West Virginia

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    Dimock, PA Among Likely Locations for EPA Study of Hydraulic Fracturing

    A critical component in the federal Environmental Protection Agency’s (EPA) plan to study hydraulic fracturing is where they will conduct case studies. Starting on page 42 of the draft proposal, we find out.

    There were 48 proposed locations suggested to the EPA, from which they will select between five and eight locations. We know five likely locations right now, and two of those are in the Marcellus Shale region—the other three are in other shale formations around the country.

    Read More “Dimock, PA Among Likely Locations for EPA Study of Hydraulic Fracturing”

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    Forced Pooling for Marcellus Shale Drilling May be Coming to West Virginia Landowners

    The West Virginia legislature is actively debating new legislation that regulates drilling in the Marcellus Shale. One of the provisions in the proposed legislation being hotly debated is the issue of forced pooling:

    Read More “Forced Pooling for Marcellus Shale Drilling May be Coming to West Virginia Landowners”

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    Marcellus Landowners: Check for These Important Things in Your Lease Before You Sign

    At a recent meeting in Sherrard, West Virginia, senior trust officer for WesBanco Inc., Paul McKay, had some excellent advice for landowners as they get ready to sign leases. He told those at the meeting that the first lease they’re offered usually has room for negotiation, and some of the items landowners need to check for include shut-in royalties, the question of who pays taxes, and payment for natural gas liquids.
    Read More “Marcellus Landowners: Check for These Important Things in Your Lease Before You Sign”

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    WV Legislators Consider Forced Pooling for Marcellus Shale Landowners

    The West Virginia legislature is considering a couple of bills that deal with rules for Marcellus shale gas development in the state. One of those bills contains a provision for forced pooling, a hot-button issue to be sure among landowners and mineral rights owners. The WV legislature may adopt a pooling provision that is used in the state currently for coalbed methane drilling.

    Read More “WV Legislators Consider Forced Pooling for Marcellus Shale Landowners”

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    West Virginia Now Employs 10K People in Marcellus Shale Gas Industry, Wetzel & Marshall Counties Most Active in Gas Drilling

    WV - New Marcellus WellsAn article in today’s West Virginia paper The Intelligencer / Wheeling News-Register attempts to denigrate Marcellus gas drilling in the state by focusing on some of the problems. One of those problems, according to the article, is that 13 illegal aliens (undocumented workers) that have been caught working for drilling contractors in the state “in the last few years.” But 13 illegals apprehended out of some 10,000 workers employed by the Marcellus gas drilling industry in the state is an infinitesimally small 1/10th of one percent. That is, it’s a non-story. If the statistics are to be believed that there are some  20 million illegals in the U.S., and the population of our country is around 300 million, that means an average 6 1/2 percent of the entire population are illegal aliens! Point is: the drilling industry does not seek to employ illegals—it happens, like any industry.

    Read More “West Virginia Now Employs 10K People in Marcellus Shale Gas Industry, Wetzel & Marshall Counties Most Active in Gas Drilling”

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    Triana Energy and Marathon Oil Join Forces in Deal to Drill 350 Wells in the Marcellus Shale in PA and WV

    Triana Energy is stepping up its commitment to drilling in the Marcellus Shale by entering into a partnership with Marathon Oil. From the official press release:

    Read More “Triana Energy and Marathon Oil Join Forces in Deal to Drill 350 Wells in the Marcellus Shale in PA and WV”

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    East Resources Sells to Royal Dutch Shell for $4.7 Billion, Deal Includes All of East’s Marcellus Shale Operations

    East Resources, a major drilling company in the Marcellus Shale, especially in Pennsylvania, is selling itself to Royal Dutch Shell for a whopping $4.7 billion. From drilling a single horizontal Marcellus Shale gas well in 2009, East has drilled some 75 horizontal wells in the past 12 months. East did have plans to drill 6,000-7,000 wells in Tioga County, PA over the next “several years” (see this MDN story). No word on the planned drilling for Tioga County and other regions, but MDN assume Shell did not invest in East to not drill. In fact, the pace of drilling may well pick up with Shell’s investment.

    From the East Resources press release:

    East Resources, Inc., a Pennsylvania-based independent oil and gas producer and one of the most active explorers in the Marcellus Shale, along with its private equity investor Kohlberg Kravis Roberts & Company, signed a definitive agreement to sell the company’s principal subsidiaries to an affiliate of Royal Dutch Shell plc (“Shell”) for cash consideration of $4.7 billion. The sale includes East’s natural gas and oil exploration and production operations and most of its holdings in related businesses. With the purchase of East Resources, Shell will acquire approximately 650,000 net acres of Marcellus Shale rights in Pennsylvania, West Virginia and New York, and 1.05 million acres in total.

    East Resources, founded in 1983 by Terrence M. Pegula, has been one of the Appalachian Basin’s most active exploration and production companies for more than 25 years. Since its inception, East has grown primarily through its exploration successes, several strategic acquisitions, and most recently the development of the Marcellus Shale.

    East Resources employs approximately 300 office and field personnel in Pennsylvania, West Virginia, New York and Colorado. Its principal offices are located in Warrendale, PA, Broomfield, CO and Parkersburg, WV. Shell will continue to operate with East’s workforce to ensure continuing success in the growth and development of the reserves it will acquire in the purchase.

    The sale of East Resources to Shell is expected to close in two phases. The first phase of the sale will be completed in mid- to late summer. The second phase of the sale, including the sale of the West Virginia business, will close later this year, pending certain regulatory approvals.

    “The sale of the company to Shell will ensure that the capital needed to develop East’s significant Marcellus Shale holdings will be available,” says Mr. Pegula, East’s owner and Chief Executive Officer. “Shell’s entry into the region should benefit Pennsylvania, West Virginia and New York through significant new capital investment, new jobs and new business opportunities. I am very proud that this transaction has brought Shell into the Appalachian Basin.”

    President of Shell Oil Company, Marvin Odum commented, “East Resources’ management has built an excellent organization which we are pleased to have as we enter the northeast US and specifically the Marcellus Shale play.”*

    *East Resources Press Release (May 28) – East Resources Inc announces sales agreement with Royal Dutch Shell plc

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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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    MarkWest Expands Marcellus Shale Gas Processing Capacity in West Virginia & Pennsylvania

    MarkWest Liberty Midstream & Resources—also known as MarkWest Energy—announced today it is expanding its processing and fractionation capacity in the Marcellus Shale in West Virginia (Marshall County) and Pennsylvania (Washington County). What exactly does that mean, and why should landowners care? MarkWest is a “midstream” company, providing processing, storage, transportation and marketing for natural gas. Think of midstream companies as bridges between energy companies that do the drilling, and the large pipelines that deliver natural gas to buyers. Along the way the gas must get from the well to a processor where it’s cleaned up and separated into different products. There are different types of chemical compounds in “natural gas” and impurities must be removed before it’s saleable. MarkWest provides processing, fractionation (a separation process), pipelines, compressor facilities and more.

    The MarkWest announcement means drillers will have more capacity to clean up, transport and market the gas they discover. More capacity expands the market. The MarkWest announcement says they have “reached definitive agreements” which will allow them to expand operations, but it does not say which energy companies those agreements have been made with.

    From the MarkWest press release:

    Read More “MarkWest Expands Marcellus Shale Gas Processing Capacity in West Virginia & Pennsylvania”

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    Landowners Beware of Post-Production Expenses Deducted from Your Royalty Checks

    An informative article with a lot of background on the issue of gas royalty payments and the practice of deducting post-production expenses from those payments is published in today’s The State Journal. The article covers in detail the case of Tawney v. Columbia Natural Resources that was settled by the West Virginia Supreme Court in 2006. That decision said, in essence:

    [G]as producers cannot deduct “post-production” expenses — those incurred between the wellhead and market, such as dehydration, compression and transportation — from royalty payments unless explicitly spelled out in the lease.*

    West Virginia is in the minority of states that have ruled against post-production expenses. Other states disallowing post-production expenses (unless specifically spelled out in the lease) include Arkansas, Colorado, Kansas and Oklahoma.

    However, because gas “at the wellhead” is not in “marketable condition,” a number of other states do allow deduction of post-production expenses from royalty payments in cases where it’s not specifically enumerated in the lease. Those states include Louisiana, Mississippi, Texas, California, Montana, New Mexico and some others.

    Kentucky and Pennsylvania have not yet ruled on the matter, although the Pennsylvania Supreme Court is due to rule soon in Kilmer v. Elexco Land Services Inc.

    The lesson for landowners: Make sure the language in your lease is spelled out in detail about what kinds of post-production expenses can and cannot be deducted from your royalty checks. And if you have a contract that is not specific, get legal advice and be sure you’re receiving the money you’re owed.

    *The State Journal (Mar 11) – State Courts Continue to Evaluate Gas Royalties

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    AOP Clearwater Plant in WV a Big Success in Treating Marcellus Shale Wastewater

    AOP Clearwater Plant, Fairmont, WV A lesson for Owego and Tioga County, NY from Marion County, West Virginia where a new wastewater treatment plant is a big success. The AOP Clearwater Plant is located just outside of Fairmont.

    According to AOP Clearwater President Louis Bonasso, they have had no problems getting customers from oil and gas drilling companies in the Marcellus Shale. In fact, the trucks are “lining up” at the facility.

    “We are a distillation-crystallization process, available to the oil and gas producing community in the area for clean-up of flow back and production brine waters,” said Bonasso.

    Which means, the contaminated water is brought in on trucks, put through an extensive cleaning process, and pumped back out–as clean water for the oil and gas companies to reuse.

    “We offer a very rapid unload-reload opportunity for trucking companies. Instead of sitting in line, we unload in about 11 minutes and we can reload in about the same time,” said Bonasso.*

    Beside creating 16 jobs and bringing revenue to the county, there is this positive side benefit:

    Through the cleaning process, salt is removed from the contaminated water and is able to be re-used to treat winter roads.

    “All the salt that we produced since the plant started operations in November was sold in Marion County to independent contractors and the city,” explained Bonasso.*

    *The State Journal (Mar 9) – AOP Clearwater Plant Open in Marion County

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    Marcellus Leasing & Drilling in the West Virginia Panhandle Heats Up

    West Virginia Marcellus Shale is getting hot. From an article* in the Steubenville (OH) Herald-Star, we get a mountain of good intelligence on what energy companies have and are paying in the West Virginia panhandle:

    • AB Resources is paying the New Vrindaban Hare Krishna Community in Marshall County $2,500 per acre for approximately 4,000 acres, and 18.75 percent production royalties. That works out to $10 million in lease payments.
    • Chesapeake paid $750 per acre and 14 percent royalties to the Wheeling Park Commission for leases in the Oglebay and Wheeling Parks in 2009. The park commissioner is not happy that Chesapeake is planning to pay more this year to lease public lands in neighboring Ohio County.
    • Chesapeake paid $2,800 per acre and 18.75 percent production royalties last month to the Marshall County Board of Education for rights to 177 acres in Sherrard.
    • Chesapeake has 11,000 acres under lease in Ohio County, and 45,000 acres (with 26 wells drilled) in Marshall County.
    • Trans Energy owns and operates 300 active wells in Marshall, Wetzel and Marion counties, with 40,000 acres under lease.

    Also, according to the article:

    Current lease contracts range from as low as $5 per acre to as high as $2,800 per acre, with production royalties ranging from 12.5 percent to 18.75 percent. Landowners are being urged to think carefully before signing any contract.*

    *Steubenville Herald-Star (Mar 8th) – Steubenville Herald-Star – Natural gas could bring riches to Panhandle

  • WV Senate Votes on Change of Definition for Marcellus Drilling from Deep to Shallow

    The West Virginia State Senate is set to vote on a bill (SB369) that would change the designation of horizontally drilled gas wells in the Marcellus Shale from “deep” wells to “shallow” wells. The reason? To clear up jurisdictional disputes about who regulates and monitors the wells. Deep wells are regulated by the West Virginia Oil and Gas Conservation Commission, and shallow wells are regulated by the Shallow Gas Well Review Board.

    But some, including the West Virginia Surface Owners’ Rights Organization, an anti-drilling organization, say the change is the equivalent of “legalized stealing.” According to Dave McMahon, founder of the group:

    Unlike wells defined as “deep,” shallow wells cannot be made subject to well spacing and royalty sharing rules, McMahon said well spacing and royalty sharing laws allow mineral owners whose natural gas is drained by wells on their neighbors to receive their share of the royalties, McMahon said.

    If Marcellus wells aren’t subject to those laws, McMahon said, gas well drillers could drill on the edge of neighboring mineral owners’ land and drain gas from the mineral owners’ tracts without paying for it.*

    The Independent Oil & Gas Association of West Virginia has endorsed the bill, saying the changes allow drillers to finish wells with newer technology.

    Who’s right? A tough one to call. It’s certainly not fair to have the gas beneath your feet drained away by a neighbor and not be compensated for it. But will that really happen? If you have insight, or an opinion, share it in the comments.

    *The Charleston Gazette (Mar 1) – Rush on gas-well drilling bill unfair, owners group says

    UPDATE – March 2

    Senate Bill SB369 passed the West Virginia Senate today with only a single dissenting vote (Sen. Randy White, D-Webster). Read about it here: WV Public Broadcasting

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    Trans Energy Begins Drilling Third Horizontal Marcellus Well in Marshall County, WV

    Trans Energy (Nov 18):
    Press Release: Trans Energy Begins Drilling Third Horizontal Marcellus Well in Marshall County, WV

    From the press release:

    Trans Energy, Inc. announced today that it has begun drilling the Whipkey #1H well in Marshall County, West Virginia. The Whipkey #1H will be drilled and completed horizontally in the Marcellus shale.

    The Company plans to drill the vertical portion of the Whipkey #1H well to a depth above the kick-off point of approximately 6,500 feet. A second, larger rig will follow-on immediately to drill the horizontal portion.

    James K. Abcouwer, President and CEO of Trans Energy, said, “We have to-date successfully drilled four vertical Marcellus wells. We have also successfully drilled and completed one horizontal Marcellus well, the Hart #28H, and partially drilled a second horizontal Marcellus well, the Anderson #7H, both of which are in Wetzel County, West Virginia. Continuing our horizontal program in another county is another significant step forward for Trans Energy to properly develop its acreage position in northern West Virginia.”

    The Company continues to expand its acreage position centered on Wetzel, Marion, and Marshall Counties in West Virginia, which it believes to be the heart of the most prolific natural gas resource in Appalachia, and one of the greatest in the United States.

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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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    Anti-drilling Crowd Calls for “Balance” Between Energy and Environment

    Poughkeepsie Journal (Oct 8):
    Outdoors: Balance must be struck between energy, environment

    More misinformation from the anti-drilling crowd. The “reporter” for this article, Bill Conners, starts with general information that is of interest for everyone in New York:

    According to the New York State Department of Environmental Conservation, there have been more than 75,000 oil and gas wells drilled here since the late 1800s; some 14,000 remain active.

    He then briefly describes hydrofracturing, and moves on to cite the Dunkard Creek problem of fish dying along the border of Pennsylvania and West Virginia. As previously noted in MDN, the problem is about an overgrowth of algae, of a strain of algae not normally found in the creek. There may or may not be a tie with gas drilling. The link that is being made is “perhaps” the algae somehow got onto drilling equipment and trucks used in drilling and hitchhiked to the Dunkard Creek. This is highly speculative at best. More science please!

    But the anti-drilling crowd is in a rush to tie Dunkard Creek to the thought in readers’ minds that “drilling causes fish to die where ever it’s used.” Mr. Conners, in this article, does not detail the issue of Dunkard Creek, he merely mentions lots of fish dying and that it is somehow tied to drilling–leaving the impression that chemicals are the cause. Here is the sum total, in context, of what he says on the matter:

    Unfortunately, there are risks associated with using the [hydrofacturing drilling] technique. The various fluids used can, and sometimes do, damage aquifers and nearby water bodies. In early September in Blacksville, W.Va., residents started noticing dead fish along Dunkard Creek, just below the border of Pennsylvania. It wasn’t long before the entire fish population was wiped out along 35 miles of the previously fertile stream. It is virtually impossible to know how long it will take for the damage to be mitigated, whether by remediation or by Mother Nature.

    There are charges flying back and forth, and there is an ongoing investigation as to whether or not the damage to Dunkard Creek came as the result of a spill from a drilling operation along the creek. Nationwide, it is estimated that 90 percent of the wells are drilled using fracking. It is not hard for things to go wrong, and when they do, property is damaged and lives turned on end.

    Here is the story as told in the Pittsburgh Post-Gazette from last week:

    An invasive toxic algae, blamed for contributing to the massive Dunkard Creek fish kill along the Pennsylvania-West Virginia border, may have hitchhiked to the region aboard equipment used in Marcellus shale drilling.

    And this:

    But the West Virginia agency [Department of Environmental Protection] doesn’t know how the algae got into the creek.

    “We might never know how it got there,” said spokewoman Kathy Cosco. “We are trying to determine if it’s present already in other water bodies or has spread.”

    Investigators also are looking at the possibility that someone illegally dumped drilling wastewater into the creek.

    Yes, wastewater from drilling is one of the possible scenarios being looked at, but that, as well as “hitchhiking algae” are pure speculation right now. There is no science, no proof, no direct tie-in with drilling. But you won’t find that in this story because it doesn’t fit the template of the anti-drilling crowd. Read your news carefully.