 32.5% partner in Anadarko’s Marcellus Shale assets in exchange for providing a $1.4 billion capital carry to Anadarko that covers 100% of its capital in 2010 and 90% thereafter. The carry is expected to be fully utilized by 2013. In addition, Mitsui committed to approximately $100 million to normalize its position with respect to Anadarko’s historical costs.

    At the end of the 1st quarter, Anadarko was operating four rigs and participating in an additional 12 non-operated rigs. The company spud ten operated wells and completed two wells during the quarter. Anadarko expects to be operating six rigs by the end of the 2nd quarter 2010.

    The Company completed and tested its first Lycoming County well (Larry’s Creek 3H) in January. The well was tested at a peak rate of approximately 6.1 MMcf/d.*

    *Anadarko Operations Report First-Quarter 2010

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    Six Short-Line Railroads in Central PA Report Business is Up 40 Percent Because of Marcellus Drilling

    MDN previously reported on two short-line railroads that have seen their prospects dramatically improve with Marcellus drilling activity in Pennsylvania—the Wellsboro & Corning Railroad and the Reading & Northern Railroad. You can now add six more short-lines to the list—all of them owned by the North Shore Railroad Company.

    A system of six railroads in northcentral Pennsylvania, including the Lycoming Valley Railroad Co., is enjoying a 40 percent increase in business over last year’s first quarter, said chairman and CEO Richard Robey.

    “We have seen a substantial increase in business related to the Marcellus Shale gas well drilling,” Robey said Wednesday.

    Before that, the recession had sliced the railroads’ business by nearly 20 percent, as it hauled fewer loads of iron and steel products and scrap, food stuffs and plastics to manufacturers, he said.*

    Once again the main product being hauled is sand, which is mixed with water and chemicals and injected into well bores as part of the process to free trapped natural gas from the shale.

    *Charleston Daily Mail (Mar 31) – Railroads booming with Marcellus Shale business

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    New Pipelines Coming to Lycoming, Tioga and Bradford Counties in Pennsylvania

    PVR Midstream, a division of Penn Virginia Resource Partners, has signed an agreement with Range Resources to construct and operate pipelines and compression facilities for Range’s drilling in the Marcellus shale in PA.

    According to the press release:

    PVR Midstream and Range have agreed to an area of mutual interest (AMI) that covers parts of Lycoming, Tioga and Bradford Counties in north central Pennsylvania, in which Range currently holds a substantial acreage position. Within this AMI, PVR Midstream will construct approximately 16 miles of 24- and 30-inch gathering trunklines, smaller-diameter field gathering lines and compression facilities required to gather Range’s production from the AMI. The gathering system will have over 700 million cubic feet per day (MMcf per day) of throughput capacity, and the initial phase is expected to become operational in the fourth quarter of 2010. The agreement provides Range significant firm gathering capacity in the system, and PVR Midstream will be compensated for the gathering and compression services provided to Range through a combination of volumetric fees, with no direct commodity exposure. Excess capacity on the system and the location within a core area of Marcellus Shale development should allow PVR Midstream to develop additional revenue by providing gathering and compression services to area producers.

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    More Details on Southwestern Energy’s Marcellus Shale Plans from Earnings Call

    From a Q4 2009 earnings call* held on Feb. 26, we learn the following about Southwestern Energy’s involvement in the Marcellus Shale:

    At December 31, 2009, we had approximately 149,000 net acres in Pennsylvania prospective for the Marcellus Shale. Our undeveloped acreage position as of December 31, 2009 had an average remaining lease term of five years, an average royalty interest of 13%, and was obtained at an average cost of $594 per acre.

    During 2009, we invested $40 million in Pennsylvania, almost all of which was for acquisition of acreage, including approximately 22,800 net acres in Lycoming County that was purchased for $8.7 million, or $382 per acre.

    We are currently drilling our first horizontal well since 2008 in Pennsylvania. The Heckman Camp #1 well is located in Bradford County, and first gas production is expected in the area in the second quarter of 2010.

    Later in the call was this exchange between Jeff Hayden, an analyst with Rodman & Renshaw, and Steve Mueller, CEO of Southwestern Energy:

    Jeff Hayden: Okay, appreciate that. And then, jumping up to the Marcellus really quickly, I just wonder if you could give us an update kind of how you’re looking at the drilling program for 2010 in terms of where you’re going to spot the wells, whether it’s Bradford, Susquehanna, Lycoming, et cetera. And then, kind of building on that, sort of an update on the takeaway capacity that you’re looking at and how you’re going to manage that.

    Steve Mueller: Well, the rig that we’re running, we’ll drill between 20 and 24 wells this year. It is going to be all in Bradford County. It’s right on top of–I want to say right on top or within a mile or two of the Stagecoach Pipeline. And we have firm on that pipeline today of 20 million cubic foot and we’re building that going forward. And that’s the reason we’re drilling where we’re at, because we do have the capacity on that line to be able to do that. We’ll participate probably in another 20 wells. Most of those will probably be–a little bit maybe in the Bradford, but most will be in Susquehanna. And we’ll have a minority in those wells. And whatever the operator there is will have the takeaway, so we don’t have to worry about that portion.

    Over the next year, we’ll keep one rig running, and then you’ll see us build that activity into the future. We’ll say the one area that will have the less drilling over the next couple of years will be in Lycoming County. That’s more 2012 and beyond before you see much drilling there.

    *Southwestern Energy (Mar 1) – SWN 4Q 2009 Earnings Teleconference Transcript (PDF)

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    Range Resources Will Drill 150 Horizontal Wells in PA in 2010

    Range Resources Press Release (Feb 24)
    Range Announces 2009 Results

    Range Resources held an investors conference call today, and released a report on the health of the company for 2009, with predictions for 2010. In advance of the call, they issued a comprehensive press release detailing all of their operations. Below is the portion of the release dealing with Range’s drilling activities in the Marcellus Shale. Although originally the information below was in one large paragraph, MDN has formatted it to be more readable.

    From the press release:

    During the fourth quarter, the Marcellus Shale division continued to make outstanding progress. Most notably, we drilled and completed our first two horizontal wells in the northeastern portion of the play in Lycoming County, Pennsylvania. The average seven-day test rate for the first well was 13.3 Mmcfe per day, while the average seven-day test rate for the second well was 13.6 Mmcfe per day. These two wells are now shut-in awaiting pipeline hook-up. The pipeline to the first well is expected to be completed late in the fourth quarter of 2010 with the pipeline to the second well expected to be completed in 2011.

    We also drilled our first horizontal Upper Devonian Shale well and our first horizontal Utica Shale well. The Upper Devonian well has been completed and is testing, and the Utica well has been drilled and cased and is awaiting completion.

    Currently, Range’s net production in the Marcellus is approximately 115 Mmcfe per day. We have 31 horizontal wells that have been drilled, of which 26 are awaiting completion and five are awaiting pipeline hook up. In the southwest portion of the play, where we have drilled the majority of our wells and have been accumulating data for the past 2.5 years, the average estimated ultimate recovery for a Marcellus horizontal is 4.4 Bcfe gross.

    Prior to August 2009, typical Range Marcellus wells had horizontal laterals that averaged 2,200 to 2,800 feet and were typically fraced with eight stages. Since then, we have been experimenting with longer laterals and more frac stages. The longer laterals range from 2,900 up to 5,000 feet and the higher frac stages range from nine stages up to 17 stages. As has been demonstrated in other shale plays, it appears that the longer laterals result in higher initial production rates, higher EURs and improved economics.

    Currently we are running 13 drilling rigs in the play. Plans are to add more rigs in the fourth quarter and exit at 16 rigs. During 2010, we expect to drill and case 150 horizontal Marcellus Shale wells. For 2011, we plan to increase our rig count and exit the year with 24 rigs running. Finally, the build out of the Marcellus midstream infrastructure is progressing as scheduled. In the high Btu portion of the play, gross cryogenic processing capacity increased to 155 Mmcf per day in the fourth quarter of 2009, and an additional 30 Mmcf per day is expected to be added in mid-2010. Another 150 Mmcf per day has been requested for first quarter 2011, which will bring gross cryogenic processing capacity to 335 Mmcf per day. In the dry gas portion of the play, we have 160 Mmcf per day of pipeline tap capacity with 20 Mmcf per day of compression capacity in place currently. Plans are in place to steadily increase dry gas pipeline compression capacity to meet our needs.

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    Ultra Petroleum Expands Marcellus Leases to 486,000 Acres and 110 Active Wells in 2010

    Ultra Petroleum News Release (Feb 12)
    Ultra Petroleum Reports Strong Financial and Operating Results and Record Production for 2009

    A portion of the release relating to its operations in the Marcellus in PA is extracted below:

    During 2009, Ultra drilled 37 gross (22.5 net) wells in Pennsylvania. The company’s first production in the Marcellus program began in July 2009, and by year-end 13 wells were producing. Initial production (IP) rates for the producing wells average 7,500 Mcf per day with an average lateral length of just over 3,800 feet. Preliminary estimated ultimate recoveries affirm Ultra’s 3.75 Bcfe type-curve, with some preliminary EURs exceeding 6.0 Bcfe. The cost to drill and complete a horizontal Marcellus well during 2009 was $3.5 million.

    The company’s four pipeline interconnects to major interstate pipelines remain well ahead of the drilling campaign. By mid-year, this interconnect capacity is expected to exceed 560 MMcf per day.

    The company began 2009 with 288,000 gross (152,000 net) acres in the Marcellus. Through a combination of land acquisitions, trades and swaps, Ultra increased its holdings to 326,000 gross (169,000 net) acres by year-end. On December 21, 2009, Ultra announced that it had signed a purchase and sale agreement to acquire approximately 160,000 gross (80,000 net) acres in the Marcellus Shale. Upon closing of the acquisition in late February 2010, the company will hold approximately 486,000 gross (249,000 net) acres. With the acquisition, the company’s core position in Tioga, Bradford, Lycoming, and Potter counties in north-central Pennsylvania will expand to include the adjacent counties of Clinton and Centre.

    In 2009, we initiated our horizontal Marcellus activity with above expectation results. Accordingly, we believe that we have substantially de-risked our Marcellus acreage due to these results. Well performance is improving along with our returns. Of the horizontal wells that we have completed so far, IP rates have ranged from over 3,400 Mcf per day to 10,400 Mcf per day, including two wells that are producing over 7,500 Mcf per day after 30 days. Examining our early wells, the first six have 30-day production averaging over 3,000 Mcf per day with the next seven wells averaging over 5,700 Mcf per day. In 2010, our Marcellus development program will expand with a drilling program exceeding 110 wells.

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    Waste Water Treatment Plants the Next Battleground in the Drilling Debate

    Harrisburg Patriot-News (Nov 18):
    Twelve Marcellus Shale gas drilling wastewater treatment plants proposed in northern Pennsylvania

    Water treatment plants are the next battleground in the drilling debate. There is increasing opposition to the licensing of treatment plants, not only because of the chemicals used, but the truck traffic involved. From this article out of Harrisburg:

    The state Department of Environmental Protection is reviewing permit applications associated with at least 12 different proposals to build treatment plants for chemical-tainted wastewater from natural gas drilling operations in northern Pennsylvania.

    Ten of the plants are proposed in DEP’s 14-county north-central region, which is centered on Lycoming and Clinton counties.

    Also from this article, a few stats of interest:

    Through October, 120 of the 1,592 Marcellus Shale well drilling permits issued by DEP this year were for sites in Susquehanna County.

    And this:

    DEP issued 1,592 Marcellus Shale gas well drilling permits in the first 10 months of 2009. More than one-third of them were in the 14-county north-central region.

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    Exxon Leases 19,400 Acres in Pennsylvania Marcellus Shale

    From a Reuters news story on the Financial 24 website:

    Exxon Mobil Corp, the world’s largest publicly traded company, has leases on 19,400 acres in the Marcellus Shale, a formation that is said to hold vast amounts of natural gas.

    In September, Exxon bid $85.2 million for 18 blocks in the Marcellus, a large shale formation that runs through parts of New York, Pennsylvania, Ohio and West Virginia.

    Exxon, based in Irving, Texas, was the high bidder on six Marcellus blocks, paying a total of $22.4 million for acreage in Tioga and Lycoming counties in Pennsylvania, company spokesman Patrick McGinn, said.

    Read the full article: Exxon has 19,400 acres in the Marcellus shale