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New President of Marcellus Shale Coalition Says Drilling Will Bring 110,000 Jobs to PA in 2010

Katie Klaber, the new President of the Marcellus Shale Coalition recently appeared on the Clean Skies News network to discuss the environmental issues of natural gas drilling. It’s an informative and short piece (under 10 minutes), and worth watching (embedded below).

Among the things discussed that MDN found interesting:

  • Ms. Klaber says Marcellus Drilling will bring 110,000 jobs to Pennsylvania in 2010.
  • Some drillers recycle and reuse 100% of fracking water, but the industry average right now is recycling and reusing 60%.
  • Because of the high rate of recycling, a shortage of wastewater treatment facilities is not critical at the moment, but more facilities will be needed in the next few years.
  • Drilling companies already have an MSDS (Materials Safety Data Sheet) at the drilling site for each and every chemical used in the fracking process. That is right now, today. So the hue and cry that drillers are “hiding” the chemicals used in fracking is not true.
  • Ms. Klaber predicts that Pennsylvania will be a net exporter of natural gas by 2014.

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Southwestern Energy Investing $145 Million and Drilling 35-40 Wells in the Marcellus in 2010

MarketWatch/PR Newswire (Feb 25)
Southwestern Energy Announces 2009 Financial and Operating Results

Southerwestern Energy made it’s 2009 results known today in a press release. Of concern to landowners in the Marcellus, particularly in northeastern PA, is this paragraph:

Appalachia – The company began leasing in northeastern Pennsylvania in 2007 in an effort to gain a position in the emerging Marcellus Shale play. At December 31, 2009, Southwestern had approximately 149,000 net acres in Pennsylvania under which it believes the Marcellus Shale is prospective. The company’s undeveloped acreage position as of December 31, 2009 had an average remaining lease term of 5 years, an average royalty interest of 13% and was obtained at an average cost of approximately $594 per acre. During 2009, Southwestern invested approximately $40 million in Pennsylvania, almost all of which was for acquisition of acreage. In 2010, the company plans to invest approximately $145 million in Appalachia, which includes drilling with one operated rig in the Marcellus Shale play in Pennsylvania and participating in a total of 35 to 40 wells, 21 to 24 of which will be operated.

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PA Marcellus Shale Gas is Getting a Pipeline – To Canada!

Vancouver Sun (Feb 22)
Tertzakian: Lessons from a green ice resurfacer’s failure

Will Marcellus Shale gas find a market over the border in Canada? It sure looks that way. An excerpt from an article published in the Vancouver Sun, says, in part:

In fact, the real Energy Story of the Week came in the form of a couple of announcements: two corporate proposals hoping to bring natural gas and liquids from Pennsylvania’s Marcellus shale into Canadian markets. First Nova Chemicals and Buckeye Partners announced a joint memorandum of understanding to develop an NGL pipeline from Pittsburgh to Sarnia. Then, Union Gas announced that they would conduct an open season for a pipeline service that would allow for the shipping of up to 0.75 Bcf/d of natural gas from the Marcellus into Kirkwall, Ontario and through to Dawn.

While there have been countless pipeline expansions and extensions announced recently to transport Marcellus gas into the US Northeast, this is the first major export proposal to pit Pennsylvania gas head-to-head with western Canadian gas, on Canadian soil.

New York State shares one-third of its border with Canada! Unfortunately the Powers That Be in Albany are still diddling away while enterprising states like Pennsylvania are making money.

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PA Game Commission Executive Director Reports on Problems with Marcellus Drilling on Public Lands

PR Newswire (Feb 16)
Game Commission Delivers Annual Report to Legislature

Pennsylvania Game Commission Executive Director Carl G. Roe presented the agency’s annual report to the General Assembly, and delivered testimony before the House Game and Fisheries Committee on February 16. Below is an excerpt of his testimony as it touched on the subject of drilling on Game Commission (publicly owned) lands:

I am sure there will be questions on Marcellus Shale, so I will quickly address the subject. During Fiscal Year 2008, the Game Commission approved three oil/gas leases within the Marcellus Shale development areas of the Commonwealth.  These leases totaled 2,693.43 acres and were worth an average upfront payment of $907.38 dollars per acre to the Commission constituting an additional 10 acres of State Game Lands acquisition as well as revenues to the game fund. The average royalty per acre for these leases was 23.08 percent. During Fiscal Year 2008, there were no Marcellus wells drilled on any of these leases but there were four wells planned for drilling in the Fiscal Year 2009. On all other currently active leases on State Game Lands, there were two Marcellus wells commenced and placed into production in Fiscal Year 2008. The Game Commission received a total of $113,336.26 royalty revenues during Fiscal Year 2008 from Marcellus gas production, with the average approximate well production being only 250 mcf/day, rather than the 2,000-3,000 mcf/day production some have assumed would occur. Unfortunately, there have also been two separate environmental degradation incidents which occurred during these wells development causing the need for increased Game Commission coordination, and oversight management scrutiny.

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Chesapeake Energy Continues to Expand Production in the Marcellus Shale

Houston Star-Telegram (Feb 16)
Chesapeake reports 19 percent production increase

Chesapeake Energy, one of the largest gas drilling companies in the U.S., recently reported a 19% increase in its natural gas production across all of its shale plays. With respect to the Marcellus, we learn from a Houston Star-Telegram article that:

  • Chesapeake has a huge leasehold of 1.6 million net acres in the Marcellus
  • Current net Marcellus production equals 65 million cubic feet of gas per day
  • Chesapeake expects its Marcellus output will rise to 270 million cubic feet of gas per day by year-end 2010 (over 4x current levels)
  • Chesapeake expects its Marcellus output will rise to 450 million cubic feet of gas per day by year-end 2011 (nearly 7x current levels)
  • Three recent wells drilled in Susquehanna County (PA) had peak 24-hour rates of 8.7 million, 8.6 million and 8.4 million cubic feet of gas
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Mitsui Investment in Anadarko Projected to Grow from $1.4 to $4 Billion in Next 10 Years

Philly.com – Philadelphia Inquirer (Feb 17)
Japanese firm to invest $1.4 billion in Marcellus operation

The Philadelphia Inquirer has posted a story about the huge investment from Mitsui in Anadarko. As Marcellus Drilling News reported yesterday, Mitsui has purchased a 32.5% stake in Anadarko for $1.4 billion. What was not in the original news release is this tidbit:

The Tokyo company expects to invest up to $4 billion over 10 years in the partnership, which would produce up to 460 million cubic feet of natural gas a day at its peak.

We also learn from the article that 768 Marcellus wells were drilled in Pennsylvania in 2009. Anadarko alone, with Mitsui’s new investment, projects drilling 4,500 wells in PA “in the coming years.”

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Anadarko Takes on Mitsui as Partner in Marcellus Drilling

Anadarko Press Release (Feb 16)
Anadarko Announces Joint Venture with Mitsui in the Marcellus Shale

The full text of the press release from Anadarko is below. It announces they have taken on a partner for their Marcellus drilling interests, mostly in north-central Pennsylvania.

Anadarko Petroleum Corporation (NYSE:APC) today announced a joint-venture agreement with Mitsui E&P USA LLC, an affiliate of Mitsui & Co., Ltd. (NSDQ: MITSY), whereby Mitsui will participate with Anadarko as a 32.5-percent partner in Anadarko’s Marcellus Shale assets, primarily located in north-central Pennsylvania, for approximately $1.4 billion. Mitsui will earn approximately 100,000 net acres in exchange for funding 100 percent of Anadarko’s share of development costs in 2010, and 90 percent of these costs thereafter, with an estimated completion of all obligations by 2013. In addition, Mitsui will have the opportunity to purchase a 32.5-percent share of Anadarko’s existing wells and additional acreage acquisitions by reimbursing a proportionate share of Anadarko’s prior expenditures, currently estimated to be approximately $100 million.

"We are very pleased to have Mitsui as a partner in the Marcellus Shale," Anadarko Chairman and CEO Jim Hackett said. "This transaction reflects the significant value of Anadarko’s fairway position in the Marcellus Shale, which has a gross unrisked resource potential of more than 30 Tcf (trillion cubic feet) of natural gas and spans more than 715,000 gross acres. We continue to ramp up our activities in the Marcellus and anticipate drilling more than 4,500 wells over the coming years. We have successfully partnered with Mitsui in other parts of the world and look forward to working with them and our other partners in the Marcellus, as we continue to develop and deliver these domestically produced, clean-burning natural gas resources to American consumers."

The joint-venture agreement is effective Jan. 1, 2010. Closing of the transaction is subject to applicable regulatory approvals and other contractual conditions, and is anticipated on March 15, 2010.

A map of Anadarko’s Marcellus Shale acreage, primarily located in north-central Pennsylvania, will be available under the "Media Center/Anadarko News" tab at //www.anadarko.com.

Anadarko Petroleum Corporation’s mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world’s health and welfare. As of year-end 2009, the company had approximately 2.3 billion barrels-equivalent of proved reserves, making it one of the world’s largest independent exploration and production companies. For more information about Anadarko, please visit //www.anadarko.com.

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A Balanced View of Waste Water Treatment from Marcellus Shale Drilling

Towanda Daily Review (Nov 18):
Treatment plant for gas drilling waste water subject of Athens Twp. hearing tonight

An informative article about the waste water treatment plants proposed for northeastern Pennsylvania. Some tidbits from the article:

The North Central Regional Office of the DEP, which serves Bradford, Cameron, Centre, Clearfield, Clinton, Columbia, Lycoming, Montour, Northumberland, Potter, Snyder, Sullivan, Tioga, and Union counties, has received 10 applications for NPDES permits, according to spokesman Dan Spadoni. Of those 10 applications, four are for plants proposed on the west branch of the Susquehanna River, one is for the Somerset plant on the Chemung River, one is proposed on the Tioga River, and the remainder are for various creeks and streams, he said.

Somerset Regional Water Resources is requesting a discharge permit for around a million gallons a day, which makes it the largest in the North Central Region, Spadoni said. The other proposed plants are requesting permits for between 50,000 to 500,000 gallons per day, he said.

The article discusses naturally occuring radioactive substances that might be concentrated in waste water, and how the plants would deal with it. The article also points out the plan is for the plants to recycle and re-use most of the water for other shale drilling instead of discharging it all into the environment. However, there will necessarily be some water discharged into tributaries and streams.

I found this article very enlightening and balanced in its coverage–a good read for landowners and other interested parties.

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Pennsylvania Offers 32,000 Acres of State Land for Drilling Leases

Wellsboro Gazette (Nov 18):
Marcellus Shale, climate change, money, politics and the environment

Pennsylvania is offering state-owned land for lease to energy companies interested in drilling in the Marcellus Shale. According to the article:

Monday, the secretary of the Department of Conservation and Natural Resources (DCNR), John Quigley, announced that six tracts of land are being offered for lease. The lease offering amounts to 31,967 acres.

Nearly 22,000 of the acres for lease lie in Tioga and Potter counties.

The 31,967 acres represents 1.5% of the total amount of state-owned forest land, a very small fraction.

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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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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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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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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.