Statewide PA

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    Constitution Pipeline Payments to Groups – Donations or Payola?

    money bagWhat do you call it when a company pays money to local organizations and agencies before the project has been fully approved by federal, state and local agencies? These payments, mind you, are not fees for permits or licenses, but voluntary chunks of money offered to groups that may be affected by the project if it’s built–in this case a pipeline. Is it called, Good corporate citizenship? Being a responsible member of the local community? Or perhaps, payola?

    Regardless of what you call it, the Constitution Pipeline, a desperately needed natural gas pipeline that will run from the gas fields of Susquehanna County, PA to central New York where it will connect to two major interstate pipelines, has now paid out more than $1 million in “community grants” to help build support for the pipeline. Is that a good thing, or bad? We think it’s time to have that discussion…
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    Hundreds of Thousands of Marcellus Drilling Jobs in PA

    Over the past six years hundreds of thousands of jobs have been created in Pennsylvania that are either directly or indirectly tied to the Marcellus Shale drilling industry. Of that there is no dispute. It is provable and has been proven, over and over, by government agencies that count such things. Yet, when a new jobs report is issued that shows another 15,000 direct jobs have been added over the past few years, those opposed to drilling jump on the number and say, “See! See! It doesn’t create all that many jobs. They’re a lyin’ to ya–all them pro-drillers.”

    Meanwhile, anti-drillers ignore the total number of 240,000 people working directly in the Marcellus Shale industry, or for companies that serve the industry (“supply chain”), in Pennsylvania. And so the anti-drilling spin machine keeps whirling around and around and around…
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    Voting for the Lesser of the PA LibDem Loonies

    There’s at least a few prominent Democrats running in the primary for Lieutenant Governor that have departed from the Democrat Party’s lunatic demand to stop all Marcellus drilling in the state–precious few, but at least a few that don’t share that view. So if you’re a registered LibDem and you must (hold your nose and) swing the lever for a Dem, you might want to consider who should get your vote based on their loony rating.

    Hint: Don’t vote for Brenda Alton or Brad Koplinksi, both support an immediate ban on further shale drilling…
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    PA Marcellus Industry’s Biggest Fines & Biggest Violators

    NPR’s StateImpact Pennsylvania is only too happy to bring us the breathless news of who the baddest of the bad were in the Marcellus drilling industry in PA for 2013. How do they measure who was naughty and who was nice? Well, they’re all naughty (right?), but the naughtiest were those who paid the biggest fines last year. It may surprise you to know that the when you add all fines together, the company paying the most in 2013 was Williams, a pipeline operator–not a driller. Williams settled up in 2013 for violations going back several years, mostly related to accidents and drilling mud spills that resulted from foul weather (including Hurricane Irene and Tropical Storm Lee). Williams’ total fine tab in 2013 was $388,694 (for violations occurring in 2011-2012). Coming in at #2 was National Fuel Gas Company’s Seneca Resources subsidiary. They were clipped $377,000 for violations occurring from 2010 to 2013.

    Below are the top 5 violators cumulatively (adding up all of their violations), along with the top 5 biggest single violations from last year, in the PA Marcellus drilling industry:
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    Chesapeake 2013 & Beyond: Lack of Pipelines Still a Big Problem

    Yesterday Chesapeake Energy issued their fourth quarter and full year 2013 operational and financial results. Chessy’s CEO, Doug “the ax” Lawler is all proud of himself for having fired over 1,200 employees, saving the company all that money (money that goes into Carl Icahn’s bank account). Whatever. For all of our disgust with what Chesapeake has become because of Icahn and his corporate raiding practices, it’s still a very important driller in the Marcellus and Utica (as well as other plays), and will continue to be so. When they issue an update, we need to pay attention, because as Chessy goes, so goes the Marcellus and Utica, in some senses.

    What does yesterday’s update show? Chessy has drilled a lot of wells in the Utica–425 so far, more than half of the 747 Utica wells drilled to date in Ohio. Of those 425, 230 are online and producing, but a huge 195 wells are still waiting to be hooked up to pipelines. Lack of infrastructure is still a big issue in the Utica and in the Marcellus. In the northern Marcellus area (northeast PA) Chesapeake has 112 wells waiting to be connected to pipelines. They’ve scaled back their drilling in NEPA somewhat over the past year. In the southern Marcellus (SWPA and WV) Chesapeake has 47 wells waiting to be connected to pipelines or otherwise completed. Here’s the operations update for both the Utica and Marcellus from Chessy’s announcement yesterday:
    Read More “Chesapeake 2013 & Beyond: Lack of Pipelines Still a Big Problem”

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    Happy Story Ends Badly Because of 7 PA Towns

    Who doesn’t like a county (or state) park, or a newer trend–converting old railroad beds into “rail trails”–resurfacing them for walkers, joggers, bikers and roller skaters? We sure love and use them. This story begins happily, with York County spending $100,000 to improve the Old Northern Central Railroad tracks and a portion of the York County Heritage Rail Trail that runs alongside them. Where did the money come from–taxpayers? Nope. It came from the Marcellus Shale industry, from the impact fee levied as part of the Act 13 law. In fact York County has received, so far, nearly 3/4 of a million dollars from that fund–even though there’s no active shale drilling in the county–thanks to Act 13.

    But the story ends badly, because quite likely starting next year, all of that impact fee money will disappear (see PA Supreme Court Won’t Reconsider Act 13, Impact Fee Now in Doubt). There will be no more impact fee money because seven townships in PA got their knickers in a twist, insisting their own layman zoning regulations were better than a set of statewide, uniform regulations designed by geologists and experts. So the seven petulant towns sued to toss out large portions of the Act 13 law, and it now looks like the impact fee will be tossed out too….
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    Latest Hypocritical Protest of PA’s State Forest Drilling Plan

    A handful of anti-drilling nutters–mostly washed up hippies from the 60s–held a protest rally in Harrisburg at the PA State Capitol yesterday to object to the very thing one of their icons, Ed Rendell (and his DEP Secretary John Hanger) themselves did: allow a little bit of drilling under (not on) state forests for natural gas. The hypocrisy was on full display as a small group, inflated by media reports as some sort of huge, massive movement thing, gathered to get their photo op before retiring to the nearest Starbucks to sip coffee created by machines operating on natural gas in a shop heated with natural gas to discuss how great it feels to relive the good ole days of protesting.

    Here’s how the reliably anti-drilling StateImpact Pennsylvania reported the so-called “rally”…
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    PA Supreme Court Won’t Reconsider Act 13, Impact Fee Now in Doubt

    The Pennsylvania Supreme Court continues their lunacy. On Friday they obstinately said they would not revisit their decision on the Act 13 Marcellus drilling law passed in early 2012 (see Ongoing Fallout from PA Supreme Court’s Wrong Act 13 Decision). PA Gov. Tom Corbett asked them to reconsider but the haughty response is a big “no way.” And so the very real possibility that the Supreme Court has just shut off the spigot to $200 million+ per year in impact fees. The Supremes vacated large sections of the Act 13 law that involve the collection and distribution of the Act 13 impact fee, a fee that has benefited countless communities around the state–particularly those where drilling’s impact is felt the most (hence the name). Now? Screw you seems to be the attitude of the justices.

    And so we hope the seven “brave” townships that sued and kept suing are happy that they’ve just hosed the entire state with their actions–spoiling it for everyone. Congratulations…
    Read More “PA Supreme Court Won’t Reconsider Act 13, Impact Fee Now in Doubt”

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    More Analysis of PA’s 2H 2013 Production Numbers – from NGI

    The sharp editors and analysts at NGI’s Shale Daily did a deep dive on the production numbers released last week by the PA Dept. of Environmental Protection and came up with some interesting observations. Among them: production hit 3.3 trillion cubic feet for the year, which is up 1.3 Tcf from 2012 (an amazing 62% increase). Drillers added 700 new wells in the second half of 2013. Pennsylvania State University’s Marcellus Center for Outreach and Research (MCOR) estimates total production will hit 4.5 Tcf by the end of 2014.

    Also among the gems are the top five Marcellus producers in 2013 (listed below), which collectively produced 60% of all output in the PA Marcellus last year…
    Read More “More Analysis of PA’s 2H 2013 Production Numbers – from NGI”

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    New Staffers on Way at PA DEP O&G Courtesy Higher Permit Fees

    PA’s Secretary of the Dept. of Environmental Protection, Chris Abruzzo, told lawmakers last week that he plans to hire “several dozen” new staffers in the oil and gas regulation area of the DEP by using new money from a bump up in well permitting fees. Abruzzo said the current 83 inspectors in the field are enough to get the job done, but what they do need is extra help back in the office–support staff.

    MDN told you last September that well permit fees are set to go up 56%–from $3,200 per horizontal well to $5,000 (see Coming Soon: PA Drillers to Pay 56% More for Marcellus Permits). The new fee was approved by the DEP’s Environmental Quality Board but needs several more approvals before going into effect (expected soon). Once it does, the help wanted ads will begin to run…
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    DEP Sec. Abruzzo Praised for Quick Response to Chevron Well Fire

    Pennsylvania Secretary of the Dept. of Environmental Protection, Chris Abruzzo, is getting high marks for the DEP’s handling of the recent Chevron well fire in Greene County, PA–by both Republicans and Democrats. You may recall that former DEP Sec. John Hanger, running for the Democrat nomination for governor, called Abruzzo’s appointment by Gov. Corbett “bizarre and irresponsible” (see Former PA DEP Sec. Hanger Blasts Interim Replacement for Krancer). MDN editor Jim Willis had the pleasure of interviewing Sec. Abruzzo last September at the Shale Insight conference (see Exclusive: MDN Interviews PA DEP Sec. Chris Abruzzo). Our impression then, as now, was that he is a sharp guy and a good leader. Although it took a sad tragedy, we were proven right–and Hanger was proven wrong. Hey, don’t forget to “pass a joint for John” to help him with his failing campaign for governor, k?

    Meanwhile, here’s the story of politicians from both parties heaping praise on Abruzzo for a job well done:
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    PA Gas Production #s Released: Top 10 Wells, Top 5 Counties & More!

    Top 10Pennsylvania released their second half 2013 production numbers yesterday and man oh man is it another sizzling hot report. Another 700 horizontal (mostly Marcellus) shale wells were brought online in the second half of 2013 in PA which brings the number of horizontal wells with reported production to 5,074. And, in what we believe is a first, Susquehanna County has displaced Bradford County as having the most production during a 6-month reporting period.

    Not surprisingly Cabot Oil & Gas and their prolific wells in Susquehanna County top the list as most productive. Get this, when you look at average daily production by wells, Cabot has the top 13 most productive wells in the state for 2H13–all top 13 spots. When you expand it out, they have 17 of the top 20 spots, and 34 of the top 50 spots. Truly astonishing.

    Below we have a few lists for you: Top 10 All Time Producing Wells in PA, Top 10 Wells by Production per Day, and the amount of gas produced by the top 5 counties in PA…
    Read More “PA Gas Production #s Released: Top 10 Wells, Top 5 Counties & More!”

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    Do PA Drillers have Law on Their Side in Royalty Debate?

    A sharp MDN reader, John S., emailed MDN to remind us of how PA landowners ended up in the quagmire they are now in with regard to royalties with drillers (like Chesapeake) deducting post-production expenses from what they pay to landowners. We had forgotten about the Kilmer v ElexCo Land Services case from March 2010 in which the PA Supreme Court ruled that drillers could indeed deduct certain post-production expenses without violating the law that says landowners must be paid a 12.5% minimum royalty (see Breaking News: PA Supreme Court Rules Against Landowner Seeking to Invalidate Lease).

    PA Gov. Tom Corbett wrote a letter to Doug “the ax” Lawler at Chesapeake telling him the company’s royalty calculations were unfair at best, and perhaps illegal. Doug just has to point to the 2010 PA Supreme Court case. Here’s more information about the 2010 case and what the decision means, and doesn’t mean:
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    CONSOL to Begin Ethane Shipments Next Year–to Europe?!

    CONSOL Energy is a big, important driller in the Marcellus and Utica Shale. Most of their operations are in “wet gas” areas–those locations that produce a lot of natural gas liquids (NGLs), like ethane, along with “dry gas” or methane. Although CONSOL has a lot of acreage in southwestern PA and in WV and eastern OH, the ethane they produce will not be going to a proposed new ethane cracker plant being built by Odebrecht in Parkersburg, WV. Instead, CONSOL is going to send their ethane by pipeline to an export facility in Philadelphia, and from there, on to Europe for processing and use in European petrochemical factories.

    Why in the world ship ethane all the way to Europe for processing instead of selling it in your own back yard? Timing. CONSOL doesn’t want to wait the 4-5 years for an ethane cracker to be built (if it’s built at all). They’ve adopted a “bird in hand” strategy. They’d rather start shipping it next year, when Sunoco Logstics’ Mariner East pipeline is up and running, rather than wait. And so CONSOL, according to their announcement below, has locked in a deal with Ineos Europe AG. But don’t despair, CONSOL also previously signed an agreement with Shell to provide its cracker plant in Beaver County, PA with ethane–when and if that plant gets built…
    Read More “CONSOL to Begin Ethane Shipments Next Year–to Europe?!”

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    WPX Gives MDN an Update on Their 2014 Marcellus Plans

    Yesterday MDN brought you the news that WPX Energy seemed to be waving good-bye to the Marcellus, based on our observation that they will not do any new drilling in the Marcellus in 2014 (see WPX Energy Abandoning the Marcellus? Sure Looks That Way). Upon posting that story, WPX official Susan Oliver contacted MDN to provide some perspective and background. MDN concludes that we had most of our analysis right, but we may have left the wrong impression by using the word “Abandoning” in our headline. We want to clear this up right here and now, at the beginning of this update: WPX Energy is not leaving the Marcellus. That is, the 100 or so wells they’ve already drilled here in the Marcellus will continue to be WPX wells. We thank the company for making that clarification and apologize to landowners if we gave you a bit of shock.

    However, WPX is, as we noted yesterday, not doing any new drilling in the Marcellus–at least in 2014 and likely beyond. That part of yesterday’s story was correct. As Susan told us, the change we see reflected in their 2014 budget and drilling plan is that the company is shifting from drilling to production in the Marcellus. As for their new drilling program in 2014, they owe it to their stockholders to drill new wells in more oily shale plays–places where they will make more money, quite frankly. And you can’t fault them for that…
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    Penn State Figures Out How to Convert Garbage into Proppants

    Shale drilling uses a special kind of sand called silica. It uses a LOT of silica, which is mostly mined in the Midwest, in places like Wisconsin. Sand is called a “proppant” in the industry because it “props open” tiny little holes in fracked shale rock to allow the natural gas (or oil or NGLs) to slip out and up the borehole. There are alternatives to silica as a proppant material–but not many are economic to use. What if you could turn industrial and domestic waste materials into a viable alternative source of raw materials for proppants? That is, what if you could turn garbage into the equivalent of sand? That would be so cool, getting rid of industrial waste on the one hand, creating a cheap source of proppants on the other.

    Turning garbage into proppants is exactly what the brains at Penn State have now figured out how to do. Below is the announcement from Penn State that a pair of their materials scientists have published a new paper in a scientific journal (copy of the paper embedded below). The announcement and paper trumpet the discovery that there is a better way to create cheap proppants for shale drilling, and it was discovered right here in Marcellus Shale country…
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