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    Rex Energy Drills 7 Horizontal Gas Wells in the Marcellus in 2009, Expects to Drill Another 19 in 2010, Controls 67,000 Acres

    Rex Energy Corporation, an energy company drilling in the Marcellus Shale, today announced its fourth quarter and year-end 2009 results. The portion of the press release dealing with Marcellus drilling activity is reproduced below.

    —–

    In the Appalachian Region, Rex Energy has drilled and completed nine horizontal Marcellus Shale wells to date. The company drilled and completed two of these as test wells in a different zone of the shale, which resulted in lower recoveries. Excluding the two test wells, the seven day average test rate after peak production was reached has averaged 3.1 MMcfe per day with an average lateral length of 2,200 feet. The company has experimented with six to twelve stage fracture stimulations. The average gross EUR of these wells was estimated to be 3.2 Bcfe per well at an average cost of $4.6 million.

    Currently, Rex Energy is running two horizontal drilling rigs in the play. The company recently completed the drilling of two horizontal wells in Butler County. The wells have an average lateral length of 3,500 feet and were drilled in under 21 days per well. The company expects to simultaneously fracture stimulate these wells during the first quarter of 2010. The company has budgeted $4.0 million per well for its 2010 wells and it expects the wells to have average lateral lengths of 3,000 to 4,000 feet. The company is currently drilling two wells in Butler County and one well in Westmoreland County. During 2010, the company expects to drill and complete 10 gross (10 net) operated horizontal Marcellus Shale wells, and to participate in 9 gross (4.5 net) horizontal Marcellus Shale wells with our partner.

    [Rex Energy’s President and CEO Benjamin] Hulburt continued, “The build-out of our Marcellus midstream infrastructure is progressing as scheduled. We expect our two Clearfield County wells to be connected to our initial gathering system in April 2010. In Butler County, we expect our midstream joint venture to put our cryogenic processing facility into operation during the fourth quarter of 2010. We expect the plant will have a processing capacity of 40 MMcf per day. We plan to install compression to permit the plant to process 20 MMcf per day initially, which will be scaled up as additional wells are brought online.”

    The company has continued to lease additional acreage in its three Marcellus Shale project areas in southwestern and central Pennsylvania. Rex Energy’s current total acreage under control in the Marcellus Shale fairway is 68,700 acres, an increase of approximately 15% compared with the company’s previous leasing update in January 2010. The net acreage amount excludes approximately 22,000 acres, which can be earned by Williams pursuant to the Participation and Exploration Agreement entered into on June 18, 2009, and includes approximately 8,300 acres covered by oil and gas leases that are pending title verification and final closing.

    From: MarketWatch (Mar 2) – Rex Energy Corporation Announces Fourth Quarter and Year-End 2009 Results

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    Energy Company EQT Buys Rights to 58,000 Acres in PA, Now Holds 500K Net Acres in the Marcellus Shale

    EQT Corp. said today it is buying mineral rights to 58,000 net acres in the Marcellus Shale from a group of private operators and landowners for $280 million in stock and cash. That works out to $4,828 per acre. While the names of the sellers were not disclosed, most of the land is located in the Pennsylvania counties of Cameron, Clearfield, Elk and Jefferson.

    The deal includes a 200 mile gathering system and approximately 100 producing vertical wells. The deal is expected to close on April 30th, at which time EQT will then control approximately 500,000 net acres in the Marcellus Shale.

    More Details: Yahoo Finance (Mar 2) – EQT Announces Strategic Marcellus Acreage Acquisition; Increases EUR per Marcellus Well; Provides Update on Latest Marcellus Well

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    Two Bills in NY Legislature Will Kill Drilling in the Marcellus Shale

    New York State Senator Tom Duane (Democrat-Manhattan), and New York Assemblyman James Brennan (Democrat-Brooklyn) have introduced bills in the state legislature that would kill Marcellus Shale drilling in New York State.

    [The] two bills…would prohibit any permits for oil or gas drilling from being issued for two years, prohibit drilling within five miles of the New York City water supply and ban drilling anywhere within the Delaware River watershed.

    The bills introduced by Duane and Brennan have already attracted a number of Democratic co-sponsors in the Assembly from both upstate and downstate.*

    Sen. Duane says there is no such thing as safe hydrofacturing drilling. The Independent Oil and Gas Association of New York State opposes the legislation, as does the Business Council of New York and many other organizations and individuals.

    MDN recommends landowners who support drilling should make their voices heard. Call Sen. Duane and Assemblyman Brennan to register your opposition. And check in with your local Senator and Assemblyperson while you’re at it.

    • Sen. Duane’s phone numbers
      District Office – (212) 633-8052; Albany Office – (518) 455-2451
    • Assemblyman Brennan’s phone numbers
      District Office – (718) 788-7221; Albany Office – (518) 455-5377

    *City Hall (Mar 1) – Legislators In Albany And New York Float Hydrofracking Bills

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    Susquehanna County, PA Landowner Offered $800K for Mineral Rights to 153 Acre Farm

    A landowner in Brooklyn Twp. (Susquehanna County), Pennsylvania faces a big decision. Denise Dennis owns 153 acres and a farm that is eligible to be placed on the National Register of Historic Places. Her ancestors moved to the land in 1811. They were African American and they were free landowners during a time when slavery was legal.

    Ms. Dennis does not want to “destroy the property or the landscape,” but she needs money to fix up the buildings, the cemetery and the stone walls. According to a news report, she has been offered $800,000 for the “mineral rights” to the farm. No word on which drilling company made the offer, and what those rights entail (i.e., does that include royalties?).

    Ms. Dennis is mulling over the proposition.

    See: WBNG-TV (Mar 1) – The Price of History

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    Tennessee Gas Pipeline from PA to NJ Clears Major Hurdle

    The Tennessee Gas Pipeline Northeast Upgrade Project (previously reported on here), also known as the 300 Line Project, has just cleared a major hurdle on its way to becoming reality. The Federal Energy Regulatory Commission (FERC) has completed an environmental assessment of the proposed project and has found there will be no major impact to the environment from the proposed pipeline.

    The 300 Line Project involves the installation of seven looping segments in Pennsylvania and New Jersey totaling approximately 128 miles of 30-inch pipeline, and the addition of approximately 55,000 horsepower following the installation of two new compressor stations and upgrades at seven existing compressor stations. The new stations will be built in northwestern Pennsylvania.*

    Construction is set to begin in the later half of 2010, and the pipeline will come online by the end of 2011.

    *Wayne Independent (Mar 1) – Gas pipeline project clears review

  • WV Senate Votes on Change of Definition for Marcellus Drilling from Deep to Shallow

    The West Virginia State Senate is set to vote on a bill (SB369) that would change the designation of horizontally drilled gas wells in the Marcellus Shale from “deep” wells to “shallow” wells. The reason? To clear up jurisdictional disputes about who regulates and monitors the wells. Deep wells are regulated by the West Virginia Oil and Gas Conservation Commission, and shallow wells are regulated by the Shallow Gas Well Review Board.

    But some, including the West Virginia Surface Owners’ Rights Organization, an anti-drilling organization, say the change is the equivalent of “legalized stealing.” According to Dave McMahon, founder of the group:

    Unlike wells defined as “deep,” shallow wells cannot be made subject to well spacing and royalty sharing rules, McMahon said well spacing and royalty sharing laws allow mineral owners whose natural gas is drained by wells on their neighbors to receive their share of the royalties, McMahon said.

    If Marcellus wells aren’t subject to those laws, McMahon said, gas well drillers could drill on the edge of neighboring mineral owners’ land and drain gas from the mineral owners’ tracts without paying for it.*

    The Independent Oil & Gas Association of West Virginia has endorsed the bill, saying the changes allow drillers to finish wells with newer technology.

    Who’s right? A tough one to call. It’s certainly not fair to have the gas beneath your feet drained away by a neighbor and not be compensated for it. But will that really happen? If you have insight, or an opinion, share it in the comments.

    *The Charleston Gazette (Mar 1) – Rush on gas-well drilling bill unfair, owners group says

    UPDATE – March 2

    Senate Bill SB369 passed the West Virginia Senate today with only a single dissenting vote (Sen. Randy White, D-Webster). Read about it here: WV Public Broadcasting

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    New Wastewater Treatment Plant Approved in Central PA

    Narrowsburg, NY – The River Reporter (Feb 25)
    ‘Unauthorized’ wastewater hearing brings flowback feedback

    The Pennsylvania Department of Environmental Protection (DEP) has granted its first permit to a wastewater treatment facility since new, stricter guidelines were recently implemented. From The River Reporter article:

    The DEP has issued its first new permit for treating drilling wastewater to TerrAqua Resource Management LLC of Williamsport, allowing the company to treat and discharge 400,000 gallons per day of gas well drilling wastewater into the West Branch Susquehanna River Watershed.

    According to the DEP, the permit requires TerrAqua to meet the proposed new regulatory standards of 500 parts per million for total dissolved solids (TDS) and 250 parts per million for chlorides and sulfates. TerrAqua has indicated that it will pursue a thermal treatment process capable of reducing TDS levels to less than 500 parts per million at all times.

    The discharge permit also requires TerrAqua to monitor for radioactivity, a large number of metals, including barium, strontium, iron, manganese and aluminum, as well as organics such as toluene, benzene, phenols, ethylene glycol and surfactants.

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    PA Gov. Rendell Predicts His Proposal to Tax Marcellus Shale Gas is DOA

    WTAE Pittsburgh (Feb 25)
    Rendell Talks Expanded Sales Tax Plan In Pittsburgh

    Pennsylvania Gov. Ed Rendell (Democrat), has proposed a severance tax on natural gas in the Marcellus Shale. But the Governor himself is not optimistic that the Pennsylvania Legislature will pass his proposals. From the WTAE news report:

    In addition, Rendell is reviving proposals he has offered before, including extending the tobacco tax to cigars and smokeless tobacco and adding a severance tax on natural gas extraction to capitalize on the industry’s hot pursuit of Marcellus Shale.

    However, Rendell said he’s not optimistic the state Legislature will vote for his changes.

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    New President of Marcellus Shale Coalition Says Drilling Will Bring 110,000 Jobs to PA in 2010

    Katie Klaber, the new President of the Marcellus Shale Coalition recently appeared on the Clean Skies News network to discuss the environmental issues of natural gas drilling. It’s an informative and short piece (under 10 minutes), and worth watching (embedded below).

    Among the things discussed that MDN found interesting:

    • Ms. Klaber says Marcellus Drilling will bring 110,000 jobs to Pennsylvania in 2010.
    • Some drillers recycle and reuse 100% of fracking water, but the industry average right now is recycling and reusing 60%.
    • Because of the high rate of recycling, a shortage of wastewater treatment facilities is not critical at the moment, but more facilities will be needed in the next few years.
    • Drilling companies already have an MSDS (Materials Safety Data Sheet) at the drilling site for each and every chemical used in the fracking process. That is right now, today. So the hue and cry that drillers are “hiding” the chemicals used in fracking is not true.
    • Ms. Klaber predicts that Pennsylvania will be a net exporter of natural gas by 2014.

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    Southwestern Energy Investing $145 Million and Drilling 35-40 Wells in the Marcellus in 2010

    MarketWatch/PR Newswire (Feb 25)
    Southwestern Energy Announces 2009 Financial and Operating Results

    Southerwestern Energy made it’s 2009 results known today in a press release. Of concern to landowners in the Marcellus, particularly in northeastern PA, is this paragraph:

    Appalachia – The company began leasing in northeastern Pennsylvania in 2007 in an effort to gain a position in the emerging Marcellus Shale play. At December 31, 2009, Southwestern had approximately 149,000 net acres in Pennsylvania under which it believes the Marcellus Shale is prospective. The company’s undeveloped acreage position as of December 31, 2009 had an average remaining lease term of 5 years, an average royalty interest of 13% and was obtained at an average cost of approximately $594 per acre. During 2009, Southwestern invested approximately $40 million in Pennsylvania, almost all of which was for acquisition of acreage. In 2010, the company plans to invest approximately $145 million in Appalachia, which includes drilling with one operated rig in the Marcellus Shale play in Pennsylvania and participating in a total of 35 to 40 wells, 21 to 24 of which will be operated.

  • Testing Your Water – Advice for Landowners in the Marcellus Shale

    WaterWorld (undated, accessed Feb 24)
    Testing the waters

    Drilling activity is tightly regulated everywhere it’s done, including Pennsylvania. Water supplies located near drilling are regularly tested to ensure the water is not being contaminated. If a resident lives within 1,000 feet of a well being drilled, the cost of testing is funded by the drilling company. Local testing company Benchmark Analytics from South Waverly, PA had these useful remarks for landowners in an article published on the WaterWorld website:

    Many residents have contacted Benchmark to establish a "baseline" prior to gas drilling activity. The baseline tests are important to establish the water quality at a specific site prior to any gas well activity, [Laboratory Manager Kay] Shimer said. Natural gas producers are required to establish a baseline for any water source within 1,000 feet of a gas well, she said, though some companies test residents’ water within 1,500 or 2,000 feet. If people have any questions about whether they qualify for testing through a gas producer they should contact the well drilling company in their area, she said. The sampling and testing is done by an independent laboratory, she said, and Benchmark has completed some testing for gas producers.

    Homeowners should not collect their own water samples, Shimer said; an independent third-party sampling agency or field technicians from a certified laboratory should do the sampling. Benchmark field technicians do some sampling, Shimer said, though gas producers typically hire independent agencies to sample water sources near their well projects.

    Shimer also recommends landowners read the publication by Penn State University called Water Facts #28 – Gas Well Drilling and Your Private Water Supply (available for free download on the MDN Links & Resources page).

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    Atlas Looking for a Partner, Multi-Billion Dollar Deal Likely

    Reuters News – via FOREXYARD (Feb 25)
    Atlas looking for partner in Marcellus

    Atlas Energy is looking for a partner to help fund its operations in the Marcellus Shale. Atlas currently holds leases on 266,000 acres, in mostly southwestern Pennsylvania. According to the Reuters story:

    Bidders for the Atlas position should include large international integrated oil and gas companies as well as domestic independent oil and gas companies, the sources said.

    Still, it was not clear how much the joint venture would bring in for Atlas.

    As MDN recently reported, Mitsui & Co (from Japan) invested $1.4 billion in Anadarko Petroleum. Anadarko controls 100,000 acres in the Marcellus, so that works out at $14,000 per acre investment. It is rumored a similar price might be expected for Atlas. If that’s the case, we can expect a deal on the order of $3.7 billion. In 2008, Chesapeake Energy sold 32.5 percent of its interests to Statoil (from Norway) for $3.4 billion. Chesapeake at the time held rights to 590,000 acres.

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    Range Resources Will Drill 150 Horizontal Wells in PA in 2010

    Range Resources Press Release (Feb 24)
    Range Announces 2009 Results

    Range Resources held an investors conference call today, and released a report on the health of the company for 2009, with predictions for 2010. In advance of the call, they issued a comprehensive press release detailing all of their operations. Below is the portion of the release dealing with Range’s drilling activities in the Marcellus Shale. Although originally the information below was in one large paragraph, MDN has formatted it to be more readable.

    From the press release:

    During the fourth quarter, the Marcellus Shale division continued to make outstanding progress. Most notably, we drilled and completed our first two horizontal wells in the northeastern portion of the play in Lycoming County, Pennsylvania. The average seven-day test rate for the first well was 13.3 Mmcfe per day, while the average seven-day test rate for the second well was 13.6 Mmcfe per day. These two wells are now shut-in awaiting pipeline hook-up. The pipeline to the first well is expected to be completed late in the fourth quarter of 2010 with the pipeline to the second well expected to be completed in 2011.

    We also drilled our first horizontal Upper Devonian Shale well and our first horizontal Utica Shale well. The Upper Devonian well has been completed and is testing, and the Utica well has been drilled and cased and is awaiting completion.

    Currently, Range’s net production in the Marcellus is approximately 115 Mmcfe per day. We have 31 horizontal wells that have been drilled, of which 26 are awaiting completion and five are awaiting pipeline hook up. In the southwest portion of the play, where we have drilled the majority of our wells and have been accumulating data for the past 2.5 years, the average estimated ultimate recovery for a Marcellus horizontal is 4.4 Bcfe gross.

    Prior to August 2009, typical Range Marcellus wells had horizontal laterals that averaged 2,200 to 2,800 feet and were typically fraced with eight stages. Since then, we have been experimenting with longer laterals and more frac stages. The longer laterals range from 2,900 up to 5,000 feet and the higher frac stages range from nine stages up to 17 stages. As has been demonstrated in other shale plays, it appears that the longer laterals result in higher initial production rates, higher EURs and improved economics.

    Currently we are running 13 drilling rigs in the play. Plans are to add more rigs in the fourth quarter and exit at 16 rigs. During 2010, we expect to drill and case 150 horizontal Marcellus Shale wells. For 2011, we plan to increase our rig count and exit the year with 24 rigs running. Finally, the build out of the Marcellus midstream infrastructure is progressing as scheduled. In the high Btu portion of the play, gross cryogenic processing capacity increased to 155 Mmcf per day in the fourth quarter of 2009, and an additional 30 Mmcf per day is expected to be added in mid-2010. Another 150 Mmcf per day has been requested for first quarter 2011, which will bring gross cryogenic processing capacity to 335 Mmcf per day. In the dry gas portion of the play, we have 160 Mmcf per day of pipeline tap capacity with 20 Mmcf per day of compression capacity in place currently. Plans are in place to steadily increase dry gas pipeline compression capacity to meet our needs.

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    Engineer Explains Why Hydraulic Fracturing in the Marcellus Shale is Safe

    The Energy Collective (Feb 23)
    Shale Gas and Drinking Water

    In an article posted on The Energy Collective website, Geoff Styles, who has a degree in chemical engineering (U.C. Davis) and worked for Texaco for 22 years, in addition to working for NASA, explores just what hydraulic fracturing is, how it’s done, and why it’s safe, particularly in the Marcellus Shale deposit. It is an extremely well written and enlightening article—please read it!

    Here is a brief extract:

    [F]or the purposes of this discussion let’s take a quick look at one of the shale regions at the heart of this controversy, the Marcellus Shale in the Appalachian region of New York, Pennsylvania and the Virginias. In the course of my research I ran across a handy document on groundwater from Penn State. Aside from surface water (lakes, rivers and streams), it identifies the various aquifers in Pennsylvania by type in Figure 4. The key fact from the perspective of fracking safety is that the deepest of these aquifers lies no more than about 500 ft. below the surface, and typically less than a couple of hundred feet down. By contrast, the Marcellus Shale is found thousands of feet down–in many areas more than a mile below-ground–with a thickness of 250 feet or less. In addition, the gas-bearing layers are sealed in by impermeable rock, or the gas would eventually have migrated somewhere else. In other words, the shale gas reservoirs are isolated by geology and depth from the shallower layers where our underground drinking water is found.

    He covers many other issues, including the relatively SMALL amount of water used to frack a well with horizontal drilling—compared with water used in a “traditional” oil or gas well. And how the aquifer is protected when the drilling begins, before any water and chemicals are pumped into the well.

    Bottom line?

    Thus, whether intentionally or as a result of a basic misunderstanding of how this technology works, we are being presented with a false dichotomy concerning shale gas and fracking. The real choice here isn’t between energy and drinking water, as critics imply, but between tapping an abundant source of lower-emission domestic energy and what looked like a perpetually-increasing reliance on imported natural gas just a few years ago.

    Well said Mr. Styles. Well said.

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    Sierra Club National Organization Supports Gas Drilling, Local Chapters Do Not – Tension Brewing

    NPR Morning Edition (Feb 23)
    Natural Gas As A Climate Fix Sparks Friction

    In a surprisingly balanced report by NPR, we learn of the infighting that is taking place in the Sierra Club, between the national organization and the state and local chapters. It seems the national organization believes natural gas and gas drilling are a good and acceptable alternative to coal. But local chapters are concerned about drilling’s effect on the the landscape and on water supplies.

    Click through on the link above to read the transcript or listen to the four minute segment, which includes the Sierra Club attending a ribbon cutting ceremony at a plant at Cornell University to celebrate their conversion from coal to natural gas.

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    Engineering Firm in Luzerne County, PA is Hiring Engineers for Marcellus Drilling

    Wilkes-Barre Times Leader (Feb 23)
    Natural gas industry has engineering firm hiring

    More jobs are coming to the Marcellus Shale region because of drilling activity. An engineering firm in Plains Township (Luzerne County), Pennsylvania is hiring:

    Borton-Lawson has been advertising for seven engineering, design and surveyor positions. Chris Borton, company president, said the marketplace is unlike anything he’s seen in the 22 years since he and Tom Lawson teamed up.

    “It’s a tough economy. There are still things that are going on out there,” said Borton on Tuesday.

    The influx of companies exploring and drilling in the Marcellus Shale region has created work for Borton-Lawson and others. It’s opened a branch office in the Pittsburgh area.