Marcellus & Utica Shale Story Links: Monday, Nov 7, 2011
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading:
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MDN Weekly Update – Nov 6, 2011: Should PA Tax Gas Drilling?
After an initial rush of voting where it seemed MDN readers would not support the concept that it’s time to litigate for landowners’ rights in New York, the tide turned later in the week and a clear majority of NY landowners (and those who support them) have said it’s now time to sue the DEC to stop the delay tactics. It seems most people think three and a half years is enough time. The DEC’s draft rules are “good enough” and it’s now time to adopt them and move forward with drilling, according to MDN readers and last week’s poll. Is it time for NY landowners to sue the DEC to allow fracking?
Yes (57%, 182 Votes)
No (43%, 136 Votes)Total Voters: 318
What kind of fee/tax should PA assess on Marcellus wells, if any?
Pennsylvania lawmakers are close to completing new legislation that will strengthen rules for drilling in the Marcellus and Utica Shales, and assess a new “impact fee” on drilling. Gov. Tom Corbett, in just his first year in office, has remained steadfast against a severance tax on drilling because, as everyone knows, the money will disappear into the state’s budget hole to be used however politicians want to use it—mostly rewarding political friends with largesse and buying votes. Instead, Gov. Corbett’s advisory commission has recommended the state adopt an “impact fee,” which is a polite way of saying a tax. But most of this fee/tax will stay local, in the community where the well is drilled, to help with things like roads and first responders and police—things that start costing more when drillers show up. Seems a good solution to MDN.
The proposed plan that most likely will get adopted is that drillers will pay $40,000 the first year a well is drilled, $30,000 the second year, $20,000 the third year and then $10,000 per year in years 4-10, for a total fee of $160,000 per well drilled.
But many people who support a severance tax in PA point to other states like Texas and Wyoming and Alaska and say if oil and gas drilling is booming there and they can have a severance tax (that contributes a lot of money to the state budget), why shouldn’t PA? It’s a fair question. Those who support drilling in PA will say that Marcellus drilling is doing so well in the state precisely because there isn’t a tax on drilling—that drilling in PA is pulling drilling away from those other states because doing business in PA is more economically advantageous.
MDN wants to know what you think. Should PA adopt an impact fee? Or a severance tax? Or perhaps stick with no fees or taxes on drilling at all? Head on over to the right side of any page and cast your vote.
Below are the most recent “top 5” lists and the calendar of Marcellus related events for the next two weeks.
Happy reading,
Jim Willis, EditorRead More “MDN Weekly Update – Nov 6, 2011: Should PA Tax Gas Drilling?”
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EPA Releases Plan to Study Fracking, Jumps the Gun
Yesterday, the federal Environmental Protection Agency (EPA) finally released its plan with specifics for how it will conduct research into the question of whether or not hydraulic fracturing contaminates, or otherwise negatively impacts, drinking water supplies. A copy of the 190-page plan is embedded below.The first (preliminary) results from the study are due in 2012, but a final report is not due until 2014. In order to meet those deadlines, the EPA has already begun collecting field data and water samples. The problem is, that data was collected before the the plan itself was completed—before the rules for how the data collection should be done were established. Industry groups rightly have asked EPA Administrator Lisa Jackson how data collection for the study can begin before the methodology, the “how we will do this” part of the study was complete. It immediately calls into question the veracity of the data itself.
The EPA has “jumped the gun” by starting before the methodology was released. GIGO—garbage in, garbage out.
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Mystery Company Invests $2.14B in Chesapeake Utica Shale JV
The Utica Shale in eastern Ohio, and Chesapeake Energy’s discovery that it contains oil and wet gas in addition to methane, is paying off big-time for the company. Yesterday, Chesapeake announced a major cash infusion from a new joint venture with a mystery/unnamed “international major energy company” to the tune of $2.14 billion. Some $640 million of that will be paid when the deal officially closes, and the balance of $1.5 billion will be paid by the end of 2014.
A third company in the joint venture is EnerVest. The joint venture values the land leased by Chesapeake and EnerVest at $15,000 per net acre. The previous highest deal for Utica Shale leases was Hess—for $8,000 per net acre. The overall deal between Chesapeake, EnerVest and the unnamed company is a bit complicated (see the press release below), but the gist of the matter is that Chesapeake will get enough money to fully fund their Utica Shale drilling program in Ohio, and the overall value of the joint venture means Chesapeake will eventually receive $3.4 billion.
Read More “Mystery Company Invests $2.14B in Chesapeake Utica Shale JV”
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Broome County NY Landowners Receive Money to Stay in Lease
At least one energy firm has voted with its pocketbook that drilling will come, eventually, to New York State. Inflection Energy has just paid landowners in the Town of Maine (Broome County), NY $1,000 per acre to not bail out of the previous deal they signed.
In 2010, Inflection signed a deal that Maine landowners would receive a $6,000 per acre signing bonus over eight years plus 20 percent royalties. The initial payment was $1,000 per acre, the rest due after New York starts issuing permits for drilling. Problem is, those permits have not been issued and under the terms of the deal, landowners would have the right to vacate their leases and find a better deal later. So to keep them in the deal until permits are finally forthcoming, Inflection paid an additional $1,000 per acre (one-time payout) stipulating the landowners will not cancel their leases.
Read More “Broome County NY Landowners Receive Money to Stay in Lease”
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Chesapeake Energy | Energy Companies | Energy Services | Enterprise Products Partners | Industrywide Issues | Pipelines
Chesapeake First Customer for Ethane Pipeline to Gulf Coast
Looks like Enterprise Products’ plan to build an ethane pipeline from the Marcellus and Utica Shales to the Gulf Coast (see this MDN story) is already paying off. Chesapeake Energy is the first company to commit to using the pipeline, which is due to be completed and in service by 2014.
Read More “Chesapeake First Customer for Ethane Pipeline to Gulf Coast”
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Sunoco Looking to Invest in Marcellus & Utica Midstream
Sunoco is getting out of the refinery business by July of next year and is instead looking to expand its investment in midstream businesses, including pipelines, terminals and storage, in addition to its retail outlets. Sunoco is particularly interested in opportunities in the Marcellus and Utica Shales.
Read More “Sunoco Looking to Invest in Marcellus & Utica Midstream”
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Charleston WV Shows Community Support for Cracker Plant
Residents of Charleston, WV want large energy companies looking to locate an ethane cracker plant in the Marcellus region to know that residents of Charleston want it and welcome it with open arms. An online letter-writing campaign has been launched to show community support for the project, which is estimated to bring more than 12,000 new jobs and some $7 billion in economic activity to the region where it’s built.
Read More “Charleston WV Shows Community Support for Cracker Plant”
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Marcellus & Utica Shale Story Links: Friday, Nov 4, 2011
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading:
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WV Official: No Cases of Water Contamination from Fracking
The top oil and gas regulator in West Virginia said at a conference on Wednesday that he has not seen any confirmed cases of groundwater contamination from fracking in West Virginia.Read More “WV Official: No Cases of Water Contamination from Fracking”
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PA Lawmakers Close to Passing New Drilling Rules, Impact Fee
Pennsylvania lawmakers are getting close to passage of legislation that would adopt many of the recommendations from Gov. Tom Corbett’s Marcellus Shale Advisory Commission, including an impact fee on wells and including a measure that would supersede some local drilling ordinances.
Read More “PA Lawmakers Close to Passing New Drilling Rules, Impact Fee”
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Mercyhurst Poll: Majority of PA Residents Support Fracking
Mercyhurst College recently completed a statewide poll in Pennsylvania covering several issues, one of which is Marcellus Shale drilling in the state. A copy of the full questions and responses is embedded below. On the straightforward question, “Do you favor or oppose extracting natural gas through fracking in Pennsylvania’s Marcellus shale region?” the results were: Favor 55%; Oppose 27%; Depends 9%; Don’t Know 9%. A very clear and convincing majority of Pennsylvanians support fracking.
From the Mercyhurst press announcement summarizing the results:
Read More “Mercyhurst Poll: Majority of PA Residents Support Fracking”
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Enterprise Wants to Build Ethane Pipeline to Gulf Coast
Enterprise Products Partners L.P. is planning to build a major new pipeline to transport ethane from the Marcellus and Utica Shale regions in Pennsylvania, West Virginia and Ohio to the U.S. Gulf Coast.
The second largest component (by volume) to come out of the ground in shale gas drilling is the chemical ethane. Somewhere between one and six percent of natural gas coming from the ground is ethane, which can be converted to the hydrocarbon ethylene. Ethylene is the “feedstock” (or raw material) used to make most plastics, including polyethylene and PVC. Enterprise wants to provide a way for ethane to reach the ethylene processing plants along the Gulf Coast.
Read More “Enterprise Wants to Build Ethane Pipeline to Gulf Coast”
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Energy Companies | Hydraulic Fracturing | Industrywide Issues | Lackawanna County | Pennsylvania | Regulation | Southwestern Energy
Benton Twp Supervisors Back Down on Exploratory Well
Rather than pay legal fees to defend their legislation, the supervisors in Benton Township (Lackawanna County), PA voted Wednesday to change the language of their legislation restricting the drilling of an exploratory well by Southwestern Energy. The supervisors voted to grant Southwestern the right to drill the exploratory well back in June, but slapped 18 specific (and costly) conditions on the project, making it unfeasible according to Southwestern who challenged 11 of the 18 conditions. The supervisors changed 9 of those 11 yesterday.
Read More “Benton Twp Supervisors Back Down on Exploratory Well”
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PA Economist Says Shale Gas Only Way to Economic Recovery
Edmond Seifried is professor emeritus of economics at Lafayette College in Easton, PA. He says that fiscal and monetary policy used by the Federal Reserve has not and will not work. He says that natural gas is not just the best, but the only way for the U.S. to recover from the current economic malaise.
Seifried points out the obvious: The less money we spend on foreign oil and invest in our own energy sources (in particular natural gas), the more the country’s Gross Domestic Product (GDP) will increase, meaning more jobs here at home, and more money that stays here in our country.
Read More “PA Economist Says Shale Gas Only Way to Economic Recovery”
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Ohio EPA Seeks Public Comment on New Air Permit for Drilling
The Ohio Environmental Protection Agency (EPA) is asking for public comments on a draft permit that controls air emission standards for shale gas drilling. The new standards do not affect the actual drilling and fracking activities because those are regulated by federal rules. The Ohio permit would regulate emissions from generators, dehydration systems and other “peripheral” activities that go on in the drilling process. A copy of the draft permit can be downloaded here.
From the Ohio EPA press release about the new air permit:
Read More “Ohio EPA Seeks Public Comment on New Air Permit for Drilling”
After an initial rush of voting where it seemed MDN readers would not support the concept that it’s time to litigate for landowners’ rights in New York, the tide turned later in the week and a clear majority of NY landowners (and those who support them) have said it’s now time to sue the DEC to stop the delay tactics. It seems most people think three and a half years is enough time. The DEC’s draft rules are “good enough” and it’s now time to adopt them and move forward with drilling, according to MDN readers and last week’s poll. 
Yesterday, the federal Environmental Protection Agency (EPA) finally released its plan with specifics for how it will conduct research into the question of whether or not hydraulic fracturing contaminates, or otherwise negatively impacts, drinking water supplies. A copy of the 190-page plan is embedded below.