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Binghamton Natural Gas Summit: Video Interview with Bryant La Tourette

At the Binghamton Natural Gas Development Summit held on March 18 at the Binghamton Regency Hotel, Marcellus Drilling News had the pleasure of speaking with Bryant La Tourette, Vice President of the Joint Landowners Coalition of New York (JLCNY), the organization sponsoring the event. Bryant is also the president of the Oxford Land Group, a landowner coalition in Chenango County, NY. Bryant unveiled the brand new JLCNY website at the Summit. In our interview, he briefed MDN about the JLCNY and it’s mission, and told us a bit about the new website.

The JLCNY is made up of 37 member landowner coalitions from 17 counties in New York State. In all, there are 800,000 acres and 70,000 people represented in the combined 37 member coalitions. Bryant said to think of the the JLCNY as “the next Farm Bureau,” referring to the American Farm Bureau, an advocacy group for farmers and others who work in agriculture, to give them a voice. In the same way, the JLCNY seeks to give a voice to landowners who want to profit from their land via natural gas drilling.

The new website, which can be found at //jlcny.org, provides information for landowners from the very beginning stages of signing a lease through receiving royalty payments and beyond. Bryant points out, however, that the site will be particularly helpful as a resource for landowners who have already signed. For those landowners, it will answer the question, “What comes next?”

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Sullivan County, NY Legislature Wants to Ban Marcellus Drilling for Everyone in the County

Sullivan County, NY landowners have some reason to be concerned. Their county legislature wants a complete moratorium of horizontal gas drilling in the county.

At a recent meeting, the Sullivan County legislature voted to prevent drilling on county-owned lands. Frankly, “So what?” A ban on county-owned land likely does not make a difference for local landowners still interested in leasing. However, according to news reports:

“They [the county legislature] want the whole of Sullivan County off limits, via a moratorium.”*

That is a concern to Sullivan County landowners. It’s likely no more than huff and bluff, however, because New York has “home rule,” meaning if the State allows drilling, and local towns allow it, the county cannot supersede and disallow it.

Some Sullivan County land is considered part of the New York City watershed area—where the City gets its drinking water from. That complicates matters too.

MDN will keep an eye on the developing situation in Sullivan County when drilling finally begins in New York State.

*Mid-Hudson News Network (Mar 19) – Sullivan legislators say ‘no’ to hydrofracking, on county land

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Marcellus Driller Funds Water Monitoring Program in Susquehanna River Basin

As Marcellus Drilling News previously noted, the Susquehanna River Basin Commission is in the process of placing 30 monitoring devices to track the effects of Marcellus drilling wastewater that enters area waterways. We now learn the program is being funded by the drilling industry itself:

The commission used a $750,000 grant from natural gas company East Resources Inc. to start the monitoring system. The monitoring stations provide data on factors such as temperature, pH level, depth and clarity. That information is available immediately on the commission’s Web site, and the state Department of Environmental Protection is notified if any problems are found.*

Kudos to East Resources for contributing a significant sum of money to help alleviate concerns that drilling is harming our waterways.

*State College Centre Daily Times, via WaterWorld (Mar 19) – System monitors water quality

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Hearing to Determine if PA Public Utility Commission has Right to Regulate Private Pipelines

The Pennsylvania Public Utility Commission (PUC) will hold a hearing on April 22 in Harrisburg, PA to discuss a particularly thorny issue: Does the PUC have the jurisdiction to regulate private pipelines?

The PUC has the responsibility of regulating pipelines that conduct oil or gas for compensation. That is, a pipeline owner leases space in the pipeline to third parties. In those cases, the law is clear. But what if an energy company builds and maintains its own pipeline and only conducts its own gas through that pipeline? The law is not clear on that matter. Hence the hearing.

Jennifer Kocher, PUC spokeswoman, said the PUC has regulatory jurisdiction over “public utility pipelines,” defined as pipelines transporting gas or oil within the state for compensation.

“But if a drilling company uses its own pipelines to transport the gas it produces, then there’s a question about our jurisdiction,” Ms. Kocher said. “We’re looking at that issue, at our safety jurisdiction, safety issues and the role of the PUC.”

Matt Benson, a spokesman for the Pennsylvania Oil and Gas Association, said the industry trade group hasn’t addressed the pipeline regulation issue and is taking a “wait and see position” on PUC regulation. He said the group, along with gas producers, hopes to be offered an opportunity to testify at the hearing.*

*Pittsburgh Post-Gazette (Mar 18) – PUC sets hearing on Marcellus shale pipes

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PA Marcellus Shale Coalition Responds to EPA Plan to “Study” Hydraulic Fracturing

The following is a press release issued by the Pennsylvania Marcellus Shale Coalition in response to the rogue EPA’s announcement that they will study hydraulic fracturing (again):

The Marcellus Shale Coalition today issued the following statement regarding a plan by the U.S. Environmental Protection Agency to study hydraulic fracturing:

“The members of the Marcellus Shale Coalition develop and drill wells in an environmentally responsible manner, including the use of hydraulic fracturing to complete a well for production. Hydraulic fracturing has been an established and proven practice for 60 years in Pennsylvania and around the country, and has been regulated successfully by state agencies. There have been no identified groundwater contamination incidents due to hydraulic fracturing, as noted by the Pennsylvania Department of Environmental Protection, other state regulators and the U.S. Groundwater Protection Council.

“Similarly, there have not been impacts to surface water sources due to the practice. Water withdrawals in Pennsylvania are highly regulated by state agencies and water commissions, with a typical permitted withdrawal amounting to about one-half of one percent of the average flow of a stream or river.

“The MSC will provide information and participate as appropriate in EPA’s study. Our industry is confident that an objective evaluation of hydraulic fracturing will reach the same conclusion as other studies – that it is a safe and well-regulated process that is essential to the development of natural gas.”*

*PA Marcellus Shale Coalition (Mar 18) – MSC Statement on EPA Study of Hydraulic Fracturing

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Encana Holds Leases for 25K Acres in Luzerne County, Claims Every Well Drilled Creates 120 Jobs

An article in the Wilkes-Barre Times Leader reveals this interesting information about Encana’s activity in Pennsylvania:

Encana Oil and Gas Inc. – has leased 25,000 acres of property in Luzerne County. The land is mainly on the north side of Route 118 in Fairmount, Ross, Lake and Lehman townships.

Encana so far has obtained permits for drilling one well in Lake Township and another in Fairmount Township and is seeking a permit for one in Lehman Township, said company spokesman Doug Hock. Hydrogeological studies are now under way, and officials hope to begin constructing wells by May.

“For every well drilled, that creates about 120 jobs, either directly or indirectly…  The bulk of these jobs as we begin operations are done by subcontractors,” Hock said.*

*Wilkes-Barre Times Leader (Mar 21) – Law, engineering firms will be the first for jobs

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Chesapeake Drilled 94 Wells in PA in 2009, Plans to Drill 200 Wells in PA in 2010

An article in the Wilkes-Barre Times Leader reveals this interesting information about Chesapeake Energy’s activity in Pennsylvania:

Chesapeake Energy has invested significantly in not only leasing land in Pennsylvania, but in doing business with private companies.

With 94 wells drilled in the state in 2009 and more than 200 additional wells planned for this year, the company has paid subcontractors and vendors in Pennsylvania $269 million since January 2009, company spokesman Rory Sweeney said in an e-mail.*

*Wilkes-Barre Times Leader (Mar 21) – Law, engineering firms will be the first for jobs

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Marcellus Shale Drilling – Revival for Short-Line Railroads?

You can add short-line railroads to the list of businesses that benefit from drilling in the Marcellus Shale. And it’s all because of sand. Drillers like to use a special kind of sand found in the Midwest. They need railroad cars full of the stuff when drilling. The sand aids in the process of opening or “fracking” horizontally drilled wells. And lots of sand means drillers need a way to get it to the drill site. Enter short-line railroads.

Two years ago Tom Myles purchased the 35-mile Wellsboro & Corning Railroad, not knowing that a drilling boom would be a boom for his company.

In the two years since Myles took over the Wellsboro & Corning line, cargo traffic has nearly tripled, to 849 railcars last year, the most in its modern history. In a recession, Myles has hired 10 people to transfer sand from the cars into trucks.

He anticipates that business will nearly double this year, to 1,600 railcars. Almost all of that is sand used in hydraulic fracturing, the process that shatters the dense Marcellus Shale under high pressure to unlock its stores of natural gas.

“We sold $40 million of sand last year,” O’Neill said. “This is now our primary business.”*

*The Philadelphia Inquirer (Mar 21) – Marcellus Shale sends short-line railroad booming

Marcellus Drilling News – State of the Blog

Thanks to the many regular readers and email subscribers visiting this blog/news service, activity for the Marcellus Drilling News website has grown rapidly. As editor of MDN, I want to personally thank you for visiting and reading. In the last 30 days alone, we’ve had 5,000 visits to this blog. There is a real hunger for information about drilling in the Marcellus Shale.

In the coming weeks and months I plan to revise the look and feel of the website to make it easier to find the content you want to read. People read this blog for differing reasons, but it is written primarily for and about issues that landowners in the Marcellus Shale region are interested in. With 15-20 new posts each week, the information provided on MDN can be somewhat of a “fire hose.” Perhaps one of the best ways of keeping track is to subscribe to the daily email alert. Let me assure you, your email address and details are never sold, traded or disclosed in any fashion. And you have the power to unsubscribe at any time. Each daily email (only issued when there’s new posts added the previous day) contains the headline and the first few lines so you can see whether or not you want to click and read the entire article. Why not take a moment and subscribe now?

All news services, especially blogs, have a bias or point of view. Those who tell you they are completely impartial are not being truthful. Let me be clear about my own viewpoint: I am pro-drilling. I believe horizontal drilling/hydraulic fracturing is safe and should be done. The benefits are huge, and the time is right. We can and must move forward with drilling in the Marcellus (particularly in New York State where I live).

But I am also concerned, as a homeowner living in a semi-rural area (with 2/3 of an acre of land, not enough to lease), about truck traffic, damage to roads, noise, potential for accidents and spills, etc. I balance those concerns against the facts that drilling of this type has gone on for years and it has been safe. Contrary to doom and gloom predictions that the environment will be irreparably damaged and people’s drinking water will be contaminated, the facts are, drilling is safe and problems related to drilling are rare.

Unlike anti-drilling opponents, I don’t believe energy companies are out to grab money with no concern for the environment. On the other hand, the deal a landowner strikes with an energy company to allow drilling is, in some senses, “adversarial.” There are two parties to every contract. The landowner must be careful about the lease they sign, that the lease spells out in detail how the drilling company will perform and the consequences for violating those standards. Nothing wrong with that. Trust, but verify.

I believe landowners and energy companies can work together to accomplish something incredible here in the Marcellus Shale. I respect the other side of the drilling debate and, when warranted (and true), I include information about the negatives of drilling. We must not cover up or ignore the problems. Our attitude should be that of working together to find solutions to problems when they occur, and in the process, moving all of us forward. Although people on both sides of the drilling debate are passionate, and sometimes patience wears thin, we should all remain civil. The truth will win out, of that I’m confident.

Again, thanks for reading MDN, and feel free to drop me a line anytime. If you have any bits of news you think would be of interest to landowners, please send it. I can’t guarantee I’ll post it, but chances are good that I will! I’m also open to “guest posts” on the blog, so if you want to submit an article, feel free and I will consider it.

Kind regards,

Jim Willis
Editor
Marcellus Drilling News
[email protected]

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Rogue EPA Takes a Second Run at Regulating Hydraulic Fracturing

Here we go again. The federal Environmental Protection Agency (EPA) announced today they would once again study hydraulic fracturing (“fracking”) as a mining method to extract natural gas. The EPA already spent considerable time and expense in 2004 to study it and found no evidence that fracking threatens drinking water. But Democrats in Congress, led by Congressman Maurice Hinchey (Democrat from Upstate New York), now have control of the EPA and they want a new study. Their claim is that the original study was “flawed” and unduly influenced by then Vice President Dick Cheney.

The EPA is upset that Congress passed a law in 2005 that prevents them from regulating fracking. And the EPA now has a sympathetic ear in Congress, so they’re trying once again to grab hold of an entire industry not within their jurisdiction or charter to regulate. This is their back door way of doing it.

On the matter of fracking and safety, an ABC News article about the EPA announcement today says:

Arthur E. Berman, a Houston-based petroleum geologist who’s questioned the headlong rush to open up shale fields on economic grounds, said the environmental risks have been overblown.

“We have been doing hydraulic fracturing for 50, 60 years and there is no evidence whatsoever that there has been ground or surface water contamination,” he said.

He said only “point-5 percent” of what goes into a well were chemicals, and those were mostly “common chemicals that you would put in your swimming pool or hot tub, something like chlorine.”*

The EPA is spending $1.9 million on the study, and expects to complete it in 2012. MDN sincerely hopes a likely change in the balance of power in Congress after November 2010 will mean a Congress willing to keep a rogue EPA in check.

*ABC News (Mar 18) – EPA to Study ‘Fracking’ Gas Drilling Method

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Binghamton Natural Gas Summit: Opening Remarks and Scene-Setting with Scott Kurkoski

Scott Kurkoski Marcellus Drilling News attended the Natural Gas Development Summit held in Binghamton on March 18th at the Regency Hotel. The event was organized and sponsored by the Joint Landowners Coalition of New York. There were about 150 people in the audience, made up of landowners, people from the drilling industry (lawyers, energy companies, engineering companies and others), and the press. It was a half day event, starting at 9:30 am and ending at 12:45 pm. MDN will run a series of posts to cover the presentations. This article contains the opening remarks delivered by Scott Kurkoski, a lawyer specializing in mineral rights with Levene, Gouldin & Thompson. Scott was one of the chief organizers of the event and master of ceremonies.

He opened by stating the purpose of the meeting is to have a discussion about the issues, with an aim to move the issue of drilling in New York State forward. He thanked Broome County Executive Barbara Fiala for hosting the event and for her efforts on behalf of landowners.

Scott next provided the background for where we are now in New York, and how we got here. In 1992, the New York Department of Environmental Conservation created a Generic Environmental Impact Statement (GEIS) to govern oil and gas drilling in New York. Since then, newer technologies (horizontal drilling and hydraulic fracturing or “fracing”) have come along and the DEC, under direction from the Governor’s office, drafted Supplemental (new) regulations to account for these new technologies and their use.

Continue reading

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How Long Will Drilling in the Marcellus Shale Last?

Nothing lasts forever, as the old cliché goes, and neither will drilling. While we are at the very beginning of what will be a life-changing event for many landowners, a natural question is, How long will it last? How long before the natural gas locked away in the Marcellus is largely mined from the ground?

One person to address that question is Marty Muggleton, spokesman for The Larson Design Group and TerrAqua Resource Management, a wastewater processor newly permitted to handle flowback from Marcellus drilling operators. At a recent meeting of the Tioga County (PA) Development Corporation Board of Directors, he said:

Drilling will last about 20 years…and locals should try to use the resulting income wisely. There will be new opportunities for jobs, culture, education, health care and more. Communities just need to plan so those benefits remain when the drillers leave.*

So there you have it. Once drilling begins, plan to see drilling operators for about 20 years.

*The Wellsboro Gazette (Mar 17) – Natural gas dominates TCDC agenda

UPDATE: At the Natural Gas Development Summit held in Binghamton, NY on March 18, one of the speakers also addressed this issue. Larry Michael, Executive Director for Workforce Economic Development at the PA College of Technology, has studied jobs and drilling in the Marcellus extensively. He said while a single well may produce for 15-20 years, the activity of drilling in the various shales in our region will go on for 80-100 years total. It will span several generations, before all shale gas is mined.

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Landowner Pipeline Group Forms in Northeast PA

Some Susquehanna and Wyoming County, PA landowners are forming a group to force drilling and pipeline companies to “behave responsibly” with installation and operation of new pipelines as more and more Marcellus Shale gas wells are drilled and go online in Northeast PA. The group wants to arm landowners with information about their rights when negotiating “right-of-way” agreements for pipelines.

Excerpts from an article in today’s WC Press Examiner:

The Lemon Township Pipeline Group has been meeting for months and its members are looking at a range of easement and right-of-way agreements that leaseholders need to consider as more and more drilling companies come into the area looking to get the gas from the Marcellus shale to market.

Such issues as price, nature, location, type, pipeline depth below surface, installation, road repair, pressure, timetable, abandonment, rights, restrictions and environmental responsibilities are among the many issues that individuals need to consider.*

An email address is given for those interested in joining or finding out more: [email protected].

*Wyoming County Press Examiner (Mar 17) – Landowners’ pipeline group forms

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A Novel Approach to Signing New Landowners by Chesapeake Energy in Bradford County, PA

Forget the landmen, Chesapeake Energy wants to talk directly to landowners and is throwing a “signing party” hoping to convince landowners in Bradford County to show up and sign up at the Wysox Fire Hall on March 20th.

Chesapeake sent letters to unsigned landowners in Towanda, North Towanda, Wysox, Standing Stone, Monroeton, Asylum, Wyalusing and Herrick, inviting them to the event.

Chesapeake tells landowners in the letter:

“Our records indicate that you own certain oil and gas rights that Chesapeake is interested in leasing,” the copy of the letter states. “We will have personnel on hand to discuss with you an offer to lease [the oil and gas rights on] your property that will potentially allow you to share in the royalty pool to be established for wells to be drilled in your area.”*

The letter offers unsigned landowners a 10-year lease for $5,000 per acre and 20% royalties. By comparison, just last September Chesapeake signed a deal with the Wyoming County Landowners group for $5,750 per acre and 20% royalties. Chesapeake has made an offer to Wysox Township to lease town land for the same terms ($5,750 per acre, 20% royalties). However, in January 2010, Northern Tier Career Center in North Towanda approved a five-year lease with Chesapeake for $6,500 per acre and 20% royalties on the school’s 73 acres.

MDN has not seen a copy of the full letter, but a commenter on The Daily Review website states the Chesapeake letter was sent to landowners with less than 3 acres of land. Landowners with small parcels do not have as much negotiating clout as larger landowners or groups. Even so, MDN cautions landowners about just showing up and signing up. While it may be a good deal, the devil is in the details of a contract. There is no substitute for having a contract reviewed by legal counsel before signing. Landowner groups (who retain legal counsel) are often the best way to ensure your interests as a landowner are protected. If you cannot find a landowner group to join, make sure you retain a good lawyer with experience in mineral rights leases.

Go enjoy the free coffee and donuts, but be careful about signing anything on the spot.

*Towanda The Daily Review (Mar 17) – Chesapeake to hold lease-signing event for Towanda-area landholders

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Kane Borough Sewer Authority Making Money from Selling Effluent to Marcellus Shale Driller

Kane Borough Sewer Authority in McKean County, Pennsylvania is planning to sell (sell!) sewer effluent to Seneca Resources for drilling gas wells. Seneca is the oil and gas drilling division of National Fuel Gas Company. Effluent is the treated water discharged from sewage treatment plants.

According to a report given by Phil Lingenfelter, the foreman for the [Kane Borough] sewage treatment plants, more than 700,000 gallons of effluent is discharged daily from the two plants in “dry weather.”

Jim Salvamoser, chairman of the five-member authority, endorses the plan to sell the effluent to Seneca Resources.

“I think it’s a good idea,” Salvamoser said Monday. “It may give us a good source of revenue.”

Lingenfelter said he still is talking with Seneca about the proposal. He said a price for the effluent has not been set. He said the state Department of Environmental Protection (DEP) has been made aware of the proposal and has not ruled against the effluent sale.

“DEP thinks it’s a great idea,” he told the authority.*

Seneca has already drilled one gas well in the area and is now drilling another, with plans to drill more wells in the near future.

There are many municipal sewage treatment facilities located throughout the northeast and mid-Atlantic in the Marcellus Shale. Perhaps some other enterprising managers can tap this new revenue source for their cities and towns.

*Kane Republican (Mar 16) – Kane plans to sell sewer effluent for well drilling