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    Binghamton Natural Gas Summit: Millennium Pipeline President Richard Leehr

    richard-leehr-millennium One of the speakers at the Natural Gas Development Summit held in Binghamton on March 18th was Richard Leehr, president of Millennium Pipeline (MP), a major natural gas pipeline running from Western New York State almost to New York City. What follows are MDN’s notes from his presentation. Unfortunately Millennium has a policy against sharing their PowerPoint slides on the web (we asked and were turned down). It’s unfortunate because there were a number of good slides that would be of interest to landowners. However, MDN located two PDF maps showing the MP and its interconnect points with other pipelines, and a pipeline system map for Upstate New York and the Northern Tier of Pennsylvania (see bottom of this post for the links).

    Dick Leehr started his presentation with a “thank you” to landowners for their patience and inconvenience during the recent construction of the pipeline. The MP has its home office in Pearl River, NY, almost on the border with New Jersey and not far from metro New York City. The MP is an underground steel 30-inch diameter pipeline with 1 inch thick walls. The steel is coated and should last at least 100 years.

    The MP has the capacity to move 1/2 BCF (billion cubic feet) of natural gas over the entire length of the pipeline per day. On January 4th, the MP hit its current high in delivery with 714,000 dekatherms.

    Mr. Leehr said to think of pipelines as Interstate Highways. Shippers contract or “reserve” capacity on the pipeline. The pipeline picks gas up at one point and delivers it to a different point specified by the customer. Pipelines are among the safest forms of energy transportation in the country according to Leehr.

    Read More “Binghamton Natural Gas Summit: Millennium Pipeline President Richard Leehr”

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    SRBC Fines Southwestern Energy $50K for Lack of Proper Approvals

    Although the details are somewhat slim in the newspaper account, the known facts are that Southwestern Energy started construction on a well conductor pipe at a site in Wyalusing Township (Bradford County, PA) in early January, before the Susquehanna River Basin Commission (SRBC) had given its approval for said construction—something required by law. So the SRBC slapped them with a fine:

    Under a settlement agreement between Southwestern and the commission, which was approved by both sides, Southwestern was required to make a $50,000 “payment in lieu of a penalty” to the commission.*

    MDN firmly believes drilling companies need to be responsible and follow the rules, especially since the issue of drilling has been so distorted by anti-drilling propaganda. On the other hand, was this just an oversight on Southwestern’s part? Did someone not get the paperwork filed properly? Who knows. It does seem to be a case of “Simon Says” or “Mother May I?” Since the SRBC didn’t give the go-ahead, Southwestern was fined. Now that the paperwork is filed, have they gone ahead with construction at the site? Did the SRBC find any problems with the application once it was reviewed?

    So, is SRBC’s action vigilant oversight of the public interest? Or a shakedown? You decide.

    *Towanda Daily Review (Mar 24) – Southwestern Energy fined $50,000 for violation in Wyalusing Township

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    Breaking News: PA Supreme Court Rules Against Landowner Seeking to Invalidate Lease

    Last year, Susquehanna County landowner Herbert Kilmer sued ElexCo Land Services Inc. and Southwestern Energy Production to invalidate his lease. The reason? He said that by deducting drilling costs from his royalty payments, his payments fell below Pennsylvania’s law that a minimum one-eighth share of royalties are guaranteed to the landowner. A Susquehanna County judge ruled against the landowner and in favor of the energy companies. Other people started filing lawsuits, so the energy companies asked the PA Supreme Court to take up the matter. The Supremes did, and today they also ruled in favor of the energy companies:

    Pennsylvania’s high court sided Wednesday with the natural gas industry in a dispute with landowners who had sought to invalidate the leases they signed before the Marcellus Shale rush intensified and drove up land values.

    In a 6-0 decision, the Supreme Court upheld a Susquehanna County judge’s ruling that validated lease agreements that subtract drilling costs from the calculation of landowners’ natural gas royalties.

    Justice Max Baer, who wrote the court’s decision, noted that the term “royalty” and the method of calculating a one-eighth share is not defined by the state’s Guaranteed Minimum Royalty Act. However, he cited various texts on the industry that say a royalty is paid from the net amount remaining after deduction of certain production and well development costs.*

    This case will now force similar pending cases to be settled or dismissed. Landowners beware: (1) There is no such thing as a “standard” contract, and (2) Always have an attorney review a lease agreement first.

    *BND.com (Mar 24) – Pa. justices side with gas industry over landowner

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    Lackawanna College, PA College of Technology Offer Programs to Train Marcellus-Related Workers

    Colleges in Pennsylvania are adding programs to train workers for Marcellus Shale jobs. And a lot of workers will be required. MDN wrote about the presentation by Larry Michael (Pennsylvania College of Technology, PCT) and James Ladlee (Penn State Cooperative Extension) at the Binghamton Natural Gas Development Summit and their study that says every well drilled translates into 12 full-time jobs. Larry and James helped establish the Marcellus Shale Education & Training Center at PCT in Williamsport, where they are training students for a variety of careers:

    Careers include welders, construction workers, drivers and machine operators and fabricators.Tracy Brundage, [PCT’s] managing director of the Workforce Development and Continuing Education programs, said that as the landscape of the Northern Tier changes, so too do course offerings at the college.

    She said input from energy companies has been influential in the design of 21 new courses.*

    In Scranton, Lackawanna College established an applied science degree in Oil and Gas Production Technology program in December 2008.

    To prepare potential employees for [Marcellus-related gas] jobs, Lackawanna College offers an associate’s degree in natural gas technology and is developing an operating and maintenance degree program in compression technology that could debut next fall.

    In addition, the college will soon start giving accounting students at its Towanda Center the option of customizing their degree to prepare them to work in the accounting side of the natural gas industry.

    Last week, Chesapeake Energy donated $50,000 to help Lackawanna College expand its Natural Gas Technology Program at its New Milford Center campus in Susquehanna County. The college plans to use the money for capital-equipment costs in fitting out their new facilities for the program that began last fall.*

    As drilling in the Marcellus Shale continues to expand in Pennsylvania (and when it finally begins in New York), many thousands of new jobs will need to be filled by local people. And those people will need to be trained. Forward-thinking colleges and technical schools are expanding now to meet the demand.

    *Wilkes-Barre Times Leader (Mar 24) – Some colleges add programs to train workers

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    Three Upstate Landowners on New York City Public Radio Discuss Drilling in the Marcellus

    An interesting radio segment from WNYC Public Radio. Leonard Lopate conducted an interview with three Upstate landowners. From the program description:

    We’ll look into the controversy over drilling for natural gas in Marcellus shale in Upstate New York, and discuss the challenges landowners face when deciding whether to lease their land to gas companies, the role of landowners coalitions, and how public officials are managing the drilling already occurring in their towns. We’ll speak with Mark Dunau, organic farmer from Delaware County; Jim Bays, Supervisor of the Town of Smyrna, in Chenango County; and Abby Tamber, steering committee member of the Central New York Landowners Coalition.*

    While Mr. Dunau is clearly anti-drilling and Mr. Bays is somewhat anti-drilling, Ms. Tamber does a good job of representing local landowner groups and the concerns of landowners. The questions by the host are pretty good, and as far as public radio goes, this is about as fair and balanced as it gets. Overall, a B+ from MDN. Worth listening to as it does discuss some very important issues for landowners. Embedded player below—give it a listen! The segment is 34 minutes in length.

    *WNYC (Mar 23) – The Lenoard Lopate Show

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    Lots of Marcellus Leases Signed in “Shallow” Yates and Schuyler Counties in NY

    At a recent presentation in Penn Yan and Watkins Glen, NY, Tony Ingraffea, professor at Cornell University, and Peter Landre, director of Yates County Cornell Cooperative Extension, said Yates and Schuyler Counties (NY) are not “ideal” for drilling in the Marcellus Shale because the shale deposit in those counties is relatively shallow. Even so, energy companies have signed a number of leases:

    There are currently 1,342 signed gas leases in Yates County, from 2005 to 2009.  Colby Peterson, Yates County Soil and Water Conservation District technician, said the leases make up 20 percent, or 44,076 acres, of the acres in Yates County.

    According to Lloyd Wetherbee, Schuyler County Soil and Water Conservation District technician, there are up to 50,000 acres leased in Schuyler, or 13 percent of the land in the county. Wetherbee said this equals between 1,600 to 1,700 leased parcels.*

    *Dundee The Observer Review (Mar 23) – Marcellus Shale drilling: ‘Not ideal’ here

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    EPA Director of Drinking Water Protection says States are “Doing a Good Job Already” Regulating Hydraulic Fracturing

    Brad Gill, executive director of the Independent Oil & Gas Association of New York, recently responded to an article in The Buffalo News supporting regulation of hydraulic fracturing by the federal Environmental Protection Agency (EPA). Marcellus Drilling News considers the EPA proposal way out of line and a federal power grab that is unwarranted and illegal. Seems that Mr. Gill thinks so too. From his letter to the editor:

    All processes related to natural gas exploration and extraction are regulated by the states which, because of their vast geological differences, can do a more thorough job. The U. S. Environmental Protection Agency would never be able to regulate these processes efficiently or cost-effectively. In fact, Steve Heare, director of EPA’s drinking water protection office, recently said states are “doing a good job already” regulating hydraulic fracturing, adding that there is no evidence that suggests the process contaminates water.*

    Be sure to click through and read the rest of the letter. Great summary of why hydraulic fracturing is safe, and why drilling should move forward now.

    *The Buffalo News (Mar 22) – Brad Gill: Hydraulic fracturing issues are already answered

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    Mesa Energy Using Conventional Vertical Drilling for Two Marcellus Gas Wells in Western NY

    It seems hardly a day doesn’t go by that Marcellus Drilling News doesn’t observe a new press release, interview or other mention of Mesa Energy and their recent drive into gas drilling in Western New York State. The latest is a clever move by Mesa—they’re converting two of 19 gas wells they own in the Java Field from Medina sandstone to Marcellus Shale wells.

    For about 30 years, the 3,235-acre site called Java Field has been home to 19 natural-gas wells, all of them sunk into Medina sandstone. Mesa Energy Holdings recently took ownership of the site, and it has submitted applications to the state Department of Environmental Conservation to convert two of those wells into Marcellus Shale wells.

    The DEC hasn’t issued the permits yet, but has posted a notice saying it intends to.

    Because Mesa is proposing traditional wells, rather than a deep horizontal well that would use hydraulic fracturing, its project can move ahead.*

    What remains to be seen is if the vertical well transformation will yield production levels profitable enough to make it worthwhile.

    *Rochester City Newspaper (Mar 22) – Marcellus Shale’s northern promise

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    Enbridge Building a Pipeline from Southern PA Marcellus Shale to Chicago

    Canadian oil and gas pipeline company Enbridge has announced plans to build a pipeline from the Marcellus Shale in Southern PA to the Chicago area.

    From the Enbridge press release*:

    Enbridge Inc. today announced it intends to develop a natural gas liquids (NGL) pipeline from the Marcellus Shale in Southern Pennsylvania and Northern West Virginia to markets in the Midwestern United States.

    The proposed pipeline is currently targeted to deliver into existing NGL infrastructure in the Chicago area including the Aux Sable facility which processes gas from Alliance pipeline and fractionates NGLs from various supply sources. Additional NGL fractionation capacity is available at the plant.

    “The Chicago area has substantial markets to accommodate the large volumes of NGLs that are expected to be associated with future Marcellus production. Other NGL markets, including Ontario, can also be accessed from Chicago utilizing existing infrastructure. This proposed pipeline will provide an excellent long term solution for development of this promising play, as it will enable NGL production to grow unconstrained for many years,” said Stephen J.J. Letwin, Executive Vice President, Gas Transportation & International, Enbridge Inc.

    “Enbridge has extensive knowledge and expertise in the areas of NGL fractionation, transportation and marketing. With this proposed pipeline, we are uniquely positioned to help Marcellus producers obtain greater value for their future NGL production” Mr. Letwin said.

    Enbridge will develop, construct, own and operate the planned NGL pipeline. The Company is currently evaluating various routing and market alternatives and anticipates moving forward with an open season in the second quarter 2010.

    *Enbridge (Mar 22) – Enbridge Announces Plans to Hold Open Season for Proposed Natural Gas Liquids Pipeline from Marcellus Shale to Chicago

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    Binghamton Natural Gas Summit: How Many Jobs Does Drilling (Really) Create?

    Marcellus Shale Workforce Needs Assessment Beyond random speculation, is there really any way to know, scientifically and accurately, just how many drilling-related jobs are being created in the Marcellus Shale? Yes there is! And two of the speakers at the Natural Gas Development Summit held in Binghamton on March 18th at the Regency Hotel, who have extensively studied the issue, laid out their findings for the assembled group.

    The speakers were Larry Michael, Executive Director for Workforce & Economic Development with the Pennsylvania College of Technology (PCT), and James Ladlee, County Extension Director with Penn State Cooperative Extension. Both have put in a great deal of time studying the jobs issue. Larry Michael spent six months on the Marcellus Shale jobs issue as a contributing author of PCT’s Marcellus Shale Workforce Needs Assessment study.

    What follows are MDN’s notes on this informative session. But we won’t make you read to the end for an answer. According to Messrs. Michael and Ladlee’s findings, every well drilled in the Marcellus Shale generates the equivalent of 12 full-time jobs, in perpetuity—for at least 20 years, as long as the well is active. The slightly longer explanation is, there are many people who work for varying periods of time on a well project, but if you add all of their time together, it would work out to 12 people full-time, ongoing, working directly or indirectly on the well project.

    Read More “Binghamton Natural Gas Summit: How Many Jobs Does Drilling (Really) Create?”

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    Binghamton Natural Gas Summit: Video Interview with Bryant La Tourette

    At the Binghamton Natural Gas Development Summit held on March 18 at the Binghamton Regency Hotel, Marcellus Drilling News had the pleasure of speaking with Bryant La Tourette, Vice President of the Joint Landowners Coalition of New York (JLCNY), the organization sponsoring the event. Bryant is also the president of the Oxford Land Group, a landowner coalition in Chenango County, NY. Bryant unveiled the brand new JLCNY website at the Summit. In our interview, he briefed MDN about the JLCNY and it’s mission, and told us a bit about the new website.

    The JLCNY is made up of 37 member landowner coalitions from 17 counties in New York State. In all, there are 800,000 acres and 70,000 people represented in the combined 37 member coalitions. Bryant said to think of the the JLCNY as “the next Farm Bureau,” referring to the American Farm Bureau, an advocacy group for farmers and others who work in agriculture, to give them a voice. In the same way, the JLCNY seeks to give a voice to landowners who want to profit from their land via natural gas drilling.

    The new website, which can be found at //jlcny.org, provides information for landowners from the very beginning stages of signing a lease through receiving royalty payments and beyond. Bryant points out, however, that the site will be particularly helpful as a resource for landowners who have already signed. For those landowners, it will answer the question, “What comes next?”

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    Sullivan County, NY Legislature Wants to Ban Marcellus Drilling for Everyone in the County

    Sullivan County, NY landowners have some reason to be concerned. Their county legislature wants a complete moratorium of horizontal gas drilling in the county.

    At a recent meeting, the Sullivan County legislature voted to prevent drilling on county-owned lands. Frankly, “So what?” A ban on county-owned land likely does not make a difference for local landowners still interested in leasing. However, according to news reports:

    “They [the county legislature] want the whole of Sullivan County off limits, via a moratorium.”*

    That is a concern to Sullivan County landowners. It’s likely no more than huff and bluff, however, because New York has “home rule,” meaning if the State allows drilling, and local towns allow it, the county cannot supersede and disallow it.

    Some Sullivan County land is considered part of the New York City watershed area—where the City gets its drinking water from. That complicates matters too.

    MDN will keep an eye on the developing situation in Sullivan County when drilling finally begins in New York State.

    *Mid-Hudson News Network (Mar 19) – Sullivan legislators say ‘no’ to hydrofracking, on county land

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    Marcellus Driller Funds Water Monitoring Program in Susquehanna River Basin

    As Marcellus Drilling News previously noted, the Susquehanna River Basin Commission is in the process of placing 30 monitoring devices to track the effects of Marcellus drilling wastewater that enters area waterways. We now learn the program is being funded by the drilling industry itself:

    The commission used a $750,000 grant from natural gas company East Resources Inc. to start the monitoring system. The monitoring stations provide data on factors such as temperature, pH level, depth and clarity. That information is available immediately on the commission’s Web site, and the state Department of Environmental Protection is notified if any problems are found.*

    Kudos to East Resources for contributing a significant sum of money to help alleviate concerns that drilling is harming our waterways.

    *State College Centre Daily Times, via WaterWorld (Mar 19) – System monitors water quality

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    Hearing to Determine if PA Public Utility Commission has Right to Regulate Private Pipelines

    The Pennsylvania Public Utility Commission (PUC) will hold a hearing on April 22 in Harrisburg, PA to discuss a particularly thorny issue: Does the PUC have the jurisdiction to regulate private pipelines?

    The PUC has the responsibility of regulating pipelines that conduct oil or gas for compensation. That is, a pipeline owner leases space in the pipeline to third parties. In those cases, the law is clear. But what if an energy company builds and maintains its own pipeline and only conducts its own gas through that pipeline? The law is not clear on that matter. Hence the hearing.

    Jennifer Kocher, PUC spokeswoman, said the PUC has regulatory jurisdiction over “public utility pipelines,” defined as pipelines transporting gas or oil within the state for compensation.

    “But if a drilling company uses its own pipelines to transport the gas it produces, then there’s a question about our jurisdiction,” Ms. Kocher said. “We’re looking at that issue, at our safety jurisdiction, safety issues and the role of the PUC.”

    Matt Benson, a spokesman for the Pennsylvania Oil and Gas Association, said the industry trade group hasn’t addressed the pipeline regulation issue and is taking a “wait and see position” on PUC regulation. He said the group, along with gas producers, hopes to be offered an opportunity to testify at the hearing.*

    *Pittsburgh Post-Gazette (Mar 18) – PUC sets hearing on Marcellus shale pipes

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    PA Marcellus Shale Coalition Responds to EPA Plan to “Study” Hydraulic Fracturing

    The following is a press release issued by the Pennsylvania Marcellus Shale Coalition in response to the rogue EPA’s announcement that they will study hydraulic fracturing (again):

    The Marcellus Shale Coalition today issued the following statement regarding a plan by the U.S. Environmental Protection Agency to study hydraulic fracturing:

    “The members of the Marcellus Shale Coalition develop and drill wells in an environmentally responsible manner, including the use of hydraulic fracturing to complete a well for production. Hydraulic fracturing has been an established and proven practice for 60 years in Pennsylvania and around the country, and has been regulated successfully by state agencies. There have been no identified groundwater contamination incidents due to hydraulic fracturing, as noted by the Pennsylvania Department of Environmental Protection, other state regulators and the U.S. Groundwater Protection Council.

    “Similarly, there have not been impacts to surface water sources due to the practice. Water withdrawals in Pennsylvania are highly regulated by state agencies and water commissions, with a typical permitted withdrawal amounting to about one-half of one percent of the average flow of a stream or river.

    “The MSC will provide information and participate as appropriate in EPA’s study. Our industry is confident that an objective evaluation of hydraulic fracturing will reach the same conclusion as other studies – that it is a safe and well-regulated process that is essential to the development of natural gas.”*

    *PA Marcellus Shale Coalition (Mar 18) – MSC Statement on EPA Study of Hydraulic Fracturing

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    Encana Holds Leases for 25K Acres in Luzerne County, Claims Every Well Drilled Creates 120 Jobs

    An article in the Wilkes-Barre Times Leader reveals this interesting information about Encana’s activity in Pennsylvania:

    Encana Oil and Gas Inc. – has leased 25,000 acres of property in Luzerne County. The land is mainly on the north side of Route 118 in Fairmount, Ross, Lake and Lehman townships.

    Encana so far has obtained permits for drilling one well in Lake Township and another in Fairmount Township and is seeking a permit for one in Lehman Township, said company spokesman Doug Hock. Hydrogeological studies are now under way, and officials hope to begin constructing wells by May.

    “For every well drilled, that creates about 120 jobs, either directly or indirectly…  The bulk of these jobs as we begin operations are done by subcontractors,” Hock said.*

    *Wilkes-Barre Times Leader (Mar 21) – Law, engineering firms will be the first for jobs