Tioga County, PA: Marcellus Boom Followed by Not-So-Boom
The oil and gas industry has always gone through cycles–times when the industry expands like crazy, and times when it contracts. The cyclical nature of oil & gas is often characterized by fossil fuel detractors as “boom and bust.” We’ve heard the boom and bust argument for years, previously tackling the issue all the way back in 2012 (see Anti-Drilling Objection: Shale Drilling Causes Boom & Bust). We think it’s time to rename this phenomenon to something more reflective of what it really is: boom and not-so-boom. Many industries, indeed we would argue ALL industries, go through such cycles. The example we gave back in 2012 was to recount the history of the Binghamton, NY area, with our loss of IBM (founded in Endicott), and the loss of Endicott-Johnson Shoes (founded in Johnson City)–two huge employers in the region that eventually left. At least with shale the work returns after a time. IBM and EJ are long gone and never coming back. We’ll take the “boom and bust” of the shale industry over faithless manufacturers any day of the week! Here’s a close-up look at the boom, followed by the not-so-boom, in Tioga County, PA shale country…
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From time to time exploration and production companies (aka “drillers” or “producers”) decide to sell leases for acreage they don’t plan to drill on or under. Typically when a new play is discovered there is a bit of a land rush as drillers begin leasing. In the Marcellus, a driller may decide to concentrate on a specific county in the state, as Cabot Oil & Gas did with Susquehanna County in northeastern PA. Cabot happened to hit the jackpot with some of the most productive gas wells on the planet. Other times, when the leasing is done and drilling has begun drillers begin to figure out where they want to spend their money. It takes a lot of money to drill a Marcellus well–on the order of $7 million. Eventually drillers find there are isolated tracts of acreage they’ve leased that don’t fit with their future plans, so they either horse trade and swap, or perhaps put the acreage leases up for public auction. Such is the case with Shell’s SWEPI subsidiary. They recently posted three largish tracts of leased acreage up for auction–two in Tioga County, PA and one in Potter County, PA. Here’s a description of the land SWEPI is trying to dump…
In April 2015 Kinder Morgan’s Tennessee Gas Pipeline (TGP) subsidiary filed an application with the Federal Energy Regulatory Commission (FERC) to build 8.2 miles of new looping pipeline in Tioga County, PA and beef up two compressor stations in Bradford County, PA. The $142 million project is called the Susquehanna West Project. The project will increase capacity along a section of the TGP, bumping it up by 145 million cubic feet per day (Mmcf/d). All of the extra capacity is spoken for by Statoil and the wells they’ve drilled in NEPA. Good news: On Tuesday FERC issued their approval for the project, which means construction will begin in January 2017…
This one has us scratching our heads. Landowners Damon and Kendra Baker, in Tioga County, PA, signed a lease with Shell’s SWEPI in 2006. We’re guessing the signing bonus was peanuts because at that time the Marcellus was still in its infancy in PA. SWEPI constructed a well pad on their property in 2010 but had drilled no wells by the time the lease expired in 2011. The Bakers wanted a healthy re-signing bonus to allow SWEPI to lease their land again. SWEPI’s final offer was $150,000 (not sure for how many acres). The Baker’s, according to SWEPI, wanted half a million dollars. SWEPI said “no thanks” and therefore, according to state Dept. of Environmental Protection standards, needs to restore the property to its original state and be done with it. But the Bakers won’t let them re-enter the property. So SWEPI is suing and the clock is ticking–they only have until December to put it back to original condition or the company will be fined $500/day until it’s done…
Ever hear of a legal doctrine called “estoppel by deed”? No, we hadn’t either. But if you’re an attorney who specializes in oil and gas mineral rights in Pennsylvania, you may have. The Pennsylvania Supreme Court recently decided a case that upholds state laws of estoppel by deed. The case, called Shedden v. Anadarko, revolved around landowners in Tioga County, PA who thought they owned all of the mineral rights to 62 acres, only to find out half the rights belonged to someone else going all the way back to the 1800s. From there it gets complicated. What we can tell you is that some attorneys were concerned that the newly reconstituted PA Supreme Court would overturn the estoppel by deed law in the state–but that didn’t happen. Estoppel by deed is safe and sound in PA. Here’s the details…
Looks like there’s a new driller in the Marcellus/Utica. MDN received a tip from an industry insider to let us know that Travis Peak Resources, an Austin, TX-based exploration and production company (E&P, or “driller”), is firing up a rig to begin drilling in Tioga County, PA. Who’s Travis Peak? And are they targeting the Marcellus, or the Utica? We don’t have 100% definitive answers for you, but we do have some informed speculation…
Yesterday the Pennsylvania Dept. of Environmental Protection announced an agreement/settlement with three Marcellus drillers operating in the northeastern portion of the state. The three–Chesapeake Energy, XTO Energy and SWEPI (i.e. Shell) were fined a collective $374,481 for methane migration related to their drilling activities at three locations (three different counties) in 2011 and 2012. The bad news is that 13 private water wells between the three incidents were negatively affected, along with several local creeks. The good news is that the problems are all fixed. Methane migration is an eminently fixable condition. Here are the details for each fine, including what happened and where it happened…
It’s always a sad day when MDN has to report on the death of a worker related to the Marcellus/Utica Shale. On Tuesday, Ricky Dettman was operating a bulldozer on a steep grade in Tioga County, PA working on installing a pipeline for Energy Transfer Partners when the bulldozer rolled over, several times, killing Ricky. We’re not sure exactly which pipeline project it is Ricky was working on, but its a 36-inch pipeline (a big pipeline) that will flow Marcellus and Utica Shale gas, according to the PR agency working for ETP. Below are four news accounts of the accident. They all have slightly different accounts, including a discrepancy on Ricky’s age–he was either 54 or 55 years-old. Ricky hailed from Nebraska…
In February 2015, MDN did a deep dive into the issue of Pennsylvania leasing underneath rivers and streams to allow Marcellus/Utica Shale drilling (see