Pennsylvania

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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

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    CONSOL/CNX Gas Will Drill Two Dozen Horizontal Marcellus Gas Wells in 2010, Now Holds Leases on 760,000 Acres

    Highlights from the CONSOL Energy quarterly earnings report as it touches on their operations in the Marcellus Shale:

    On March 15, CONSOL Energy announced a $3.475 billion acquisition of the Appalachian gas exploration and production business of Dominion Resources. We expect to close the transaction tomorrow. The assets include approximately 1 trillion cubic feet of proved reserves and approximately 500,000 acres of Marcellus Shale. Additional assets include an overriding royalty interest from farm-outs, 300,000 acres of Huron Shale, and extensive Utica Shale acreage.

    On March 22, CONSOL Energy announced its intention to acquire the approximately 25 million shares of CNX Gas that it does not already own for $38.25 per share. We commenced the tender offer on April 28. As previously announced, T.Rowe Price has already agreed to tender the 9.47 million shares held for its investment advisory clients into the offer at the offer price of $38.25 per share.

    During the quarter, CNX Gas achieved record initial production from one of its latest Marcellus Shale wells. Well GH 2B CV, has averaged 5.0 MMcf per day for the first 47 days of production. It peaked at 5.7 MMcf per day. This well has a lateral of 2,300 feet.*

    Read More “CONSOL/CNX Gas Will Drill Two Dozen Horizontal Marcellus Gas Wells in 2010, Now Holds Leases on 760,000 Acres”

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    National Fuel Does Pipeline Deal with Statoil and East Resources to Move Marcellus Shale Gas to Canadian & Northeast US Markets

    National Fuel has struck a deal with Statoil and East Resources and is expanding two pipelines to handle Pennsylvania Marcellus Shale gas, sending it to markets in Canada and the Northeastern U.S. The announcement says National Fuel will build 16 miles of new pipeline from Corning, NY to Tioga County, PA, and construct a new interconnection with the Tennessee Gas Pipeline in Ontario County, NY, among other improvements.

    From the National Fuel press release:

    WILLIAMSVILLE, N.Y.–(BUSINESS WIRE)–National Fuel Gas Supply Corporation (“Supply”) and Empire Pipeline, Inc. (“Empire”), the companies that comprise the Pipeline and Storage segment of National Fuel Gas Company (NYSE: NFG) (“National Fuel”), have reached major milestones on two pipeline expansion projects that are the first in the industry designed to receive natural gas produced from the Marcellus Shale and transport it to key markets of Canada and the Northeast U.S. Supply has entered into a binding precedent agreement with Statoil Natural Gas LLC (“Statoil”) for 100 percent of the capacity on Supply’s “Northern Access” expansion project. Empire also has a binding precedent agreement in place with anchor shipper East Resources, Inc. (“East”) for Empire’s “Tioga County Extension” project, and is concluding negotiations for additional capacity with a second shipper. The precedent agreements provide for Statoil and East to sign, after satisfaction of conditions, firm transportation service agreements under which Supply and Empire will transport natural gas for Statoil and East.

    Read More “National Fuel Does Pipeline Deal with Statoil and East Resources to Move Marcellus Shale Gas to Canadian & Northeast US Markets”

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    EQT has Already Drilled 21 Wells in PA Marcellus Shale in 2010 – On Track for 100 Wells This Year

    Even though the price of natural gas worldwide is down, EQT Corp saw a big jump in net income (ie profits) largely due to their large increase in gas production in the Marcellus Shale formation in Pennsylvania. In a Pittsburgh Tribune-Review article we learn this about their drilling activities:

    EQT drilled 21 horizontal wells in the Marcellus formation in the first quarter, and plans to drill 100 such wells this year, at an average cost of $3.3 million to $3.5 million per well.*

    If EQT drills 100 wells in PA in 2010, that’s a $330-$350 million investment in PA with all of the jobs that kind of investment creates.

    *Pittsburgh Tribute-Review (Apr 28) – EQT tallies $88.1 million 1Q profit

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    Atlas Energy/Reliance Industries Pay $192 Million for Leases on 42K Acres in PA Marcellus Shale

    The recently announced joint venture between Atlas Energy and Indian energy giant Reliance Industries (a deal worth $3.5 billion over 10 years) is already bearing fruit. Together they’ve just forked over $192 million to secure leases for more land in Pennsylvania.

    Independent oil and gas company Atlas Energy will buy 42,344 acres in the gas-rich Marcellus shale along with Reliance Industries Ltd (RIL), weeks after the two announced a joint venture.

    The companies will buy the acreage in Fayette, Washington, Indiana, Westmoreland, Armstrong and Clarion Counties of Pennsylvania at an average price of $4,532 per acre.

    Following Wednesday’s deal, the Atlas-RIL joint venture will control about 343,000 Marcellus Shale acres, of which about 206,000 acres are net to Atlas.*

    According to the Atlas Energy website:

    Substantially all of the acreage to be acquired is held by production and is either contiguous with the joint venture’s existing acreage or is in concentrated blocks of acreage. [Atlas] believes that it will be able to drill over 450 horizontal wells on this acquired acreage assuming 1,000 foot spacing between lateral wells.**

    *Hindustan Times/Reuters (Apr 22) – Atlas, RIL to buy more shale acreage for $4,532 per acre

    **Atlas Energy Press Release (Apr 21) – Atlas Energy, Inc. and Reliance Industries Jointly Acquire over 42,000 Additional Acres within Their Core Marcellus Shale Position

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    Speakers at Marcellus Midstream Conference: Infrastructure Critical to Future Success

    According to speakers at today’s Marcellus Midstream Conference and Exhibition in Pittsburgh, infrastructure will be play a key role, and if not ramped up quickly, may create problems for drillers in the Pennsylvania Marcellus Shale.

    “The opportunity for Marcellus Shale production growth can be overwhelmed by a lack of infrastructure,” said Scott Soler, managing director of Houston-based private equity firm Quantum Energy Partners.

    Soler said an estimated $10 billion must be spent on pipelines, processing and storage facilities within five years to keep up with projected production.*

    Bentek Energy, also presenting at the conference, said the industry has announced or already begun more than 30 pipeline projects, including new pipelines or expansion of existing pipelines.

    MDN recently reported on new processing, fractionation and storage facilities announced by both Dominion and MarkWest. Infrastructure will play a key role in drilling in the Marcellus for years to come.

    *Pittsburg Tribune-Review (Apr 21) – Marcellus Shale infrastructure inadequate, energy exec says

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    Encana Paying for Water Testing up to One Mile from Proposed Drilling Site in Luzerne County, PA

    To address concerns of area residents, Encana is paying for a baseline water study to be performed for any household up to one mile away from a proposed natural gas well Encana will start drilling in Luzerne County, PA this year:

    EnCana is attempting to establish a baseline for water quality and quantity conditions by requesting property owners participate in a water sampling assessment, which will be collected by Rettew Associates, a third-party environmental-testing firm based in Lancaster.

    Letters were mailed April 8 to landowners located within a mile radius of the well covering Lake and Lehman townships, and Harveys Lake borough.*

    Encana spoke to area residents at a recent meeting in the Lehman Township fire hall to describe the testing procedure and their desire to, “Take every safeguard to not impact your water.”

    *Wikes-Barre Times-Leader (Apr 21) – Residents worry about gas drillers contaminating water

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    Apartment Rentals, Commercial Property Leasing Benefits from Marcellus Drilling in Wellsboro, PA

    Depending on your viewpoint, one of the benefits (or drawbacks) of an increase in drilling activity is the rise in rental prices for apartments and houses. The borough of Wellsboro in Tioga  County, PA (population about 3,300) is experiencing a real estate boom due to drilling. Prices for apartments around Wellsboro have doubled:

    [Real Estate Agent Victoria] Costanzo says the average rental rate in Wellsboro use to range between $400 to $600 a month. But now with the natural gas companies moving their employees into local areas, they are willing to pay more and rents have doubled.

    The Wellsboro Mayor [Jim Daugherty] says people, who originally were going to sell their homes, are now opting to rent or lease their properties for higher prices.*

    Office space and garages to store equipment are also in high demand, and two area hotels have been sold to drilling companies to house workers.

    *WETM Channel 18 TV (Apr 21) – Rent Prices on Rise in Wellsboro

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    Dominion Expands Marcellus Shale Gas Processing Capacity, Plans to Convert & Expand Ohio-WV Pipeline

    Not to be outdone by MarkWest’s recent announcement about expanding their processing and fractionation facilities in the Marcellus Shale, Dominion has announced they too have big plans for expansion in the Marcellus Shale, including converting transmission pipeline TL-404—running through Ohio and West Virginia—into a “wet gas service” line. Dominion’s plans also include building new processing facilities in West Virginia.
    Read More “Dominion Expands Marcellus Shale Gas Processing Capacity, Plans to Convert & Expand Ohio-WV Pipeline”

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    PA DEP Secretary John Hanger Summons Marcellus Shale Drilling Companies to a May Meeting

    PA DEP Sec. John Hanger The PA Department of Environmental Protection (DEP) is summoning all Marcellus gas drillers operating in Pennsylvania to meeting. MDN wouldn’t exactly use the term “mandatory attendance required” to describe the meeting, but reading between the lines it certainly seems that way.

    MDN welcomes the DEP keeping a close eye on drillers, especially in the aftermath of Dimock. However, the tone of the press release is confrontational and bullyish, rather than collaborative and respectful.

    From the official DEP summons press release:

    HARRISBURG—Department of Environmental [Protection] Secretary John Hanger announced today that he has called a meeting of oil and gas companies with permits to drill in the Marcellus Shale to discuss what steps the industry must take to prevent gas migrating from wells and polluting Pennsylvania’s natural resources, which can create a public safety risk.

    The meeting will be held on May 13 in Harrisburg.

    “The Department of Environmental Protection has a constitutional and statutory obligation to protect Pennsylvania’s environment. That right is not for sale and is not subject to compromise,” said Hanger.

    “Drilling for natural gas beneath our soil can be done responsibly without putting the citizens of Pennsylvania, their property or livelihoods at risk,” added Hanger. “I am urging the industry to come and discuss how to effectively and safely prevent gas migration, protect our natural resources, and ensure that what happened to the residents of Dimock Township, Susquehanna County, does not happen elsewhere.”

    Last week, DEP took further action against Cabot Oil & Gas Inc. after it failed to address migrating gas discovered in 2009 from drilling operations that contaminated groundwater and the drinking water supplies of 14 homes in the region.

    “Gas migration is unacceptable and the department is taking every precaution necessary to address this issue to protect our citizens and their communities,”   Hanger added. “In addition to increased oversight, the department has proposed tougher regulations to meet the growing demand and new drilling technologies including improving well construction standards to protect from gas migration.”

    PA DEP Press Release (Apr 20) – DEP to Meet With Drilling Companies to Discuss Ways to Prevent Dangerous Gas Migration Situations, Safeguard Homes, Water Supplies

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    Delaware River Basic Commission Continues to Obstruct Drilling in PA

    The Delaware River Basin Commission (DRBC) continues to obstruct drilling in the Marcellus Shale in Pennsylvania. The latest energy company to experience frustrations in dealing with the DRBC is Hess, which holds leases to 126,000 acres in Wayne County, PA:

    “It’s a big issue,” said Gene Linscomb, a Hess Corp. business manager based in Honesdale. “We’re asking them [the DRBC] for input.”*

    The thing is, the DRBC has not approved a single, solitary Marcellus shale operation in the watershed. Not one.

    The commission, a West Trenton, N.J.-based regulatory authority that has jurisdiction over water resources in the 13,539-square-mile Delaware River watershed, has yet to green light a single natural gas production well.*

    Hess has been asking the DRBC, repeatedly, what they want them to do so Hess can begin to drill.

    The [DRBC] has stated it does not intend to be a roadblock to natural gas development – something many Wayne County residents who signed leases do not believe.*

    So what is the DRBC doing? They’ve requested $250,000 to do a study about drilling in the Marcellus Shale in the watershed. They’re hoping to get federal money for the study “late this year.” In other words, they’re not doing anything. If you’re a landowner in the Delaware River Basin, or a drilling company, don’t hold your breath for drilling to begin any time soon.

    *Scranton Times Tribute (Apr 17) – Hess to Wayne County: ‘(We’re) here for the long term’

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    Opinion: How the AP and Other Media Outlets “Wag the Dog” Against Drilling in the Marcellus Shale

    Google News Search "Louis Matoushek" MDN notes with some amusement how news is manufactured—and is thankful blogs are around to help set the story straight. Case in point: A few days ago the Associated Press ran a single story about the “raging debate” over gas drilling in Northeast Pennsylvania. While the drilling debate is certainly ongoing, and there are plenty of people on both sides of the debate, the AP story would have us believe the forces of good (people against drilling) are rising up in overwhelming numbers to oppose the forces of evil (the nasty energy companies who want to rape and pillage the unspoiled landscape, along with the greedy landowners who enable them).

    That single AP anti-drilling story was picked up by no less than 250 media outlets, including large city newspapers, television stations and everything down to small town newspapers—all in the course of two days. One would have to be blind to miss the coverage and not think, “Maybe there are a lot of people opposed to drilling after all!” And all from a single story run again and again and again.

    The AP story starts this way:

    A few hundred yards from Louis Matoushek’s Wayne County farmhouse is a well that could soon produce not only natural gas, but a drilling boom in the wild and scenic Delaware River watershed.

    Energy companies have leased thousands of acres of land in Pennsylvania’s unspoiled northeastern tip, hoping to tap vast stores of gas in a sprawling rock formation—the Marcellus shale—that some experts believe could become the nation’s most productive gas field.*

    But wait, it’s not enough that the villainous drilling companies want to spoil the unspoiled land in PA. While that argument will sway some readers, let’s throw in the thing that works every time, the one thing that will magically turn everyone against drilling: Water.

    Standing in the way is a loose coalition of sporting groups, conservationists and anti-drilling neighbors. They contend that large-scale gas exploration so close to crucial waterways will threaten drinking water, ruin a renowned wild trout fishery, wreck property values, and transform a rural area popular with tourists into an industrial zone with constant noise and truck traffic.

    Both sides are furiously lobbying the Delaware River Basin Commission, the powerful federal-interstate compact agency that monitors water supplies for 15 million people, including half the population of New York City. The commission has jurisdiction because the drilling process will require withdrawing huge amounts of water from the watershed’s streams and rivers and because of the potential for groundwater pollution.*

    PA learns fast. They look over the border at New York where City politicians bleat about the New York City watershed as if drillers are about to poison the water supply of the entire City, and say, “Hey, if it works for them, maybe it will work for us.” And so, the shrill voices in PA have found their argument: Drilling pollutes water. Run the story (i.e. lie) enough times and after a while people will believe it.

    Don’t fall for the lie. And landowners: Make your voices heard!

    *Pittsburgh Tribute-Review/AP (Apr 19) – Gas-drilling foes fear for local water supplies