Marcellus & Utica Shale Story Links: Thu, Feb 21, 2013
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading:
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About MDN | MDN Resources | Ohio | Pennsylvania | Statewide OH | Statewide PA | Statewide WV | West Virginia
MDN Calls It: PA Hits 2 Trillion in NatGas Production in 2012
Last month MDN released Volume 3 of the Marcellus and Utica Shale Databook. We predicted something in the ‘Drilling Update’ section that Databook readers have now known for a month—that Pennsylvania would hit the 2 trillion cubic feet of natural gas production milestone for 2012. The exact quote from the Databook, published at the end of January: “Pennsylvania, which just passed 1 trillion cubic feet of shale natural gas production in 2011, will double that and hit 2 trillion cubic feet of production for 2012. In addition, we believe Ohio’s Utica Shale will achieve 67 billion cubic feet of production for 2012.” We also predicted: “WV will likely double production again, so we’re estimating they will show an increase to 455 bcf for 2012.” (Databook Volume 3, page 10)We don’t yet have 2012 final numbers for OH and WV, but our prediction for PA was spot on and is now verified by the latest reports just released by the PA Dept. of Environmental Protection:
Read More “MDN Calls It: PA Hits 2 Trillion in NatGas Production in 2012”
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Allegheny County | CONSOL Energy | Energy Companies | EQT Corp | Lease & Royalty Payments | Pennsylvania
$50M Check in the Mail: Pittsburgh Airport Lease a Done Deal
The deal by CONSOL Energy to lease 9,000 acres owned by Pittsburgh International Airport for shale gas drilling is a done deal. Yesterday the Allegheny County Council voted to accept the deal. A few nut job protesters turned up in gas masks (as is their way). The vote was 9-4 in favor of the deal. Once County Executive Rich Fitzgerald signs it, the Airport Authority will receive a check for $50 million.
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Anti-Drilling/Fossil Fuel | Hydraulic Fracturing | Industrywide Issues | Medina County | Ohio | Regulation
Big OH Company Will Leave Town if Anti-Drilling Resolution Passes
Politicians in Brunswick, OH (near Cleveland) are about to learn a lesson the hard way. The Brunswick City Council intends to pass a resolution that calls shale gas drilling “risky” and asks the state legislature to allow local municipalities to ban it—the implication being they want to ban it in Brunswick. The resolution is outright anti-drilling and hostile to the drilling industry. If it passes, a large local company that’s been located in the city for 100 years says they’ll leave and take a huge chunk of tax revenue with them.
Philpott Rubber held a press conference to discuss their very serious threat. Philpott provides “environmentally friendly” products and services for shale drillers through their subsidiary Philpott Energy & Transportation Company. Philpott is planning a major expansion of their business due to an increase in drilling. If Brunswick persists in passing the resolution, Philpott will build a new wholesale operation outside the city, denying the city a boatload of tax money.
Read More “Big OH Company Will Leave Town if Anti-Drilling Resolution Passes”
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Rice Energy in Hunt for $400M to Develop Utica Shale Acreage
Have an extra $400 million to spare? Rice Energy is looking for investors to help it develop their “significant holdings” in the Utica Shale. Rice Energy was founded by Dan Rice, the single most successful mutual fund manager in the United States over the past 10 years. Because the company he worked for, BlackRock, screwed up and didn’t tell investors about Dan’s extra circular activities with Rice Energy, they fired him last summer (see BlackRock’s Screw-up with Dan Rice & Rice Energy). Nice company.
Here’s the story about Rice Energy’s hunt for new investors for the Utica:
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Anti-Drilling/Fossil Fuel | Hydraulic Fracturing | Industrywide Issues | Pennsylvania | Statewide PA | Washington County
Hearing on PA DEP Water Testing – 2.5 Hour Gripe Session
Pennsylvania State Rep. Jesse White (Democrat from Cecil, PA) held a hearing yesterday in Washington, PA that took aim at practices by the state Dept. of Environmental Protection (DEP) over how they test (or don’t test) and report (or don’t report) on water supplies near active shale drilling locations. The DEP was invited to attend their own roasting but declined, calling White’s hearing political theater, unproductive, unprofessional and a waste of time (see PA DEP Not Attending Hearing on Water Testing Near Shale Drilling).
With representatives from anti-drilling organizations like Earthworks and PennFuture scheduled to testify at the hearing, it’s not surprising the DEP declined to show up just to be bullied. The session was apparently a 2 1/2 hour dump-on-the-DEP-fest:
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Kent State University: No Plans to Allow Gas Drilling
In Ohio, whether or not a state university like Kent State wants to allow drilling for natural gas on or under their land is up to the administrators of that university. Kent State owns over one thousand of acres of land. The main campus, in Portage County, OH, is over 900 acres by itself. Kent State owns eight campuses, a golf course and an airport—all in the Utica Shale region.
Although there is no official position (yet) coming from Kent on whether they want to lease their land for gas drilling, the administration has said there are “no plans to initiate drilling” on the Kent State campus.
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NiSource Spending $1.8B over 5 Years on Pipeline Upgrades
NiSource Inc., parent company and operator of the Columbia Gas Transmission pipeline which runs throughout the northeast including Ohio, Pennsylvania, West Virginia, New York and New Jersey, released their 2012 financial and operating statement yesterday. The update and investor phone call (see presentations below) also provides updates on future plans. Among the interesting highlights: NiSource will spend $1.8 billion on pipeline improvements through 2017.
NiSource is not only pipelining natural gas in the Utica and Marcellus, they’re drilling wells too…
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Access Midstream Partners | Chesapeake Energy | Energy Companies | Energy Services | Industrywide Issues | Pipelines | Processing Plants | Williams
Access Midstream’s 2012 Numbers: Chesapeake Deal Nets 1 Bcf/d
In December, MDN told you about a complex 3-way deal in which Chesapeake Energy sold off its remaining midstream subsidiary (pipelines, compressor stations and processing plants), including midstream assets in the Marcellus and Utica Shale, to Access Midstream Partners. Access immediately turned around and sold 50% of itself to Williams. In essence, Chesapeake sold its midstream assets to Williams using Access as an intermediary (see Chesapeake, Access & Williams in Complex 3-Way Midstream Deal). No doubt there are certain tax advantages to structuring the deal the way they did. The Chesapeake acquisition netted an additional 1 billion cubic feet of natural gas per day for Access.
Access issued its fourth quarter and full year 2012 report yesterday. They spent $735 million and made $478 million in revenue for 2012. Access predicts capital spending in 2013 will be $1.6-$1.7 billion and they expect to make around $850 million in revenue. They predict the revenue number will grow to over $1 billion by the end of 2014, more than doubling revenue from 2012 (in just two years).
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AB Resources | Chesapeake Energy | Chevron | Energy Companies | Industrywide Issues | Marshall County | Taxation | West Virginia
Chesapeake’s Property Tax Assessment Lowered in Marshall County
West Virginia has a phenomenally complicated taxation structure when it comes to, well, everything—but especially for oil and gas wells. The severance tax is 5%—that’s pretty easy. But WV also has an ad valorem (property) tax for both drillers and mineral rights owners. The way WV calculates the value of income-producing properties takes a tax attorney to figure out. In Marshall County, tax attorney John Mairs represents both Chesapeake Energy and Chevron. Chesapeake has 29 wells in the county and Chevron has 19.
Mairs was successful in getting Chesapeake’s property assessments on their 29 wells reduced by nearly $60 million, but Chevron’s assessment was reduced by only $20 million and that was due to a clerical error at the state level. Here’s the story on how and why the property assessments were modified in Marshall County for these two drillers:
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PA Marcellus Health Impact Study Finally Gets Funding
In August 2012, Geisinger Health System along with a second health system, Guthrie Health, announced they would jointly conduct the first ever study of the health impacts of Marcellus Shale drilling (see Health Care Systems Partner to Study Marcellus Impacts). They were later joined by a third organization: Susquehanna Health (see Third Group Joins Unfunded Marcellus Health Impact Study). Problem was, they didn’t have funding to begin the study (see Much-Ballyhooed Marcellus Health Impact Study Not Funded).Six months later funding has finally arrived in the form of a $1 million grant from the Degenstein Foundation of Sunbury, PA. Geisinger Health announced the grant yesterday on their website:
Read More “PA Marcellus Health Impact Study Finally Gets Funding”
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Belmont County | Blue Racer Midstream | Caiman Energy | Dominion Energy | Energy Services | Industrywide Issues | Marshall County | NGLs | Ohio | Pipelines | Processing Plants | West Virginia
Bomb Threat at Natrium, WV NGL Plant Doesn’t Slow Construction
A $500 million natural gas liquids processing plant in Natrium (Marshall County), WV will go online in the next few weeks—even with a temporary stoppage of construction last Saturday due to a bomb threat (no word on who made the threat or why). The Natrium plant is part of Blue Racer Midstream, a $1.5 billion joint venture between Dominion and Caiman Energy (see Dominion, Caiman in $1.5B Utica JV: Blue Racer Midstream). The new plant was originally scheduled to go online by end of 2012.
Some of the construction for the plant is happening across the border in Belmont County, Ohio:
Read More “Bomb Threat at Natrium, WV NGL Plant Doesn’t Slow Construction”
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Bradford County | Energy Services | Eureka Resources | Industrywide Issues | Pennsylvania | Wastewater
Eureka Resources Building PA’s Biggest Marcellus Wastewater Plant
Eureka Resources currently operates a Marcellus Shale wastewater treatment facility in Williamsport, PA that processes 8,000 barrels of wastewater per day. The company announced today it is building a new, second facility near Towanda, PA. The new plant will have the capacity to treat up to 10,000 barrels of wastewater per day. Target completion date is October of this year…
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Energy Services | Industrywide Issues | Litigation | Ohio | Patriot Water Treatment | Regulation | Statewide OH | Wastewater
Patriot Water in Warren, OH Objects to ODNR Directive
A feud that stretches back to June 2011 between shale wastewater treatment company Patriot Water Treatment of Warren, Ohio and the Ohio Dept. of Natural Resources continues.
The latest skirmish in what has become a legal battle is over the ODNR’s order to D&L Energy to stop shipping wastewater to Patriot’s Warren plant:
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Landowners: Make Lease Payments You Receive Tax-Free
MDN ran across a story in the local Zanesville, Ohio newspaper that makes an interesting boast. A group of three financial advice firms have joined forces to offer workshops for landowners in the Coshocton, OH area that supposedly instructs landowners on how to save “virtually every tax dollar” on lease bonus payments. The technique, which involves setting up some sort of special legal structure, will also “save taxes” on royalty payments. We are 100% in favor of landowners keeping their money!
But, is it too good to be true? We don’t know. However, it does sound interesting, and if you live somewhere in the Coshocton vicinity, we’d encourage you to check it out. Let us know if you do…
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New Rules/Laws for Shale Drilling Will Come to WV in 2013
Last week a set of legislative rules crafted to regulate the horizontal gas well industry cleared an important committee hurdle when the WV joint Legislative Rule-Making Review Committee gave its qualified blessing to rules proposed by the WV DEP. In addition, some 60 bills related to the energy industry were introduced in the first two days of the new West Virginia legislative session—24 of them concerning natural gas. Conclusion: More regulation of shale drilling is on the way in 2013.
First, details about the DEP fracking rules recently approved by the joint committee:
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Last month MDN released Volume 3 of the 
In August 2012, Geisinger Health System along with a second health system, Guthrie Health, announced they would jointly conduct the first ever study of the health impacts of Marcellus Shale drilling (see