2011 Pipeline Capacity Additions

The Energy Information Administration (EIA) has a new report on pipeline capacity additions last year:  "The U.S. Energy Information Administration estimates that U.S. natural gas pipeline companies added about 2,400 miles of new pipe to the grid as part of over 25 projects in 2011. New pipeline projects entered service in parts of the U.S. natural gas grid that can be congested: California, Florida, and parts of the Northeast ***. Only a portion of this capacity serves incremental natural gas use; most of these projects facilitate better linkages across the existing natural gas grid."

Has NY Missed the Gas-Drilling Boom?

That's the question asked in this article from The Journal News.  Their answer:  "Most experts say no, but several said low natural-gas prices could have an effect on the pace drillers set in New York should the state allow high-volume hydrofracking."

And why is pace important?  From the Times-Tribune, regarding the slow down in Pennsylvania:  "'Economic activity is tied closely to rig count,' said Anthony J. Ventello, executive director of the Progress Authority, which handles economic development for Bradford and Susquehanna counties. *** 'As goes the rig count, so goes the economy,' Mr. Ventello said, noting that a rig has an economic impact not unlike that of an itinerant factory. 'As an industry, natural gas is not going away, but we are in a slowdown that will have an effect on the economy.'"

PA Pipeline Safety Article

The Philadelphia Inquirer has an article on pipeline safety regulation in Pennsylvania:  "Pennsylvania regulators are taking steps to begin safety checks of some natural gas pipelines in the Marcellus Shale regions - hiring inspectors and drafting new rules that will bring the state in line with the rest of the nation. *** But a dispute continues over whether the state oversight goes far enough. The new safety-inspection and construction regulations still will not apply in the most rural areas of shale country, the hotbed for new pipeline projects, with up to 25,000 miles being built or on the drawing boards."

USACE Reissues Nationwide Permits - Wells Pad Construction Now Covered

Last week the United States Army Corps of Engineers reissued 48 of the 49 existing nationwide permits that authorize certain activities requiring Clean Water Act 404 permits. The Federal Register notice, published February 21, 2012, can be found here.  The prior version of NWP 39, permitting certain Commercial and Institutional Development activities, excluded coverage for the constuction of oil and gas wells and attendant features.  The reissued NWP 39 was amended so that it now covers oil and gas well construction.  The Federal Register clarifies at 77 FR 10223 that USACE district engineers may add conditions to NWP authorizations "to require the removal of these pads and restoration of the site once oil or gas extraction operations have ceased and the wells will no longer be used."

Ohio EPA Oversight Costs a Thing of the Past?

Paying Ohio EPA its “oversight costs” (administrative costs) might be a thing of the past?  A recent Ohio First Appellate District decision (Ohio v. Mass Realty) suggests that parties under an Order are not obligated to make such payments.  This is a very interesting decision that Ohio EPA chose not to appeal to the Ohio Supreme Court.  If you are currently under orders to pay these costs . . . you need to read this decision.

Choke Points: Pipeline Infrastructure

The WSJ has an interesting article on the need for more take-away infrastructure in the Bakken:  "The reason for Clearbrook crude's big discount to WTI is much the same as for WTI's big discount to Brent: logistics. The volume of oil heading into Clearbrook has surged. North Dakota's output in 2005 was below 100,000 barrels a day. Today, it is more than five times that level and rising as development of shale resources has exploded. Meanwhile, Canadian producers trying to move their oil south toward the Gulf Coast also are filling local pipelines."

Note:  Subscription may be required.

PA Impact Fees

Pennsylvania counties may soon be imposing impact fees according to this report from CBS News:  "After Gov. Tom Corbett signs a bill passed by state lawmakers this week, county commissioners or county council members in about 35 counties will have 60 days to decide whether to impose the 15-year impact fee on their local Marcellus Shale wells.  *** If they do, they'll share 60 percent of the money with their municipalities after a cut goes to state agencies and a program to help buy natural gas-powered fleet vehicles. That could mean more than $10 million flowing later this year to each of Pennsylvania's most heavily drilled counties, including Bradford, Tioga, Washington, Lycoming, Susquehanna and Greene."

Not everyone thinks it's necessary, however:  "Doug McLinko, the Republican commissioners' chairman in Bradford County, home to the most Marcellus Shale wells of any county, said he didn't like slapping the industry with a tax while natural gas prices are hovering around 10-year lows. *** McLinko said no one has shown him an impact that the industry hasn't addressed, while it's poured $400 million into new roads in the area and given charitably to community causes."

MarkWest Processing Plant Coming to Harrison County, Ohio

At least that's the report from the Dover-New Philadelphia Times Reporter:  "Colorado-based energy company involved in the gathering, processing and transportation of natural gas has announced plans to build a processing facility in Harrison County.  MarkWest Energy Partners, with corporate offices in Denver, said the plant is expected to begin initial operations in mid-2013."


Recorder's Office Sees Boom

This article from cleveland.com takes a brief look at the leasing activity in Ohio from inside the recorder's office.  It begins:  "Paul McKeegan has served two decades as Jefferson County Recorder, but nothing has prepared him for what's occurred in his Steubenville office over the past year.  His once-sleepy office has become a bustling, elbow-to-elbow beehive of activity as lawyers and agents of oil and gas companies have descended in droves to study the property deeds chasing the liquid gold that runs deep underneath the soil in this eastern Ohio county."

Read the whole thing.

Hydraulic Fracturing: Myth and Reality

We thought you might be interested in this column on several myths told about hydraulic fracturing.  A sample:  "Those who oppose the practice say that chemicals in fracking fluids can pollute water tables that lie just a few hundred feet or less below the surface. In rock formations like the Marcellus shale, a deposit in the Northeast that underlies parts of New York, Pennsylvania, Ohio and West Virginia, fracking takes place well below 7,000 feet and solid rock separates the shale deposits from shallow groundwater aquifers. The buffer makes contamination from fracking virtually impossible. In addition, the wells being drilled are constructed with at least four thick layers of steel casing and concrete such that they are cemented in place to create a solid divider between gas production and the fresh water aquifers."

PA: Blanket Assignments Upheld

Recently, an appellate court in Pennsylvania affirmed, on mandamus, the ability of oil and gas producers to record blanket lease assignments.  See Chesapeake Appalachia, LLC v. Golden, Case No. 883 C.D. 2011 (Jan. 27, 2012).  From the decision (among other things):  "Next, the Recorder asserts that Chesapeake is not entitled to mandamus relief because it has available the alternative, adequate remedy of recording individual lease assignments.  However, it goes without saying that filing single lease assignments is not an adequate remedy for a company that has the right to file multiple lease assignments and chooses to do so, but is illegally thwarted in that right."

Apparently, it needed to be said.  Nice.

House Hearing on U.S. EPA Hydraulic Fracturing Research in Pavillion, WY

We thought you might be interested in the testimony at a recent House Subcommittee hearing on U.S. EPA's hydraulic fracturing research in Pavillion, WY.  For example, from Tom Doll, State Oil & Gas Supervisor, Wyoming Oil & Gas Conservation Commission:  "The Pavillion Draft Report was issued with incomplete data and technically inadequate conclusions.  There was no opportunity to review and verify the data by Wyoming state agencies. The data was not verified by further testing or vetted through a peer review process. Based on a limited sampling and an inconclusive data set from Pavillion Wyoming ground water, EPA’s conclusion is now national and international fodder for the hydraulic fracturing debate. Now the quality of the hydraulic fracturing debate suffers and the EPA’s science itself is questioned."

For more, see here (including video).

Ohio EPA Pulls Water Quality Rules Package

Ohio EPA first introduced a water quality rule package in 2006 - intended to cover water quality standards, 401 certifications and antidegradation.  The most recent reintroduction of that rule package was filed in December 2011, three days before Ohio's Common Sense Initiative (CSI) program was to take affect.  The CSI program requires rules to undergo economic impact analysis.  At industry request, the Ohio EPA Director pulled the rule package on February 1, 2012 and will refile them so they can go through the full CSI analysis.  Here is the Ohio EPA Press Release.

"Everything You Know About Peak Oil Is Wrong"

That's the title to an article in BusinessWeek looking at past claims of economic collapse due to exhausted natural resources.  A sample:  "Start with oil. In 1971, the Limits to Growth team forecast that the world’s supply would run out 10 years from today. And yet according to renowned oil analyst Daniel Yergin, technology advances and new discoveries have allowed oil reserves worldwide to keep growing. For every barrel of oil produced in the world from 2007 to 2009, 1.6 barrels of new reserves were added. The World Energy Council reports that global proven recoverable reserves of natural gas liquids and crude oil amounted to 1.2 trillion barrels in 2010. That’s enough to last another 38 years at current usage. Add in shale oil, and that’s an additional 4.8 trillion barrels, or a century and a half’s worth of supply at present usage rates. Tar sands, including some huge Canadian deposits, add perhaps 6 trillion barrels more."

Read the whole thing.

[Update:  (Yes, that was quick ...)  For a similar article written by Peter Orszag, see here.]

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New Ohio Air Permit

Ohio EPA has issued its final air pollution shale oil and gas well-site general permit.  "This general permit covers all operations involved in an oil and gas well site during the production phase of the well. This includes glycol dehydration units, natural gas and diesel engines, storage tanks, flares, and ancillary equipment."  You can view it and supporting documentation here.

Note:  Ohio EPA's Assistant Chief of Permitting wants to remind you that "if you previously submitted a letter stating that you were going to put a well into production and planned to apply for the general permit when it becomes available, now is the time for you to submit your application."