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Ultra Petroleum Expands Marcellus Leases to 486,000 Acres and 110 Active Wells in 2010

Ultra Petroleum News Release (Feb 12)
Ultra Petroleum Reports Strong Financial and Operating Results and Record Production for 2009

A portion of the release relating to its operations in the Marcellus in PA is extracted below:

During 2009, Ultra drilled 37 gross (22.5 net) wells in Pennsylvania. The company’s first production in the Marcellus program began in July 2009, and by year-end 13 wells were producing. Initial production (IP) rates for the producing wells average 7,500 Mcf per day with an average lateral length of just over 3,800 feet. Preliminary estimated ultimate recoveries affirm Ultra’s 3.75 Bcfe type-curve, with some preliminary EURs exceeding 6.0 Bcfe. The cost to drill and complete a horizontal Marcellus well during 2009 was $3.5 million.

The company’s four pipeline interconnects to major interstate pipelines remain well ahead of the drilling campaign. By mid-year, this interconnect capacity is expected to exceed 560 MMcf per day.

The company began 2009 with 288,000 gross (152,000 net) acres in the Marcellus. Through a combination of land acquisitions, trades and swaps, Ultra increased its holdings to 326,000 gross (169,000 net) acres by year-end. On December 21, 2009, Ultra announced that it had signed a purchase and sale agreement to acquire approximately 160,000 gross (80,000 net) acres in the Marcellus Shale. Upon closing of the acquisition in late February 2010, the company will hold approximately 486,000 gross (249,000 net) acres. With the acquisition, the company’s core position in Tioga, Bradford, Lycoming, and Potter counties in north-central Pennsylvania will expand to include the adjacent counties of Clinton and Centre.

In 2009, we initiated our horizontal Marcellus activity with above expectation results. Accordingly, we believe that we have substantially de-risked our Marcellus acreage due to these results. Well performance is improving along with our returns. Of the horizontal wells that we have completed so far, IP rates have ranged from over 3,400 Mcf per day to 10,400 Mcf per day, including two wells that are producing over 7,500 Mcf per day after 30 days. Examining our early wells, the first six have 30-day production averaging over 3,000 Mcf per day with the next seven wells averaging over 5,700 Mcf per day. In 2010, our Marcellus development program will expand with a drilling program exceeding 110 wells.

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Heckmann and Energy Transfer Partners to Bring Wastewater Treatment Plants to the Marcellus

BusinessWire (Feb 9)
Heckmann Corporation and Energy Transfer Partners, L.P. Sign Agreement to Provide Turnkey Solutions for Water Flows Created by Oil and Gas Drilling

Heckmann Corporation and Energy Transfer Partners have entered into a 50/50 joint venture to deliver solutions for:

“transportation and treatment solutions for supply, drilling, flow back, produced, and other types of discharged waters generated in the Marcellus and Haynesville Shale natural gas development areas.”

Also according to the joint press release:

“Heckmann and ETP have identified several potential projects and have begun the engineering and preliminary permitting necessary to proceed with construction of water pipelines, treatment, and other related facilities.”

The press release does not comment on where said projects and proposed facilities will be located. Handling waste water is one of the hot-button issues with drilling. Stay tuned.

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Anadarko Takes on Mitsui as Partner in Marcellus Drilling

Anadarko Press Release (Feb 16)
Anadarko Announces Joint Venture with Mitsui in the Marcellus Shale

The full text of the press release from Anadarko is below. It announces they have taken on a partner for their Marcellus drilling interests, mostly in north-central Pennsylvania.

Anadarko Petroleum Corporation (NYSE:APC) today announced a joint-venture agreement with Mitsui E&P USA LLC, an affiliate of Mitsui & Co., Ltd. (NSDQ: MITSY), whereby Mitsui will participate with Anadarko as a 32.5-percent partner in Anadarko’s Marcellus Shale assets, primarily located in north-central Pennsylvania, for approximately $1.4 billion. Mitsui will earn approximately 100,000 net acres in exchange for funding 100 percent of Anadarko’s share of development costs in 2010, and 90 percent of these costs thereafter, with an estimated completion of all obligations by 2013. In addition, Mitsui will have the opportunity to purchase a 32.5-percent share of Anadarko’s existing wells and additional acreage acquisitions by reimbursing a proportionate share of Anadarko’s prior expenditures, currently estimated to be approximately $100 million.

"We are very pleased to have Mitsui as a partner in the Marcellus Shale," Anadarko Chairman and CEO Jim Hackett said. "This transaction reflects the significant value of Anadarko’s fairway position in the Marcellus Shale, which has a gross unrisked resource potential of more than 30 Tcf (trillion cubic feet) of natural gas and spans more than 715,000 gross acres. We continue to ramp up our activities in the Marcellus and anticipate drilling more than 4,500 wells over the coming years. We have successfully partnered with Mitsui in other parts of the world and look forward to working with them and our other partners in the Marcellus, as we continue to develop and deliver these domestically produced, clean-burning natural gas resources to American consumers."

The joint-venture agreement is effective Jan. 1, 2010. Closing of the transaction is subject to applicable regulatory approvals and other contractual conditions, and is anticipated on March 15, 2010.

A map of Anadarko’s Marcellus Shale acreage, primarily located in north-central Pennsylvania, will be available under the "Media Center/Anadarko News" tab at //www.anadarko.com.

Anadarko Petroleum Corporation’s mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world’s health and welfare. As of year-end 2009, the company had approximately 2.3 billion barrels-equivalent of proved reserves, making it one of the world’s largest independent exploration and production companies. For more information about Anadarko, please visit //www.anadarko.com.

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Youngstown, OH Gets 350 New Jobs Due to Marcellus Drilling

The Vindicator (Feb 16)
V&M delivers plant, 350 jobs

Youngstown, Ohio is getting a new $650 million pipe mill and 350 new jobs due to Marcellus Shale drilling. V&M Star Steel has just announced they are building a new plant in Youngstown because of its proximity to the Marcellus Shale deposit. The new mill will manufacture pipes used in drilling in the Marcellus, according to V&M president, Roger Lindgren. The mill is expected to start operations in 2011, and be up to full capacity in 2012. Although this is a new plant and new construction, it is an expansion of V&M’s existing operation in Youngstown, built on property next to their current facility.

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Cornell University Owns 4% of Tompkins County Land, May Allow Drilling

The Cornell Daily Sun (Feb 16)
University Denies Conflict of Interest

In an article about a potential conflict of interest for the Chairman of the Cornell Board of Trustees, Peter Meinig, we learn that Cornell is a major landowner in Tompkins County, NY, with some 11,000 acres—which is 4% of the land in the county. They also control the mineral rights to some 420,000 acres across the country, no doubt donated to the university by wealthy benefactors.

The question is, will Cornell decide to lease it’s land? No one knows. The Board of Trustees and the President have decided to wait on making any decisions about leasing until the New York State Department of Environmental Conservation finalizes the Supplemental Generic Environmental Impact Statement—the set of rules that will be used for all Marcellus drilling operations in the state.

The controversy is this: Mr. Meinig is the previous chairman of Williams Companies, a huge natural gas company that transports 12% of all natural gas in the U.S. Detractors say there is a built-in conflict of interest with Mr. Meinig voting or advising on the issue, even though he has no shares in Williams now. It will be interesting to see how this plays out.

Seems to Marcellus Drilling News that having an expert on the board advising the board, as long as there truly is no conflict of interest, would be a good thing.

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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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A Balanced View of Waste Water Treatment from Marcellus Shale Drilling

Towanda Daily Review (Nov 18):
Treatment plant for gas drilling waste water subject of Athens Twp. hearing tonight

An informative article about the waste water treatment plants proposed for northeastern Pennsylvania. Some tidbits from the article:

The North Central Regional Office of the DEP, which serves Bradford, Cameron, Centre, Clearfield, Clinton, Columbia, Lycoming, Montour, Northumberland, Potter, Snyder, Sullivan, Tioga, and Union counties, has received 10 applications for NPDES permits, according to spokesman Dan Spadoni. Of those 10 applications, four are for plants proposed on the west branch of the Susquehanna River, one is for the Somerset plant on the Chemung River, one is proposed on the Tioga River, and the remainder are for various creeks and streams, he said.

Somerset Regional Water Resources is requesting a discharge permit for around a million gallons a day, which makes it the largest in the North Central Region, Spadoni said. The other proposed plants are requesting permits for between 50,000 to 500,000 gallons per day, he said.

The article discusses naturally occuring radioactive substances that might be concentrated in waste water, and how the plants would deal with it. The article also points out the plan is for the plants to recycle and re-use most of the water for other shale drilling instead of discharging it all into the environment. However, there will necessarily be some water discharged into tributaries and streams.

I found this article very enlightening and balanced in its coverage–a good read for landowners and other interested parties.

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Pennsylvania Offers 32,000 Acres of State Land for Drilling Leases

Wellsboro Gazette (Nov 18):
Marcellus Shale, climate change, money, politics and the environment

Pennsylvania is offering state-owned land for lease to energy companies interested in drilling in the Marcellus Shale. According to the article:

Monday, the secretary of the Department of Conservation and Natural Resources (DCNR), John Quigley, announced that six tracts of land are being offered for lease. The lease offering amounts to 31,967 acres.

Nearly 22,000 of the acres for lease lie in Tioga and Potter counties.

The 31,967 acres represents 1.5% of the total amount of state-owned forest land, a very small fraction.

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Waste Water Treatment Plants the Next Battleground in the Drilling Debate

Harrisburg Patriot-News (Nov 18):
Twelve Marcellus Shale gas drilling wastewater treatment plants proposed in northern Pennsylvania

Water treatment plants are the next battleground in the drilling debate. There is increasing opposition to the licensing of treatment plants, not only because of the chemicals used, but the truck traffic involved. From this article out of Harrisburg:

The state Department of Environmental Protection is reviewing permit applications associated with at least 12 different proposals to build treatment plants for chemical-tainted wastewater from natural gas drilling operations in northern Pennsylvania.

Ten of the plants are proposed in DEP’s 14-county north-central region, which is centered on Lycoming and Clinton counties.

Also from this article, a few stats of interest:

Through October, 120 of the 1,592 Marcellus Shale well drilling permits issued by DEP this year were for sites in Susquehanna County.

And this:

DEP issued 1,592 Marcellus Shale gas well drilling permits in the first 10 months of 2009. More than one-third of them were in the 14-county north-central region.

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Sustainable Tompkins Takes Aim at Drilling in the Marcellus Shale

Ithaca Journal (Nov 18):
Sustainable Tompkins awards mini-grants

People in the Ithaca, NY area should know that a local organization calling itself Sustainable Tompkins (www.sustainabletompkins.org) is helping to fund anti-drilling causes. They recently made a small grant of $370 to Shaleshock Citizens Action Alliance (www.shaleshock.org) to “produce newsletters reporting on industrial gas drilling in the Marcellus Shale and its effects on the Finger Lakes region.” That is, to fund the false and misleading propaganda that Shaleshock excretes. Unfortunately, New York State taxpayer money is one of the funding sources for Sustainable Tompkins. As a taxpayer in New York, I OBJECT. When will our politicians wise up and quit wasting money on these leftist organizations? Shame on Assemblywoman Lifton for securing funding for Sustainable Tompkins as a “member item” in the (soon to be bankrupt) New York State budget.

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Cabot Oil & Gas Fined $120K over Gas-Contaminated Wells in Susquehanna County

PA Department of Environmental Protection (Nov 4):
Press Release: DEP Reaches Agreement with Cabot to Prevent Gas Migration, Restore Water Supplies in Dimock Township

Below is the unaltered press release from the PA DEP:

Meadville – The Department of Environmental Protection and Cabot Oil and Gas Corp. have executed a consent order and agreement that will provide a long-term solution for migrating gas that has affected 13 water supplies in Dimock Township, Susquehanna County.

The affected area covers nine square miles around Carter Road.

The consent order and agreement outlines a process that will give DEP more oversight of Cabot’s new well construction work in the affected area. Prior to drilling and hydraulic fracturing, or hydro fracking, the company will submit well casing and cementing plans to DEP. Once DEP provides written approval, Cabot may proceed.

“The goal of the consent order and agreement is to ensure a long-term resolution to issues that have emerged in Dimock,” said DEP Northwest Regional Director Kelly Burch. “The company will focus on the integrity of the wells in the affected area in an attempt to determine the source of the migrating gas.”

This past week, Cabot has provided an interim solution for all of the homes where water supplies have been affected. Cabot must develop a plan by March 31 to restore or replace the affected water supplies permanently.

Under the consent order and agreement, Cabot must additionally submit to DEP:

  • Information on all parties who have contacted the company about water quantity or quality issues; and
  • A plan that specifically identifies how the company intends to prove the integrity of the casing and cementing on existing wells and fix defective casing and cementing by March 31.

If Cabot fails to fix the defective casing and cementing by the March deadline, the company must plug defective wells or implement another alternative as approved by DEP.

In addition, Cabot paid a $120,000 civil penalty for violations of the Oil and Gas Act, the Solid Waste Management Act and the Clean Streams Law.

The consent order and agreement caps a DEP investigation that began early this year when numerous Dimock area residents reported evidence of natural gas in their water supplies. DEP inspectors discovered that the well casings on some of Cabot’s natural gas wells were cemented improperly or insufficiently, allowing natural gas to migrate to groundwater.

On Sept. 25, following a series of wastewater spills, DEP ordered Cabot to cease hydro fracking natural gas wells throughout Susquehanna County. The prohibition was removed after the company completed a number of important engineering and safety tasks.

Cabot Oil and Gas Corp. is a Delaware-based company with a mailing address in Pittsburgh.

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NY DEC Extends Comment Period on New Regulations by 30 Days

Binghamton Press & Sun-Bulletin (Nov 4):
Debate on drilling rules extended by DEC

The New York Department of Environmental Conservation has caved to the anti-drillers who are screaming for more time to read the 800-page draft Supplemental Generic Environmental Impact Statement (dSGEIS)–the proposed new drilling regulations all drillers in New York would have to follow when drilling in the Marcellus Shale. So the DEC has added another 30 days to the “comment period” which is really nothing more than an extra 30 days for the anti-drillers to try and prevent drilling in New York. No worries, drilling is coming and they can’t stop it.

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Feds Deny Private Landowers the Right to Drill in PA

Kangaroo News Service (Nov 2):
Local Citizens, Civic and Business Leaders Launch Petition to Resume Oil and Gas Development in the Allegheny National Forest

This one should make every landowner shudder–with anger and fear. The Obama Administration has illegally shut down drilling on private land in Pennsylvania. Landowners who own land in the Allegheny National Forest are now denied access to drill and sell the natural gas under their own land by fiat from the U.S. Forest Service, part of the executive branch of the federal government (i.e., Obama). This naked and forceful grab of individuals’ rights by the federal government cannot go unanswered. Make your voices heard!!

We have to go all the way to an Australian news service for this one folks:

In a petition distributed by the Pennsylvania Oil & Gas Association (POGAM) and Allegheny Forest Alliance (AFA), nearly 2,000 citizens, and civic and business leaders from Elk, Forest, Warren and McKean counties have called for President Obama and the U.S. Department of Agriculture to lift a ban on oil and gas development by the U.S. Forest Service, which effectively has halted drilling on privately owned mineral lands underlying the Allegheny National Forest. The petition was also mailed to Pennsylvania Governor Ed Rendell to encourage a greater effort by the Commonwealth to support a critical element of northwestern Pennsylvania’s economy.

In a historically unprecedented action, local and regional managers of the Allegheny National Forest have banned oil and natural gas exploration and barred mineral owners from accessing their property throughout the forest, effectively seizing the development rights to privately owned oil, gas and mineral resources. The ban has shut down oil and natural gas exploration and stymied production in the forest, where the industry has operated for decades in cooperation with the U.S. government. The petition maintains that the ban illegally violates Pennsylvania’s grant of consent to the United States in 1921 to acquire the forest and also violates the protection of private property rights in the federal law, the Weeks Act of 1911, under which it was acquired.

“The behavior by the Forest Service is most irresponsible, and it amounts to the unlawful taking of private property,” said Stephen W. Rhoads, POGAM president. “State records show that fewer than 50 wells, all of them permitted prior to the drilling ban imposed on January 1, have been drilled in the Allegheny National Forest during 2009. The Forest Service has prevented the drilling of between 200-300 wells that would have otherwise occurred. These undrilled wells translate into private investment of nearly $100 million and jeopardize hundreds of good-paying jobs in the region. The action of the Forest Service amounts to a full-scale assault on the economic health of the families and communities living in and around the Allegheny National Forest.”

Private oil and gas development within the Allegheny National Forest accounts for at least 20 percent of Pennsylvania’s oil production and as much as 10 percent of Pennsylvania’s natural gas production. It contributes tens of millions of dollars annually into the regional economy of northwest Pennsylvania and western New York.

For decades, the U.S. Forest Service and the oil and natural gas industry have worked cooperatively to manage oil and gas development. The petition represents a strong consensus among citizens and local community leaders about the importance of this industry and the condemnation of the Forest Services’ current management practices to immobilize the region’s economic recovery and progress.

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St. Mary Completes First Two Wells in McKean County, PA

St. Mary Land & Exploration (Nov 2):
St. Mary Provides Operational Update; Updates Performance Guidances for 2009

From a press release from St. Mary Land & Exploration, a drilling company headquartered in Denver, CO:

St. Mary has drilled and completed its first two horizontal wells in this program. The wells are the Potato Creek 1H and the Potato Creek 3H (both SM 70% WI). These wells are located in McKean County, Pennsylvania. The Company is currently laying a temporary sales pipeline to test the first well. As a reminder, St. Mary has a total acreage position of approximately 41,000 net acres in McKean and Potter Counties in north central Pennsylvania.

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Six Regulators Police Drilling in Eastern Half of PA

Wayne Independent (Nov 2):
Few regulators in place for natural-gas drilling

At a recent meeting in Preston Township (Pennsylvania), Department of Environmental Protection (DEP) officials talked about their role in inspecting gas drilling operations in the Marcellus Shale. The article attempts to make the case there are far too few inspectors for the growing number of drilling locations. In the eastern half of Pennslvania there are only six DEP officers whose job it is to monitor drilling activity and water supplies. The DEP is requesting three more, but with the recent state budget cuts, the additional positions are not assured.

There was one bit of interesting information for landowners in Wayne and surrounding counties in the article:

Although Wayne County has had only two natural gas wells drilled in the past two years, other areas in the region have experienced a rapid proliferation of production sites including in Susquehanna, Bradford, and Tioga counties. Hundreds of drill sites are expected to come online by the end of next year in the eastern office’s jurisdiction.

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Talisman Energy Expanding in Pennsylvania

Talisman Energy (Nov 3):
Press Release: Talisman Energy Reports $838 Million Cash Flow in Third Quarter

Talisman Energy, an oil and gas drilling company headquartered in Calgary, Alerta (Canada), reports the following in a recent press release:

The Company has added over 170,000 net acres of high quality land in the Pennsylvania Marcellus and Montney shale plays, investing approximately $570 million, the majority of it subsequent to September 30.

Production from the Pennsylvania Marcellus shale play was over 50 mmcf/d [million cubic feet per day] at the end of October. A total of 31 gross wells have been drilled year-to-date and a third rig has been added, with plans to move to six rigs by year end.