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    ‘Energy in Depth’ Sets the Record Straight on Hydraulic Fracturing

    Below is an “Issue Alert” published by Energy in Depth (EID) on May 4th—reprinted here with permission. EID is an online educational website sponsored by oil and gas producing associations from across the U.S. It’s mission is to respond to half-truths and outright falsehoods with science and facts. They do an excellent job. The piece below is an important read to help set the record straight about hydraulic fracturing. In recent months, “fracking” has been made out to be dangerous and unsafe and the hue and cry is to outlaw it as a method of harvesting natural gas. EID does a great job in responding to the charges being leveled against this important and safe (and 60-year-old) technology.

    Energy in Depth (May 4 Issue Alert) – Evidence is Not the Plural of Anecdote

    EID responds to NRDC’s running list of conjectures and distortions targeting safety, performance of hydraulic fracturing

    Last month, our friends over at the Natural Resources Defense Council (NRDC) started up a running tally on their blog identifying “incidents where drinking water has been contaminated and hydraulic fracturing is a suspected cause.”

    Of course, in a country with more than 470,000 active natural gas wells in operation, providing American consumers with more than 20 trillion cubic feet of natural gas each year, the unfortunate (and inevitable) reality of the situation is that the occasional incident will occur. And since a good number of these wells depend on fracturing to be viable, it’s also inevitable that those who oppose the use of hydraulic fracturing on ideological grounds (as opposed to scientific ones) will continue to blame the heavily regulated, 60-year-old technology for just about everything that may go wrong under the sun.

    In a lot of ways, hydraulic fracturing has become the victim of its own success. Almost universally regarded as the sine-qua-non of energy production in America today, hydraulic fracturing—coupled with horizontal drilling technology—allows operators today to produce more than 10 times the amount of energy by drilling fewer than 1/10th the number of wells.

    That this is great news for the environment is so self-evident as to require no further explanation. But smaller footprints aside, it also allows us to tap an abundance of resources that simply could not be accessed without it. And that’s the thing: NRDC would prefer these resources be kept in the ground—and at least has the courage to say so. But it knows the way to do that isn’t to attack the jobs, revenue or people associated with bringing this extraordinary resource to the surface. It knows it can’t attack the carpenter. So it’s decided to attack his tools instead.

    Read More “‘Energy in Depth’ Sets the Record Straight on Hydraulic Fracturing”

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    Rex Energy has Already Drilled 4 Wells in Butler County, PA in 2010, On Track to Complete 6 More by Year’s End

    The following operational updates about Rex Energy Corporation’s Marcellus drilling activity thus far in 2010, from a company press release:

    Butler County, Pennsylvania Marcellus Project Area

    Drilling and completion activity in Rex Energy’s Marcellus Shale project area in Butler County, Pennsylvania is continuing to progress on schedule. The two ‘Magill’ horizontal wells completed by the company earlier this year have been flow-testing for approximately 20 days. The combined peak 24 hour rate of the two Magill wells to date has been 5.9 MMcfe per day. The company expects these rates to continue to rise as additional water is returned to the surface. The company’s refrigeration processing plant, and therefore its gas sales in Butler County, Pennsylvania, is currently shut-in for pipeline maintenance. The company expects the plant and sales to resume during May 2010 and to connect the Magill wells to the plant at that time.

    [Rex Energy President & CEO Benjamin] Hulburt remarked, “When we compare the initial flow rates of the Magill wells to our P. Knauff #1H well, our first horizontal Marcellus Shale well completed in Butler County, Pennsylvania during 2009, we are very encouraged by the results. The P. Knauff #1H well took approximately 90 days to achieve its peak rate, and thereafter, the rate remained relatively flat for the next 180 days. Although the results of the Magill wells are still preliminary, we are encouraged by what appears to be a similar profile.”

    Read More “Rex Energy has Already Drilled 4 Wells in Butler County, PA in 2010, On Track to Complete 6 More by Year’s End”

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    NY Congressman Michael Arcuri Talks Out Both Sides of His Mouth on Drilling in the Marcellus

    Upstate New York Congressman Michael Arcuri says the BP oil disaster in the Gulf of Mexico means we should slow down (or perhaps not even start) drilling in the Marcellus Shale. Yes folks, we don’t make this stuff up! An oil drilling accident off-shore now equates with hydraulic fracturing of shale for natural gas. Go figure.

    Mr. Arcuri’s press release below, taken verbatim from his website, is a classic example of a politician talking out of both sides of his mouth:

    WASHINGTON, DC – U.S. Rep. Michael A. Arcuri (NY-24) issued the following statement renewing his call for a cautious approach to natural gas drilling in Upstate New York in light of the BP oil spill in the Gulf of Mexico:

    “The BP oil spill in the Gulf of Mexico demonstrates how vital it is for us to proceed with the utmost caution when considering natural gas drilling in Upstate New York.  While I support measures to open up energy reserves here at home and create new job opportunities for Upstate families, I also believe that we must carefully examine the potential outcome that natural gas drilling may have on the health of surrounding homes and communities.  Natural gas is a tremendous natural resource with great economic potential, but we must move forward in a way that protects an even more precious natural resource – our abundant supply of clean drinking water.

    “New York’s natural gas reserves are not declining in value as they wait to be developed, and methods become safer and more efficient as companies adapt techniques. But, as we have seen in the Gulf of Mexico, we cannot assume a spill will not happen or become careless in protecting the environment because one mistake could be devastating.

    “With so many residents who live in rural areas relying completely on well water, we cannot afford to sacrifice the purity of our water by rushing to drill.

    “It is my hope that this disaster serves as a reminder to us all just how high the stakes are and that we must take every precaution possible to ensure that a rush to drill the Marcellus Shale does not irreparably contaminate our water.”

    *Press Release (May 4) – Arcuri Renews Call for Cautious Approach to Natural Gas Drilling in Upstate New York in Light of Gulf of Mexico Oil Spill

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    Anti-Driller Lets the Truth Slip Out: “It’s not about the science”

    Don’t look now, but somehow a little bit of truth seeped into the reporting about hydraulic fracturing. And it happened in the Syracuse Post-Standard:

    At a public forum in DeWitt, Syracuse University hydrology professor Don Siegel thought he had presented enough unbiased, scientific information to prove that drilling for natural gas in New York would benefit the state far more than it might hurt.

    Then someone in the audience of more than 75 stood up.

    “With all due respect, Dr. Siegel,” she said, “it’s not about the science.”

    Two months later, Siegel still stews over those words.

    The debate should be about the science, he contends, as do two retired SU professors, Bryce Hand and Joe Robinson — who have defended high-volume hydraulic fracturing as a safe method to capture a huge supply of underground natural gas in the Marcellus Shale formation.

    But opponents of hydrofracking have “dispensed with science and rely on fear” to turn the public against drilling, Siegel said.*

    The article quotes one scientist (a Cornell professor) who is opposed to drilling, but at least the pro-drilling (and scientific) side of the debate is fully explored in this article, and is well worth the read. Kudos to the Post-Standard for some honest reporting.

    *Syracuse Post-Standard (May 2) – Some scientists say hydrofracking benefits outweigh risks

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    Chesapeake on Track to Drill 170 Wells and Operate 31 Drilling Rigs in Marcellus Shale in 2010

    This bit of information about Chesapeake’s Marcellus Shale activities from a recent operational update:

    With approximately 1.5 million net acres, Chesapeake is the largest leasehold owner in the Marcellus Shale play that spans from northern West Virginia across much of Pennsylvania into southern New York. On its Marcellus leasehold, Chesapeake estimates it has approximately 26 tcfe of risked unproved resources and 66 tcfe of unrisked unproved resources.

    During the 2010 first quarter, Chesapeake’s average daily net production of 65 mmcfe in the Marcellus increased approximately 40% over the 2009 fourth quarter and approximately 815% over the 2009 first quarter. Chesapeake is currently producing approximately 100 mmcfe net per day from the Marcellus. Chesapeake is currently drilling with 24 operated rigs in the Marcellus and anticipates operating an average of approximately 31 rigs in 2010 to drill approximately 170 net wells. During the 2010 first quarter, approximately $90 million of Chesapeake’s drilling costs in the Marcellus were paid for by its joint venture partner Statoil. From April 2010 through 2012, 75% of Chesapeake’s drilling costs in the Marcellus, or approximately $1.9 billion, will be paid for by Statoil.

    Three notable recent wells completed by Chesapeake in the Marcellus are as follows:

    • The James Barrett 2H in Bradford County, PA achieved a peak 24-hour rate of 12.7 million cubic feet of natural gas (mmcf) per day;
    • The James Barrett 1H in Bradford County, PA achieved a peak 24-hour rate of 11.8 mmcf per day; and
    • The Strom 1H in Bradford County, PA achieved a peak 24-hour rate of 8.2 mmcf per day.

    *Business Wire (May 3) – Chesapeake Energy Corporation Provides Quarterly Operational Update

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    More Delay Tactics, Elected Officials in NY Actively Oppose Drilling in the Marcellus Shale

    New York State’s future with drilling in the Marcellus Shale continues to be cloudy at best. While MDN believes drilling should start—now—hoping and wishing will not make it happen and New York landowners have to face the cold, hard reality it may not happen until summer 2011 at the very earliest (if indeed it ever happens). Now that the NY Department of Environmental Conservation is proposing two sets of rules for drilling—one for the New York City and Syracuse watershed areas, the other for everyone else—anti-drillers are using it as a wedge issue.

    Must be fun being an anti-drilling person in NY. First, you say over and over and over again that drilling in the Marcellus in the watershed may contaminate New York City’s water supply. And so, when finally the DEC throws up its hands and says, “OK, we’ll take drilling in the watershed off the table,” the new argument becomes, “See! See! If it’s not safe for the watershed, it’s not safe anywhere!” Gotta love that twisted logic. Point of fact: Hydraulic fracturing is safe everywhere, including the watersheds.

    Here’s some of the latest opposition to drilling from New York’s elected leaders:

    Assemblyman Kevin Cahill, D-Kingston, chairman of the Assembly’s Energy Committee, and Assemblywoman Barbara Lifton, D-Ithaca, are preparing legislation that will require the same drilling regulations for all state watersheds, including the Delaware.

    Assemblywoman Aileen Gunther, D-Forestburgh, recently co-sponsored a bill calling for a moratorium on drilling at least until a federal study on the impact of “fracking” on drinking water is complete — in about two years.

    And on Friday, Rep. Maurice Hinchey, D-Hurley, called on the Delaware Basin Commission, which approves withdrawals of Delaware River water used for “fracking,” to conduct an environmental impact study on the cumulative effects of those withdrawals before it considers any applications.*

    So, let’s recite the playbook: Claim it’s not safe. Claim it pollutes water supplies. And when all else fails, call for “let’s go slow and do more studies” and try to delay drilling for at least 2-3 more years to give the anti-drilling forces time to solidify opposition and completely kill it forever.

    And lest PA thinks they’re clear of all this, you’re not. The Delaware River Basic Commission has effectively blocked drilling in the Delaware River watershed for now. And your own U.S. Senator, Bob Casey, is asking the U.S. Environmental Protection Agency to get involved in the situation in Dimock, PA.

    *Middletown Times Herald-Record (May 2) – Legislators want drilling rules fairly crafted

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    PA League of Women Voters Comes Out Against Drilling in the Marcellus

    The League of Women Voters of Pennsylvania is anti-drilling. Although they pretend to be a non-partisan group, they are anything but. Not only do they sponsor forums with anti-drilling speakers on a regular basis, they have now issued an official position in favor of an extraction tax on drilling in PA, and they have gone on record favoring strict new regulations for drilling in PA. While they don’t categorically say “don’t drill,” their positions and statements essentially do say it. Here’s the opening (alarmist) paragraph from the press statement announcing their official position on drilling in the Marcellus:

    FRAC is a four-letter word, F, R, A, C. FRAC impacts everyone in Pennsylvania. It requires the immediate attention of all–from young and old, from rich to poor, from Pittsburgh to Easton, and from Philadelphia to Erie. Why? Fracturing is an explosive process that expels natural gas from Marcellus Shale, a rock that lies deep beneath two-thirds of our Commonwealth. Natural gas extraction impacts our water, our land, our air, our communities, our public health, and our economy.*

    Yes, fracturing is an explosive process—small, controlled explosions that happen a mile below solid rock (conveniently left out of the statement). The language used in the press statement is distorting and pejorative about the process of drilling. But hey, it’ll bring in the contributions and it whips up the faithful!

    *Statement by Olivia Thorne, President, PALWV (May 3) – Press Conference on Marcellus Shale Natural Gas Extraction

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    Anadarko Now Operating Four Drilling Rigs in Marcellus, Drilled First Lycoming County, PA Well in 1Q 2010

    An update on Anadarko’s Marcellus drilling activities from a recent operations report released to investors:

    Anadarko entered into a joint venture with Mitsui E&P USA LLC. Under the terms of the agreement, Mitsui will participate with Anadarko as a 32.5% partner in Anadarko’s Marcellus Shale assets in exchange for providing a $1.4 billion capital carry to Anadarko that covers 100% of its capital in 2010 and 90% thereafter. The carry is expected to be fully utilized by 2013. In addition, Mitsui committed to approximately $100 million to normalize its position with respect to Anadarko’s historical costs.

    At the end of the 1st quarter, Anadarko was operating four rigs and participating in an additional 12 non-operated rigs. The company spud ten operated wells and completed two wells during the quarter. Anadarko expects to be operating six rigs by the end of the 2nd quarter 2010.

    The Company completed and tested its first Lycoming County well (Larry’s Creek 3H) in January. The well was tested at a peak rate of approximately 6.1 MMcf/d.*

    *Anadarko Operations Report First-Quarter 2010

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    Hess Net Marcellus Shale Acreage 80K, Mostly in Wayne County, PA – Will Drill 5-10 Test Wells in Second Half of 2010

    An update from Greg Hill, President, Worldwide Exploration and Production with Hess Corporation, about their activities in the Marcellus (from a recent earnings call):

    “We’re continuing to build our position in the Marcellus. We’re at about 80,000 net acres now in the Marcellus, primarily in Wayne County, Pennsylvania. About 50,000 of that is Hess operated and the balance is part of this joint venture we have with Newfield. Our plan this year are to drill five to 10 wells during the second half of 2010 in order to evaluate the resource potential on the acreage.”*

    *Seeking Alpha (Apr 29) – Hess Corp. Q1 2010 Earnings Call Transcript

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    Penn Virginia Marcellus Shale Acreage Stands at 35,000 – Looking to Invest $48 Million in 2010 to Add More

    We get the following details on Penn Virginia Corporation’s Marcellus drilling activities from their quarterly operational report:

    Marcellus Shale – [PVC spent] approximately $17 million, or six percent, to drill five (3.8 net) horizontal and vertical wells primarily to test our acreage position in Potter and Tioga Counties, Pennsylvania.

    During the first quarter of 2010, we drilled one (0.8 net) Marcellus Shale vertical exploratory well which was recently stimulated with approximately one million pounds of sand. The well is currently cleaning up and being evaluated. We continue to add to our acreage position in the Marcellus Shale, increasing our acreage position to approximately 35,000 net acres, and we expect to spend up to $48 million in 2010 to add leasehold acreage in our existing and new prospect areas.*

    *Penn Virginia Corporation Press Release – Penn Virginia Corporation Provides Operational Update (PDF file)

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    Marcellus Shale Companies in Pennsylvania Looking to Fill Jobs and Contract with Local Businesses

    Companies involved in drilling, processing and transporting Marcellus Shale gas in Pennsylvania are looking to contract with local businesses and hire local people to work for them. On the list are…

    • Contractors for:
      • clearing land
      • constructing well pads
      • setting up rigs
      • running wirelines
      • hauling waste
      • hauling dirt
      • mechanical work
      • civil work
      • electrical work
      • environmental surveyors
      • installers
    • Real estate/office space
    • Drilling crews
    • Frac crews
    • Right-of-way agents
    • Suppliers for:
      • drilling mud
      • frac fluid
      • steel pipes
      • valves and fittings
      • natural gas compressors
    • Engineering firms
    • Environmental firms
    • Professionals:
      • geologists
      • geophysicists
      • environmental engineers

    The companies looking to hire include:

    • East Resources
    • Chief Oil & Gas
    • Laurel Mountain Midstream
    • MarkWest Energy
    • Talisman Energy

    For more details, along with contact names and inside tips for submitting a bid or applying for a job, see the article linked below.

    *Pittsburgh Business Times (Apr 29) – The Marcellus Shale: How your company could get in on the action

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    CONSOL/CNX Gas Will Drill Two Dozen Horizontal Marcellus Gas Wells in 2010, Now Holds Leases on 760,000 Acres

    Highlights from the CONSOL Energy quarterly earnings report as it touches on their operations in the Marcellus Shale:

    On March 15, CONSOL Energy announced a $3.475 billion acquisition of the Appalachian gas exploration and production business of Dominion Resources. We expect to close the transaction tomorrow. The assets include approximately 1 trillion cubic feet of proved reserves and approximately 500,000 acres of Marcellus Shale. Additional assets include an overriding royalty interest from farm-outs, 300,000 acres of Huron Shale, and extensive Utica Shale acreage.

    On March 22, CONSOL Energy announced its intention to acquire the approximately 25 million shares of CNX Gas that it does not already own for $38.25 per share. We commenced the tender offer on April 28. As previously announced, T.Rowe Price has already agreed to tender the 9.47 million shares held for its investment advisory clients into the offer at the offer price of $38.25 per share.

    During the quarter, CNX Gas achieved record initial production from one of its latest Marcellus Shale wells. Well GH 2B CV, has averaged 5.0 MMcf per day for the first 47 days of production. It peaked at 5.7 MMcf per day. This well has a lateral of 2,300 feet.*

    Read More “CONSOL/CNX Gas Will Drill Two Dozen Horizontal Marcellus Gas Wells in 2010, Now Holds Leases on 760,000 Acres”

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    National Fuel Does Pipeline Deal with Statoil and East Resources to Move Marcellus Shale Gas to Canadian & Northeast US Markets

    National Fuel has struck a deal with Statoil and East Resources and is expanding two pipelines to handle Pennsylvania Marcellus Shale gas, sending it to markets in Canada and the Northeastern U.S. The announcement says National Fuel will build 16 miles of new pipeline from Corning, NY to Tioga County, PA, and construct a new interconnection with the Tennessee Gas Pipeline in Ontario County, NY, among other improvements.

    From the National Fuel press release:

    WILLIAMSVILLE, N.Y.–(BUSINESS WIRE)–National Fuel Gas Supply Corporation (“Supply”) and Empire Pipeline, Inc. (“Empire”), the companies that comprise the Pipeline and Storage segment of National Fuel Gas Company (NYSE: NFG) (“National Fuel”), have reached major milestones on two pipeline expansion projects that are the first in the industry designed to receive natural gas produced from the Marcellus Shale and transport it to key markets of Canada and the Northeast U.S. Supply has entered into a binding precedent agreement with Statoil Natural Gas LLC (“Statoil”) for 100 percent of the capacity on Supply’s “Northern Access” expansion project. Empire also has a binding precedent agreement in place with anchor shipper East Resources, Inc. (“East”) for Empire’s “Tioga County Extension” project, and is concluding negotiations for additional capacity with a second shipper. The precedent agreements provide for Statoil and East to sign, after satisfaction of conditions, firm transportation service agreements under which Supply and Empire will transport natural gas for Statoil and East.

    Read More “National Fuel Does Pipeline Deal with Statoil and East Resources to Move Marcellus Shale Gas to Canadian & Northeast US Markets”

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    NY DEC Message to Landowners in New York’s Watersheds: Forget About Drilling

    These are the bald facts of life for New York landowners who own land in either the New York City or Syracuse watershed areas and may want to lease their land for Marcellus Shale gas drilling: Forget it. That’s the loud and clear message from NY Department of Environmental Conservation (DEC) Commissioner Pete Grannis. After the DEC’s announcement of last week, no energy company in their right mind will be willing to drill in New York’s watersheds (although drilling companies currently drill safely in the Susquehanna River watershed in PA, and are trying to drill in the Delaware River watershed in PA).

    Reaction from landowners in New York has been mixed. While some believe watershed landowners are being unfairly penalized, others think this may speed up the process of drilling for everyone else by removing a key objection to drilling—that drilling may contaminate city water supplies.

    From a press release issued by the NY DEC last week:

    April 23 – New York State Department of Environmental Conservation (DEC) Commissioner Pete Grannis today announced that due to the unique issues related to the protection of New York City and Syracuse drinking water supplies, these watersheds will be excluded from the pending generic environmental review process for natural gas drilling using high-volume horizontal drilling in the Marcellus shale formation. Instead, applications to drill in these watersheds will require a case-by-case environmental review process to establish whether appropriate measures to mitigate potential impacts can be developed. There are 58 pending applications for horizontal drilling in the Marcellus shale; no applications are located in either the New York City or the Skaneateles Lake watersheds (Syracuse utilizes the Skaneateles watershed).

    Read More “NY DEC Message to Landowners in New York’s Watersheds: Forget About Drilling”

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    Joint Landowner’s Coalition of NY Makes Appeal to Landowners

    The Joint Landowner’s Coalition of NY has put out a plea for donations. Drilling in New York may not happen unless landowners can generate enough noise to break through the resistance in Albany. Here is the letter reproduced in full from the JLCNY:

    A Message from the JLCNY President Dan Fitzsimmons – April 27, 2010

    Fellow Landowners – I don’t have to tell you we have much at stake.  But I do need to sound an alarm:  the time for us to act is NOW.  We are organized.  We are prepared.  And although we have worked intensely over the last two plus years, we are outmanned, outspent, outmaneuvered.  We need to step up our game, and we have a plan to get it done.  But we desperately need your financial support.  Some of you have given generously financially.  Some of you have poured blood, sweat and tears into this effort.  And some of you will make your first donation right now.  We need as much as you can afford to give to fund our efforts to:

    • Hire professionals in Albany who can represent us and make sure our voices are not drowned out by the better-funded extremists.  These professionals can open doors, cut through clutter and red-tape for us and focus us on the most effective strategy for being heard where it counts.

    • Get the word out:  you’ve heard the same arguments I hear:  more people are against drilling than are for it.  We know that’s not true – but we have to erase that perception.  The best way to do that is to blanket our area with lawn signs, drown our airwaves with pro-drilling ads, promote speakers at public forums who can support our issues with facts, erect billboards with clear messages, etc.

    • Continue to support landowners.  In some respect, the work begins when the moratorium is lifted and leases are signed.  Who will advocate for landowners in their negotiations and relations with energy companies?  Who will be a watchdog with the regulatory agencies?  Who will make sure we have the best and latest information on and about the industry and the technology surrounding us?  Landowners will need the JLC more and more as time goes by and as the stakes continue to rise. We cannot sustain it without your support.

    We are seeking support from a number of channels:  from corporations and industry; from foundations and other organizations who may provide grants for our work; from local business and farm organizations.  But the most important support we need RIGHT NOW is from you.  Please give what you can today – $10, $20, $100, $500 or more.  See if your company has a matching donation program – or if you know of any other source you can approach for us – please do.  Use PAYPAL on our website: JLCNY.org or send a check to:

    PO Box 2839
    Binghamton, NY 13902

    Thank you from the bottom of my heart.  We will get there, but only if we stay together on this.

    Dan Fitzsimmons
    President JLCNY

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    EQT has Already Drilled 21 Wells in PA Marcellus Shale in 2010 – On Track for 100 Wells This Year

    Even though the price of natural gas worldwide is down, EQT Corp saw a big jump in net income (ie profits) largely due to their large increase in gas production in the Marcellus Shale formation in Pennsylvania. In a Pittsburgh Tribune-Review article we learn this about their drilling activities:

    EQT drilled 21 horizontal wells in the Marcellus formation in the first quarter, and plans to drill 100 such wells this year, at an average cost of $3.3 million to $3.5 million per well.*

    If EQT drills 100 wells in PA in 2010, that’s a $330-$350 million investment in PA with all of the jobs that kind of investment creates.

    *Pittsburgh Tribute-Review (Apr 28) – EQT tallies $88.1 million 1Q profit