• | | | | |

    Forced Pooling – An Issue Coming to the Forefront in Pennsylvania

    Now that a severance tax is coming to Pennsylvania, natural gas drillers will likely push for a provision called “forced pooling” in PA which makes it easier to gather gas from properties that are not leased but sit in-between other leased land.

    The Marcellus Shale natural gas industry wants to see legislation attached to any severance tax adopted by the state that would force property owners who refuse leases to allow drillers to gather the gas beneath their land, an industry coalition leader said Monday.

    Calling it the most economical and conservative land-use approach to drilling for gas, David Spigelmyer, Chesapeake Energy’s regional vice president for government relations, said in a Times-Shamrock newspapers editorial board meeting that “forced pooling” is a key element of any legislation the state’s Marcellus drillers could support and is actively being discussed during budget negotiations in the capital.

    Such a statute would help avoid an unnecessary proliferation of wells, Spigelmyer said, but critics say it is a form of eminent domain.*

    This is an unresolved and complex issue that’s about to become red hot in PA. There are strong arguments on both sides. MDN believes landowners should have the right to allow drilling on and under their land provided it does not harm nearby populations or the environment. It is the constitutional right for citizens of this country to use their land as they see fit. On the other hand, to force a landowner who does not want to lease their land into a pool with their neighbors who have leased, is also unfair. If it means a proliferation of wells and added expense, so be it. The drilling company will have to bear the cost. Citizens should not have to worry that portions of their property will be used against their will—both on the surface and under it. It’s wrong to stop drilling based on irrational fear (as is being done in New York), and it’s equally wrong for drillers to force landowners to allow drilling under their land.

    What do you think about forced pooling? Leave a comment below and let us know.

    *Wilkes-Barre Citizen’s Voice (June 29) – Gas industry wants access to unleased property

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    PA Budget Deal Approved: Marcellus Landowners are the Losers

    Pennsylvania has just reached a new budget agreement for the next fiscal year, weighing in at a staggering $28.05 billion. Those who smoke cigars and use smokeless tobacco can breathe easier (or perhaps not)—your bad habit has escaped the tax man yet again this year. There are no state taxes on cigars and smokeless tobacco. But if you’re a landowner who’s getting royalty payments, you’re about to get soaked. Everyone knew it was only a matter of time before the politicians, who can’t resist taxing everything under the sun, would not be able to resist a severance tax on gas drilling. It’s now happened:

    The [budget] agreement calls for the Legislature to enact a severance tax on natural gas extraction in the Marcellus Shale by Oct. 1, Rendell said, with the tax becoming effective Jan. 1, 2011. He said he would like to see a tax rate close to West Virginia’s, which is roughly 6 percent.*

    It makes no difference if the tax is levied on the drilling company or not—ultimately this tax will come out of the pockets of landowners because expenses are always passed back. Oh well, it was a good run while it lasted. At least they’re drilling in PA!

    *Pittsburgh Business Times (June 29) – Rendell: Pa. reaches budget agreement

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    Gas Well Blowout in Clearfield County, PA Causes “Modest” Environmental Damage

    What do we know about the gas well blowout that occurred on June 3rd? EOG Resources had almost completed drilling and fracking a gas well in Clearfield County, Pennsylvania when a blowout (too much pressure too fast) occurred. Here is the chronology of events:

    The month long drilling operation [in Clearfield County] ended on March 3. Contractors returned in May to hydraulically fracture the well over 12 days. The process involves the injection of water, sand and chemicals under high pressure to shatter the gas-bearing rock so that the fuel can be recovered.

    The frack job ended on May 28. The operator [EOG Resources] had begun well-completion operations on June 1. The blowout occurred two days later.

    High pressure in an oil or gas well is both desired and essential – the pressure is what brings the fuel to the surface. Blowouts occur when the pressure surges and overwhelms control mechanisms.

    A device known as a blowout preventer is attached to the wellhead at the surface. It is designed to be triggered by operators to control pressure surges.*

    And this from the Pennsylvania Department of Environmental Protection (DEP) official press release on the matter:

    The leak began at approximately 8 p.m. on Thursday, June 3, when the well’s operators lost control of it while preparing to extract gas after fracking the shale. As a result, natural gas and flowback frack fluid was released uncontrollably onto the ground and 75 feet into the air. The well was capped at around noon on June 4.

    The EOG well pad is located in a rural area near the Penfield/Route 153 exit of Interstate 80 in northwestern Clearfield County, near Moshannon State Forest.

    The department’s [DEP] Emergency Response and Oil and Gas programs responded to the incident, along with the Pennsylvania State Police, the Pennsylvania Emergency Management Agency, and local fire and police departments.**

    The DEP believes the blowout preventer failed—but they don’t yet know why. Investigations continue. Since the blowout, the DEP has stopped all new drilling by EOG Resources until a cause is found:

    The Department of Environmental Protection today [June 7] ordered EOG Resources Inc. to suspend its natural gas well drilling activities in Pennsylvania after a June 3 blowout at one of the company’s Clearfield County wells sent natural gas and at least 35,000 gallons of drilling wastewater into the sky and over the ground for 16 hours.

    DEP Secretary John Hanger said that while the order bans all drilling and hydrofracturing, or fracking, operations for specified periods of time, the suspension will remain in effect until DEP has completed a comprehensive investigation into the leak and the company has implemented any needed changes.**

    Here’s what else we know: No one was hurt. About 35,000 gallons of drilling fluid (mostly water) was spilled. The well did not explode. According to DEP Secretary John Hanger:

    “Fortunately, the well did not ignite and explode, and there were no injuries to the well crew or emergency responders. Our preliminary assessment is that the environmental damage was modest as the frack fluid was contained and did not appear to reach any streams.”**

    Since the accident, anti-drillers (and mainstream media) have had a field day referring to the “tragedy” and “disaster” in Clearfield County. While MDN does not excuse or minimize the accident and encourages a full investigation, a little perspective is in order: According to the Federal Highway Administration (as of 2005), an average of 115 people die every day in automobile accidents. The average number of people who die every day from gas well accidents? Zero.

    *Philadelphia Inquirer (June 7) – Pa. suspends gas drilling at Marcellus rupture site
    **PR Newswire (June 7) – DEP Orders EOG Resources to Halt All Natural Gas Drilling Activities in PA

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    Dominion Signs Deal to Transport CONSOL Marcellus Shale Gas for Next 15 Years

    From a Dominion press release issued today:

    Dominion today announced that its natural gas transmission and storage subsidiary, Dominion Transmission, has reached a 15-year agreement with the gas subsidiary of CONSOL Energy Inc. for firm transportation of CONSOL’s Marcellus shale natural gas production.

    The project, capable of transporting 200,000 dekatherms per day, will move supplies from various receipt points in central and southwestern Pennsylvania to a nexus of market pipelines and storage facilities in Leidy, Clinton County, Pa.

    “Dominion is pleased to provide CONSOL with year-round access to growing Northeast markets and to provide another supply alternative for market area customers,” said Gary Sypolt, chief executive officer of Dominion Energy. 

    Earlier this year Dominion sold its natural gas exploration and production business to CONSOL so that the company could concentrate on its regulated businesses, including increased transportation and storage infrastructure opportunities resulting from Marcellus shale discoveries.

    Dominion plans to file for a FERC certificate in December. If the project is approved, construction is planned to begin in March 2012, and it would enter service in November 2012. Construction plans include new compression facilities at three existing compressor stations in central Pennsylvania.

    Dominion Transmission provides gathering, processing, transportation and storage services, operating in the heart of the Marcellus shale production area.

    Dominion is one of the nation’s largest producers and transporters of energy, with a portfolio of more than 27,500 megawatts of generation, 12,000 miles of natural gas transmission, gathering and storage pipeline and 6,000 miles of electric transmission lines. Dominion operates the nation’s largest natural gas storage system with 942 billion cubic feet of storage capacity and serves retail energy customers in 12 states.

    *Dominion Press Release (June 14) – Dominion Announces 15-Year Contract for Marcellus Northeast Natural Gas Project

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    Delaware River Basin Commission Bans Exploratory Drilling in Marcellus Shale in the Watershed

    Once again the Delaware River Basin Commission (DRBC) is overreaching. There is no doubt the commission is packed with people opposed to shale gas drilling, and they have no regard for private property owners or their property rights. Under the guise of “protecting the water supply,” a single person—the director of the DRBC—has now banned exploratory drilling in the watershed with the stroke of a pen. What does it mean? If you’re a property owner living in the Delaware River watershed (New York or Pennsylvania), drilling for you won’t happen any time soon. Maybe never.

    Today’s DRBC press release:

    Delaware River Basin Commission (DRBC) Executive Director Carol R. Collier today announced that she has supplemented her May 19, 2009 determination to include natural gas exploratory wells.

    “My 2009 determination that sponsors of natural gas extraction projects in shale formations must obtain commission approval before commencing such projects expressly did not cover wells intended solely for exploratory purposes,” Collier said.  “Today, I am extending the provisions of my 2009 determination to include exploratory wells, subject to reservations for exploratory well projects already approved by the states on or before June 14, 2010.”

    By this supplemental determination, all natural gas well project sponsors, including the sponsors of natural gas well projects intended solely for exploratory purposes, must first apply for and obtain commission approval before commencing any natural gas well project for the production from or exploration of shale formations within the drainage area of Special Protection Waters in the Delaware River Basin.

    “For the purpose of this determination, any natural gas well drilled in or through shale is assumed to be targeting a shale formation and is subject to this determination, unless the project sponsor proves otherwise,” Collier added. All other aspects of the 2009 determination remain in effect.

    Today’s action recognizes the risks to water resources, including ground and surface water that the land disturbance and drilling activities inherent in any shale gas well pose. “In light of the commission’s May 5, 2010 decision to finalize natural gas regulations before considering project approvals, this supplemental determination removes any regulatory incentive for project sponsors to classify their wells as exploratory wells and install them without  DRBC review before the commission’s natural gas regulations are in place,” Collier said. “It thus supports the commission’s goal that exploratory wells do not serve as a source of degradation of the commission’s Special Protection Waters.”

    “Where entities have invested in exploratory well projects in reliance on my May 2009 determination and information from DRBC staff, there are countervailing considerations that favor allowing these projects to move ahead,” Collier stated in her supplemental determination. “I am informed that since May of 2009, Pennsylvania has issued a limited number of natural gas well drilling permits within the Delaware River Basin targeting shale formations, while New York State has not issued any natural gas well permits targeting shales in the basin since that date. In contrast to the thousands of wells projected to be installed in the basin over the next several years, the risk to basin waters posed by only the wells approved by Pennsylvania since May 2009 are comparatively small. Not only are these wells subject to state regulation as to their construction and operation, but they continue to require commission approval before they can be fractured or otherwise modified for natural gas production. In light of these existing safeguards and the investment-backed expectations of the sponsors of these projects, this supplemental determination does not prohibit any exploratory natural gas well project from proceeding if the applicant has obtained a state natural gas well permit for the project on or before June 14, 2010.”

    Most of the shale formations that may be subject to horizontal drilling and hydraulic fracturing techniques requiring large volumes of water in the basin are located within the drainage area to DRBC’s designated Special Protection Waters (SPW). The commission’s SPW program is designed to prevent degradation in streams and rivers considered to have exceptionally high scenic, recreational, ecological, and/or water supply values through stricter control of wastewater discharges, non-point pollution control, and reporting requirements. Coverage of the DRBC’s SPW anti-degradation regulations includes the 197-mile non-tidal Delaware River from Hancock, N.Y. south to Trenton, N.J. and the land draining to this stretch.

    Any person adversely affected by this action may request a hearing by submitting a request in writing to the commission secretary within 30 days of the date of this supplemental determination in accordance with the DRBC’s Rules of Practice and Procedure.

    *DRBC Press Release (June 14) – DRBC Executive Director Determination Extended to Include Natural Gas Exploratory Wells

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    New York Landowners Call to Action – Another Sneak Attack Bill in NY Legislature Attempts to Stop Drilling

    MDN received the following email from the Central New York Landowner’s Coalition encouraging New Yorkers who want to see gas drilling to get on the phone and call to express your opposition to (yet another) bill that would kill drilling in New York. MDN encourages those of like mind to call.

    LAST-MINUTE BILL NEEDS YOUR CALL
    SNEAKY “ANTI-GAS” BILL MUST BE STOPPED

    OPPOSITION’S ATTEMPT TO SNEAK A BILL THROUGH: NYS Senator Antoine Thompson has just introduced a bill to the NYS Encon Committee, which he chairs, that would ban any hydraulic fracturing activity in NYS for one year – which is certain to be followed up by subsequent moratoriums in future years. THIS BILL HAS THE SAME LONG-TERM AGENDA AS THE OTHERS AND IS NOT A COMPROMISE!!! If this passes, we can forget about leasing for years to come and we can be certain that any gas company who might be waiting for the DEC to release the SGEIS will give up & head elsewhere.

    WE HAVE BEEN SUCCESSFUL SO FAR: Our rally, emails and phone calls have derailed the bills that would all-out ban or impose a 2-3 year moratorium on gas drilling in NY. We can defeat this bill if we all work together! And with one full week left before the Albany Politicians go to summer recess, this week requires our biggest push ever.

    WE NEED 125 CALLERS FIRST THING MONDAY MORNING:
    Because it’s too late to email or write letters, your coalition committee will be calling and we need 125 additional callers after 9am on Monday to voice your opposition to this moratorium with us. The Encon committee meets Monday afternoon, so it is best if your call reaches them by then. WHEN YOU HAVE CALLED, EMAIL US AT chenangogas@gmail.com and let us know. We’ll keep the website updated with our tally for the day.

    HERE ARE THE NAMES WITH THE “TALKING POINTS” BELOW.

    Name
    Albany Phone

    Thompson, Antoine M.
    Ph: 518-455-3371

    Oppenheimer, Suzi
    Ph: 518-455-2031

    Schneiderman, Eric T.
    Ph: 518-455-2041

    Parker, Kevin S.
    Ph: 518-455-2580

    Serrano, Jose M.
    Ph: 518-455-2795

    Perkins, Bill
    Ph:518-455-2441

    Stewart-Cousins, Andrea
    Ph: 518-455-2585

    Foley, Brian X.
    Ph: 518-455-2303

    Marcellino, Carl L.
    Ph: 518-455-2390

    Leibell, Vincent L.
    Ph: 518-455-3111

    Johnson, Owen H.
    Ph: 518-455-3411

    Little, Elizabeth O’C.
    Ph: 518-455-2811

    Young, Catharine M.
    Ph: 518-455-3563

    Padavan, Frank
    Ph: 518-455-3381

    TALKING POINTS:

    POSSIBLE CONVERSATION: (Not everything below needs to be mentioned. The main thing is the first sentence!)
    “Good Morning (afternoon); I am calling to express my full opposition to the bill being presented by Senator Thompson to the Encon Committee further delaying safe Natural Gas Drilling in NY. Our New York State DEC has successfully monitored, studied and regulated hydraulic fracturing in our state for nearly 2 decades. In additional to this, they have put thousands of man hours into their current SGEIS which will make New York the safest state in our nation for natural gas development. Also, the federal EPA has already studied hydraulic fracturing on numerous occasions and has never found a single instance of underground water contamination by this drilling process. And with the current EPA study, there was never a federal consideration of a ban. This bill appears to be a mere political ploy to create an additional, needless moratorium before the DEC’s latest regulations are even being released. I am asking that you trust the scientists of the DEC who have already created a safe track record for drilling in NY. We have already been forced to wait 2 years so I respectfully ask that this committee not create needless long-term delays to this essential economic push for upstate NY.”

    Many additional talking points are posted on the website of the Joint Landowner’s Coalition (www.jlcny.org). Don’t worry about being eloquent – JUST CALL EVERYONE ON THAT LIST!! We can’t count on anyone else to call for us – you need to pick up the phone and do this for yourself, your family, your community and your state.

    Counting on YOU!

    Brian Conover

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    The Rank Hypocrisy of ‘American Rivers’ on the Marcellus Shale Drilling Issue

    You would have to be blind to have missed the recent announcement from American Rivers, a so-called conservation organization, that the Delaware River is this year’s #1 most threatened river from sea to shining sea in the good ole US of A. The announcement was picked up, according to Google, by no less than 349 news outlets and repeated, almost verbatim, from the American Rivers press release. Here’s how their press release of June 2 beings:

    The Upper Delaware River, the drinking water source for 17 million people across New York, New Jersey and Pennsylvania is at risk from shale fracking for natural gas, a process that poisons groundwater and creates toxic pollution. This threat landed the Upper Delaware in the number one spot in America’s Most Endangered Rivers: 2010 edition.

    “Unless we stop the threat of rampant shale fracking, the drinking water for 17 million people across the Northeast will be threatened by toxic pollution,” said Rebecca Wodder, president of American Rivers. “We can’t let natural gas companies fatten their profits by putting our precious clean water at risk.”*

    Frankly, the press release is shot full of lies and the same tired scare tactics that anti-drillers find so effective: Drilling will poison your drinking water. Problem is, it doesn’t. But let’s not let the truth get in the way of a good press release! There is not one documented case of chemicals used in drilling a gas well poisoning ground water supplies across hundreds of thousands of hydraulically fractured wells. What is so mind-boggling is that one organization can create a press release airing nothing more than an opinion, and it gets picked up and run as “news” of an imminent threat across the entire country by the likes of Associated Press and CNN, repeated and amplified, until the general population believes the headline. The headline says the Delaware River is threatened—indeed the “most threatened” river in the entire country for 2010. Why? Because American Rivers doesn’t like gas drilling. It’s all manufactured news. In fact, it’s not really news at all.

    American Rivers is utterly hypocritical in identifying the Delaware River as “threatened.” To wit, in 2005, American Rivers named the Susquehanna River as the #1 most endangered river in the USA. This year? The mighty Susquehanna isn’t on the list at all. Here’s the thing—Marcellus gas drilling hasn’t even happened yet in the Delaware River basin. The Delaware River Basin Commission has not approved a single drilling permit anywhere in the watershed, even though plenty have been submitted. But there’s lots of Marcellus gas drilling going on in the Susquehanna River basin right now! So if gas drilling would be so dreadfully disastrous for the Delaware basin and the millions who get their drinking water from it, why isn’t it equally disastrous for the Susquehanna basin and the millions who get their drinking water from it? I’ll tell you why: Because gas drilling doesn’t pollute groundwater supplies of any kind—including rivers—and if American Rivers mentioned the Susquehanna (where drilling already exists) on this year’s list alongside the Delaware, it might raise some uncomfortable questions for them.

    So what’s really going on here? The people at the top of these so-called “environmental” organizations are trying to manipulate public opinion and stop drilling dead in its tracks. Also from the American Rivers press release:

    American Rivers called on the Delaware River Basin Commission to ban any shale fracking in the Upper Delaware watershed until a thorough study of impacts is completed and the pollution potential of shale fracking is fully documented and assessed.*

    Now we see the real agenda. Stop drilling, and if you can’t stop it, slow it down any way you can. There’s isn’t any evidence that natural gas drilling pollutes water supplies because such evidence does not exist. So instead, manufacture a scare with headlines in hopes you can buy time to figure out a way to get Congress to kill gas drilling for good.

    I can only speculate why anyone would not want cheaper, cleaner energy supplies that benefit everyone, but my guess is that the people running organizations like American Rivers have become so caught up in their philosophy of anti-fossil fuels of any kind, they’re willing to deny their fellow Americans the benefits of cheaper, cleaner energy because they (the self-proclaimed enlightened ones) think we (the great unwashed) should all be driving golf carts for cars and getting energy from wind mills. No thanks. Renewable energy is a part of our future, but it’s not a meaningful and substantial part of our present—and organizations like American Rivers just don’t get that. Don’t fall for their cynical manipulations.

    *American Rivers Press Release (June 2) – Upper Delaware Named America’s Most Endangered River

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    New President and Board Members for Central New York Landowner’s Coalition

    MDN received the following email noting changes in the leadership of the Central New York Landowner’s Coalition:

    Transition In The Leadership of the Central New York Landowner’s Coalition
    Bringing you up-to-speed on these recent developments.
    June 3, 2010

    Just two weeks ago, a special meeting was held at the office of Levene, Gouldin and Thompson, our coalition’s legal representation. Present at the meeting were our attorney, steering committee members (Todd Barnes, Charlie Rowe, Hank Tumilowicz, Kern Walling, Abbie Tamber and Brian Conover) along with some of the more active members of our landowner forum. After discussing specific ways to help our coalition become stronger, the committee voted on certain leadership changes that you need to be aware of.

    After 2 years of sacrificial and loyal service, Richard Lasky, our coalition president stepped aside from his position. His farewell note follows this notice.  Richard is known for investing his personal time, finances and talents to grow the coalition from the ground up to where it is today. This coalition would not be all it is without his leadership, dedication and sacrifice. Following the acknowledgment of this decision, the steering committee nominated and voted Brian Conover as our current president. Brian has served with Richard and the steering committee for the past two years.

    After much positive discussion between the forum members and the steering committee, the steering committee members present saw an opportunity for the forum individuals to rise to the occasion and give of their energy and perspective to help advance the coalition. The greatest tasks of the coalition have already been accomplished: our lease is completed, our members and community have been educated, our coalition has grown to the largest coalition in New York State, and our hard-working committee members receive credit along with Mr. Lasky for these accomplishments. However, recognizing the future needs of the coalition to grow our political voice and continue to fill in our coalition acreage, the steering committee encouraged these individuals to fill their positions and continue the purposes to which they dedicated over two years of their life advancing. The landowner forum representatives then formed an advisory committee that worked in coordination with our attorneys and Brian Conover to give immediate direction and helped establish a new formal steering committee. The new steering committee members are … Steve Gage, Chris Babcock, Lee Schultz, Scott Utter, Sean Campbell along with Wilma Gorrell and Brian Conover from the previous committee.  Additional committee members will be added in the future as representatives for various areas of the coalition range.

    Please know that our commitments to the landowners of this coalition are unchanged. We do appreciate your loyalty to the coalition purposes as well as your understanding through this transition. Another newsletter update will be arriving in the near future announcing the JLC Albany rally on June 9th and also promoting our coalition values and direction for the future.

    Grateful for all that has been done – excited about our future,

    Brian Conover

    —–

    Farewell Note From Richard Lasky

    Two years ago, a small group of committed landowners assembled in my living room to contemplate a growing crisis: landmen were combing our hills and valleys and leasing land from folks who had no idea of the issues surrounding natural gas, or how to effectively form a business partnership with an energy company. Destitute farmers and elderly people were gleefully signing over their mineral rights without understanding how to ask for protections for land, air and water and for pennies and dollars per acre. As we sat and faced the music – we knew we had a choice: bury our heads in the sand and let the events unfold – or spring into action and create an educational outreach program to make formidable partners of landowners around the central and southern parts of NY who could face energy companies with knowledge, fortitude, and power. Many times in my life I have recalled the words of Johann Wolfgang von Goethe, a German playwright and poet who said, “What is my life if I am no longer useful to others.”

    That sentiment in mind, two years later, it is clear which path we struck. Today, I am proud to have presided over the Central NY Landowners Coalition (CNY) which has grown to almost 170,000 acres of land, comprising the largest regional coalition in the state.  To the members of CNY, I pledged to make sure that people who did not know how to protect themselves could be given all the information they needed so that they could make the right choice about leasing their land.

    It has been my passion to bring hope to this area; hope that we can rise above the economic challenges of our day, hope that we can protect our environment and way of life through this drilling endeavor and hope that the future of our great state will, one day, exceed anything in its glorious past. Although I leave behind my term as president of the Central NY Landowners Coalition, that hope in me yet lives on. I thank you for your work, for your support but mostly for your friendship. I wish you all Godspeed.

    Richard Lasky

  • | | | | |

    Western Reserve Petroleum Leases 4,500 Marcellus Shale Acres in Eastern Ohio in Last Two Weeks

    Western Reserve Petroleum has just snapped up lease rights to 4,500 acres in the past few weeks in Jefferson and Harrison Counties in eastern Ohio, located close to the border of West Virginia and not far from Pittsburgh, a prime Marcellus Shale region.

    With one company locking up about 4,500 acres for oil and natural gas exploration over the past two weeks, Jefferson County property owners appear to be getting their own taste of the Marcellus Shale rush.

    While companies such as Chesapeake Appalachia, A B Resources, CNX Gas Corp., Dominion Exploration and others are gobbling up property rights in West Virginia, Western Reserve Petroleum is quickly staking its claim to the oil and gas rights in eastern Ohio.

    “It has taken us less than two weeks to acquire 4,500 acres in Jefferson and Harrison counties,” said Molly Johnson Phillips, lease acquisition manager for Western Reserve. “We are glad to give some smaller landowners a chance to get in on this.”

    Western Reserve is not disclosing how much they are paying for the leases. Recent deals just across the border in West Virginia have seen a signing bonus of $3,600 per acre and royalty payments between 12 and 19 percent.

    *The Intelligencer/Wheeling News-Register (May 30) – Gas Rush On In Jefferson

  • | | | | |

    Marcellus Shale Ethane Headed to the Gulf Coast in a New Plan from MarkWest and Sunoco

    MarkWest Liberty Midstream is partnering with Sunoco Logistics to use existing and new pipelines in a project that will take Marcellus Shale gas liquids (ethane) from the northeast all the way to the Gulf Coast. How’s that for a change?! Ethane is primarily used in manufacturing plastics and is one of the by-products obtained from processing shale gas methane. Range Resources and Chesapeake Energy are among the major Marcellus Shale producers who are supporting the project and will sell processed ethane using the new system offered by MarkWest and Sunoco Logistics. Part of the project includes constructing a new 45-mile pipeline from Houston, PA to Delmont, PA. The ethane arriving at Delmont will then be piped to the East Coast, and from there it will go by ship to the Gulf Coast.

    From the official press release:

    MarkWest Liberty Midstream & Resources, LLC, a partnership between MarkWest Energy Partners, L.P. and The Energy & Minerals Group, and Sunoco Logistics Partners L.P. today announced a combined pipeline and marine project for ethane produced in the Marcellus Shale Basin. The Mariner Project is anticipated to have initial capacity to transport up to 50,000 barrels per day of ethane to Gulf Coast markets as soon as the second quarter of 2012 and could be scaled to transport higher volumes to support additional ethane production in the Marcellus region. MarkWest Liberty has been working with key producers and petrochemical consumers since late 2009 and the project is supported by key producers including Range Resources Corporation and Chesapeake Energy Corporation.

    The Mariner Project includes MarkWest Liberty making minor modifications to its processing facilities to recover sufficient ethane to allow the residue gas to meet interstate gas pipeline specifications and installing additional facilities at its Houston, Pennsylvania processing and fractionation complex to separate the ethane for delivery to downstream Mariner Project facilities. MarkWest Liberty will also construct a 45-mile pipeline from the Houston complex to an interconnection with an existing Sunoco Logistics pipeline at Delmont, Pennsylvania. The ethane will be transported to an existing East Coast facility where Sunoco Logistics will construct refrigerated ethane storage facilities. The ethane will then be transported via marine vessel to premium markets in the Gulf Coast. In addition, the existing Sunoco Logistics pipeline crosses many of the large pipelines transporting natural gas into the northeast, which will provide multiple ethane blending options.

    “We are excited to be able to participate in the Mariner Project and we are especially pleased to partner with MarkWest Liberty due to their extensive experience in the Marcellus Shale Basin,” said Deborah M. Fretz, President and Chief Executive Officer of Sunoco Logistics. “Our existing Pennsylvania active and idle pipeline infrastructure is well-positioned to provide an efficient solution for producers to move ethane across Pennsylvania to a Delaware River marine port to access multiple markets. The combination of MarkWest Liberty’s fractionation complex and Sunoco Logistics’ transportation system offers producers a higher value for their natural gas liquids by transporting only the ethane portion of the liquids and allowing the heavier liquids to remain in the northeast marketplace.”

    Frank M. Semple, Chairman, President and Chief Executive Officer of MarkWest stated, “We have been working with Sunoco Logistics and our producer customers for a number of months and we believe the Mariner Project provides the most efficient solution to maximize the value of Marcellus ethane, supports the development of more than 2 BCF per day of Marcellus rich gas, and significantly accelerates the in-service date to transport ethane compared to other pipeline projects. MarkWest and The Energy & Minerals Group are very pleased to partner with Sunoco Logistics because of their strong set of assets and significant experience in the storage and transportation of liquefied petroleum gas.”

    *Businesswire (June 1) – MarkWest Liberty Midstream & Resources and Sunoco Logistics Announce New Marcellus Ethane Pipeline and Marine Project

  • | | |

    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