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Encana and Luzerne County Draft Emergency Response Plan for Potential Marcellus Shale Drilling Disaster

One of the concerns (fears?) expressed by community members when learning there will be a gas well drilled nearby is the question of what happens in the case of a disaster, like a fire or gas leak. Will local first responders be responsible for handling a situation they may not be equipped or trained to handle?

The off-shore Deepwater Horizon oil drilling disaster in the Gulf makes people concerned about local natural gas drilling. Even though the two forms of energy extraction are vastly different, with completely different levels of risk involved, it makes no difference. It has people spooked. Planning for safety, and how you will respond to a disaster, is a good thing—especially with gas drilling.

Enter Encana, which is about to drill Luzerne County, Pennsylvania’s first Marcellus Shale gas well. And people are nervous. Working closely with the Luzerne County Emergency Management Agency, Encana is drafting a disaster emergency response plan.

Wendy Wiedenbeck, public and community relations advisor for EnCana, said local firefighters would not be responsible for containing or fighting a gas well fire or gas release at a well site.

“In the event of an incident, local emergency responders will be asked to provide support to our operations personnel who are specially trained to deal with incidents at oil and gas locations,” Wiedenbeck said.

“Should a serious well-control incident occur, such as release of gas or fire, EnCana will look to local emergency responders to provide support while EnCana calls upon well-control experts to assist in addressing such an incident,” she said.*

So the plan is that if the unthinkable happens, local first responders will provide support, but “experts” will actually handle the emergency. The only problem MDN sees is that the well-control experts Encana will call on have their offices in Texas. The news account does not specify whether or not there is an office closer, or how the experts intend to respond in a timely manner, but presumably that’s outlined in the proposed plan.

Encana and the Luzerne County Emergency Management Agency are completing the draft disaster response plan now, and as soon as it’s ready, it will be released to the public for comment and feedback. Encana and Luzerne County are showing the way for other energy companies and municipalities. Plan now for the unthinkable, and when/if it happens, the severity will hopefully be less than it otherwise would have been because you have a plan.

*Wilkes-Barre Times Leader (May 31) – Response to gas disaster in the works

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Penn Virginia Corporation Acquires 10,000 Marcellus Shale Acres in PA for $19.5M

Penn Virginia Corporation (“PVA”) announced it has acquired approximately 10,000 net Marcellus Shale acres primarily in Potter, Somerset and Tioga Counties, Pennsylvania in two transactions for approximately $19.5 million in cash and overriding royalty interests on a portion of the acquired acreage.

The first acquisition was from a private oil and gas firm who was PVA’s joint venture partner. The acquired leases were located primarily in Potter, Somerset and Tioga Counties, including approximately 7,900 net acres with Marcellus Shale rights and approximately 23,000 net acres with deeper rights. In connection with the acquisition, PVA granted the seller a 1.5 percent overriding royalty interest on the acquired acreage. After taking into account the override, PVA’s net revenue interest in the joint venture acreage is approximately 84 percent.

The second acquisition was from another private oil and gas firm of leases primarily in Potter County covering approximately 2,100 net acres, with rights to the Marcellus Shale and all other formations.

A. James Dearlove, President and Chief Executive Officer, said, “We are pleased to have expanded our Marcellus Shale acreage position from approximately 35,000 net acres to 45,000 net acres, and to have accomplished this expansion at a very attractive cost. We plan to begin testing the acreage in these areas later in 2010. In addition, we continue our leasing efforts and our review of other acquisition opportunities, as we seek to establish a significant presence in this emerging play over the next few years.”

Source: Penn Virginia Corporation Announces Acquisitions in the Marcellus Shale (May 28)

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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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Gas Drilling & Compressor Plants in DISH, TX Not Poisoning Local Population

Since February of this year, Mayor Calvin Tillman from DISH, Texas has visited—several times—the Marcellus Shale regions of New York and Pennsylvania, sponsored by groups like Shaleshock and other anti-drilling organizations. Mayor Tillman claims that his small town in Texas, north of the Dallas-Fort Worth metroplex area, has been contaminated by shale gas drilling. DISH is located in the Barnett Shale deposit. Some of the drilled gas wells are within the city limits, and others sit just outside of town. MDN attended one of Mayor Tillman’s presentations back in February and you can read about my impressions here. It’s a fair statement that Mayor Tillman has been a popular speaker for those opposed to drilling in the Marcellus Shale, drawing sizable crowds.

One of the claims made by Mayor Tillman in his talks is that either local gas wells, or the compressor plants used to pressurize shale gas for area pipelines, or both is polluting DISH and its citizens. DISH is unusual in that there are 11 large pipelines in the DISH area, far more than normally found in a single location (the most in one area for shale gas that MDN is aware of). Odors are coming from the compressor plants, so it’s certainly not a stretch to think that if you can smell it, it may be polluting or causing harm. That was Mayor Tillman’s suspicion, so he used city funds to conduct environmental testing in the DISH area, and separately another organization performed a health “survey” of current and former DISH residents (for free). Problem is, both the environmental testing and the health survey were flawed in their methodologies, which casts doubt on the findings. So the Texas Department of State Health Services stepped in to do a scientific health study using blood and tissue samples.

Agency officials collected biological samples from 28 Dish residents in late January to see whether levels of volatile organic compounds (VOCs) in their blood were higher than those in the broader population. “We were looking to see whether a single contaminant or a handful of contaminants were notably elevated in many or all of the people we tested,” said Dr. Carrie Bradford, the toxicologist who led the investigation.*

And what was the conclusion of the Department of State Health?

Texas health officials found no connection between pollution from a natural gas compressor station in Dish, Texas and levels of toxins in the blood of people living nearby.*

The new report from the Department of State Health Services says levels of benzene and other contaminants was no higher in Dish residents than in the nation’s population in general.**

MDN wonders if the now less than credible Mayor Tillman will still be such a large draw when he comes calling again?

*Elimra Star-Gazette (May 26) – Texas gas study finds no pattern of elevated toxins near compressor
**Dallas Fort Worth – Channel 33 News (May 12) – DISH Report: No evidence gas well hurting residents of Dish, Texas

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New Website Resource for Marcellus Shale Workers Coming to PA

Marcellus Shale drilling in Pennsylvania continues to bring business, and people, to the state. Now there’s a new website to assist out-of-staters who need a place to stay:

STATE COLLEGE, Pa.—Workers traveling to the Marcellus Shale natural gas deposit in Pennsylvania now have a valuable online travel guide dedicated to helping find accommodations in Pennsylvania’s Marcellus Shale region.

MarcellusShaleHotels.com offers those coming to stay in the area information on hotels with short and long-term stay options. All the hotels featured on the site offer special rates to those coming to work on the Marcellus Shale.

Michael Szczesny is the Director of Operations at the State College hotels featured on the resource site. He’s eager to assist Marcellus Shale companies with their lodging needs.

“All our State College properties are either adjacent to or within walking distance to restaurants such as Outback Steakhouse, Olive Garden, Otto’s Microbrewery and Texas Roadhouse,” Szczesny said. “We are offering both short and long-term stays to accommodate the requirements of each company.”

Each of the hotels featured on the site is just minutes away from various locations in Pennsylvania’s Marcellus Shale region and offers amenities designed to accommodate every guest.

Locations of properties on the site range from Lock Haven to State College and down to Pittsburgh. To learn more about hotels in the Marcellus Shale region of Pennsylvania, visit MarcellusShaleHotels.com today.*

*Business Wire (May 26) – Marcellus Shale Website a Resource to Those Traveling to Work Pennsylvania’s Gas Field

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PA Gas Driller Bonds Will Skyrocket from $2,500 to $150,000 per Marcellus Gas Well Under Proposed Legislation

Pennsylvania lawmakers, both Democrat and Republican, agree that bonds posted by drillers need to increase—dramatically. The bonds are used to cover the costs of plugging or closing natural gas wells. The current bond requirements date back to 1984.

Drillers are required to post a $2,500 bond for a single well and $25,000 blanket bond to cover any number of wells under current law. A measure sponsored by Rep. Camille George, D-74, Houtzdale, would require a $150,000-per-well bond for any well in the Marcellus Shale formation and $12,000 bond on other oil and gas wells. George, chairman of the House Environmental Resources and Energy Committee, also proposes setting a $240,000 blanket bond, while prohibiting blanket bonds for wells in the Marcellus Shale formation. He suggested those amounts would cover the actual costs of decommissioning.

*Hazelton Standard Speaker (May 23) – Marcellus drilling spurs calls for higher bonds

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The “Father of the Marcellus Shale” Predicts Marcellus is Only the Beginning – Other Layers Rich with Shale Gas Too

William Zagorski, Range Resources Vice President of geology in Appalachia and the man known as “the father of the Marcellus Shale” is making some new predictions about the potential for natural gas in the Appalachian (eastern) region of the U.S.

Zagorski said two new shale formations – the Utica Shale deeper below the surface and the shallower Upper Devonian Shale – were “in the same ballpark” as the [production potential of the] Marcellus.*

Zagorski is not the only one looking beyond the Marcellus Shale:

Cabot Oil & Gas Corp., a Houston company, disclosed to analysts last year that it had drilled a successful horizontal well through the Purcell Limestone in its Marcellus acreage in Susquehanna County north of Scranton. The Purcell Limestone is an intermediate stratum sandwiched between two layers of the Marcellus Shale.*

Cabot is thinking they may be able to run pairs of horizontal wells at different depths from the same bore hole. And all of the infrastructure being built for Marcellus Shale gas can also be used for shale gas from other layers.

A few months ago at a meeting in Binghamton, NY, James Ladlee from Penn State Cooperative Extension made the prediction that we are only at the beginning of the natural gas boom in the northeast, and it will last for the next 80-100 years. With shale gas being discovered in other layers, it’s easy to see why Mr. Ladlee and others are bullish on the prospects for natural gas in the Marcellus and beyond.

*Philadelphia Inquirer (May 23) – Firms find more gas beyond the Marcellus field

Is Methane Migration from Marcellus Gas Drilling Causing Deaths?

The May 23 Sunday edition of the Binghamton Press & Sun-Bulletin (PSB) ran an article titled, “Pa. seeks stronger drilling rules to combat methane migration.” At least the headline is accurate. Pennsylvania is indeed attempting to prevent a recurrence of the situation at Dimock, PA which was a failure to properly case a well that led to methane (natural gas) migration into local groundwater supplies. Nothing wrong with good oversight and slapping the offending driller with fines to make sure it doesn’t happen again. But the PSB started their latest anti-drilling narrative with this opening paragraph:

Methane migration related to natural gas drilling has caused death, injuries and property damage in Pennsylvania, leading to plans for stronger regulations and enforcement efforts.*

There you have it—methane migration is causing death. The proof that drilling causes death offered by the PSB? They cite the case of a house explosion in Jefferson County, PA in 2004 due to methane migration that killed three people. That case is a tragedy to be sure and not to be trivialized. But the problem is, it wasn’t due to a horizontally drilled Marcellus Shale gas well like we have today. Horizontally drilled wells did not start to happen until 2006 (with Range Resources). So while it may have been a gas well in Jefferson County that led to an explosion in a nearby house, it was not a horizontally drilled Marcellus gas well. The implied meaning is that the drilling happening today is unsafe and leads to deaths—which is untrue.

The latest apples and oranges comparison is to equate the tragedy of the oil platform in the Gulf of Mexico and BP’s response with drilling on land for a different fuel—natural gas—and try to infer that all energy companies are greedy and all drilling of any kind is unsafe. “Better to wait until we know more. Better to wait until it’s 100 percent safe. The gas has been there for jillions of years and isn’t going anywhere.” Bunkum.

Let’s talk about risk

If you’re alive, you are at risk. Every day you live you experience risk of some type. Risk of getting in a car accident. Risk that lightning will strike you. Risk of a heart attack. How do you deal with it? Minimize the risk if you can, and if you can’t, don’t stress over it. Life is a risk. Here’s the reality: If you drill 10,000 gas wells, one of them will have a problem of some kind. Methane migration, flowback spillage, a truck with chemicals runs off the road and spills something, a worker gets killed. Of all the Marcellus wells drilled, accidents have been very few in number—but they do happen. It’s life. We can ban all drilling, but how would you like to pay double or triple for your energy? How would you like to be cold in the winter? How would you like the government to tell you how many miles you can drive in a day because there isn’t enough energy (oil, gas, natural gas) to meet demand? Or what if the Middle Eastern countries suddenly stopped sending us oil? If that were to happen, there would be far more deaths due to severe energy shortages than you’ll ever have from Marcellus gas drilling. It’s a tradeoff. You don’t simply ban drilling because there will be an accident somewhere, someday.

A second example: One in every 10,000 bridges will fail. No idea if that’s the real number…again, this is an example. So because one in 10,000 (or 5,000, or 15,000) fails, does that mean we should stop building bridges? Because someone dies, tragically, from a bridge failure, or because there is property damage from a bridge failure, should we immediately cease and perhaps even ban traffic over bridges? Try going one mile from your own home without crossing a bridge—you can’t do it! It’s nonsense. But it’s no more nonsense than what is being peddled by anti-drillers whose aim to ban all drilling.

No industry, including natural gas drilling, oil drilling and bridge building, can be subjected to a standard of perfection, no matter how much we strive for it and want it. Don’t fall for Chicken Little arguments that the sky is falling.

*Binghamton Press & Sun-Bulletin (May 23) – Pa. seeks stronger drilling rules to combat methane migration

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PA DEP Secretary Hanger Summons Marcellus Shale Drillers to Meeting, Asks Them to Comply with Unratified New Drilling Rules

After the PA Secretary for the Department of Environmental Protection, John Hanger, summoned Marcellus Shale drilling companies to a meeting, he proceeded to “challenge” them to comply with new drilling rules that likely won’t be adopted until this fall. Talk about arrogant.

“I urged the industry to implement the stronger standards immediately and not wait for the rule to be finalized,” Mr. Hanger said. “I challenged the industry to set a world-class example.”

The summit came ahead of action by the state Environmental Quality Board on Monday on several proposed regulations to require that oil field-grade cement be used in Marcellus Shale wells, to delineate responsibility and notification procedures for gas migration problems and to strengthen requirements for treating drilling wastewater and limiting sediment erosion from wells. Mr. Hanger expects the rules to be adopted by fall.*

Certainly nothing wrong with new rules to help prevent a repeat of the situation in Dimock, PA from recurring, which supposedly the new rules will help guard against. However, MDN continues to notice that Hanger’s tone is increasingly confrontational rather than collaborative.

*Scranton Times Tribune (May 14) – DEP head asks gas drillers to comply with new rules

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Bradford County, PA Experiencing a Job Boom, Leads Entire State in Net Job Growth

Bradford County, PA Little, rural Bradford County located in northeastern Pennsylvania is seeing a boom in new jobs:

According to the Pennsylvania Department of Labor and Industry and the Center for Workforce Information and Analysis, Bradford County led the Commonwealth of Pennsylvania in net job growth from March of 2009 to March 2010.

According to the Northern Tier Regional Planning & Development Commission (NTRPDC), the 2,000 jobs gained represented a 7.2 percent increase while most counties suffered losses in employment. Bradford County saw the unemployment rate drop from 10 percent a year ago to 7.4 percent now.*

And also this:

Tioga County [PA] gained 800 jobs, the third-best improvement of the Commonwealth’s 67 counties.*

How can that be? Simple: Both counties have very active Marcellus Shale drilling.

*Wyalusing Rocket-Courier (May 13) – Bradford County Leads Commonwealth in Job Growth

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Steuben County, NY May Accept Marcellus Drill Cuttings in County Landfill

Like neighboring Chemung County, NY, officials in Steuben County, NY are actively considering accepting Marcellus drill cuttings (leftover dirt and rock from drilling gas wells) in the county landfill. Drillers over the border in Pennsylvania are looking for a location to dump the cuttings. The debate over whether to accept drill cuttings always centers on whether there is radioactivity in the cuttings and if it will become a problem down the road when liquids leach from the landfill into groundwater supplies. Chemung County has done extensive research and finds the radioactivity levels to be very low—and safe. Chemung County currently accepts drill cuttings, and now Steuben County is considering it too.

“Right now, we’re just talking about relatively small amounts we would bring in, if we brought it in. We want to be sure of ourselves though,” said Steuben County public works commissioner Vince Spagnoletti.*

As with Chemung County, economics is driving the decision for Steuben County as well:

Spagnoletti says bringing in around 10,000 tons per year of the drill cuttings could raise around $300,000 to the operational budget of the landfill.*

That’s a potential $300,000 that taxpayers would not have to pony up.

*YNN Your News Now (May 11) – Steuben County may allow Marcellus shale debris to be dumped in landfill

New York Times Talks About the Rising Importance of Shale Gas Worldwide

The New York Times recently ran an article talking about the emerging importance of natural gas from shale around the world. The article focuses on Poland and Europe, who have a desire to cut their energy dependence on Russia. But the article also includes these statements about the importance of shale gas in the United States:

The attraction of shale gas is already well known in the United States, where diversification is an advanced theme in energy policy. With the discovery of big shale deposits several years ago, shale gas now accounts for nearly a fifth of the U.S. natural gas supply, compared with just 1 percent in 2000, according to a recent study by IHS CERA, an independent energy research center in Cambridge, Massachusetts.

Shale gas “ranks as the most significant energy innovation so far this century,” IHS CERA said in a recent report. “It has the potential at least to cause a paradigm shift in the fueling of North America’s energy future.”*

*New York Times (May 11) – Eastern Europe, Seeking Energy Security, Turns to Shale Gas

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Marcellus Drilling May Begin in Rockingham County, Virginia

You don’t hear much about Marcellus drilling in Virginia, so a recent story caught the attention of MDN. Carrizo Oil and Gas, operating under its subsidiary name of Carrizo Marcellus Oil and Gas, has applied for a permit to drill a Marcellus gas well in Bergton, VA (Rockingham County). The permit was discussed at a recent Harrisonburg City Council meeting. A few members of the community addressed the Council with concerns about potential drilling. Ultimately, the Rockingham County Board of Supervisors will make a final decision on the permit.

The interesting thing about this particular story? The location where Carrizo intends to drill is considerably east from the “recognized” Marcellus fairway in West Virginia.

*WHSV-TV3 (May 12) – Drilling Proposal Draws Criticism at Council Meeting

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EQT Chairman Murry Gerber Speaks Bluntly About the Marcellus Shale and America’s Energy Future

EQT Corp is a large energy company with 500,000 net acres of land leased in the Marcellus Shale. Having drilled 21 Marcellus gas wells in 2010 already, and with plans to drill 100 wells total this year, EQT is a major player in the Marcellus. So when the Chairman and former CEO of EQT, Murry Gerber, delivers a speech in Pittsburgh at the Rivers Club, he’s someone to listen closely to. Among his choice comments at the Rivers Club:

“The Marcellus Shale will be more important to this region than the blast furnace ever was … as long as we don’t screw it up.”

“America needs to move with a position of more independence to its energy needs. (No country has) survived without the energy to fuel its manufacturing. We are dangerously close to achieving that status.”*

Read more about his talk by following the link below.

*Pittsburgh Business Times (May 11) – EQT’s Murry Gerber speaks of Marcellus Shale’s importance

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MarkWest Request to Expand Gas Compressor Facilities in Washington County, PA Denied

As MDN has previously reported (see this story), MarkWest Energy operates more than 100 gas compressor facilities, including two in Mount Pleasant Township in Washington County, PA—the location of the very first horizontally drilled Marcellus Shale gas well. There has been tension between area residents and MarkWest about the facilities over issues of noise, lights and odors coming from the facilities. A few months ago MarkWest made application to expand the facilities but the Mt. Pleasant Township Zoning board has just turned them down:

The board denied a request from Mark West Liberty Midstream to expand its Fulton and Stewart compressing stations.

The company had made the request to add two engines at each site and expand the steel structures. The company processes gas for Range Resources.*

MDN doubts this will be the end of this story. There is an ongoing debate about just who has authority to regulate pipelines and compressor facilities, and the matter is far from settled. Does regulation for these types of facilities lie with local governments? Or is it a “utility” that is/should be regulated by the state rather than local authorities? Stay tuned.

*Washington Observer-Reporter (May 12) – Board nixes expansion for gas compressing stations in Mt. Pleasant Township