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    Anti-Drillers Turn Out in VA to Disrupt Forum on Drilling

    Ignorant anti-drillers–typically old hippie retreads and hippie wannabes–seem to derive meaning from their miserable existence by turning up at meetings where drilling will be discussed so they can cause trouble. They don’t listen because their minds are closed. They simply want to be heard. Real communication takes place when there is both a sender and a receiver (Speech 101). Anti-drillers are simply stuck on “sender” mode–they never open up and receive.

    A perfect example is a meeting held last week in Virginia. The Virginia Outdoors Foundation (VOF) sponsored a forum in Fredericksburg to look at the issue of whether oil and gas drilling should be allowed on land protected from other development by conservation easements. Shale drilling may soon come to land with easements–easements that otherwise prohibit development but allows drilling–in the Taylorsville Basin, along the eastern/central part of the state around Caroline County, VA (see Fracking Finally on the Way in Virginia? Maybe Yes, Maybe No). The VOF invited Mike Ward, executive director of the Virginia Petroleum Council, to speak and answer questions about potential drilling. In typical fashion, closed-minded anti-drillers turned out to pester Mr. Ward…
    Read More “Anti-Drillers Turn Out in VA to Disrupt Forum on Drilling”

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    Cuts Coming to Shell’s Marcellus Shale Operations

    chopping blockIn a statement issued yesterday, and from comments made by Shell’s CEO Ben van Beurden on a “management day” analyst phone call, Shell has signaled they aren’t happy with the return they’re getting from their shale plays in the U.S., including the Marcellus. Specifically Shell has said they plan to decrease spending and investment, and trim operations, in dry gas (methane only) shale areas starting this year. Trim by how much? The statement they issued says 20%, but van Beurden is reported to have said 30% in his statements on the analyst call. In either case, look for Shell to sell some of the their 900,000 acres of Marcellus Shale leases and trim back on the 300 workers they currently have working in the Marcellus play.

    It was just four years ago that Shell bought all of East Resources and their Marcellus operations (see East Resources Sells to Royal Dutch Shell for $4.7 Billion, Deal Includes All of East’s Marcellus Shale Operations). Apparently they now believe that was a bit of “irrational exuberance,” to borrow a phrase from Alan Greenspan. The odd thing for us is that much smaller companies, like Cabot Oil & Gas, make money hand over fist in dry gas-only areas of the Marcellus, but the big boys like Shell are hamstrung and don’t make money. Why is that? What gives the smaller players a leg up that simply can’t be matched by companies like Shell?…
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    Shell’s Shale Pessimism Signals Worry for Some re PA Cracker

    The Shell emotional roller coaster continues to gyrate up and down when it comes to the fate of a multi-billion dollar ethane cracker plant previously announced by Shell for Beaver County, PA. We knew it would be a years-long process just to make a decision, and told you that two years ago almost to the day (see Shell’s Cracker Plant Actually “Years Away”?). Since that time it seemed at one point like all was lost (see Rumor Mill: PA Ethane Cracker Plant on Shell Chopping Block?). Over the past two years we’ve written dozens of stories, at first it seemed like a sure thing, then it wasn’t, then it was again, then it wasn’t again… you get the idea (see our list of Shell cracker stories here).

    According to a Morningstar analyst interviewed by the Pittsburgh Post-Gazette, the pendulum has now swung back to the pessimistic side again in light of Shell CEO Ben van Beurden’s comments yesterday knocking U.S. shale (see our companion story today). van Beurden said Shell is triming back on U.S. shale investments this year, “restructuring” those assets (which is CEO talk for selling a good portion of it). Although the ethane cracker will be fed by Marcellus and Utica Shale gas, Shell’s impotence when it comes to turning a profit from shale drilling doesn’t mean they will walk away from a huge petrochemical plant. Such big projects are what they think they’re best at doing. Still, van Beurden’s comments have at least one analyst wondering if the PA cracker plant is now down the list of Shell’s priorities…
    Read More “Shell’s Shale Pessimism Signals Worry for Some re PA Cracker”

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    Chesapeake Shafting Landowners out of Royalties Mess Gets Messier

    Corporate raider Carl Icahn is likely developing a case of heartburn over his investment in Chesapeake Energy. He’s been responsible for cutting thousands of jobs and selling off billions in assets at Chesapeake, but there is a developing situation he can’t control that will definitely affect his pocketbook. Pennsylvania’s landowners are up in arms over what they perceive to be theft of their royalty payments by Chesapeake Energy. We told you about the recent rally in Bradford County, and about Gov. Corbett and others who invited PA’s anti-drilling Attorney General, Kathleen Kane, to get involved (see Bradford PA Landowner Rally over Chesapeake Royalty Shenanigans). It’s now a royal mess and likely to get messier as time goes on.

    The sorta short version of the story is this: A few years ago Chesapeake was hammered by bad press (because the media hates Aubrey McClendon, then CEO). Chessy’s stock tanked and with lots of debt, McClendon couldn’t find any more money to borrow at a reasonable rate. So McClendon invented a clever scheme to re-interpret leases that would allow Chessy to deduct certain pipeline fees from landowner royalties. The expenses would be paid to Access Midstream (spun off from Chesapeake) in return for Access giving Chessy a big, fat pile of cash/investment. The inflated pipeline fees paid to Access–now deducted from royalty checks–would generate enough revenue for Access to recoup their investment in Chessy. It was a clever way of extracting money from landowners by doing it through the intermediary of a pipeline company. At least that’s the theory spun by the anti-drilling ProPublica/Daily Beast. Is it true?…
    Read More “Chesapeake Shafting Landowners out of Royalties Mess Gets Messier”

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    Rice Energy Issues First Public Quarterly & Full Year Update

    Rice Energy, one of the success stories of a brand new energy company starting up to focus on the Marcellus and Utica Shale region, went public in January (see Rice Energy IPO Soars, Brings in $84M More Than Expected). Along with becoming a publicly traded company comes the responsibility to file quarterly updates with the Securities and Exchange Commission. Rice has done just that. Yesterday they released their fourth quarter and full year 2013 operational and financial update, for the first time. What did it show?

    It shows that Rice’s natural gas production in 4Q13 was up 120% over 4Q12 (154 million cubic feet per day average, or MMcf/d), and up 20% over 3Q13. They certainly expect their daily volume to grow–a lot. The company has pipeline agreements in place for up to 330 MMcf/d in 2014, up to 654 MMcf/d in 2015 and up to 761 MMcf/d in 2016. As of Dec. 31, Rice owns 43,351 net acres in the Marcellus and 46,488 net acres in the Utica Shale with a big budget to buy more this year. That’s the good news. However, there was a small (very small) spot of “bad” news…
    Read More “Rice Energy Issues First Public Quarterly & Full Year Update”

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    Gastar Update: First Utica Well Coming in April, Marcellus Grows

    Gastar Exploration released their fourth quarter and full year 2013 report yesterday. Gastar drills in both the northeast (Marcellus) and the Mid-Continent shale play areas in the U.S. What do we learn about Gastar’s recent history and plans going forward in our neck of the woods? First, the update says that Gastar plans to drill their very first Utica Shale well in April. Gastar says they believe there is drillable Utica acreage under their leased land in Wetzel and Marshall counties in West Virginia–and they plan to take full advantage of it starting this year.

    We also learn that the company’s Marcellus Shale production increased by 37% year over year. In Q412 Gastar produced 29.9 million cubic feet per day of natural gas, and in Q413 it was 41.0 MMcf/d. Which is tiny when compared to the 1 Bcf/d being produced by several Marcellus producers. But still, the numbers are going in the right direction. Here’s a small portion of yesterday’s update that deals with the Utica and Marcellus…
    Read More “Gastar Update: First Utica Well Coming in April, Marcellus Grows”

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    TransCanada’s ANR Pipeline to Reverse & Carry Marcellus Gas South

    This week TransCanada’s ANR Pipeline announced an open season to gauge interest on carrying plain old natural gas from the Marcellus and Utica Shale region all the way to the Gulf Coast. The plan is to reverse the flow of the ANR Pipeline that stretches from Indiana to the Gulf, and get the gas to Indiana by using the ANR Lebanon Lateral, a pipeline that goes from Lenanon, OH to the mainline ANR in Indiana. TransCanada is offering up to 600,000 dekatherms per day (Dth/d).

    Here’s the story from NGI’s excellent Shale Daily publication:
    Read More “TransCanada’s ANR Pipeline to Reverse & Carry Marcellus Gas South”

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    Hocus Pocus Drilling Impacts Health Survey in Wheeling, WV

    We spotted a mention that the Wheeling-Ohio County (WV) Health Department has launched a so-called health survey to measure the impacts of Marcellus Shale drilling on area residents. So we took a peek–and we were unimpressed. Survey respondents are asked to self-report (no verification) how they “feel” about their current aches and pains–essentially the common ailments everyone faces no matter where they live. Then they’re asked precisely two questions (that we can determine) that *may* be related to gas drilling: “Have you noticed any changes in road conditions in your region since 2010?” and “Do you work in the gas industry?”

    We’re guessing this is the kind of survey where they try to assign blame for headaches, etc. on gas drilling based on your address or occupation. If the people living (or working) within 5 miles of drill site have a statistical 2% increase in headaches, voilà–it was gas drilling that caused it. Which of course is not science at. It’s statistical hocus pocus that proves nothing. It’s all self-reported for goodness sake! How long will this “survey” be live? Oh, a few years, until they can “prove” drilling is causing problems…
    Read More “Hocus Pocus Drilling Impacts Health Survey in Wheeling, WV”

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    PA Gov Corbett Blocks Promotion of Moonlighter at Game Commission

    Last August MDN told you about the moonlighting PA Game Commission employee, William A. Capouillez, the director of the Bureau of Wildlife Habitat Management at the Game Commission (see PA Director of Game Commission Double-Dipping with Gas Leases?). Capouillez’s day job is to oversee leasing 1.4 million acres of public game lands for oil and gas drilling. But in his off hours he negotiates leases for oil and gas drilling for private landowners–sort of an “on the side” landman. When it all came to light in the *Philly Inquirer* last year, it prompted an ethics investigation (see PA Game Comm. Head Not Afraid of Gas Leasing Ethics Investigation).

    How’s the investigation going? No one will say. However, the PA Game Commission is considering promoting Capouillez to the top job of executive director. PA Gov. Tom Corbett (Republican) isn’t impressed. In fact, he’s sent a warning shot across the bow of the independent 8-member board of the Commission, saying he will actively work to block the promotion…
    Read More “PA Gov Corbett Blocks Promotion of Moonlighter at Game Commission”

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    # of Youngstown Earthquakes go from 2 to 11 – Fracking to Blame?

    earthquakeTwo days ago MDN told you about a pair of earthquakes near Youngstown, OH (see 2 New Earthquakes Near Youngstown, OH – Fracking Connection?). That number has now grown. So far there have been a total of 11 measurable earthquakes ranging from 1.2 (not felt by humans) to 3.0 (barely felt by some humans). We suspect most people around Mahoning County didn’t feel anything, but that doesn’t stop mass hysteria when it’s announced that there have been a series of earthquakes and the only thing (supposedly) going on in the area is drilling and fracking.

    As we previously pointed out, we are aware of one instance–in England–where fracking over an active fault caused an earthquake. So it can happen. But that’s one time out of 60,000+ horizontally, hydraulically fractured shale wells worldwide (maybe more than that now). Statistically it’s zero. We need to keep perspective in this situation. Initially the Ohio Dept. of Natural Resources (ODNR) said there are no active Class II injection wells in the area pumping waste fluids deep below the surface for disposal, and so the well being drilled and fracked by Hilcorp near the epicenter of the quake looks like the prime candidate as the cause. But one news story we’ve read (below) seems to cast doubt. There may be injection wells, which also have been known to cause earthquakes when injecting near a fault, operating in the area…
    Read More “# of Youngstown Earthquakes go from 2 to 11 – Fracking to Blame?”

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    Local Town Slows CONSOL’s Plan to Drill at Pittsburgh Airport

    More than a year ago the Pittsburgh International Airport, located about 20 miles west of downtown Pittsburgh, elicited bids to have shale drilling done on 9,263 acres of airport-owned land. After some toing and froing, CONSOL Energy was awarded the contract. After some more toing and froing, CONSOL raised the lease signing bonus to 50 million smackeroos (see CONSOL Increases Bonus Offer to Pgh Airport by 2.4 Times to $50M). Then the real work began. CONSOL has put together a plan to drill 47 wells on 6 well pads, building three water impoundments (see CONSOL Energy Reveals Drilling Plan for Pittsburgh Airport). CONSOL is going to extraordinary lengths with the airport project, including the use of all-electric drilling rigs (a first in the Marcellus). Problem is, three people on the Findlay Township board have the power to approve, or not, the permits to drill. Findlay has CONSOL by the proverbial short hairs, especially since the right to zone oil & gas activities by local municipalities was upheld when the Act 13 law was trampled by seven PA towns that sued and won in state Supreme Court–a decision handed down just a few months ago.

    Last night CONSOL presented their safety plan to the three Findlay board members and interested local residents who attended the board’s regular meeting. The bone of contention (for some local residents) is the location for one of the proposed drill pads–about a half mile from a populated neighborhood. When the hour plus presentation by CONSOL was over, and local residents had had their say, the Findlay board members decided to postpone a decision to approve CONSOL’s permits, yet again…
    Read More “Local Town Slows CONSOL’s Plan to Drill at Pittsburgh Airport”

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    OH Gov. Kasich’s One-Track ‘Tax the Utica’ Mindset

    You have to hand it to Ohio’s RINO Gov. John “foreigner hunter” Kasich–he has a single-track mind when it comes to taxing Utica Shale drilling. He wants a piece o’ that drillin’ pie so he can transfer the money from those who produce (the drillers and the landowners), to those who don’t (voters). Kasich is hell-bent on assessing a 2.75% tax on all Utica Shale drilling. The Ohio Oil and Gas Association (OOGA), which did support a smaller increase, is pushing back against Kasich’s latest demand saying it’s “unacceptable to the association.” Good for them–someone needs to be the voice of reason on this issue.

    Here’s more on Kasich’s desire to take the easy way out–to tax more–instead of manning up and doing the right thing–cutting more:
    Read More “OH Gov. Kasich’s One-Track ‘Tax the Utica’ Mindset”

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    Fired ODNR Official Returns with Views on Best Locations in Utica

    Larry Wickstrom used to be Ohio’s official state geologist and chief of the ODNR’s Division of Geological Survey. He was fired in May 2012 because he updated and released a map showing new boundaries for the Utica Shale–where the best places to drill would be located (see Did This Map Get the Ohio State Geologist Fired?). The map update caused some of the previous lines to change, and that upset a few people, especially Larry’s political bosses. That map has since changed by quite a bit. Drilling has drifted south to counties like Harrison, Guernsey, Belmont, Noble and Monroe.

    The very talented Wickstrom had been employed for 29 years by ODNR, but his exit didn’t mean he was washed up. Far from it. Larry is back (in private business). Last week he shared his keen and experienced insights with the 1,500 people who attended the recent Ohio Oil and Gas Association winter meeting in Columbus on the latest thinking about the best places to drill in the Ohio Utica. He notes that the sweet spot for Utica drilling is much smaller than folks thought just a few years ago…
    Read More “Fired ODNR Official Returns with Views on Best Locations in Utica”