Pennsylvania

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    PA DEP Secretary Hanger Summons Marcellus Shale Drillers to Meeting, Asks Them to Comply with Unratified New Drilling Rules

    After the PA Secretary for the Department of Environmental Protection, John Hanger, summoned Marcellus Shale drilling companies to a meeting, he proceeded to “challenge” them to comply with new drilling rules that likely won’t be adopted until this fall. Talk about arrogant.

    “I urged the industry to implement the stronger standards immediately and not wait for the rule to be finalized,” Mr. Hanger said. “I challenged the industry to set a world-class example.”

    The summit came ahead of action by the state Environmental Quality Board on Monday on several proposed regulations to require that oil field-grade cement be used in Marcellus Shale wells, to delineate responsibility and notification procedures for gas migration problems and to strengthen requirements for treating drilling wastewater and limiting sediment erosion from wells. Mr. Hanger expects the rules to be adopted by fall.*

    Certainly nothing wrong with new rules to help prevent a repeat of the situation in Dimock, PA from recurring, which supposedly the new rules will help guard against. However, MDN continues to notice that Hanger’s tone is increasingly confrontational rather than collaborative.

    *Scranton Times Tribune (May 14) – DEP head asks gas drillers to comply with new rules

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    Bradford County, PA Experiencing a Job Boom, Leads Entire State in Net Job Growth

    Bradford County, PA Little, rural Bradford County located in northeastern Pennsylvania is seeing a boom in new jobs:

    According to the Pennsylvania Department of Labor and Industry and the Center for Workforce Information and Analysis, Bradford County led the Commonwealth of Pennsylvania in net job growth from March of 2009 to March 2010.

    According to the Northern Tier Regional Planning & Development Commission (NTRPDC), the 2,000 jobs gained represented a 7.2 percent increase while most counties suffered losses in employment. Bradford County saw the unemployment rate drop from 10 percent a year ago to 7.4 percent now.*

    And also this:

    Tioga County [PA] gained 800 jobs, the third-best improvement of the Commonwealth’s 67 counties.*

    How can that be? Simple: Both counties have very active Marcellus Shale drilling.

    *Wyalusing Rocket-Courier (May 13) – Bradford County Leads Commonwealth in Job Growth

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    MarkWest Request to Expand Gas Compressor Facilities in Washington County, PA Denied

    As MDN has previously reported (see this story), MarkWest Energy operates more than 100 gas compressor facilities, including two in Mount Pleasant Township in Washington County, PA—the location of the very first horizontally drilled Marcellus Shale gas well. There has been tension between area residents and MarkWest about the facilities over issues of noise, lights and odors coming from the facilities. A few months ago MarkWest made application to expand the facilities but the Mt. Pleasant Township Zoning board has just turned them down:

    The board denied a request from Mark West Liberty Midstream to expand its Fulton and Stewart compressing stations.

    The company had made the request to add two engines at each site and expand the steel structures. The company processes gas for Range Resources.*

    MDN doubts this will be the end of this story. There is an ongoing debate about just who has authority to regulate pipelines and compressor facilities, and the matter is far from settled. Does regulation for these types of facilities lie with local governments? Or is it a “utility” that is/should be regulated by the state rather than local authorities? Stay tuned.

    *Washington Observer-Reporter (May 12) – Board nixes expansion for gas compressing stations in Mt. Pleasant Township

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    Will PA Landowners Pay Higher Property Taxes When Drilling Begins? Maybe

    Landowners in Pennsylvania have gotten property tax relief in recent years from a PA law known as “Clean and Green.” If landowners keep their property use as agricultural, open space or forest-land, they are taxed at a lower rate (for those uses) rather than the higher fair market value the land might bring for other uses. But there’s a catch—if a landowner starts using the land for another non-agricultural use, they not only start paying higher taxes on it now, they also have to pay the difference in the tax rate between Clean and Green and fair market value going back up to seven years—as a penalty.

    The intent of the program, which is administered through county government, is to encourage property owners to retain their land in agricultural, open-space or forest-land use by providing real estate tax relief.

    Property owners benefit through lower taxes as long as their land isn’t used for housing developments or other uses inconsistent with agricultural production, open-space or forest-land use.

    If a property owner decided to use the land for a purpose inconsistent with the program, the landowner would have to pay “rollback taxes” – the difference between fair market value and use value of the land – for as many years as the property had been designated Clean and Green, up to a maximum of seven years.*

    So the million dollar question: If landowners allow drilling on their land, is that land disqualified from the Clean and Green lower tax rate? Right now, as things stand, each county will interpret the law the way they see fit. There is a bill that has passed the PA Senate and is now before for the House for consideration that would allow gas drilling on Clean and Green land without penalty.

    Landowners who have signed leases where drilling will soon begin (or has already begun) need to monitor this situation. Landowners in PA who have not yet signed a lease would do well to be sure there is a clause requiring the driller to pay the difference in taxes should the bill not get signed into law.

    *Wilkes-Barre Times Leader (May 11) – Drilling’s effect on ‘Clean and Green’ land uncertain

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    Susquehanna River Basin Commission Establishes Marcellus Shale Field Office in Northeast PA

    To it’s credit, the Susquehanna River Basin Commission (SRBC) has established a field office in Northeastern PA specifically to monitor compliance with Marcellus drillers in the Susquehanna River watershed. Too bad the Delaware River Basin Commission is not as industrious and sensitive to landowners’ rights as the SRBC (no drilling allowed in the Delaware River watershed for the foreseeable future).

    From the SRBC press release:

    HARRISBURG, Pa. – Susquehanna River Basin Commission (SRBC) today announced the start-up of its first-ever field office aimed exclusively at enhancing compliance through increased on-site inspections, particularly of natural gas well development projects in the Marcellus and Utica shale regions. The field office is located on 1760 Elmira Street, Sayre, Bradford County, Pennsylvania.

    This location strategically places SRBC’s compliance staff in and around the most active drilling areas in the upper basin region. It also allows staff to follow up more quickly on problems and concerns reported by basin citizens in Pennsylvania and New York.

    Prior to the Sayre field office, staff drove from SRBC’s headquarters in Harrisburg to inspect natural gas well development sites and to meet with citizens and industry officials.

    “Having our compliance staff closer to project areas to conduct inspections and to the citizens affected by the boom in natural gas drilling is intended to enhance our effectiveness and day-today efficiency,” said SRBC Executive Director Paul Swartz.

    “For each and every water withdrawal or water use project the Commission approves, there are many subsequent and ongoing compliance requirements we impose on project sponsors such as monitoring and reporting. Because we take very seriously our obligations to verifying compliance, the Commission took the extraordinary and historic step of establishing the Sayre field office.”

    Read More “Susquehanna River Basin Commission Establishes Marcellus Shale Field Office in Northeast PA”

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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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    PA College of Technology to Offer Marcellus Gas Drilling Courses to High Schoolers in Northern and Central PA

    The Pennsylvania College of Technology (part of the Penn State University system) continues to innovate by offering training for those interested in jobs and careers in the gas drilling industry. This time, they’re offering courses to high schoolers:

    The National Science Foundation has awarded a $294,689 grant to the Pennsylvania College of Technology to educate and train high school and college students for careers in the Marcellus Shale natural gas industry, according to officials from the college and a press release issued this week by U.S. Rep. Chris Carney’s office.

    The college will use much of the money to develop and implement college-level courses that will be offered at high schools in Bradford, Sullivan and other counties to provide training that will be useful in jobs in the natural gas extraction industry, said Jenette Carter, Pennsylvania College of Technology’s director of outreach for K-12.

    The high school courses will benefit students from 23 school districts in central and northern Pennsylvania…The high school courses for which college credit will be granted are technical or vo-tech courses in areas such as welding, electronics, diesel technology, heavy equipment operation and repair, forestry, and information technology (networking).*

    *Towanda Daily Review (May 6) – High school courses that will lead to careers in gas industry being implemented locally

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    Northeastern PA Experiencing a Boom for Local Businesses from Marcellus Shale Drilling

    A recent meeting of the Wyoming County (PA) Chamber of Commerce saw over 400 members, mostly from area small businesses, networking and listening to presenters who have already reaped financial rewards from Marcellus drilling activity in the area. Two examples:

    Early on as the industry developed in Susquehanna County about 18 months ahead of Wyoming County, [Bill Kelley of Taylor Rental] noted an occasional need for drillers to borrow rental equipment when something broke down. Not only did Kelley enhance his inventory, but in the intervening months he saw a need and created a new spinoff business known as BX3 Oilfield Supply. He enlarged his workforce to handle the clients.

    Art Carpenter who oversees the Skidder Shop just out Rt. 92 south of Tunkhannock said his business has become a franchise dealer for water tankers and frankly can’t keep the rigs that run around $170,000 on the lot long enough.*

    It’s not only landowners and energy companies who benefit from drilling—the entire community benefits.

    *The Susquehanna Independent Weekender (May 5) – Gas boom creating opportunity

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    Talisman Energy Selling Conventional Gas Properties, Investing in Marcellus Shale Instead

    Talisman Energy is selling off its conventional gas properties and shifting investment to shale gas properties:

    Talisman Energy Inc, Canada’s No.4 independent oil and gas explorer, said on Wednesday it is boosting its U.S. shale gas holdings, as it reported an operating profit that trumped expectations.

    Shale gas regions have emerged as the leading source of new natural gas supplies over the past few years, pushing up production of the fuel as new drilling techniques lower the cost of exploiting the massive reserves locked in the shale.

    Talisman is selling off much of its conventional gas properties to concentrate on its shale holdings, with the bulk of its spending on the Marcellus shale region around Pennsylvania and the Montney region of northeastern British Columbia.*

    *MSN/Reuters (May 5) – Talisman says shale strategy at turning point

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    Rex Energy has Already Drilled 4 Wells in Butler County, PA in 2010, On Track to Complete 6 More by Year’s End

    The following operational updates about Rex Energy Corporation’s Marcellus drilling activity thus far in 2010, from a company press release:

    Butler County, Pennsylvania Marcellus Project Area

    Drilling and completion activity in Rex Energy’s Marcellus Shale project area in Butler County, Pennsylvania is continuing to progress on schedule. The two ‘Magill’ horizontal wells completed by the company earlier this year have been flow-testing for approximately 20 days. The combined peak 24 hour rate of the two Magill wells to date has been 5.9 MMcfe per day. The company expects these rates to continue to rise as additional water is returned to the surface. The company’s refrigeration processing plant, and therefore its gas sales in Butler County, Pennsylvania, is currently shut-in for pipeline maintenance. The company expects the plant and sales to resume during May 2010 and to connect the Magill wells to the plant at that time.

    [Rex Energy President & CEO Benjamin] Hulburt remarked, “When we compare the initial flow rates of the Magill wells to our P. Knauff #1H well, our first horizontal Marcellus Shale well completed in Butler County, Pennsylvania during 2009, we are very encouraged by the results. The P. Knauff #1H well took approximately 90 days to achieve its peak rate, and thereafter, the rate remained relatively flat for the next 180 days. Although the results of the Magill wells are still preliminary, we are encouraged by what appears to be a similar profile.”

    Read More “Rex Energy has Already Drilled 4 Wells in Butler County, PA in 2010, On Track to Complete 6 More by Year’s End”

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    Chesapeake on Track to Drill 170 Wells and Operate 31 Drilling Rigs in Marcellus Shale in 2010

    This bit of information about Chesapeake’s Marcellus Shale activities from a recent operational update:

    With approximately 1.5 million net acres, Chesapeake is the largest leasehold owner in the Marcellus Shale play that spans from northern West Virginia across much of Pennsylvania into southern New York. On its Marcellus leasehold, Chesapeake estimates it has approximately 26 tcfe of risked unproved resources and 66 tcfe of unrisked unproved resources.

    During the 2010 first quarter, Chesapeake’s average daily net production of 65 mmcfe in the Marcellus increased approximately 40% over the 2009 fourth quarter and approximately 815% over the 2009 first quarter. Chesapeake is currently producing approximately 100 mmcfe net per day from the Marcellus. Chesapeake is currently drilling with 24 operated rigs in the Marcellus and anticipates operating an average of approximately 31 rigs in 2010 to drill approximately 170 net wells. During the 2010 first quarter, approximately $90 million of Chesapeake’s drilling costs in the Marcellus were paid for by its joint venture partner Statoil. From April 2010 through 2012, 75% of Chesapeake’s drilling costs in the Marcellus, or approximately $1.9 billion, will be paid for by Statoil.

    Three notable recent wells completed by Chesapeake in the Marcellus are as follows:

    • The James Barrett 2H in Bradford County, PA achieved a peak 24-hour rate of 12.7 million cubic feet of natural gas (mmcf) per day;
    • The James Barrett 1H in Bradford County, PA achieved a peak 24-hour rate of 11.8 mmcf per day; and
    • The Strom 1H in Bradford County, PA achieved a peak 24-hour rate of 8.2 mmcf per day.

    *Business Wire (May 3) – Chesapeake Energy Corporation Provides Quarterly Operational Update

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    More Delay Tactics, Elected Officials in NY Actively Oppose Drilling in the Marcellus Shale

    New York State’s future with drilling in the Marcellus Shale continues to be cloudy at best. While MDN believes drilling should start—now—hoping and wishing will not make it happen and New York landowners have to face the cold, hard reality it may not happen until summer 2011 at the very earliest (if indeed it ever happens). Now that the NY Department of Environmental Conservation is proposing two sets of rules for drilling—one for the New York City and Syracuse watershed areas, the other for everyone else—anti-drillers are using it as a wedge issue.

    Must be fun being an anti-drilling person in NY. First, you say over and over and over again that drilling in the Marcellus in the watershed may contaminate New York City’s water supply. And so, when finally the DEC throws up its hands and says, “OK, we’ll take drilling in the watershed off the table,” the new argument becomes, “See! See! If it’s not safe for the watershed, it’s not safe anywhere!” Gotta love that twisted logic. Point of fact: Hydraulic fracturing is safe everywhere, including the watersheds.

    Here’s some of the latest opposition to drilling from New York’s elected leaders:

    Assemblyman Kevin Cahill, D-Kingston, chairman of the Assembly’s Energy Committee, and Assemblywoman Barbara Lifton, D-Ithaca, are preparing legislation that will require the same drilling regulations for all state watersheds, including the Delaware.

    Assemblywoman Aileen Gunther, D-Forestburgh, recently co-sponsored a bill calling for a moratorium on drilling at least until a federal study on the impact of “fracking” on drinking water is complete — in about two years.

    And on Friday, Rep. Maurice Hinchey, D-Hurley, called on the Delaware Basin Commission, which approves withdrawals of Delaware River water used for “fracking,” to conduct an environmental impact study on the cumulative effects of those withdrawals before it considers any applications.*

    So, let’s recite the playbook: Claim it’s not safe. Claim it pollutes water supplies. And when all else fails, call for “let’s go slow and do more studies” and try to delay drilling for at least 2-3 more years to give the anti-drilling forces time to solidify opposition and completely kill it forever.

    And lest PA thinks they’re clear of all this, you’re not. The Delaware River Basic Commission has effectively blocked drilling in the Delaware River watershed for now. And your own U.S. Senator, Bob Casey, is asking the U.S. Environmental Protection Agency to get involved in the situation in Dimock, PA.

    *Middletown Times Herald-Record (May 2) – Legislators want drilling rules fairly crafted

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    PA League of Women Voters Comes Out Against Drilling in the Marcellus

    The League of Women Voters of Pennsylvania is anti-drilling. Although they pretend to be a non-partisan group, they are anything but. Not only do they sponsor forums with anti-drilling speakers on a regular basis, they have now issued an official position in favor of an extraction tax on drilling in PA, and they have gone on record favoring strict new regulations for drilling in PA. While they don’t categorically say “don’t drill,” their positions and statements essentially do say it. Here’s the opening (alarmist) paragraph from the press statement announcing their official position on drilling in the Marcellus:

    FRAC is a four-letter word, F, R, A, C. FRAC impacts everyone in Pennsylvania. It requires the immediate attention of all–from young and old, from rich to poor, from Pittsburgh to Easton, and from Philadelphia to Erie. Why? Fracturing is an explosive process that expels natural gas from Marcellus Shale, a rock that lies deep beneath two-thirds of our Commonwealth. Natural gas extraction impacts our water, our land, our air, our communities, our public health, and our economy.*

    Yes, fracturing is an explosive process—small, controlled explosions that happen a mile below solid rock (conveniently left out of the statement). The language used in the press statement is distorting and pejorative about the process of drilling. But hey, it’ll bring in the contributions and it whips up the faithful!

    *Statement by Olivia Thorne, President, PALWV (May 3) – Press Conference on Marcellus Shale Natural Gas Extraction

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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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    Hess Net Marcellus Shale Acreage 80K, Mostly in Wayne County, PA – Will Drill 5-10 Test Wells in Second Half of 2010

    An update from Greg Hill, President, Worldwide Exploration and Production with Hess Corporation, about their activities in the Marcellus (from a recent earnings call):

    “We’re continuing to build our position in the Marcellus. We’re at about 80,000 net acres now in the Marcellus, primarily in Wayne County, Pennsylvania. About 50,000 of that is Hess operated and the balance is part of this joint venture we have with Newfield. Our plan this year are to drill five to 10 wells during the second half of 2010 in order to evaluate the resource potential on the acreage.”*

    *Seeking Alpha (Apr 29) – Hess Corp. Q1 2010 Earnings Call Transcript

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    Marcellus Shale Companies in Pennsylvania Looking to Fill Jobs and Contract with Local Businesses

    Companies involved in drilling, processing and transporting Marcellus Shale gas in Pennsylvania are looking to contract with local businesses and hire local people to work for them. On the list are…

    • Contractors for:
      • clearing land
      • constructing well pads
      • setting up rigs
      • running wirelines
      • hauling waste
      • hauling dirt
      • mechanical work
      • civil work
      • electrical work
      • environmental surveyors
      • installers
    • Real estate/office space
    • Drilling crews
    • Frac crews
    • Right-of-way agents
    • Suppliers for:
      • drilling mud
      • frac fluid
      • steel pipes
      • valves and fittings
      • natural gas compressors
    • Engineering firms
    • Environmental firms
    • Professionals:
      • geologists
      • geophysicists
      • environmental engineers

    The companies looking to hire include:

    • East Resources
    • Chief Oil & Gas
    • Laurel Mountain Midstream
    • MarkWest Energy
    • Talisman Energy

    For more details, along with contact names and inside tips for submitting a bid or applying for a job, see the article linked below.

    *Pittsburgh Business Times (Apr 29) – The Marcellus Shale: How your company could get in on the action