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    Chesapeake Withdraws Application to Store Millions of Gallons of Wastewater near Keuka Lake

    Syracuse Post-Standard (Feb 21)
    Plan to truck hydrofracking wastewater to Finger Lakes shelved, for now

    Readers of Marcellus Drilling News know that we advocate for landowners, and that we support safe drilling. But, drilling companies sometimes do themselves no favors and deservedly receive suspicion and condemnation. Case in point: Chesapeake Energy, one of the largest drillers in the U.S., is looking for a place to store millions of gallons of wastewater from their drilling operations in Pennsylvania. They thought they may have found a spot in the Steuben County (New York) town of Pulteney, in an old gas well no longer in use. They wanted to store up to 663 million gallons of wastewater—called “flowback” in the drilling business—in the old gas well, and they filed an application to do so.

    Flowback, which is water combined with sand and unspecified chemicals, is what’s leftover after it’s been pumped into the ground and brought back out again. The problem is, the chemicals used by drilling companies are a closely guarded trade secret—something that gives them an edge over competitors when drilling. So no one knows what, exactly, is in the flowback, nor in what proportions. This makes people uneasy when you want to store millions of gallons of it close to homes with water wells, and close to their vineyards. The old gas well sits next door to an active vineyard.

    It’s also bone-headed of Chesapeake to want to store it in this particular abandoned gas well, as the location is just one mile away from Keuka Lake, one of the Finger Lakes in Central New York. The proposed underground storage by Chesapeake “would not be lined or contained.” If, by some unfortunate event, the stored flowback were to leak into Keuka Lake, the resulting contamination could be catastrophic. It appears to be a risk just not worth taking. Much better for Chesapeake to look for a facility that will treat the flowback and return it to them to be reused for more drilling.

    Chesapeake has withdrawn its application for now. Although not a popular subject with drillers, if drilling companies were to disclose the chemicals used in the drilling process, it would go a long way to silencing the critics that there is no safe way to drill.

    The article from the Syracuse Post-Standard is fair and balanced (more or less) with a video interview of a local landowner who lives across from the abandoned gas well. It’s worth your time to read the article and watch the video interview.

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    Cabot Oil & Gas Reports Increase in Production, New Wells Coming Online in 2010 in PA

    PR Newswire (Feb 21)
    Cabot Oil & Gas Provides Operations Update Current Marcellus Production Over 100 Mmcf per Day!

    From a press release just issued by Cabot Oil & Gas, we get the following update on their Marcellus drilling activities (below is exact wording from the release):

    During the third quarter call, Cabot announced its intent to complete one well per week through the end of the year in its Marcellus operation.  This effort was successful although weather at year-end and a stream-crossing delay slowed several wells from being turned in line.  During this period ten wells were completed with five wells flowing to sales and five wells waiting on pipeline.  "These five wells, that were turned in line, had an average 30 day production rate of 6 Mmcf per day," stated Dinges [Dan O. Dinges, Chairman, President and Chief Executive Officer].  "Included in this population was the Company’s first horizontal Purcell Limestone test that had a 30 day production rate of 7.3 Mmcf per day.  The Purcell is located between the Upper and Lower Marcellus under our acreage position in Susquehanna County, PA."  Dinges added, "This success potentially opens up additional locations and prospectivity."

    In total for 2009, the Company drilled 30 horizontal wells with 14 being completed and turned in line.  The average initial production (IP) rate for these wells was 7.5 Mmcf per day with an average 30 day production rate of 6.9 Mmcf per day.  "Because of the production history and the consistency of results, we are now estimating ultimate reserves of 5.5 Bcf per well, up from our original disclosure of 4.5 Bcf per well," commented Dinges.

    The enhanced pace of completions has carried through to 2010 with three more horizontal wells turned in line and gross production over 100 Mmcf per day as of February 19, 2010.  Since January 1, the range of 24-hour IP rates for the 2010 completions has been from 2.6 Mmcf to 16.1 Mmcf per day.  "We currently have 17 horizontal wells waiting on completion with five rigs running and two completions underway in Susquehanna County.  We also have a significant pipeline laying operation ongoing," said Dinges.  "One year ago in the Marcellus we were producing 16 Mmcf per day and now our rate is just above 100 Mmcf per day."

    In terms of infrastructure, Cabot recently executed binding Agreements to anchor a new 20" high pressure gathering line.  Williams Partners L.P. (NYSE: WPZ) will construct and operate the 28-mile gathering line, which will run from Cabot’s Susquehanna County operating area south to Williams Partners’ Transco interstate gas pipeline.  The new line is expected to be in service by mid-summer 2011.  Cabot will be the majority capacity holder and this firm service will add additional flexibility to its current takeaway position. "This firm takeaway commitment goes a long way to providing the next wedge of needed capacity for the Company," stated Dinges.

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    DISH, Texas Mayor Calvin Tillman Visits Binghamton – Marcellus Drilling News was There

    This will necessarily be a long article. As a regular reader of Marcellus Drilling News, you have come to expect brief articles highlighting information useful for landowners and other interested parties in the Marcellus Drilling debate. Last night, your faithful scribe attended a local meeting in Binghamton, NY at Binghamton’s East Middle School, to hear DISH, Texas Mayor Calvin Tillman and his views on natural gas drilling. I went with an open mind to evaluate whether Mr. Tillman and the other speaker of the evening—lawyer Helen Slottje from Ithaca—would present information that would challenge my views that drilling can be done safely when it’s done right.

    I would say it’s a fair statement that if you went to the meeting as a supporter of drilling, or as an opponent, your view was not changed by the presentations. I attended on behalf of the average landowner, even though I do not have land for lease in the Marcellus myself. I tried to be your eyes and ears at the meeting. Disclaimer: I am in no way affiliated with, nor compensated by, anyone in the drilling debate on either side of the debate. I’m just an interested blogger and advocate for landowners and the rights of private property owners.

    This is an account of what happened last night…

    Read More “DISH, Texas Mayor Calvin Tillman Visits Binghamton – Marcellus Drilling News was There”

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    Patriot Water Treatment Plant in Owego Gets a Yellow Light

    Binghamton Press & Sun-Bulletin (Feb 17)
    Owego wastewater plan hits snag

    Patriot Water Treatment wants to build a wastewater treatment plant in Owego, NY. The plant would take in fracking water from drilling operations in the region, treat it, and return the water back to drillers to be used again. According to Andrew Blocksom, of Patriot, the resulting treated water is “cleaner than my tap water.” This new plant will bring 20 fulltime jobs and tax revenues to the community, and is needed for area drillers. But, it also will bring traffic, which is a concern:

    Approximately four trucks per hour for 24 hours a day would enter the facility with fracking water. The facility would treat the water, distilling it in a vacuum, and provide distilled water back to trucks to return it to natural gas drilling sites.

    Neighbors of the facility and those that live along proposed truck routes voiced concerns about spills and the toxicity of the incoming fracking water.

    And this:

    “I don’t think 24 hours, seven days a week is reasonable,” Village of Owego Mayor Ed Arrington said. “If there was another way, I wouldn’t oppose it.”

    The Tioga County Planning Board was due to make a recommendation on whether or not the Village of Owego Planning Board should accept the plan. Unfortunately, five of the Tioga County Planning Board members were AWOL from the meeting, so the final vote was 5 to 2 to recommend, but not the required 6 affirmative vote minimum that would be needed for an official recommendation. Marcellus Drilling News wants to know why five members were missing from such an important meeting? For or against the facility is not the issue—Planning Board members are supposed to be present and represent the people. This is dereliction of duty in our humble opinion.

    No word on who was absent, and no word on what the next step is for Patriot now that it appears the process is stalled.

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    East Resources Predicts 6,000-7,000 New Wells for Tioga County, PA in Next Few Years

    Williamsport Sun-Gazette (Feb 18)
    New ventures in natural gas may take Tioga County from ‘rags to riches’

    An influx of people and jobs will lead to a boon in economic growth for Tioga County, Pennsylvania, according to an article in the Williamsport Sun-Gazette. Local resident Ed Trask is setting up a Community Education Team to “help manage the economic and social impacts of Marcellus Shale gas play in Tioga County.”

    Trask was quoted as saying:

    “I think the fastest growing areas of the county are going to be Mansfield, Wellsboro and Lawrenceville,” he said, adding that he thinks the valley between Mansfield and Covington will “fill in” in the next few years, mainly because of the discovery of gas within the Marcellus Shale.

    In the same article, Jack Showers, community relations liaison with drilling company East Resources Inc., said:

    [T]here already are 255,000 acres leased for natural gas wells, with up to between 6,000 and 7,000 wells drilled by East in the next several years.

    Trask added that before the drilling activity Tioga County was “slowly dying.” But now? Trask says: “I think we are going to become ‘enriched rural.’”

    One thing’s for sure: Drilling in Tioga County, PA is about to pick up rapidly.

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    PA Game Commission Executive Director Reports on Problems with Marcellus Drilling on Public Lands

    PR Newswire (Feb 16)
    Game Commission Delivers Annual Report to Legislature

    Pennsylvania Game Commission Executive Director Carl G. Roe presented the agency’s annual report to the General Assembly, and delivered testimony before the House Game and Fisheries Committee on February 16. Below is an excerpt of his testimony as it touched on the subject of drilling on Game Commission (publicly owned) lands:

    I am sure there will be questions on Marcellus Shale, so I will quickly address the subject. During Fiscal Year 2008, the Game Commission approved three oil/gas leases within the Marcellus Shale development areas of the Commonwealth.  These leases totaled 2,693.43 acres and were worth an average upfront payment of $907.38 dollars per acre to the Commission constituting an additional 10 acres of State Game Lands acquisition as well as revenues to the game fund. The average royalty per acre for these leases was 23.08 percent. During Fiscal Year 2008, there were no Marcellus wells drilled on any of these leases but there were four wells planned for drilling in the Fiscal Year 2009. On all other currently active leases on State Game Lands, there were two Marcellus wells commenced and placed into production in Fiscal Year 2008. The Game Commission received a total of $113,336.26 royalty revenues during Fiscal Year 2008 from Marcellus gas production, with the average approximate well production being only 250 mcf/day, rather than the 2,000-3,000 mcf/day production some have assumed would occur. Unfortunately, there have also been two separate environmental degradation incidents which occurred during these wells development causing the need for increased Game Commission coordination, and oversight management scrutiny.

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    Tennessee Gas Pipeline to Invest $400 Million in New Pipeline from PA to NJ

    El Paso Press Release (Feb 16)
    El Paso Corporation Announces Northeast Upgrade Project

    Part of the development required to tap the huge natural gas reserves in the Marcellus includes the infrastructure to get the gas from well to market. El Paso Corporation’s subsidiary Tennessee Gas Pipeline is helping provide the pipeline piece of the puzzle.

    Below is the full text of a press release from El Paso, dated Feb. 16:

    HOUSTON, TX, — El Paso Corporation (NYSE: EP) today announced that its wholly owned subsidiary, Tennessee Gas Pipeline Company (TGP), has executed binding, 20-year term agreements with Chesapeake Energy Marketing, Inc., a wholly owned subsidiary of Chesapeake Energy Corporation (NYSE: CHK), and StatOil Natural Gas LLC, a wholly owned subsidiary of Statoil (NYSE: STO), for 100 percent of the capacity for its Northeast Upgrade Project. The project will provide 636,000 dekatherms per day of incremental firm transportation capacity from TGP’s 300 Line in Pennsylvania to an interconnect in New Jersey to serve growing markets in the Northeast.

    The Northeast Upgrade Project is a natural extension of TGP’s presence in the heart of the developing Marcellus Shale play. The project would cost approximately $400 million with a majority of the capital spending taking place during 2013.

    "We are very pleased to add another major pipeline project that provides significant new firm transportation capacity for two prominent Marcellus Shale producers," said Doug Foshee, El Paso’s chairman, president, and chief executive officer. "With the previously announced 300 Line Project, we will be adding approximately 1 billion cubic feet per day of new firm capacity that will provide safe and reliable transportation of clean-burning, domestic natural gas supplies to key Northeast markets."

    "We are pleased to enter into this agreement with El Paso," said Aubrey McClendon, Chesapeake’s chief executive officer. "It continues our practice of contracting for strategic pipeline capacity, which in this case provides access to premium northeast markets for our growing Marcellus production in Northeast Pennsylvania. We have a long history of transactions with the El Paso family of companies, and this transaction continues that tradition, creating substantial value to both firms."

    A spring 2011 Federal Energy Regulatory Commission filing date is anticipated with a scheduled November 1, 2013 in-service date. An open season is expected to begin this month with final capacity awarded in March 2010.

    El Paso Corporation provides natural gas and related energy products in a safe, efficient, and dependable manner. The company owns North America’s largest interstate natural gas pipeline system and one of North America’s largest independent natural gas producers. For more information, visit www.elpaso.com.

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    Chesapeake Energy Continues to Expand Production in the Marcellus Shale

    Houston Star-Telegram (Feb 16)
    Chesapeake reports 19 percent production increase

    Chesapeake Energy, one of the largest gas drilling companies in the U.S., recently reported a 19% increase in its natural gas production across all of its shale plays. With respect to the Marcellus, we learn from a Houston Star-Telegram article that:

    • Chesapeake has a huge leasehold of 1.6 million net acres in the Marcellus
    • Current net Marcellus production equals 65 million cubic feet of gas per day
    • Chesapeake expects its Marcellus output will rise to 270 million cubic feet of gas per day by year-end 2010 (over 4x current levels)
    • Chesapeake expects its Marcellus output will rise to 450 million cubic feet of gas per day by year-end 2011 (nearly 7x current levels)
    • Three recent wells drilled in Susquehanna County (PA) had peak 24-hour rates of 8.7 million, 8.6 million and 8.4 million cubic feet of gas
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    Mitsui Investment in Anadarko Projected to Grow from $1.4 to $4 Billion in Next 10 Years

    Philly.com – Philadelphia Inquirer (Feb 17)
    Japanese firm to invest $1.4 billion in Marcellus operation

    The Philadelphia Inquirer has posted a story about the huge investment from Mitsui in Anadarko. As Marcellus Drilling News reported yesterday, Mitsui has purchased a 32.5% stake in Anadarko for $1.4 billion. What was not in the original news release is this tidbit:

    The Tokyo company expects to invest up to $4 billion over 10 years in the partnership, which would produce up to 460 million cubic feet of natural gas a day at its peak.

    We also learn from the article that 768 Marcellus wells were drilled in Pennsylvania in 2009. Anadarko alone, with Mitsui’s new investment, projects drilling 4,500 wells in PA “in the coming years.”

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    Susquehanna River Basin Commission Monitors Waterways for Contamination

    WETM-18 TV (Feb 15)
    Gas Drilling Prompts More Water Quality Monitoring

    Due to concerns over drilling in the Marcellus and discharge of wastewater from drilling operations into area waterways that ultimately find their way to Susquehanna River, the Susquehanna River Basin Commission has placed monitoring devices in the Twin Tiers area of New York (Binghamton and Elmira). So far 10 monitoring devices have been installed, with another 20 to be installed by June.

    Marcellus Drilling News applauds the efforts of the SRBC to ensure local waterways remain contamination-free from drilling activities. Everyone wins when there is vigilance and monitoring.

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    Ultra Petroleum Expands Marcellus Leases to 486,000 Acres and 110 Active Wells in 2010

    Ultra Petroleum News Release (Feb 12)
    Ultra Petroleum Reports Strong Financial and Operating Results and Record Production for 2009

    A portion of the release relating to its operations in the Marcellus in PA is extracted below:

    During 2009, Ultra drilled 37 gross (22.5 net) wells in Pennsylvania. The company’s first production in the Marcellus program began in July 2009, and by year-end 13 wells were producing. Initial production (IP) rates for the producing wells average 7,500 Mcf per day with an average lateral length of just over 3,800 feet. Preliminary estimated ultimate recoveries affirm Ultra’s 3.75 Bcfe type-curve, with some preliminary EURs exceeding 6.0 Bcfe. The cost to drill and complete a horizontal Marcellus well during 2009 was $3.5 million.

    The company’s four pipeline interconnects to major interstate pipelines remain well ahead of the drilling campaign. By mid-year, this interconnect capacity is expected to exceed 560 MMcf per day.

    The company began 2009 with 288,000 gross (152,000 net) acres in the Marcellus. Through a combination of land acquisitions, trades and swaps, Ultra increased its holdings to 326,000 gross (169,000 net) acres by year-end. On December 21, 2009, Ultra announced that it had signed a purchase and sale agreement to acquire approximately 160,000 gross (80,000 net) acres in the Marcellus Shale. Upon closing of the acquisition in late February 2010, the company will hold approximately 486,000 gross (249,000 net) acres. With the acquisition, the company’s core position in Tioga, Bradford, Lycoming, and Potter counties in north-central Pennsylvania will expand to include the adjacent counties of Clinton and Centre.

    In 2009, we initiated our horizontal Marcellus activity with above expectation results. Accordingly, we believe that we have substantially de-risked our Marcellus acreage due to these results. Well performance is improving along with our returns. Of the horizontal wells that we have completed so far, IP rates have ranged from over 3,400 Mcf per day to 10,400 Mcf per day, including two wells that are producing over 7,500 Mcf per day after 30 days. Examining our early wells, the first six have 30-day production averaging over 3,000 Mcf per day with the next seven wells averaging over 5,700 Mcf per day. In 2010, our Marcellus development program will expand with a drilling program exceeding 110 wells.

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    Heckmann and Energy Transfer Partners to Bring Wastewater Treatment Plants to the Marcellus

    BusinessWire (Feb 9)
    Heckmann Corporation and Energy Transfer Partners, L.P. Sign Agreement to Provide Turnkey Solutions for Water Flows Created by Oil and Gas Drilling

    Heckmann Corporation and Energy Transfer Partners have entered into a 50/50 joint venture to deliver solutions for:

    “transportation and treatment solutions for supply, drilling, flow back, produced, and other types of discharged waters generated in the Marcellus and Haynesville Shale natural gas development areas.”

    Also according to the joint press release:

    “Heckmann and ETP have identified several potential projects and have begun the engineering and preliminary permitting necessary to proceed with construction of water pipelines, treatment, and other related facilities.”

    The press release does not comment on where said projects and proposed facilities will be located. Handling waste water is one of the hot-button issues with drilling. Stay tuned.

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    Anadarko Takes on Mitsui as Partner in Marcellus Drilling

    Anadarko Press Release (Feb 16)
    Anadarko Announces Joint Venture with Mitsui in the Marcellus Shale

    The full text of the press release from Anadarko is below. It announces they have taken on a partner for their Marcellus drilling interests, mostly in north-central Pennsylvania.

    Anadarko Petroleum Corporation (NYSE:APC) today announced a joint-venture agreement with Mitsui E&P USA LLC, an affiliate of Mitsui & Co., Ltd. (NSDQ: MITSY), whereby Mitsui will participate with Anadarko as a 32.5-percent partner in Anadarko’s Marcellus Shale assets, primarily located in north-central Pennsylvania, for approximately $1.4 billion. Mitsui will earn approximately 100,000 net acres in exchange for funding 100 percent of Anadarko’s share of development costs in 2010, and 90 percent of these costs thereafter, with an estimated completion of all obligations by 2013. In addition, Mitsui will have the opportunity to purchase a 32.5-percent share of Anadarko’s existing wells and additional acreage acquisitions by reimbursing a proportionate share of Anadarko’s prior expenditures, currently estimated to be approximately $100 million.

    "We are very pleased to have Mitsui as a partner in the Marcellus Shale," Anadarko Chairman and CEO Jim Hackett said. "This transaction reflects the significant value of Anadarko’s fairway position in the Marcellus Shale, which has a gross unrisked resource potential of more than 30 Tcf (trillion cubic feet) of natural gas and spans more than 715,000 gross acres. We continue to ramp up our activities in the Marcellus and anticipate drilling more than 4,500 wells over the coming years. We have successfully partnered with Mitsui in other parts of the world and look forward to working with them and our other partners in the Marcellus, as we continue to develop and deliver these domestically produced, clean-burning natural gas resources to American consumers."

    The joint-venture agreement is effective Jan. 1, 2010. Closing of the transaction is subject to applicable regulatory approvals and other contractual conditions, and is anticipated on March 15, 2010.

    A map of Anadarko’s Marcellus Shale acreage, primarily located in north-central Pennsylvania, will be available under the "Media Center/Anadarko News" tab at //www.anadarko.com.

    Anadarko Petroleum Corporation’s mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world’s health and welfare. As of year-end 2009, the company had approximately 2.3 billion barrels-equivalent of proved reserves, making it one of the world’s largest independent exploration and production companies. For more information about Anadarko, please visit //www.anadarko.com.

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    Youngstown, OH Gets 350 New Jobs Due to Marcellus Drilling

    The Vindicator (Feb 16)
    V&M delivers plant, 350 jobs

    Youngstown, Ohio is getting a new $650 million pipe mill and 350 new jobs due to Marcellus Shale drilling. V&M Star Steel has just announced they are building a new plant in Youngstown because of its proximity to the Marcellus Shale deposit. The new mill will manufacture pipes used in drilling in the Marcellus, according to V&M president, Roger Lindgren. The mill is expected to start operations in 2011, and be up to full capacity in 2012. Although this is a new plant and new construction, it is an expansion of V&M’s existing operation in Youngstown, built on property next to their current facility.

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    Cornell University Owns 4% of Tompkins County Land, May Allow Drilling

    The Cornell Daily Sun (Feb 16)
    University Denies Conflict of Interest

    In an article about a potential conflict of interest for the Chairman of the Cornell Board of Trustees, Peter Meinig, we learn that Cornell is a major landowner in Tompkins County, NY, with some 11,000 acres—which is 4% of the land in the county. They also control the mineral rights to some 420,000 acres across the country, no doubt donated to the university by wealthy benefactors.

    The question is, will Cornell decide to lease it’s land? No one knows. The Board of Trustees and the President have decided to wait on making any decisions about leasing until the New York State Department of Environmental Conservation finalizes the Supplemental Generic Environmental Impact Statement—the set of rules that will be used for all Marcellus drilling operations in the state.

    The controversy is this: Mr. Meinig is the previous chairman of Williams Companies, a huge natural gas company that transports 12% of all natural gas in the U.S. Detractors say there is a built-in conflict of interest with Mr. Meinig voting or advising on the issue, even though he has no shares in Williams now. It will be interesting to see how this plays out.

    Seems to Marcellus Drilling News that having an expert on the board advising the board, as long as there truly is no conflict of interest, would be a good thing.

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    Trans Energy Begins Drilling Third Horizontal Marcellus Well in Marshall County, WV

    Trans Energy (Nov 18):
    Press Release: Trans Energy Begins Drilling Third Horizontal Marcellus Well in Marshall County, WV

    From the press release:

    Trans Energy, Inc. announced today that it has begun drilling the Whipkey #1H well in Marshall County, West Virginia. The Whipkey #1H will be drilled and completed horizontally in the Marcellus shale.

    The Company plans to drill the vertical portion of the Whipkey #1H well to a depth above the kick-off point of approximately 6,500 feet. A second, larger rig will follow-on immediately to drill the horizontal portion.

    James K. Abcouwer, President and CEO of Trans Energy, said, “We have to-date successfully drilled four vertical Marcellus wells. We have also successfully drilled and completed one horizontal Marcellus well, the Hart #28H, and partially drilled a second horizontal Marcellus well, the Anderson #7H, both of which are in Wetzel County, West Virginia. Continuing our horizontal program in another county is another significant step forward for Trans Energy to properly develop its acreage position in northern West Virginia.”

    The Company continues to expand its acreage position centered on Wetzel, Marion, and Marshall Counties in West Virginia, which it believes to be the heart of the most prolific natural gas resource in Appalachia, and one of the greatest in the United States.