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    New York State Releases Draft Rules for Drilling in the Marcellus Shale

    Originally run on RSSBinghamton.com on October 1st:

    The New York State Department of Environmental Conservation (DEC) has finally released its Supplemental Generic Environmental Impact Statement for drilling in the Marcellus Shale. Instead of making drilling companies do an environmental impact statement for each well they drill, the DEC decided to do one “generic” environmental impact statement that will apply to all drilling sites throughout the state. You can read the document for yourself here: //www.dec.ny.gov/energy/58440.html.

    I have not yet had a chance to fully digest the 500+ page document. I have reviewed some of it (a lot of it is technical). An article in the Press & Sun-Bulletin purports to cover some of the highlights. Read the P&SB article here: NY regulators propose pre-emptive checks of gas wells in Marcellus Shale. But let me warn you that Tom Wilber, the P&SB writer, shades all of his Marcellus drilling articles with anti-drilling sentiment. For example, he says:

    The DEC’s regulatory overhaul began after Southern Tier residents crowded into school auditoriums and town halls to attend public information sessions hosted by the agency in the summer of 2008. Those sessions often became heated, as regulators were unable to satisfactorily answer questions about water consumption, waste disposal, chemical handling and other aspects of large scale Marcellus drilling.

    Perhaps so Mr. Wilber. Maybe that’s why New York decided to do a complete review in the first place. But in the interests of being fair and balanced, why didn’t you also mention the rally held just recently (this past summer) in Afton, where thousands of landowners showed up to support drilling? There were more people in one location at one time to support drilling than there ever have been in any location who oppose it.

    He also asserts in the article:

    DEC officials have watched and learned from developments in Dimock Township, Pa., where Cabot Oil & Gas recently had to shut down some operations after repeated spills and environmental problems. Explosive levels of methane contaminated some drinking water supplies earlier this year. More recently, an 8,000 gallon spill of chemicals used to stimulate well production polluted a creek and wetland.

    Yes, Cabot has had problems and they are being appropriately spanked for it by the Pennsylvania Department of Environmental Protection (PA’s version of our DEC). The situation is being carefully monitored and handled. But again, the lingering sentiment from the paragraph seems to be that all drilling is unsafe and all drilling companies are out to screw the populace. What about the hundreds (thousands?) of other natural gas wells in PA that are doing just fine with their operations? No spills or contamination of anything. No mention of that.

    My very preliminary take on the new DEC proposed regulations: Likely overbearing and restrictive, but at least we’re moving again. After a public comment period until Nov. 30, the DEC will hopefully sew this thing up and drilling can finally begin in New York.

    Stay tuned as more will surely come out about the proposed new regulations as people have time to review them in detail.

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    CNX Gas Corp. chief: Slow down or stop gas drilling

    Pittsburgh Tribune-Review (Oct 3):
    CNX Gas Corp. chief: Slow down or stop gas drilling

    Gas prices are depressed right now. The question is, how long will it go on? While prices are low, CNX Gas CEO Nick DeIuliis says drillers have to remember to be good business people and slow down or stop drilling to reign in costs. What does that mean for landowners? Will drilling slow down or stop any time soon? Good questions to ponder. A good article to read to give you an update on gas prices on the commodities market and the overall drilling landscape.

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    PA House budget unlikely to advance

    Pittsburgh Post-Gazette (Oct 3):
    House budget unlikely to advance

    Pennsylvania still has not adopted a budget for the new fiscal year. Part of the wrangling is how to raise taxes to meet the ever growing demand of government to transfer wealth from the producers of society to the non-producers. In PA, the Democrats want to tax natural gas drilling, which of course will take money out of the landowner’s pocket…make no mistake, any tax on drilling will be passed on as an “expense” by the energy companies, reducing royalties to landowners. The Republicans in the PA statehouse are trying to stop it. Make your voice heard if you’re in PA!

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    Toxins tied to fish kill may have hitchhiked: Investigators weigh whether mining equipment is culprit

    Pittsburgh Post-Gazette (Oct 4):
    Toxins tied to fish kill may have hitchhiked: Investigators weigh whether mining equipment is culprit

    A highly speculative and irresponsible article trying to tie an algae buildup along the Pennsylvania-West Virginia border to drilling for natural gas. I would go as far as saying it’s pure fantasy. But that’s what passes for “news” these days. Part of the article ties in completely unrelated news, like the Cabot problems in Northeast PA, with this one–a favorite tactic of people who don’t have a case.

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    Natural gas quest: DEC investigating disposal of fluids by drilling vendor

    Press & Sun-Bulletin (Oct 3):
    Natural gas quest: DEC investigating disposal of fluids by drilling vendor

    Pretty much a non-story story, typical “hit piece” by leftist media. There is a company providing chemicals for drilling, for Pennsylvania companies (PA because so far, since there IS no drilling in New York). Said company, Northeast Mud Services Co. of Bridgeport, W.Va. (NEMSCo), is alleged to have leaked chemicals at their warehouse facility. Problem is, no one can find any leaks. The other complaint is that they have the audacity to wash their trucks, the fear being that an eye-dropper full of chemical may have contaminated the mud through which the trucks travel and then affixed itself to the truck, and so spray washing the trucks to keep them clean is a no-no. Both allegations came from an anonymous “tip”.

    You can expect more of this nonsensical reporting to ramp up in the coming months as the New York DEC tries to sign off on the Supplemental Generic Environmental Impact Statement.

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    Exxon Leases 19,400 Acres in Pennsylvania Marcellus Shale

    From a Reuters news story on the Financial 24 website:

    Exxon Mobil Corp, the world’s largest publicly traded company, has leases on 19,400 acres in the Marcellus Shale, a formation that is said to hold vast amounts of natural gas.

    In September, Exxon bid $85.2 million for 18 blocks in the Marcellus, a large shale formation that runs through parts of New York, Pennsylvania, Ohio and West Virginia.

    Exxon, based in Irving, Texas, was the high bidder on six Marcellus blocks, paying a total of $22.4 million for acreage in Tioga and Lycoming counties in Pennsylvania, company spokesman Patrick McGinn, said.

    Read the full article: Exxon has 19,400 acres in the Marcellus shale

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    Steuben County League of Women Voters Go on Record as Anti-Drilling in the Marcellus

    It seems anti-drilling groups, although small in numbers, are popping up like dandelions in the spring. The latest is the Steuben County League of Women Voters, a supposedly non-partisan group (but that’s a lie, LWV is an extremely partisan group). WENY-TV has video from a recent meeting held by the League. The meeting started with a propaganda movie about drilling in Colorado to whip up the crowd.

    Read the account and watch the WENY segment: Steuben County League of Women Voters Holds Natural Gas Drilling Meeting

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    Marcellus Anti-Drilling Protesters Assemble in Cooperstown Outside SPE Convention

    The Daily Star (Oneonta) reports that upward of 50 protesters from the Southern Tier and central New York gathered outside of Otesaga Hotel in Cooperstown to voice their disapproval of drilling in the Marcellus. Inside the hotel was a meeting/convention of the Society of Petroleum Engineers (SPE).

    The Daily Star dutifully recounts the nightmarish (and inaccurate) party line of anti-drilling proponents. But to their credit, The Daily Star also reports a few counter arguments from a few people who are in the know and educated about these things–the engineers attending the SPE meeting whose job it is to safely get gas (and oil) from the ground.

    Read the full article: 50 protest gas drilling at Otesaga

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    Finally Some Common Sense About (Not) Taxing Marcellus Production in Pennsylvania

    Pennsylvania Rep. Dave Reed (Republican, Indiana, PA) “gets it” when it comes to drilling in the Marcellus. Gov. Ed “fast Eddie” Rendell (Democrat), wants to tax drilling in the Marcellus. According to the Indiana Gazette (PA), fast Eddie’s plan calls for:
    Read More “Finally Some Common Sense About (Not) Taxing Marcellus Production in Pennsylvania”

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    Breaking News: Dimock Gas Wells Pass DEP Test, Cabot Not at Fault

    On February 27, the Pennsylvania Department of Environmental Protection (DEP) served Cabot Oil & Gas with a “Notice of Violation” claiming Cabot’s drilling activities in the Carter Road area of Dimock Township, PA caused some local private water wells to be contaminated with methane (see the MDN article Cabot Oil & Gas Served with “Notice of Violation” in Dimock, PA). One month later, the DEP seems to have reversed its position.

    Buried in the Saturday, March 28 edition of the Scranton Times-Tribune we get the story that recent test results from the DEP show no indication of water contamination due to Cabot’s hydro-fracturing activities in the area. Yes, you read that right. Cabot’s Marcellus drilling activity is not to blame for methane (natural gas) water contamination in the Dimock area according to the PA State DEP.

    The DEP will continue testing and monitoring, and Cabot will continue providing water for four homes that it has been providing water to, due to elevated levels of methane in the water. But the DEP seems to have just reversed its position that Cabot is the cause of methane appearing in a few local water wells. Big news that deserves a big headline.

    What has the DEP tested for that might indicate hydrofacturing has caused contamination?

    Indicators could include total dissolved solids, chlorides, specific conductivity, pH, alkalinity, hardness, sodium, calcium, barium, iron, manganese, potassium and aluminum.

    The DEP is promising they will continue to be vigilant in Dimock:

    Residents “expressed concern to us that methane wasn’t the only thing impacting their groundwater, their wells,” DEP spokesman Mark Carmon said. “We’ll continue to look at both.”

    Cabot spokesman Ken Komoroski said the company is “pleased” that the department has found no indication of wells being tainted from gas well hydro-fracturing activity, and will continue to work with the DEP to ensure the safety and health of residents.

    MDN will continue to cover this story as it develops.

    Read the full article: Dimock gas wells pass DEP test

    Read the full DEP press release: PA DEP Continues to Analyze Dimock Water Supplies

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    Lock Haven University Biology Professor (and Landowner) Recounts Positive Experience with Drilling in the Marcellus

    Lock Haven University (PA) produces a regular online publication called The Hemlock. The current issue, dated March 2009, focuses on drilling in the Marcellus region in Pennsylvania. The issue is quite long with different articles focusing on different aspects of Marcellus drilling. As you can imagine, the articles are mostly negative and “the sky is falling” in nature. Fair enough. They have a viewpoint and wish to air it. Those of us who believe drilling can occur safely, but understand there will be problems along the way, have nothing to fear from the very worst the anti-drilling side can dish out. I rather enjoy reading such articles because I always learn something.

    What do I learn from the opposition? As an example, one of the articles contributed is from a retired state forester–Butch Davey–offering this bit of insight into why he’s against drilling in the Marcellus:

    Reading the children’s book The Lorax by Dr. Seuss to my grandchildren brings home the lesson that we need to carefully conserve the natural resources of Pennsylvania on both private and public land.  It is up to us to start living in a sustainable way so that future generations won’t be saddled with mistakes we made because of a myopic view of natural resource limitations or outright greed.

    There you have it folks. Dr. Seuss, a leading light of environmental knowledge and highly-sought after expert source, is one of Mr. Davey’s inspirations.

    About half way down the issue, amongst the articles recounting the gloom and doom of drilling, are a couple of landowner perspectives. One perspective is from a landowner who purchased his land without purchasing the mineral rights. Doh! When the energy companies show up and drill and you don’t get a dime from it, of course you’re going to be against it and focus on every single shortcoming and ill-effect of drilling (noise, traffic, etc.). Such a perspective is hardly impartial. Lesson to those buying land in the Marcellus: Be sure you purchase the mineral rights–and don’t blame the Realtor for your own stupidity if you don’t purchase the mineral rights, as this person did.

    But, somehow The Hemlock added a pro-drilling perspective! About the only pro-drilling aspect of the entire issue–no doubt their idea of “balance.”  The perspective is offered by Dr. Ralph Harnishfeger, a biology professor at Lock Haven–someone who knows and cares about nature and the environment. He recounts how he and his wife (also a professional biologist) and his neighbors “did it right” by banding together, working out a lease that protects them all and protects the environment, while at the same time allowing drilling on their property. A win/win for everyone. He acknowledges there is always some environmental impact from drilling, but when done right, the negatives can be minimized. Slogging through the entire Hemlock issue is worth it just to read his short contribution. He concludes his perspective with this:

    We believe that energy development can occur responsibly and in a manner consistent with good environmental stewardship. Farmland has been significantly altered by man from what existed prior to the arrival of Europeans on this continent and such change has dramatically improved food production and the resulting quality of life for many humans. This transition has increased habitat for some species and decreased habitat for others. It is unrealistic to expect a return to primeval forest and in the context of our highly altered environment we prefer well-managed and planned land use with the additional protections guaranteed through our lease.

    It seems at its core much of the debate over drilling in the Marcellus, as is the debate for most environmental issues, is a clash of philosophies, as Dr. Harnishfeger alludes to in his summary statement. Many people erroneously believe we can return “nature” to it’s pre-man condition. They view man and his activities on this planet as an infestation rather than as a species with the God-given (or Nature-given, if you’re a non-believer) right to manage the resources around us. It is not only impractical, but idiotic to ignore the energy needs of humans and think we can return to animal skins and clubs and give up electricity, machinery and the many advances of the last 500 years of human-kind. That view is truly unsustainable.

    Does drilling for natural gas impact the environment? Sure does. Do accidents happen along the way? Yes. Do we throw the baby out with the bathwater with respect to drilling because of some negatives? No way! Although The Hemlock issue is long, I encourage you to read it, particularly Dr. Harnishfeger’s contribution (especially if you’re a landowner) so you get some insights into how to “do it right” when it comes to creating a lease for your land.

    Read the issue here: The Hemlock, Volume 2, Issue 6 (March 2009)

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    Drilling Activity is Linked to the Price of Natural Gas

    I suppose the headline of this post may have you saying, “It doesn’t take a genius to figure that out.” But how, exactly, does the spot price for natural gas relate to drilling activity? Can we quantify it? Let’s try.

    In a recent article on an investment blog called Energy & Capital, author Keith Kohl offers some excellent insights into the natural gas marketplace from the perspective of those interested in investing in it. And along the way, he makes some observations well worth reading for landowners in the Marcellus. I encourage you to read the entire article.

    Here are just a few insights from his article:

    [N]atural gas has been treading water. After deteriorating more than 70% since July records, prices have fallen below $4/Mcf this week. That’s a level many people thought they’d never see. And to make matters worse, I’ve been hearing more and more people calling for natural gas to plummet below $2/Mcf and stay in that range for several months.

    …

    Developing…shale sources will be extremely difficult (or even nonexistent) if natural gas prices fall below $2/Mcf for a sustained period. The depreciation of natural gas prices since July has already caused companies across the board to slash exploration and production spending.

    Much like the oil industry, not a week passes that I don’t see another project being delayed or canceled. Furthermore, the number of active drilling rigs has been in serious decline. The latest numbers from Baker Hughes Inc. reported that the number of exploration rigs has dropped nearly 45%. And if prices continue to remain this low, you can bet we’ll see even more rigs going silent.

    That means production is headed one way—much lower.

    But his longer term prediction is not gloomy. He believes prices and production will start to improve in 2010 when an improving economy, more demand and less supply kick in. In the article he also offers his opinion on liquefied natural gas (LNG) imports, and his thoughts on which companies to invest in (EOG Resources is one of them). Read the whole article! It’s well worth it.

    Based on Mr. Kohl’s views and other sources, this is Marcellus Drilling News’ take: If natural gas prices stay at or above $4/Mcf ($4 per thousand cubic feet), drilling will continue and slowly expand. That price level is just above break even for energy companies. If the price goes higher at $5-$6/Mcf, happy days are here again. If the price drops to $2/Mcf and stays there, production all but stops because energy companies will lose money.

    Read the full article: The Inevitable Crunch in Natural Gas Supply… and How to Prepare Your Portfolio

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    Downstate New Yorkers Demand Total Ban on Drilling in Upstate’s Marcellus Shale

    Marcellus Drilling News sees a growing chorus of voices from New York City who believe the city’s water supply, 90% of which comes from the Catskill/Delaware watershed area in Upstate, is directly threatened by drilling activity in the Marcellus. And they are becoming vocal in their demands to stop the drilling before it even starts.

    Some demand no drilling only in the watershed region itself (take note landowners in those counties). Others want a blanket ban throughout the state. From a recent article in The Villager covering a forum held in New York City:

    Worried about an imminent threat to the Catskill/Delaware watershed, which supplies New York City with 90 percent of its water, Community Board 2 [C.B. 2] last week voted unanimously to demand a ban on drilling for natural gas in New York State.

    And this:

    “We can’t let the bad economy and people wanting to cash in on natural gas provoke wholesale drilling,” said Queens Councilmember James Gennaro at a March 18 forum held by the C.B. 2 Environmental Committee at Judson Church. “We can’t be the generation that loses New York City’s water supply to the lure of natural gas,” said Gennaro, who is a trained geologist.

    Gennaro is the sponsor of City Council legislation calling on the state Legislature, the state Department of Environmental Conservation and Governor Paterson to prohibit drilling for natural gas within the watershed’s boundaries in Delaware, Greene, Ulster and Sullivan Counties.

    The article quotes a parade of officials and heads of environmental groups in NYC that are opposed to any and all drilling in New York. Will the growing chorus of protests make a difference? Perhaps. Landowners need to make their voices heard just as loudly to counter the din that will come from Downstate. Contact Governor Paterson and your state representatives in the Assembly and Senate.

    An aside: No one is in favor of contaminating the water supply, least of all our own! The issue of what chemicals are used and in what concentrations is an important one and must be dealt with fairly. Energy companies would do well to diffuse the issue by revealing at least general information about the chemicals they use. However, a blanket ban on all drilling is nonsensical. The problem is, there’s a lot of nonsensical things that happen in our great state. So we must be vigilant to protect our rights as landowners. Let’s not let “the mob” (little “m”) dictate what we can and cannot do with our land. We still have a (precious) few rights left, among them the right to own property. We can protect the water supply and still drill safely in the Marcellus. Let’s figure it out.

    Read the full article: No fracking way! C.B. 2 forum warns about water

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    Lackawanna College Predicts 90,000 New Jobs from Marcellus Drilling, Offers New Degree in Oil & Gas Production Technology

    It seems drilling in the Marcellus is not only good for landowners and energy companies, but also for education and jobs. From an article published on iStockAnalyst (reprinted from The Daily Review, Towanda, PA):

    Lackawanna College will begin offering an associate’s degree this fall in natural gas technology to prepare students to work in the growing local natural gas industry, and many of the required courses for the degree will be offered at the college’s Towanda Center.

    In addition, Lackawanna College will soon start giving accounting students at the college’s Towanda Center the option of customizing their degree to prepare them to work in the accounting side of the natural gas industry, said Larry D. Milliken, director of energy programs at the college.

    And the college is in the process of contracting with Sage Technical Services of Vestal, N.Y., so that its Towanda Center can again offer training to students who wish to obtain a commercial driver’s license, as there will be a large number of trucks required when drilling for gas, he said.

    And this on the number of new jobs that will be created from Marcellus drilling activities:

    “Development of the Marcellus Shale gas is expected to generate over 90,000 jobs over the next 20 years,” states a press release from Lackawanna College, which this week announced the launching of the natural gas technology program. “This kind of job growth and economic stimulus to northeastern Pennsylvania will be transforming to our region and to the lives of those people who get the technical education and training needed to take advantage of the best job opportunities as they arise.”

    The new applied science degree in Oil and Gas Production Technology will be available at the college’s main campus in Scranton, and some of the other satellite locations, in addition to Towanda.

    For more information about the new program, read the article Lackawanna College to Offer Natural Gas Technology Degree, read Lackawanna College’s news release, or contact Lackawanna College’s Department of Continuing Education at (570) 961-7883.

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    West Virginia DEP Wants Your Comments on Water Use in Marcellus Drilling

    From an article in the Charleston Daily Mail (obviously adapted from a press release):

    CHARLESTON, W.Va. — The state Department of Environmental Protection announced it is seeking public comment on a draft document that addresses drillers’ water use and disposal in the Marcellus Shale formation.

    Department secretary Randy Huffman said in a prepared statement, “New advancements in drilling technology have created increased interest in exploring the Marcellus Shale formation in New York, Pennsylvania, and recently in West Virginia. What we are concerned about is the increase in the amount of water used and the disposal of wastewater that results from using these new drilling techniques.”

    The department will accept comments about the document until April 17. The document can be viewed online at www.wvdep.org/marcellusguidance. Comments about the draft can be submitted by e-mail to DEP.Comments@wv.gov or mailed to the Public Information Office at 601 57th Street SE, Charleston, WV 25304.

    Make your voice heard! You have until two days after tax day to comment.

    Direct link to the draft document: www.wvdep.org/FrontNews/Marcellus Guidance Document.pdf