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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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St. Mary Completes First Two Wells in McKean County, PA

St. Mary Land & Exploration (Nov 2):
St. Mary Provides Operational Update; Updates Performance Guidances for 2009

From a press release from St. Mary Land & Exploration, a drilling company headquartered in Denver, CO:

St. Mary has drilled and completed its first two horizontal wells in this program. The wells are the Potato Creek 1H and the Potato Creek 3H (both SM 70% WI). These wells are located in McKean County, Pennsylvania. The Company is currently laying a temporary sales pipeline to test the first well. As a reminder, St. Mary has a total acreage position of approximately 41,000 net acres in McKean and Potter Counties in north central Pennsylvania.

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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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Talisman Energy Expanding in Pennsylvania

Talisman Energy (Nov 3):
Press Release: Talisman Energy Reports $838 Million Cash Flow in Third Quarter

Talisman Energy, an oil and gas drilling company headquartered in Calgary, Alerta (Canada), reports the following in a recent press release:

The Company has added over 170,000 net acres of high quality land in the Pennsylvania Marcellus and Montney shale plays, investing approximately $570 million, the majority of it subsequent to September 30.

Production from the Pennsylvania Marcellus shale play was over 50 mmcf/d [million cubic feet per day] at the end of October. A total of 31 gross wells have been drilled year-to-date and a third rig has been added, with plans to move to six rigs by year end.

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Drilling Permits are “Flying Out the Door” in PA

Philadelphia Inquirer (Nov 2):
Editorial: Shale game

In an editorial, the Philly Inquirer revisits drilling in the Marcellus Shale in Pennsylvania. The editorial is mostly a rehash of old information and the theme is, “New York’s recently proposed drilling regulations are more strict than Pennsylvania’s, we need to get more strict too.”

But, they also include this bit of detail that’s useful for landowners in PA to know:

Drilling permits are flying out of DEP’s doors. Through Sept. 30, 1,340 Marcellus permits were issued and 385 wells drilled – more than double the number from last year. And the just-completed state budget requires the Department of Conservation and Natural Resources to raise $60 million by leasing up to 10,000 more acres of public forest land to drillers in the next year, a goal driven by a revenue grab rather than environmental stewardship.

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M&T Bank Economist Bullish on Drilling in the Marcellus in PA

Wilkes-Barre Times-Leader (Oct 29):
Banker: Marcellus Shale to boost region

M&T Bank economist and Chief Investment Officer James Thorne, Ph.D., addressed a recent meeting of the Greater Wilkes-Barre Chamber of Business and Industry about the impact of drilling in the Marcellus Shale in Northeast Pennsylvania. Among his comments:

The Marcellus Shale gas play will be “a game changer” for Northeastern Pennsylvania, bringing a “huge economic injection” and making life here very different a decade from now…

He also said,

The region will get “a huge shot in the arm” from natural gas drilling. “The economic forecast is very bright.”

There was also this interesting update about drilling activity in Luzerne County:

Many landowners in Luzerne County have entered into leases with drillers, but no wells are yet operating in the county.

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Cabot Resumes Drilling in Susquehanna County, PA

Binghamton Press & Sun-Bulletin (Oct 16):
DEP gives Cabot OK to resume gas operations in Pennsylvania

Cabot Oil & Gas has had several spills of chemicals used in the hydraulic fracturing process at one of their drilling sites in Dimock Township, Pennsylvania. The spills have led to fish dying in the local Stevens Creek. The PA Department of Environmental Protection shut them down for a while and conducted a review. Cabot is now back in business. From the article:

Cabot Oil & Gas has been given approval to resume work to produce natural gas from the Marcellus Shale after spills in Dimock Township halted certain operations.

The approval came Friday after DEP officials reviewed Cabot’s plans to limit future problems and respond to emergencies.

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Dunkard Creek Fish Kill Update

Pittsburgh Post-Gazette (Oct 14):
Drilling water may be cause of fish kill: DEP points to salty discharge from mine

Charleston Gazette (Sept 21):
Consol mine may not be reason for fish dying

An update on the fish kill in the Dunkard Creek which runs along the Pennsylvania and West Virginia border. As you recall, MDN pointed out that a connection to drilling in the Marcellus Shale for natural gas was tenous at best. A new story in the Pittsburgh Post-Gazette further strengthens that view (although you have to read the article with a discerning eye).

This new article says the PA Department of Environmental Protection is now pointing the finger of blame (mostly) at an area coal mine. Here’s how the article starts:

A heretofore undisclosed underground flow of mine pool and methane gas well drilling water into Consol Energy’s Blacksville No. 2 Mine may have contributed to the salty, polluted discharges that caused the massive, month-long fish kill on Dunkard Creek.

Notice the confusing language that talks about “methane gas well drilling.” It leads you to believe the problem is about gas drilling, perhaps even hydrofracturing. It is not. Later on we get this:

[The PA DEP] requested that the U.S. Environmental Protection Agency revoke the federal deep well injection permit that allows Consol to dispose of coalbed methane drilling waste water…

So the waste water, IF it is the cause, comes from coal mining, not natural gas hydrofracturing. We need to be very clear about that. Blacksville No. 2 is a coal mine–there is no drilling for natural gas at that location. The PA DEP is saying that discharges from the coal mine into the creek “may have contributed” to the fish kill. Consol is vigorously denying the connection.

So what is the connection to drilling in the Marcellus? A fantastical story. Here’s another paragraph, deep in this article:

The Pennsylvania DEP said that algae — which may have “hitchhiked” to the Mason-Dixon Line on drilling rigs brought up from Texas to work in the Marcellus shale gas fields in Pennsylvania and West Virginia — was able to flourish in a brackish Dunkard Creek because of the high levels of dissolved solids and chlorides discharged into the stream by Consol’s treatment facility.

There you have it. Nasty coal miners weakened Dunkard Creek, and nasty gas drillers drove trucks from Texas to the area and those little algae devils had the nerve to hitchhike along and jump into the Creek right where it was weakened and cause this problem. Go figure.

Oh, one more little wrinkle in this story, that comes from the Charleston Gazette:

West Virginia environmental officials now say a nearby coal mine may not be the only reason fish are dying in Dunkard Creek.

Department of Environmental Protection officials say more dead fish have been found in the creek, but more than a mile upstream from Consol Energy’s Blacksville No. 2 mine.

So, more than a mile upstream from where the coal mine discharges into Dunkard Creek they found dead fish. If the “weakened” water was downstream and the algae flourish in weakened water, how might that have somehow traveled upstream? Oh wait, I’m using logic instead of blind eco-nut belief…what was I thinking??

Bottom line: I’m not categorically saying the coal mine plays no role, nor that hitchhiking algae plays no role. I am saying before we declare such things to be the case, let’s investigate and use some SCIENCE instead of blind and biased beliefs to declare a combination of coal and natural gas mining as the cause.

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Anti-Drilling Organizer Predicts Environmental Holocaust

Pocono Record (Oct 9):
Environmentalist: Firms drilling for natural gas would ‘destroy’ local state game lands

A reporter with anti-drilling views (Jessica Cohen) interviews a local anti-drilling organizer (Pat Carullo) in Northeast Pennsylvania. In the process, you get an article shot full of lies. Mr. Carullo is upset over 2,500 acres owned by the Mushpaugh Sportsman’s Association in Lackawaxen (privately owned, I might add), that are being leased to Cabot Oil & Gas. Mr. Carullo predicts environmental holocaust. He then goes on to rail about the state leasing public lands for drilling, confusing the two issues–the state leasing of public lands held in trust for all citizens, and citizens (or groups of citizens) who possess private property rights guaranteed by the U.S. Constitution. The entire “article” is so full of random tirades and so completely one-sided, it’s a joke.

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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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Philadelphia Inquirer – In a Snit Over Rendell Aide

Philadelphia Inquirer (Oct 8):
Editorial: Drilling for friends

A snarky editorial with a snarky title from the lefties at the Philadelphia Inquirer. Actually has me laughing with a smile on my face. 🙂 The self-righteous anti-drillers are outraged that a top Democrat has defected from government to work for industry–in this case an aide to Gov. Rendell who was the governor’s point man on drilling in the Marcellus in Pennsylvania. He’s gone to work for (gasp), an energy company that’s drilling in PA. The anti-drillers see it as a betrayal and hint there may have been payoffs involved. For shame! Payoffs in the Rendell administration? Say it ain’t so. Shocking, I tell ya.

Anyway, MDN finds it very amusing that the Inquirer never says a peep when top Democrats defect (either at the state level or federal level) to take high paying jobs with lobbying firms. It seems only people like Karl Rove (who left the Bush White House to work for Fox News), and people on the right deserve their righteous indignation. Oh, and Democrats who flip and start to work for “the other side.”

Like a said, puts a smile on my face.

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Fair and Balanced Column on Drilling in Philly Inquirer

Philadelphia Inquirer (Oct 8):
Daniel Rubin: Hard to extract consensus on natural gas

A very fair and balanced piece by Philadelphia Inquirer columnist Daniel Rubin. In fact, a delight to read with some very good information. Mr. Rubin recently attended a meeting hosted by the League of Women Voters, who had invited people on both sides of the drilling issue to speak. On the pro-drilling side was Stephen Rhoads, chief lobbyist for the state’s oil and gas industry. Rhoads shared some excellent information, including how much taxing extraction in Pennsylvania would actually raise ($26 million this year), and how many active natural gas wells there are in PA (329 hydrofactured gas wells right now). He also said the gas industry will provide 174,000 jobs in PA at an average salary of $60,000 per year. Be sure to read this article.

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Residents: Keep drilling discharge out of the Susquehanna

Wilkes-Barre Times Leader (Oct 7):
Residents: Keep drilling discharge out

The Pennsylvania Department of Environmental Protection (DEP) held a public hearing on Tuesday in Tunkhannock, PA on the question of whether to grant a permit to discharge treated water that comes from drilling into the Susquehanna River. Local members of the community turned out to (mostly) oppose it. The article says landowners and drilling companies were not present at the meeting. The view the media and eco-nut groups want to create in people’s minds is that water used in hydrofracturing is hopelessly contaminated and can never be reused again. From the article:

But the economic development comes at an environmental cost that some residents are unwilling to accept, such as contamination to water that’s forced underground to crack the shale and release the gas.

The process is called hydraulic fracturing, and the fluid used, while mostly water, contains hazardous chemicals and lots of salt.

North Branch Processing LLC hopes to build a plant near Skyhaven Airport to clean the “frac” water and discharge it into the river. The hearing, called by the state Department of Environmental Protection, was on a permit for that discharge.

Residents said the water should be reused for “fracing” rather than put into the river.

No argument here that the water can and should be reused for more hydrofracturing. However, at some point, some of this water will need to be treated and put back into the environment. If it’s unsafe to do so, then hydrofracturing is fundamentally an unsafe practice that should be disallowed. MDN believes hydrofactured water can be treated so that it’s safe. Let’s get some more science and facts injected into the debate and less speculation and scare tactics.

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Range Announces Management Additions and Bank Borrowing Base Reaffirmation

Press Release from Range Resources (Oct 7):
Range Announces Management Additions and Bank Borrowing Base Reaffirmation

FORT WORTH, TEXAS – Range Resources Corporation announced today that it has hired Joseph H. Frantz, Jr. as Vice President of Engineering and K. Scott Roy as Vice President of Government and Regulatory Affairs for the Marcellus Shale Division located in Pittsburgh, Pennsylvania.

Mr. Frantz brings more than 26 years of petroleum engineering experience with Texaco, S.A. Holditch & Associates and Schlumberger. Recently, Mr. Frantz led Schlumberger’s shale evaluation team for various emerging shale formations, including the Barnett, Fayetteville and Marcellus. Mr. Frantz has extensive experience working in the Appalachian Basin, and he has performed studies on topics ranging from reservoir simulations to hydraulic fracture optimization. He holds a bachelor’s degree in Petroleum and Natural Gas Engineering from Penn State University.

Mr. Roy previously served as Executive Deputy Chief of Staff in the Office of the Governor of the Commonwealth of Pennsylvania. He has spent more than 17 years in public service in various positions, including key roles in both the Rendell and Ridge administrations and acting as the Governor’s liaison to various regulatory and environmental agencies. Mr. Roy earned his bachelor’s degree from Allegheny College and his juris doctorate from the Dickinson School of Law at Penn State University.

Range also announced that at its regularly scheduled review, the Range bank group unanimously reaffirmed the Company’s $1.5 billion borrowing base effective September 30, 2009. Range elected to retain the existing $1.25 billion commitment amount, which provides in excess of $800 million in available liquidity. There were no changes to the interest rate, repayment terms or number of banks in the credit facility.

Range’s Chairman and CEO, John H. Pinkerton, commented, “We are extremely pleased to announce these two new management additions to our Marcellus Shale team. Both Joe and Scott are Pennsylvania natives, who will report to Ray Walker in our Pittsburgh Marcellus Shale Division. Joe Frantz will head up our technical evaluation, not only of the Marcellus, but also for the other Appalachian shale formations. His extensive technical background in shale reservoir evaluations and optimized completion techniques is a key addition to our technical team. As the pioneer of the Marcellus Shale play, we fully understand the importance of forging a strong partnership among public, regulatory and industry interests to ensure that the development of the Marcellus Shale is accomplished in a responsible way. The addition of Scott Roy reflects Range’s commitment to being a good steward of Pennsylvania’s resources. Lastly, the unanimous affirmation of our borrowing base by our bank group reflects our low-cost structure, high-margin asset base and strong financial position. We are well positioned to continue to execute our plan of low-cost, consistent per share growth.”

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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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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!