OH Fed Court Ruling Further Clarifies Post-Production Deductions
An important decision was recently issued in a federal court case (in Ohio) that has the potential to affect landowners and drillers with shale leases throughout the Marcellus/Utica. At least, we believe it has broader implications. The case is known as Grissoms et al. v. Antero Resources Corporation. The case revolves around the issue of a “market enhancement” royalty clause (MEC), which is common in many shale leases throughout the M-U. An MEC lease typically prohibits the deduction of any post-production costs incurred in transforming raw gas into a marketable product. The question is, when is the gas marketable? At the wellhead or later on, after it has been cleaned up? The judge in the Grissoms case ruled in favor of the landowner and said the gas is NOT “marketable” in its raw form at the wellhead.
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Hope Gas, a Local Distribution Company (LDC) or a utility company, provides gas service to approximately 112,000 residential, industrial, and commercial customers in thirty-five West Virginia counties. Hope Gas recently received approval from the Public Service Commission (PSC) of West Virginia to acquire nearly 900 miles of gathering pipelines in northern West Virginia from Equitrans Midstream and add the pipeline to the 2,000 miles of WV gathering pipes it already owns (see 
Yesterday, Ameren Missouri, a subsidiary of Ameren Corporation, a regional electric utility, announced its updated 20-year plan to provide reliable, affordable, and resilient energy to its customers. The plan calls for investment in new on-demand energy sources (two new gas-fired power plants) to ensure the long-term stability of the energy grid and accelerated deployment of renewable energy generation. Even though the plan is loaded with all sorts of so-called new renewable electric generation, anti-fossil fuel zealots have latched onto the two new gas-fired power plants and are stroking out. By the way, those two gas-fired plants will get their molecules from the Marcellus/Utica.
Going back at least 10 years, MDN has referred to the way Coterra Energy (then Cabot Oil & Gas) was seemingly able to spin golden profits from the straw of low gas prices in the northeastern PA Marcellus (see 
MARCELLUS/UTICA REGION: Climate litigation would close Pennsylvania for business; OTHER U.S. REGIONS: Cheniere Energy cuts intake at 2 US LNG plants by 1 bln cubic feet/day; NATIONAL: NYT’s monstrous misrepresentation of U.S. fracking operations; INTERNATIONAL: World’s top shareholder urges systemic change to rein in oil emissions; Demand for coal, oil and natural gas to peak within 10 years.
Did the Democrats running the Pennsylvania Dept. of Conservation and Natural Resources (DCNR) just receive a consolation prize from the Democrats who run the federal Dept. of Energy (DOE)? That’s the question swirling in our heads as we read about the PA DCNR receiving a $1 million grant from the DOE’s Office of Fossil Energy and Carbon Management (FECM) to do some CCUS (carbon capture, utilization, and sequestration) work. Is the DOE about to bypass PA and award a $1 BILLION grand prize to West Virginia for a hydrogen hub (that includes CCUS), and is this $1 million grant the Biden way of preempting sore feelings in PA by throwing them a bone?
According to analysts writing for S&P Global Commodity Insights, the long-range forecast from the U.S. National Weather Service calls for milder temperatures in the U.S. Mid-Atlantic region this winter. Warm temps equal less natural gas usage. Williams’ Transco Regional Energy Access Expansion (REAE) project will partially come online in October, flowing an initial 450 MMcf/d (out of 829 MMcf/d) of Marcellus gas to PA, NJ, and Maryland. More supply with less demand is a classic economic prescription for lower prices in New York, New Jersey, and the Mid-Atlantic region. So says the S&P analysts.
Folks new to the Marcellus/Utica may not know this, but Chesapeake Energy’s then-CEO Aubrey McClendon first “discovered” the Ohio Utica about 15 years ago. Under McClendon, Chesapeake spent over $2 billion acquiring rights to drill 1.3 million acres in Ohio — or roughly 5% of the state’s land area. McClendon pegged the value of the Utica for Ohio at half a trillion dollars. He famously said the Ohio Utica is “the biggest thing economically to hit Ohio, since maybe the plow.” While McClendon rightly deserves credit for launching the development of the Utica, he guessed wrong on the best places to drill in the Utica.
As far back as July 2021, MDN began to cover the issue of geothermal energy, which uses the same technology (drilling rigs, horizontal drilling) to drill holes in the ground to circulate and warm (or cool) water underground as a “green” energy source. Geothermal is an area of interest for Marcellus/Utica shale drillers as a potential new source of revenue (
In May, the Bidenistas at the EPA released a hellscape of new regulations (681 pages) aimed at forcing coal- and natural gas-fired power plants to close (see 
The Algonquin Gas Transmission pipeline (owned by Enbridge) transports up to 3.09 Bcf/d through 1,131 miles of pipeline. Algonquin connects to Texas Eastern Transmission (TETCO), Millennium Pipeline, and Maritimes & Northeast Pipeline and supplies New England with critically needed natural gas supplies for power generation and consumer use. Enbridge is conducting an open season to gauge interest in expanding Algonquin’s capacity to flow more gas into New England–mainly from the Marcellus/Utica–called Project Maple.
Penneco Environmental Solutions wants to site a second injection well in Plum Boro, next to an existing one. Penneco’s first wastewater injection well in Plum finally opened for business in mid-2021, overcoming all sorts of smears, slanders, and lawsuits by the enviro-left (see