Energy & Environmental Law Blog : Energy & Environmental Lawyer & Attorney : Vorys, Sater, Seymour and Pease Law Firm : Oil, Gas & Green Technology

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.

• Email This
• Print

The WSJ is reporting that the Energy Information Administration (EIA) will soon confirm that oil production in the United States is surging, largely due to increases in shale production:  "The forecast will include new production data from developing oil fields, including the Bakken shale area in North Dakota, which could hold as much of 4.3 billion barrels of recoverable oil. North Dakota's output of oil and related liquids topped 500,000 barrels per day in November, meaning that the state pumped more oil than Ecuador. In fact, U.S. oil production grew faster than in any other country over the last three years and will continue to surge as drillers move away from natural gas due to a growing gas glut, experts say. The glut has sent natural-gas prices to a 10-year low."

Nice.  (Note:  Subscription may be required.)

[Update:  And from the EIA's AEO2012 Early Release:  "Domestic crude oil production is expected to grow by more than 20 percent over the coming decade: Domestic crude oil production increased from 5.1 million barrels per day in 2007 to 5.5 million barrels per day in 2010. Over the next 10 years, continued development of tight oil combined with the development of offshore Gulf of Mexico resources are projected to push domestic crude oil production to 6.7 million barrels per day in 2020, a level not seen since 1994."  (Emphasis is ours.)]

• Email This
• Print

4Hoteliers has an interesting take on the impact of Marcellus drilling in Pennsylvania:  "The 4,374 square-mile region comprising four northeastern Pennsylvania counties—Bradford, Lycoming, Susquehanna and Tioga—experienced a hotel industry RevPAR growth of 37 percent from 2007 to 2010, and grew another 22.2 percent through August of 2011.  That’s not a misprint; rather, this remarkable growth is largely attributable to the exploitation of an old resource through the birth of a new industry: natural gas extraction from the Marcellus Shale."

Read the whole thing.

• Email This
• Print

The Columbus Dispatch is reporting that Governor Kasich wants to impose new impact fees and severance taxes on operators seeking to develop the Utica shale in Ohio:  "Ohio’s oil and gas industry would pay an 'impact fee' for deep-shale wells to cover the cost of infrastructure damage caused by oil and gas extraction, part of a package of taxes and fees for the industry that Gov. John Kasich soon will propose."

A word of caution:  Brings to mind one of Aesop's Fables ...

• Email This
• Print

The Marietta Times has an interesting article on the job creation potential of the Utica Shale in Ohio.  For example:  "Kvamme [president and interim chief investment officer with JobsOhio] noted chemical industries like local polymer plants will benefit from low energy costs but also from easy access to 'feedstock' gases like ethane, butane, propane and methane used in product processing.  He said the cheaper fuel and access to the feedstock gases could also help bring more companies into the area and that there have already been talks with a large steel company and other manufacturers."

Just thought you might like to know.

• Email This
• Print

We've reported previously on the Draft Supplemental Generic Environmental Impact Statement (SGEIS) issued by New York (see here, e.g.).  The NYT is reporting that more than 20,000 comments have been received regarding that draft:  "After taking over 20,000 public comments, more than on any issue they have ever faced, New York environmental officials are getting ready for the final phase of work on their proposal to allow hydrofracking of natural gas in the state."  How many are "form" comments sent in by multiple parties ...

• Email This
• Print

Bloomberg is reporting that a Youngstown steel mill is re-opening its doors due to increased demand for pipe used in the development of shale resources here in the northeast:  "The factory for Vallourec SA’s V&M Star will have 350 workers and produce seamless pipes used in hydraulic fracturing, also known as fracking. It’s part of a development that an oil and gas industry study calculates will mean more than 200,000 jobs and $22 billion in economic output in Ohio by 2015 -- and which has neighboring states looking to get in on the action."

Congratulations!

• Email This
• Print

That's the name of a new article in City Journal reporting on shale development in New York.  A sample:  "With more and more producers in the business, the price of natural gas has dropped steadily, and the U.S. has become the world’s leading producer of natural gas. A new age of clean, cheap shale-gas energy is about to begin—except, perhaps, in New York State, where influential environmental groups seem to be winning their struggle against shale. *** Perhaps what motivates the environmentalists’ attack on shale gas is worry about the survival of their movement. The green movement gave up on hydrocarbons years ago: it has already announced the arrival of “peak oil,” and the imminent demise of petroleum power—despite many recent discoveries of large oil and gas fields around the world—is a fundamental article of green faith. Environmentalists see shale gas as a relapse, a return to destructive habits, an end run around their self-appointed role as judge and jury for energy policy in America."

You might enjoy it ...

• Email This
• Print

Despite low natural gas prices, the Zanesville Times-Reporter observes that Utica development in Ohio should continue:  "[T]he Utica Shale, a rock formation thousands of feet below the eastern half of the state, is home to not only trillions of cubic feet of natural gas, but billions of barrels of oil and natural gas liquids. The latter is what attracted investment and will keep money flowing into Ohio, said Tim Rezvan, vice president of senior energy analyst at Sterne Agee."

• Email This
• Print

Ohio remains in the running for a natural gas processing plant that Shell plans on constructing in the northeast, according to this report in the Cleveland Plain Dealer:  "Shell Chemical is finalizing plans for a $2 billion complex that is expected to create hundreds of jobs and pull other industries and manufacturers into its orbit. Shell has said only that it plans to build in either West Virginia, Pennsylvania or Ohio, three states that overlay ancient shale beds rich in natural gas."

The site announcement is expected to come in February.  Wish Ohio good luck!

• Email This
• Print

The Columbus Dispatch is reporting on a new Spectra Energy Corp. pipeline intended to connect Ohio resources to Spectra’s Texas Eastern pipeline system, which runs from Texas to New York.  "The Texas Eastern pipeline already goes through Ohio from east to west. This new addition will create a connection between the pipeline and the northeastern Ohio counties that are expected to have the most shale-gas resources, though the specific path is still being determined, said Wendy Olson, spokeswoman for Houston-based Spectra."

For more, see here (Spectra press release).

• Email This
• Print

The Intelligencer has an interesting article on the natural gas processing plant being built by Dominion Transmission in Marshall County, West Virginia:  "Dominion Transmission's natural gas processing facility is the largest piece yet of what local officials hope will be an industrial rebirth for the Ohio Valley. The crown jewel of that rebirth would be an ethane cracker facility along the Ohio River, a multi-billion dollar project that remains in the works as 2012 looms."

• Email This
• Print

The WSJ is reporting that Governor Earl Ray Tomblin is prepared to sign a new rule package governing Marcellus drilling in West Virginia:  "Large-scale drilling for natural gas in West Virginia's Marcellus shale deposit will require $10,000 and $5,000 permit fees, buffer zones around wells and advance notices to property owners and the public, under a broad regulatory package the Legislature approved Wednesday.  *** Gov. Earl Ray Tomblin heralded the measure at a packed Capitol news conference shortly after the House of Delegates passed it 92-5 and the Senate then voted unanimously to send it to his desk, ending a four-day special session."

For a copy of the legislation, see here.

• Email This
• Print

The Sacramento Bee is reporting on a new study published by PwC addressing the potential benefits for manufacturers from U.S. shale gas development:  "'An underappreciated part of the shale gas story is the substantial cost benefits that could become available to manufacturers based upon estimates of future natural gas prices as more shale gas is recovered,' said Bob McCutcheon, U.S. industrial products leader, PwC. He continued, 'In fact, the number of U.S. chemicals, metals and industrial manufacturing companies that disclosed shale gas potential and its impact so far in 2011 easily surpassed that of the last three years combined, indicating this is of growing importance in the outlook of U.S. manufacturers. The significant uptick in shale gas commentary among the manufacturing community reflects the positive influence that shale gas is having from investment, operational and demand standpoints.'"

For a copy of the study, see here.

• Email This
• Print

We've reported previously on air emissions studies done in Pennsylvania (see here, e.g.).  The Pennsylvania Department of Environmental Protection (PA DEP) is now requiring certain E&P companies to submit air emissions data regarding their facilities for 2011 by March 1, 2012:  "'The use of natural gas for fuel will have very beneficial impacts on air quality, and we want to ensure we are protecting the quality of Pennsylvania’s air as we access and bring to market this abundant, domestic fuel source,' DEP Secretary Mike Krancer said. *** This week, the agency is initially asking 99 operators identified as being involved in natural gas development, production, transmission, processing and related activities to respond with the necessary data."  (From this press release.)

For more, see here.

• Email This
• Print

The Houston Chronicle is reporting:  "A nationwide boom in natural gas production is set to fuel nearly 900,000 jobs and add roughly $1,000 to annual household budgets by 2015, according to a new industry study released Tuesday."  From the President and CEO of ANGA (America's Natural Gas Alliance), which commissioned the study:  "At a time when our nation's economy is still suffering from a downturn and jobs are top-of-mind for many Americans, the impact of shale gas on employment is invaluable. Last year, shale plays supported 600,000 jobs, and by 2035, the study projects that shale gas will support more than 1.6 million jobs."

For a copy of the study (including video statements by local business owners), see here.

• Email This
• Print

MedPage Today has an interesting article on the claimed health impacts of increased Marcellus exploration in Pennsylvania.  The take-away conclusions:  "A few people have had clearly documented health problems related to the Marcellus gas boom, but these were occupational exposures in rig workers.  Some aspects of gas drilling and production release toxins into the environment, but the level of exposure to the public is uncertain and no links to specific instances of disease have been confirmed, and may never be."  (Emphasis is ours.)  And regarding groundwater contamination due to frac operations in particular:  "But in that scenario the fracking chemicals would presumably be highly diluted. Rob Jackson, PhD, of Duke University, said preliminary results from a study he and his colleagues conducted in northeastern Pennsylvania showed no evidence of fracking fluids or brine in well water sampled from more than 200 sites."  (Emphasis is also ours.)

Read the whole thing.

• Email This
• Print

The Intelligencer has another interesting article looking at the fee legislation proposed in West Virginia.  "Now, the fee is $650, but would increase to $10,000 for the first well and $5,000 for each additional well on the drilling pad, if the legislation is ultimately signed into law by Gov. Earl Ray Tomblin."  The bargaining chip?  Well, at least for one legislator - it looks like hiring more WV organized labor:  "State Sen. Orphy Klempa is prepared to push for a higher natural gas severance tax if drilling companies do not prove to him that they plan to hire more West Virginia workers.  *** Klempa, D-Ohio, is affiliated with organized labor as co-chairman of Project BEST. He is a member of the Legislature's Joint Select Committee on Marcellus Shale, which passed a bill for the full Legislature's consideration that, among many changes, would increase the permit fee to drill a Marcellus well in West Virginia substantially."

Come to Ohio!

• Email This
• Print

We've reported previously on the NYT's efforts to find environmental and economic issues in the oil patch (see here, e.g.).  Now it seems that they want to complain about oil and gas leases:  "Americans have signed millions of leases allowing companies to drill for oil and natural gas on their land in recent years. But some of these landowners — often in rural areas, and eager for quick payouts — are finding out too late what is, and what is not, in the fine print."

• Email This
• Print

Columbus Business First has an interesting article on a Federal Reserve report on the Midwest that finds (among other things):  "Expanding activity in the pursuit of oil and natural gas in Ohio’s underground shale fields. Production in wells that already have been drilled in the state has been 'good,' according to the report."

Read the whole thing (it's short, but with links to core documents).

• Email This
• Print

The WSJ has a good article on job growth in Ohio due to the anticipated growth in Ohio's E&P industry.  It begins:  "A rare sight in hard-luck Youngstown, a new industrial plant, has generated hope that a surge in oil and natural gas drilling across a multistate region might jump-start a revival in Rust Belt manufacturing."

• Email This
• Print

The Delaware River Basin Commission (DRBC) has issued revised draft regulations regarding the construction and operation of natural gas development projects (for previous entries, see here and here, e.g.).  According to the WSJ:  "Energy companies collectively would be permitted to drill a maximum of 300 natural gas wells after receiving initial approval to explore the Delaware River basin under draft rules released Tuesday by the agency that monitors the drinking-water supply of 15 million people."  (Emphasis is ours.)  (Subscription may be required.)

A hearing to consider the rules has been scheduled for November 21, 2011.  For more, including a copy of the revised regulations, see here.

[Update:  The hearing has been postponed because a couple of the commissioners opposed the proposal.  See here. (Moved up.)]

• Email This
• Print

The Houston Chronicle is reporting on the hiring challenges faced by the oil and gas industry, fueled by increased shale development in the U.S.:  "While the job picture remains stagnant nationwide, the boom in domestic shale drilling has pushed hiring to a feverish pace in North American oil fields. *** A staffing crunch has caused the industry's salaries to surge and recruiters to embrace new tactics in search of the narrow pool of candidates who have the skills to work and manage the technical and gritty world of oil field services."

Read it all.

• Email This
• Print

The Buffalo News has an article pointing out the opposing views of environmentalists and New York landowners over the development of the landowners' mineral interests:  "'The extreme environmentalists have misinformed and panicked people,' said Dan Fitzsimmons, president of the Joint Landowners Coalition of New York, which represents people who have leased their lands to gas companies for potential drilling. *** Still, the environmentalists have one other argument on their side: fear of the unknown."

• Email This
• Print

The Pittsburgh Post-Gazette is reporting that a Pennsylvania Senate committee has re-inserted into pending legislation a substantial annual fee on natural gas producers:  "The new impact fee proposal would assess an initial base cost of $50,000 per well, which would decrease annually until years 11 through 20 that a well is producing, with a cost then of $10,000 per well. That price tag would increase if natural gas prices rise."

Come to Ohio!

• Email This
• Print

We've noted before that Ohio will not allow POTWs to be used for the disposal of wastewater (see here, e.g.).  You might be interested to know that Ohio EPA has asked the Environmental Appeals Review Commission to vacate as unlawful the permits issued to the city of Warren, Ohio, and Patriot Water Treatment, LLC, to allow such disposal:

Revised Code 1509.22(C) specifically states that brine may only be disposed of by one of the following three methods:  (1) underground injection; (2) surface application on roads for dust control and ice; or (3) any other method approved by the Chief of the Division of Oil and Gas Resources Management ***.  Disposal of brine wastewater through a wastewater treatment plant and discharge to waters of the state is not an authorized method of disposal under R.C. 1509.22(C), unless and until the Chief *** approves this technology.  At this time, no such approval has been given.  (Emphasis in original.)

For the filing, see here.

• Email This
• Print

The Akron Beacon Journal has an interesting article on the potential for Ohio's E&P industry:  "A state official estimated Tuesday that as much as 5 billion barrels of oil and 15 trillion cubic feet of natural gas could be underground in eastern Ohio. *** The oil and natural gas is in the Utica shale that is 100 to 300 feet thick under the eastern half of the state, said Lawrence Wickstrom, state geologist and head of the Ohio Department of Natural Resource’s Division of Geological Survey.  *** And this, he said, is 'a very conservative estimate' of the Utica potential. No dollar figure was attached to the numbers, but others have said the Utica shale will produce tens of billions of dollars in Ohio."

Read the whole thing.

• Email This
• Print

We've noted previously the problems North Dakota was having finding trained workers - a problem other states wish they had (see here, e.g.).  Both the WSJ and the Philadelphia Inquirer have similar articles mentioning the need in other areas with active production (see here and here).  From the Inquirer:  "Run - don't walk, run - to Marcellus Shale natural gas drilling areas if you are a welder or pipe fitter or engineer or a company that can deliver such people to companies already operating in the fields."

Energy = Jobs.

• Email This
• Print

With all of the claims regarding freshwater impacts from shale drilling, we thought you might find this of interest (from Essential Public Radio 90.5):  "Tests of water wells near gas drilling sites generally didn't find detrimental changes in water quality, according to a new report issued by The Center for Rural Pennsylvania at Penn State University. However, scientists said more research is needed on the sources of methane in water wells. ***  According to the report, many of the problems had existed before drilling even started. About 40 percent of the wells failed at least one water quality test before gas drilling started. Most of the failing grades were due to higher than accepted levels of coliform bacteria and turbidity, or cloudiness. Some wells also showed methane before drilling."  (Emphasis is ours.)

Not a surprise for many in PA who have been following this issue ...

For a copy of the study itself, see here.

• Email This
• Print

We thought some of you (particularly in PA) might be interested in this:  "Since Oct. 11, the existing 60,000 Mcf-per-day capacity line has collected gas from Citrus Energy Appalachia, LLC, wells in Wyoming County, connecting them to the Tennessee Gas Pipeline in Susquehanna County. The proposed 30-mile addition would extend the line from Washington Twp. in Wyoming County to Luzerne County, where it will connect with Transcontinental Gas Pipeline. UGI Energy expects the extension to move between 200,000 to 500,000 Mcf per day of gas by 2013, serving Citrus and other producers, UGI Energy spokesman Peter Terranova said."  (From the Scranton Times Tribune.)

• Email This
• Print

The WSJ has an interesting article on how shale operations are impacting the industry:  "Shale discoveries have reinvigorated U.S. oil and gas production that just half a dozen years ago was widely seen as in terminal decline. Today, there is a glut of cheap natural gas, and domestic oil production is rising for the first time in decades. Shale development is even spreading to other countries, such as Poland and Argentina."

• Email This
• Print

Marshall University has made a comparison of taxes imposed on the natural gas industry in West Virginia and other Appalachian Basin states:  "The study’s authors, a team led by MU Vice President for Business and Economic Research Calvin Kent, looked at real and personal property taxes, severance taxes, corporate income taxes and sales and use taxes as well as permits, bonds and other environmental taxes or fees."  (From WOWK.)  The conclusion - ... not favorable for West Virginia ...

For a copy of the study itself, see here.

• Email This
• Print

You may be interested in this article from the WSJ:  "May snapped up the opportunity through his local community college, Zane State, to take a two-week, 80-hour shale exploration certification course developed by the private company Retrain America. When he graduated, he'd interviewed for three jobs and taken a position cementing wells for Halliburton that will pay $60,000 to $70,000 a year."  (Emphasis is ours.)

Very nice.

• Email This
• Print

Ohio EPA has published for comment its draft air pollution oil and gas well site general permit (see here for copies of the terms and qualifying criteria documents).  It is intended to cover the equipment used during the production phase of a Marcellus or Utica/Point Pleasant shale well - drilling and completion activities are currently exempt (according to Ohio EPA).

Comments are due by November 28, 2011.

Note:  Ohio EPA has also notified producers making inquiries about air permits about an additional permitting option associated with Ohio's air pollution control program - stating, "Because Ohio EPA has only recently determined that an air permit is necessary and believes that the final general permit will be available before any case-by-case permit could be issued, Ohio EPA is exercising its discretion not to penalize a company for failing to obtain an air permit before installing an oil and gas well as long as the company applies for the general permit within thirty (30) days of the general permit becoming available."

They have asked for notification and even prepared a sample letter to use.  Nice.

• Email This
• Print

We've noted previously the NYT's "environmental reporting" on the E&P industry (see here and here, e.g.).  Now, a different strategy:  "But the boom — brought on by an advanced drilling technique called hydraulic fracturing, known as fracking — has brought problems too. While the gas companies have created numerous high-paying drilling jobs, many residents lack the skills for them. Some people’s drinking water has been contaminated. Narrow country roads are crumbling under the weight of heavy trucks. With housing scarce and expensive, more residents are becoming homeless. Local services and infrastructure are strained."

• Email This
• Print

We thought you might be interested in the following articles on local production here in the Basin:

• PA Infrastructure Incentives.  "Gov. Tom Corbett says Pennsylvania's natural gas infrastructure needs a boost if the demand for the fuel is going to grow."
• PA Marcellus Gas Case Heads to High Court:  "A case raising doubts about whether Pennsylvania's booming natural gas industry has the right to extract the methane from the thick shale more than a mile beneath countless properties is being appealed to the state's high court."  (From Forbes.)
• Steel Industry Benefits from Local Drilling.  "A natural gas drilling boom in Pennsylvania is helping the economies of Rust Belt cities long accustomed to bad news. Drilling requires steel — lots of it — and that has manufacturers expanding and hiring new workers."  (From NPR.)
• Land Rush a Boon for Eastern Ohio.  "While drilling in the Utica is in its infancy, the land rush has been an economic boon. Mary Catherine Nixon is the recorder in Ohio's Belmont County, just 10 miles from Wheeling, W.Va. On a given day, Nixon says she's collecting $1,400 in copying fees alone from the two to three dozen mineral rights researchers who have camped out in her offices for months."  (From NPR.)

• Email This
• Print

The WSJ has an interesting article on Dominion Resources, Inc.'s efforts to export LNG from its Cove Point facility:  "The terminal, Dominion Cove Point on the Chesapeake Bay in Lusby, Md., is well-situated to export gas from the prolific Marcellus Shale and the promising Utica Shale formations, Dominion's chairman and CEO, Thomas Farrell II, said in a statement."

[Note:  Subscription may be required.]

• Email This
• Print

Pennsylvania is considering some significant fees on drilling in the state according to this article in the WSJ:  "Pennsylvania Gov. Tom Corbett proposed a fee on natural-gas drilling of as much as $160,000 a well in an effort to find a middle ground between public support for assessing drillers in the booming Marcellus Shale basin and a campaign pledge not to impose taxes."  (Emphasis is ours.)  It seems as if everyone is looking for a piece of the pie these days ...

See also this article in the Philadelphia Inquirer.

• Email This
• Print

We've noted previously a U.S. EPA rulemaking proposal designed to to reduce air emissions from oil and gas operations.  Here is an article from Forbes.com on the public hearing recently held in Texas on the issue:  "The agency is proposing standards to curb hydraulic fracturing, or 'fracking,' by requiring operators to capture and sell natural gas that now escapes into the air. Thursday's EPA hearing was held in a region with a vast area of urban drilling atop the natural gas-rich Barnett Shale. The EPA's proposal would apply new pollution control standards to about 25,000 gas wells that are hydraulically fractured each year. *** While industry representatives touted the jobs and prosperity that drilling brings, critics argued it's not worth the environmental risk of toxic spills, scattered drill site explosions, tainted drinking water and polluted air."

• Email This
• Print

The Ohio Oil & Gas Energy Education Program (OOGEEP) released its second economic impact study this past week:  "According to the study, Ohio's natural gas and crude oil industry could help create and support more than 200,000 Ohio-based jobs from the leasing, royalties, exploration, drilling, production and pipeline construction activities for the Utica shale reserve. The state could experience an overall wage and personal-income boost of $12 billion by 2015 from industry spending."  (From the press release.)  Nice.

For a copy of the study, see here.

• Email This
• Print

We reported yesterday on several of the amendments approved by West Virginia's Joint Select Committee on Marcellus Shale (see here).  Forbes is reporting that the committee has also made some decisions regarding permit fees:  "Natural gas operators would pay $10,000 to drill a well in West Virginia's share of the Marcellus shale field, and $5,000 for each additional well at the initial site, under a proposal adopted Wednesday by a special legislative committee."

Not so in Ohio!

• Email This
• Print

The State Journal is reporting that the West Virginia Legislature's Joint Select Committee on Marcellus Shale approved three amendments this past week:  "One amendment, which passed by a 4-3 vote, would abolish the Oil and Gas Board and transfer its duties to the Department of Environmental Protection. The second would allow for public comment and hearings on gas well permits, while the third would increase the number of people who would have to be notified when a company plans to drill a well. Those two passed unanimously."

For more on the committee's work, see here.

• Email This
• Print

While not new to the industry as a whole, the WSJ is reporting on recent attempts to enact local bans on oil and gas development in Pennsylvania:  "Challengers to natural gas drilling are taking a new approach in Pennsylvania, putting the rights of energy companies to drill in the massive Marcellus Shale basin on the ballot in what are believed to be the nation's first voter initiatives seeking to ban such activity."

Fortunately, Ohio law largely preempts these initiatives.

[Note:  Subscription may be required.]

• Email This
• Print

The New York Department of Environmental Conservation (NY DEC) has finally released a revised Draft Supplemental Generic Environmental Impact Statement (SGEIS) for public review.  Interestingly, the NYT introduces its report on the document as follows:  "Natural gas drilling using a controversial technique known as hydraulic fracturing could create up to 37,000 jobs and generate from $31 million to $185 million a year in added state income taxes for New York at the peak level of well development."

For more, including a copy of the report itself, see here.

• Email This
• Print

We've reported previously on the Delaware River Basin Commission's (DRBC's) oil and gas rulemaking (see here and here, e.g.).  The Philadelphia Inquirer is reporting that the rule package will be considered in October:  "The Delaware River Basin Commission, which has not allowed natural-gas drilling in eastern Pennsylvania counties within the basin, announced Tuesday that it would not act on its proposed drilling regulations at its Sept. 21 meeting, as one commission member had demanded."

• Email This
• Print

Last week, the Marcellus Shale Coalition hosted its inaugural "Shale Gas Insight" conference at the Pennsylvania Convention Center.  From the Houston Chronicle:  "A who's who of Pennsylvania's emergent natural gas industry will meet in Philadelphia this week to talk about a shale gas boom that supporters say has boosted domestic energy supplies while creating tens of thousands of jobs. Drilling opponents, meanwhile, are planning a rival event to spotlight what they contend is the environmental and public health toll."

For more, see here (Philadelphia Inquirer); and here (Forbes).

• Email This
• Print

The U.S. Geological Survey recently released an updated survey on recoverable reserves in the Marcellus.  From The Hill:  "According to the updated USGS mean estimate, the area contains 84 trillion cubic feet of technically recoverable natural gas and 3.4 billion barrels of natural gas liquids.  *** The new estimate for the Marcellus Shale — which includes portions of New York, West Virginia and other states — is far higher than the 2002 survey, when the mean estimate was 2 trillion cubic feet of natural gas and 10 million barrels of natural gas liquids."  However, according to Bloomberg:  "The U.S. will slash its estimate of undiscovered Marcellus Shale natural gas by as much as 80 percent after a updated assessment by government geologists."

You can find a copy of the updated survey here.

• Email This
• Print

We thought you might be interested in these items on regulatory initiatives addressing Marcellus development in West Virginia:

• From the Houston Chronicle:  "Another factor that could help lawmakers: the emergency Marcellus rules ordered earlier by acting Gov. Earl Ray Tomblin. The Department of Environmental Protection could issue them as soon as this week, according to state officials and stakeholders. *** These rules are expected to cover several key areas. One involves permits for the horizontal drilling method that often accompanies Marcellus development. Another is oversight of the large volumes of water withdrawn from area supplies, and of the chemicals mixed with that water before it is pumped underground to break up the shale and release the gas. Environmental groups remain concerned about this hydraulic fracturing process, also known as fracking, and the large pools of tainted water left over afterward."

• From the West Virginia Department of Environmental Protection:  "The West Virginia Department of Environmental Protection, *** filed an emergency rule today with the Secretary of State’s Office to increase the DEP’s regulatory oversight of horizontal well development in the state. *** The rule, which adds new permit application requirements for operators drilling horizontal gas wells, as well as new operational rules to protect the state’s water quality and quantity, will become effective after approval by the Secretary of State and remain in effect for 15 months."  You can find a copy of the rule here.

Interesting.

• Email This
• Print

We reported previously on a Cornell study claiming that natural gas development will likely contribute more to global warming than burning coal (see here).  The Patriot-News is now reporting on the conclusions reached by scientists at Carnegie Mellon University:  "The peer-reviewed study published Aug. 5 in 'Environmental Research Letters' appears to be a direct refutation of an April study from researchers Robert Howarth and Anthony Ingraffea at Cornell University that indicated that shale gas was worse for global warming than coal."  Looking specifically at Marcellus shale development, it finds that "Marcellus gas is essentially no different than conventional natural gas, the study found, and 20-50 percent cleaner than coal for producing electricity."

• Email This
• Print

The WSJ is reporting that New York State's Attorney General has issued subpoenas to several producers seeking valuation information:  "New York state's Attorney General recently issued subpoenas to several energy companies requesting details of how they value their natural gas discoveries, the latest evidence of increasing regulatory scrutiny of gas drillers."  Does this increase or decrease the likelihood that producers will want to enter New York, if and when the moratorium on hydraulic fracturing ends?

• Email This
• Print

The Times Leader is reporting on a recent industry win overturning Morgantown's ban on Marcellus shale drilling.  "On Friday, Monongalia County Circuit Court Judge Susan Tucker delivered a victory to Charleston-based Northeast Natural Energy in its legal battle with the city of Morgantown. *** Northeast is drilling wells above the Monongahela River about a mile from a city drinking water intake. Citing concern over its water supply and the lack of tough state regulations, the City Council passed an ordinance in June to ban deep horizontal drilling and hydraulic fracturing within city limits and up to a mile beyond.*** Tucker sided with Northeast, declaring the state has sole regulatory authority over oil and gas operations."  Nice.

• Email This
• Print

On July 21, 2011, Citizens For Pennsylvania’s Future (“CPF”) filed a lawsuit against Ultra Resources, Inc. (“Ultra”) in the United States District Court for the Middle District of Pennsylvania alleging that Ultra violated the Clean Air Act ("CAA") by not applying for and obtaining the proper permit to construct and operate its natural gas wells, pipelines, compressor stations and associated equipment in Tioga County and Potter County, Pennsylvania.  The central issue is whether all of Ultra's equipment involved in its natural gas production operations should be aggregated for air permitting purposes, which would impose significantly more stringent permitting, recordkeeping and reporting requirements on Ultra.

We will monitor the suit and keep you posted.

• Email This
• Print

Mandatory pooling is back on the table for consideration in Pennsylvania - at least in part.  "[T]he Marcellus Shale Advisory Commission has revived a debate over whether to allow areas of Pennsylvania rich with natural gas to be gathered into large land 'pools,' even against property owners' wishes."  (From the Pittsburgh Post-Gazette.)  The new proposal appears to have a strange twist, though:  "Only drilling companies would be forced to allow pooling, not property owners who haven't signed leases."

Better than nothing?

• Email This
• Print

The Philadelphia Inquirer is reporting that Dominion Resources is building a $500 million natural gas processing plant in West Virginia:  "The Richmond, Va., energy company announced Thursday that it would construct a processing and fractionation plant along the Ohio River in Natrium, W. Va., that would separate propane, butane, and ethane from gas extracted from the Marcellus Shale formation and, increasingly, the deeper Utica Shale."

For a copy of the press release, see here.

• Email This
• Print

The Pennsylvania Patriot-News has an interesting article on Europe's interest in the Marcellus:  "Ever since New York state declared a moratorium on drilling for natural gas in the Marcellus Shale, the conventional wisdom has been it was watching Pennsylvania and learning from us.  It turns out other eyes are watching us as well. *** Markus Wailand, a film producer from Vienna, recently spent 10 days interviewing people involved with Marcellus drilling in Pennsylvania for what he called Austria’s version of '60 Minutes.'"

• Email This
• Print

That aphorism comes to mind when considering U.S. EPA's new proposal to reduce air emissions from oil and gas operations. From its press release: "Today’s proposal would cut smog-forming volatile organic compound (VOC) emissions from several types of processes and equipment used in the oil and gas industry, including a 95 percent reduction in VOCs emitted during the completion of new and modified hydraulically fractured wells."  But - it really helps industry make money:  "EPA’s analysis of the proposed changes, which also include requirements for storage tanks and other equipment, show they are highly cost-effective, with a net savings to the industry of tens of millions of dollars annually from the value of natural gas that would no longer escape to the air."  Really!  Thank goodness they're looking out for at your pocketbook.  (Emphasis is ours.)

You can find a copy of the rule package here.

• Email This
• Print

The PA Marcellus Shale Advisory Commission has issued its final report on natural gas drilling in the state.  According to the press release, it contains 96 policy recommendations that include increasing setback distances, making more information available to the public, imposing tougher civil and criminal penalties for violations of law, and at the same time assisting local companies do business with the natural gas industry.

You can find a copy of the report here.

• Email This
• Print

Earlier this week, acting West Virginia Governor Earl Ray Tomblin issued Executive Order No. 04-11 requiring the state's Department of Environmental Protection to develop rules regulating Marcellus Shale production.  "The rules will focus mostly on the 'fracking' process, in which millions of gallons of water are mixed with chemicals and pumped underground to fracture shale deposits. Among other things, the regulations will make companies that withdraw more than 210,000 gallons of water a month disclose the list of additives used in frack fluid, and file a water management plan with the DEP."  - from the Charleston Gazette.

We will post a copy of the order once we obtain it.

• Email This
• Print

The Wheeling Intelligencer has a free-market/regulatory success story for Ohio taxpayers (resulting in large part from cross-state regulatory program differences):  "For months, Pennsylvania gas drillers tapping into the Marcellus Shale have been shipping the hydraulic fracturing, or fracking, waste to eastern Ohio. The Buckeye State is on pace to gain nearly $1 million in fees from out-of-state drillers for accepting the brine."

Of course, there are the usual statements regarding environmental fears.  Still, interesting.

• Email This
• Print

The Philadelphia Inquirer is reporting on the possibilities a shale gas revolution can bring to the state:  For example, "Power plants could consume more gas to produce electricity, displacing coal. Natural gas vehicles might replace some diesel and gasoline transport. A few entrepreneurs are even talking about shipping liquefied gas to overseas markets."

Read it all.  Interesting.

• Email This
• Print

The New York Department of Environmental Conservation (NY DEC) has released a series of documents related to its Preliminary Revised Draft Supplemental Generic Environmental Impact Statement (SGEIS) issued in September 2009.  From the Executive Summary:  "The final SGEIS will apply statewide, except in areas that the Department proposes should be off-limits to surface drilling for natural gas using HVHF technology. As explained below, these areas include the watersheds associated with unfiltered water supplied to the New York City and Syracuse areas pursuant to Filtration Avoidance Determinations issued by the U.S. Environmental Protection Agency ('EPA'), reforestation areas, wildlife management areas, state parks, and 'primary' aquifers as defined by State regulations, and additional setback and buffer areas."

• Email This
• Print

This has got to hurt.  After all of the efforts by one of its reporters to mischaracterize hydraulic fracturing as an environmental disaster, the NYT is reporting that New York State's Governor Cuomo plans to lift the state's moratorium on the use of that process to develop its shale resources:  "The Cuomo administration is seeking to lift what has been, in effect, a moratorium on hydraulic fracturing, a controversial technology used to extract natural gas from shale, state environmental regulators said Thursday."

Ouch.

• Email This
• Print

With all of the negative media regarding hydraulic fracturing, we thought you might be interested in this video from reason.tv:

• Email This
• Print

We noted previously the NYT's attempt to impede domestic drilling through a series of articles on the "environmental dangers" presented by hydraulic fracturing (see here), and the failings of those articles (see here).  Well, having fallen short at its attempted environmental scaremongering, the "Paper of Record" appears to be at it again with a series of articles attacking the economics of shale development in the United States:  "But the gas may not be as easy and cheap to extract from shale formations deep underground as the companies are saying, according to hundreds of industry e-mails and internal documents and an analysis of data from thousands of wells."  See here.

The author appears to have missed the mark yet another time, however, relying on years-old, outdated communications and analyses while ignoring more recent data.  As John Hanger, former Secretary of Pennsylvania's Department of Environmental Protection, states in an excellent take down of this new attack:  "Reader beware. This reporter puts sensationalism ahead of fairness or truth. Pennsylvania's drinking waters are not poisoned with radionuclides, as substantial testing has verified, and the reading public should drink from this journalistic cup with great caution."

For more, see here (Energy in Depth) and here (Forbes.com:  "Most of this argument is absurd on its face.").

• Email This
• Print

The Daily Journal is reporting that the city of Morgantown, WV, has banned the use of hydraulic fracturing within the city and a one-mile radius:  "City officials say a ban on horizontal drilling and fracturing is necessary in and near city limits because of the proximity to large infrastructure."

• Email This
• Print
• Comments

We thought you might be interested in a couple of articles:  First, one on how Ohio oil and gas development is already having a positive impact on the local economy (from the Canton Repository).  Second, one on a Quinnipiac University poll finding that 63 percent of Pennsylvania voters are for allowing Marcellus Shale development because of the economic benefits (from the Philadelphia Inquirer).

• Email This
• Print

That's the title to an article in the WSJ:  "The shale drilling boom now underway in Texas, Louisiana, Pennsylvania, Oklahoma and other states is already creating jobs, slashing natural-gas prices, and spurring billions of dollars of investment in new production capacity for critical commodities like steel and petrochemicals. Better yet, it's spurring a huge increase in domestic oil production, which has been falling steadily since the 1970s."

More energy production is better for all of us.

• Email This
• Print

According to the Hazleton Standard Speaker, "The Department of Environmental Protection is recommending a major overhaul of the state Oil and Gas Act with stronger buffer zones to keep natural gas drilling away from water sources, tougher penalties and bond requirements and a 'cradle-to-grave' manifest system to track wastewater from hydraulic fracturing, or fracking."  This is from a letter to the Governor's Marcellus Shale Advisory Commission.

Interesting.

• Email This
• Print

We reported previously on the threat made by New York State's Attorney General to sue the U.S. Army Corps of Engineers and others over their alleged failure to properly review oil and gas development regulations proposed by the Delaware River Basin Commission (see Bad Feds ...).  The Hill is reporting that New York has made good on that threat:  "New York Attorney General Eric Schneiderman opened a new front Tuesday in battles over controversial natural-gas drilling projects with a lawsuit alleging that federal agencies are shirking environmental review of dangerous development techniques."

Not unexpected.

• Email This
• Print

We've frequently noted the articles in the media on hydraulic fracturing.  The NYT had one on May 7th (mis)stating:  "But the practice [i.e., hydraulic fracturing] also pours millions of gallons of dangerous chemicals into the ground and into wastewater treatment systems, which in some cases cannot remove all the potential toxins. There are also numerous documented cases in which fracking fluids leaked into aquifers and contaminated drinking water."  (From Google cache; emphasis is ours).  

What you don't see often is the following:

Correction: May 17, 2011

An article on May 7 about the Obama administration’s appointment of a panel of experts to find ways to make hydraulic fracturing safer misstated the prevalence of cases in which fluids from the gas drilling process have been proven to have contaminated drinking water. There are few documented cases, not numerous ones, although federal and state investigations into reports of such incidents are continuing.

And even that isn't necessarily correct (what documented cases?) ...  Still, the NYT should be commended for trying.

• Email This
• Print

U.S. EPA has directed six natural gas producers in Pennsylvania to disclose how they intend to dispose of their drilling wastes.  "EPA’s action follows a request by PADEP asking drillers to voluntarily stop taking wastewater to Pennsylvania wastewater treatment plants by May 19. EPA wants to know where drillers are now going to dispose of their wastewater and will work with PADEP to ensure EPA has access to this information."

For a copy of the letters see here (for a sample letter and the enclosure).

It's starting to look like a frontal assault.

• Email This
• Print

A couple of items to note regarding hydraulic fracturing in the news:

• The U.S. Department of Energy has initiated its own review of hydraulic fracturing (i.e., in addition to the study being done by U.S. EPA):  "A group of highly respected experts with experience in industry, environmental groups and state regulatory agencies will form a subcommittee of the Secretary of Energy's Advisory Board to conduct the review, and will work to identify, within 90 days of beginning their work, any immediate steps that can be taken to improve the safety and environmental performance of hydraulic fracturing. They will also develop, within six months of beginning their work, consensus recommended advice to the agencies on practices for shale extraction to ensure the protection of public health and the environment."  Why?

• Researchers at Duke University have issued a study finding systematic evidence of methane contamination in areas being drilled using hydraulic fracturing, according to this report in the Philadelphia Inquirer.  Interestingly, it found no chemical contamination:  "We found no evidence for contamination of drinking-water samples with deep saline brines or fracturing fluids."  For a copy of the report, see here.

• Email This
• Print

The San Francisco Chronicle is reporting that Chevron has agreed to purchase additional Marcellus assets in Pennsylvania from Chief Oil & Gas LLC and Tug Hill Inc.  "The transaction is expected to close by the end of June and will give the company access to about 5 trillion cubic feet of gas in the area, the company said. In February, Chevron completed its $3.58 billion purchase of Atlas Energy Inc., a Moon Township, Pa., owner of 622,000 acres in the Marcellus Shale."

• Email This
• Print

The Pennsylvania Department of Environmental Protection (DEP) has asked Marcellus producers to stop disposing of their wastewater streams at the remaining treatment facilities in the state:  "At the direction of Governor Tom Corbett, acting Department of Environmental Protection Secretary Michael Krancer today called on all Marcellus Shale natural gas drilling operators to cease by May 19 delivering wastewater from shale gas extraction to 15 facilities that currently accept it under special provisions of last year’s Total Dissolved Solids (TDS) regulations."

Well ...

• Email This
• Print

Yes, it may be hard to believe your eyes, but look here (in the NYT):  "The country has been handed an incredible gift with the Marcellus Shale. With an estimated 500 trillion cubic feet of reserves, it is widely believed to be the second-largest natural gas field ever discovered. Which means that those of you who live near this tremendous resource have two choices. You can play the Not-In-My-Backyard card, employing environmental scare tactics to fight attempts to drill for that gas. *** Or you can embrace the idea that America needs the Marcellus Shale, accept the inconvenience that the drilling will bring, but insist that it be done properly."

• Email This
• Print

Marcellus a non-issue for western New York?  That's the topic of discussion in this article from the Buffalo News:  "That’s because, even though the Marcellus runs through most of Western New York, the dark shale here doesn’t hold nearly the promise for drillers that it does along a swath that stretches from roughly the southeastern corner of Allegany County eastward to Delaware and Sullivan counties."

• Email This
• Print

The Intelligencer has an article on the possible drilling in Ohio:  "'The economies around us are benefiting from drilling. You see it in Pennsylvania, it's real; you see it in West Virginia, it's real. Now it's here, and we have to grasp the opportunity,' said state Sen. Wilson, D-Columbiana. 'I think this is the biggest opportunity for job growth for eastern Ohio we have seen in a generation.'"

• Email This
• Print

The Register-Herald is reporting that a task force consisting of members from the Bipartisan Policy Center and the American Clean Skies Foundation recently issued a report on the benefits of domestic natural gas production, but recognizing the need for reasonable regulation.

• Email This
• Print

The Pittsburgh Post-Gazette has an interesting article on the start of the Marcellus shale boom.  "But a convergence of Wall Street interests, corporate money and academia helped transform Marcellus almost overnight from rock to rock star, spurring predictions of a natural gas bounty in the U.S. and unleashing a massive land rush across the commonwealth."  Nice.

• Email This
• Print

According to this article in the Herald-Dispatch, West Virginia geologists have created an interactive online map of the Marcellus Shale.  "The map shows completed and permitted well sites, thickness and depth of shale, and other information. It also has a list of frequently asked questions."

You can access the map here.

• Email This
• Print

We noted earlier the articles recently published by the NYT regarding shale development, including the claim that it involved the discharge of radioactive wastewater in PA (see here).  Well, you would think they would have waited for the facts - right after those articles came out, the PA Department of Environmental Protection announced the results of in-stream monitoring that was done months earlier:  "DEP Announces Testing for Radioactivity of River Water Downstream of Marcellus Water Treatment Plants Shows Water Is Safe."  (See here.)  More:  "“We deal in facts based on sound science,' said DEP acting Secretary Michael Krancer. 'Here are the facts: all samples were at or below background levels of radioactivity; and all samples showed levels below the federal drinking water standard for Radium 226 and 228.'”

For a more in-depth take down of the NYT articles, see the posts from former PA DEP Secretary, John Hanger (here).

• Email This
• Print

The Parkersburg News and Sentinel is reporting legislation on Marcellus drilling in the state is looking more likely (without forced pooling provisions).

• Email This
• Print

The WSJ has a short article on possible legislative changes for West Virginia producers:  "One pending bill proposes rules meant to address these various concerns. Crafted by a House-Senate interim committee that studied the issue over the past year, it also proposes hefty hikes for drillers."  Those proposed hikes include a $15,000 drilling permit fee!

• Email This
• Print

The Delaware River Basin Commission (DRBC) has published draft natural gas development regulations (see here).  From the DRBC's Fact Sheet:  "[T]his Article requires that water used for natural gas development projects must come from water sources that have been approved by the Commission for use for natural gas development. ***. A streamlined approval process is provided that encourages the use of existing Commission-approved water sources to minimize the need to construct and operate new water sources."

From a quick look, it appears as if the DRBC is looking to limit development through, among other things, significant bond requirements and permit fees.

Comments are due:  March 16, 2011.

[Update:  Public hearings have been scheduled for middle/late February (moved up).]

• Email This
• Print

The Intelligencer has an interesting article highlighting in summary form some of the financial data related to lease transactions over the past year in West Virginia.  For example:  "Lease revenue payments have ranged from as low as $5 per acre to about $4,000 per acre over the past year with production royalty payments ranging from 12.5 percent to 18.75 percent. Many residents leased their gas rights in 2010, which led the Sunday News-Register to begin publishing weekly oil and gas lease transactions each Monday."

• Email This
• Print

U.S. EPA has announced that it will be holding four workshops in February and March, 2011, to discuss a number of topics related to its Hydraulic Fracturing Study, including well construction and operation and water resource management.  It is currently soliciting subject-matter experts to participate as presenters and provide technical knowledge during the discussions.  Applications to serve as an expert will be taken until January 3, 2011, at http://hfworkshop.cadmusweb.com.

• Email This
• Print

The NYT is reporting that New York Governor David Paterson has vetoed the proposed legislative moratorium on the use of hydraulic fracturing to develop the state's mineral resources.  But the article goes on:  "Instead, he [i.e., Gov. Paterson] issued an executive order instituting a longer moratorium that extended until July 1, 2011, but that more narrowly defined the types of drilling to be restricted."  A copy of the Executive Order can be found here once it is posted (it has not been at the time of this writing).

Whether producers will exercise force majeure provisions in their leases remains an open question.

• Email This
• Print

We have reported previously on the Laser Marcellus proceeding before the Pennsylvania Public Utility Commission (see here "PA Gathering Update," e.g.).  The Administrative Law Judge has issued her recommended decision in the matter, finding that the application for a certificate of public convenience should be denied - despite the joint stipulation filed by several of the parties.  Her reasoning:  There is no reason - nor any statutory authority in Pennsylvania - for granting gathering companies the power of eminent domain.  For example:

A gathering system is not analogous to a local distribution company. Eminent domain is not an appropriate tool for a gathering company to have when those citizens burdened by the pipeline do not benefit from it.

For a copy of the decision, see here.

Now it's up to the Commission.

• Email This
• Print

A moratorium on new drilling permits relying on hydraulic fracturing to stimulate the well has passed the NY State Assembly and awaits Governor Paterson's signature, according to this article in the NYT.  "The State Assembly voted 93 to 43 on Monday night to block new permits for the drilling practice, known as hydraulic fracturing, until May 15. The purpose would be to give the state more time to address safety and environmental worries, especially concerns that the drilling could contaminate groundwater supplies."

• Email This
• Print

We've reported several times on the emergence of alleged air contamination issues relating to E&P operations, primarily out of the southwest and U.S. EPA.  Not surprisingly, the claim has come to the Appalachian Basin.  The Pennsylvania Department of Environmental Protection (DEP) has released a report on a short term air quality study conducted near Marcellus Shale natural gas operations in southwestern Pennsylvania.  According to DEP Secretary John Hanger, "The data shows no emission levels that would constitute a concern to the health of residents living near these operations."  (Emphasis is ours.)

For a copy of the report, see here.

• Email This
• Print

We mentioned earlier that it was unlikely that a severance tax would be imposed on Marcellus production in Pennsylvania this year (see here).  It appears that doesn't sit well with the current governor (from the Philadelphia Inquirer):  "Gov. Rendell signed an executive order Tuesday that bans further leasing of state forests for Marcellus Shale natural gas drilling, a move lauded by environmentalists but shrugged off by Republicans as the symbolic effort of a lame-duck leader."

• Email This
• Print

These days, it's not often that you see an article on hydraulic fracturing that doesn't blame the energy resource industry for the end of the world.  That's why this article from National Geographic was so refreshing (discussing the use of the technology in the Marcellus Shale).  Regarding water issues, for example:  "If shale development continues to grow in the Marcellus, water usage for well fracking could reach 650 million barrels per year in Pennsylvania, New York and West Virginia, concluded a report done earlier this year for the U.S. Department of Energy and state authorities. It sounds like a lot until it’s compared to the other water uses in the three states. It would total less than 0.8 percent of the 85 billion barrels drawn yearly out of watersheds in the three states, said the study by ALL Consulting of Tulsa, Oklahoma. Coal and nuclear power plants, in particular, draw many times more water."

Nice job overall, and highly recommended reading.

• Email This
• Print

The Ithaca Journal is reporting that cuts in the state work force at the New York Department of Environmental Conservation will likely have an impact on oil and gas development in the state:  "Staff reduction could make permitting and oversight of Marcellus Shale drilling sites difficult, the DEC contends. The department is reviewing its permitting guidelines, and drilling for gas in the Marcellus -- a gas-rich formation underneath much of the Southern Tier and Pennsylvania -- remains on hold in New York until they are finalized."

With NY - The best advice may be "Don't hold your breath."

• Email This
• Print

The Pittsburgh Tribune-Review is reporting that there will be no severance tax imposed on Marcellus production in Pennsylvania this year:  "Lawmakers won't consider taxing natural gas extracted from Marcellus shale before the 2009-10 session ends next month, but supporters and opponents predict it will become an issue when the next governor and Legislature take office in January."

• Email This
• Print

Ohio's oil and gas industry celebrates its 150th anniversary this year!  From the Suburbanite:  "While energy, economics and jobs dominate the headlines, a homegrown industry has been supplying these benefits for a century and a half in the Buckeye State. This year, Ohio’s natural gas and crude oil industry celebrates its 150th anniversary, and its benefits to the state may surprise you."

For an article celebrating that achievement and the new technology available to continue that success in the Marcellus and Utica Shales, see here (from the Marietta Times).  "'We're talking about something so big and vast that it could provide (much of the nation) with 50 to 100 years of gas production,' said Bob Chase, professor and chairman of the Department of Petroleum Engineering and Geology at Marietta College."

You can find more here, at the Ohio Oil & Gas Energy Education Program.

• Email This
• Print

The issue of forced pooling has been a topic of conversation in Pennsylvania for some time.  The Scranton Times-Tribune is reporting that related legislation is unlikely to become law this year:  "Although there was talk of including forced/fair pooling in the natural gas severance tax that passed in the House and is now being considered in the Senate, Senate Republican President Pro Tempore Joseph Scarnati, R-25, Jefferson County, has indicated it isn't likely to happen this term."

On a related note, Ohio's mandatory pooling law was substantially modified earlier this year (see S.B. 165).

• Email This
• Print

As readers of this blog know, hydraulic fracturing is a hot topic across the country.  We thought you might be interested in one pundit's thoughts (from the WSJ):  "Those who value pastoral poverty and bucolic quietude over all this grubby commercialism will just have to adjust, as the fishermen and sportsmen and sun bathers of the Gulf Coast have learned to live with oil drillers (and vice versa)."  (Emphasis is ours.)  Ha!

(Note:  Subscription may be required.)

• Email This
• Print

The Philadelphia Inquirer has an interesting article illustrating another mechanism activists are using to attack shale development - pressuring customers to use alternative sources of supply.  "Philadelphia Gas Works is not currently buying natural gas that comes from Pennsylvania's Marcellus Shale, but a PGW executive suggested Tuesday that a proposal to ban future purchases might put the utility at odds with regulators."  (Emphasis ours.)

That proposal came from anti-drilling activists, according to the article.

• Email This
• Print

This is an interesting (read:  not bashing) article on hydraulic fracturing.  For example:  "Bob Anthony, Oklahoma Corporation Commissioner, said in an address to the National Association of Regulatory Utility Commissioners in July, 'In my 20-plus years as a commissioner, I can't think of anything that can compare to the all-out assault on hydraulic fracturing by groups that are obviously using it to put a stop to the tapping of America's abundant natural gas supplies.'"

The comments are interesting as well.

• Email This
• Print

Pennsylvania is inching closer to the imposition of a severance tax.  The Pittsburgh Post-Gazette is reporting that the state House has approved a 39-cent per Mcf severance tax on production from the Marcellus Shale.  "But the bill *** still has a long way to go. The Senate, which is controlled by Republicans, says the tax is too high."

• Email This
• Print

We've been reporting on development of the Marcellus Shale for some time now in the Appalachian Basin (see here and here, e.g.).  The Columbus Dispatch has a good article on Utica Shale development in Ohio:  "Geologists say the Utica shale formation, a layer of thick black rock that lies 8,000 feet beneath most of the state, might hold enormous oil and natural-gas reserves. This promise has oil and gas companies spending a lot of money to snap up land."  More:  "Utica shale is thinner and deeper, and covers more of Ohio. That and some recent drilling successes in Canada, New York and western Pennsylvania make large Ohio deposits more likely, Engelder [a Penn State geologist] said."

Nice.

[Immediate update:  There are substantial economic benefits to this type of development, noted even by NPR in a story on PA shale activity:  "Pennsylvania's natural gas industry is rapidly expanding, and the state may be on the verge of a decades-long drilling rush. Right now, most of the jobs are going to transient out-of-state workers, but that trend is providing a boost to pockets of Pennsylvania's economy."]

• Email This
• Print

The American Petroleum Institute (API) has just released a new study on the economic benefits of producing the Marcellus Shale for New York, Pennsylvania and West Virginia.  See here for a copy of the report, which finds that it "could create 280,000 new American jobs and add $6 billion in new tax revenues to local, state and federal governments over the next decade."

For more, see here (an article from the Christian Science Monitor).

• Email This
• Print

According to this news release, the Pennsylvania Department of Environmental Protection (DEP) has concluded that untrained personnel and the failure to use proper well control procedures were the main causes of a natural gas well blowout in Clearfield County in June, leading to fines of more than $400,000.  Moreover, the DEP has told Marcellus drillers:

• A snubbing unit, which prevents pipes from ejecting uncontrollably from a well, may be used to clean out the composite frac plugs and sand during post-fracturing (post-frac) if coil tubing is not an option.

• A minimum of two pressure barriers should be in place during all post-frac cleanout operations.

• Any blowout preventer equipment should be tested immediately after its installation and before its use. Records of these tests should be kept on file at the well site or with the well site supervisor.

• A sign with DEP’s 24-hour emergency telephone number and local emergency response numbers, including 911 and the county communications center, should be posted prominently at each well site.

• At least one well site supervisor who has a current well control certification from a recognized institution should be on location during post-frac cleanout operations. These certifications should be in possession at all times.

• A remote-controlled, independently powered blowout preventer unit, which allows workers to control what’s happening on the rig at a safe distance, must be located a minimum of 100 feet from the well and operational during all post-frac cleanout operations.

According to the Philadelphia Inquirer, commenting on the same incident:  "The DEP, after being criticized for accommodating the natural-gas industry as the Marcellus Shale frenzy took hold, has adopted a more stern tone this year as criticism has mounted about the industry's practices."

• Email This
• Print

The Times-Tribune is reporting that the Commonwealth Foundation has issued a policy brief opposing the new severance tax proposed for Pennsylvania oil and gas producers.  You can find a copy of the brief here.

• Email This
• Print

National Fuel Gas Company announced this week that a third Seneca Resources Corp. (a wholly-owned subsidiary of National Fuel) well in the Marcellus Shale flowed gas at an initial 24-hour rate of over 10 MMcf per day, and averaged 9.5 MMcf per day over a seven-day period.  For more, see here.

• Email This
• Print

West Virginia landowners are urging the state legislature to allow forced pooling for horizontal wells in the Marcellus Shale, according to this article in the Charleston Gazette.  Interesting, coming from the landowners.

• Email This
• Print

The Pittsburgh Post-Gazette has a good article on the interest shown by industry in Pennsylvania Marcellus production.  A small part:  "Talk to anyone in the industry about the Marcellus Shale and the conversation is likely to turn to its potential economic impact -- not just the money that a company hopes to make, but the jobs that could be created and the tax revenues that could be generated."

• Email This
• Print

The Philadelphia Inquirer is reporting on a study recently issued by PennEnvironment urging greater restrictions on natural gas production in Pennsylvania, including a moratorium on forest land leasing until the impacts of current drilling operations can be assessed.  For a copy of the report, see here.

• Email This
• Print

The NYT has a good article on the debate taking place in New York over drilling in the Marcellus Shale.  Interesting:  "As New York environmental officials draft regulations to allow drilling in the shale as early as next year, thousands of residents like the Laceys in upstate counties have banded together in coalitions to sign leases with gas companies for drilling on their land — for $5,000 to $6,000 an acre for a term of five years, and royalties of up to 20 percent on whatever gas is found."

• Email This
• Print

The New York Department of Environmental Conservation (NYDEC) has released for comment its draft Supplemental Generic Environmental Impact Statement (SGEIS) for natural gas drilling operations in the Marcellus Shale.  The SGEIS looks at the range of potential environmental impacts of shale gas development using large volume hydraulic fracturing and proposes standards and mitigation strategies that may be required of producers applying for related permits.

Comments are due by November 30, 2009.  A copy of the draft SGEIS can be found here.  A related NYT article can be found here.

[Update:  The press is already reporting on the conflicts generated by the SGEIS.  See, for example, here (from pressconnects.com).  (Moved up.)]

• Email This
• Print

The Buffalo News is reporting that the early results from a new well drilled by a joint venture between National Fuel Gas Co. and EOG Resources in the Marcellus Shale are encouraging.  Its initial rate of production appears to be more than 3 MMcf per day, more than 9 times the initial rate of production of the joint venture's first well.  Nice.

• Email This
• Print

The Philadelphia Inquirer is reporting that the PA Governor's plan to impose a new severance tax on energy production in Pennsylvania is meeting resistance, with the Senate passing a budget last week that did not contain the Governor's proposal.  At least one lawmaker stated that the proposal is "off the table" at least until the industry can firmly establish itself in the Marcellus Shale.

• Email This
• Print

Landowners in NY remain concerned that the economy and state regulatory obstacles will encourage producers to move south to Pennsylvania, Ohio and West Virginia, according to this article in pressconnects.com (Greater Binghamton, NY).  Interesting article if you're looking to drill in the Marcellus.

• Email This
• Print

The PA Department of Environmental Protection has announced new discharge standards for industrial wastewater high in total dissolved solids (TDS), effective January 2011.  This could have an impact on energy development in the Marcellus Shale, and is being addressed by the Pennsylvania Oil & Gas Association.

DEP plans to undertake a rulemaking to amend the water quality regulations accordingly some time this summer, allowing interested parties an opportunity for public comment.

• Email This
• Print

Williams Cos., Inc., and Atlas Pipeline Partners, L.P., have formed a joint venture - Laurel Mountain Midstream, L.L.C. - to gather and process natural gas produced from the Marcellus Shale, according to this report from the Philadelphia Inquirer.

• Email This
• Print

The West Virginia Department of Environmental Protection has released a draft guidance document on appropriate water use and disposal when drilling in the Marcellus Shale.  Comments are due April 17, 2009.  A copy can be found here, at the Department's website.

• Email This
• Print

Good news for the PA DEP.  The potential economic benefits from natural gas drilling in the Marcellus Shale apparently outweigh the hiring freeze imposed by the Governor on state agencies that he oversees, according to this article from The Patriot-News.  Looks like the Department of Environmental Protection may hire 31 workers and open an oil and gas management office in Williamsport to address increased drilling activity in the shale.

• Email This
• Print

There's been a lot of interest recently in the development of natural gas from Marcellus Shale.  If you have such an interest, you might find the following websites helpful:  This one, from the Marcellus Shale Committee; this one, from the NY Department of Environmental Conservation; and this one, from the PA Department of Environmental Protection.

[Updated:  Here's another website, from the Cornell Cooperative Extension of Tioga County.  (Moved up.)]

• Email This
• Print

Gov. Ed Rendell is expected to propose this week the state's first severance tax on natural gas production to address, in part, Pennsylvania's worst fiscal crisis in 20 years, according to this article from the Republican Herald.  No one seems to remember the story of the golden goose these days.

• Email This
• Print

Increased wastewater volumes from Marcellus Shale drilling activities have led to an interesting partnership.  According to this press release, "The Department of Environmental Protection and the natural gas drilling industry have launched a partnership to explore innovative methods to treat wastewater generated from oil and gas well drilling operations in the commonwealth. Working with the partnership, the department will develop a technology-based standard for total dissolved solids in oil and gas wastewater."

• Email This
• Print

Adopted by the PA Environmental Quality Board:  "The new fee structure sets a base permit cost of $900 for all Marcellus Shale wells up to 1,500 feet deep, and imposes an additional cost of $100 for every 500 feet of depth past 1,500 feet. The increased fees will take effect in early spring."  The average permit fee for a Marcellus Shale well, according to this article from the Tribune Review, could - according to the PA Department of Environmental Protection - increase to $2,600.  (Link has been corrected.)

[Update:  Following Pennsylvania's lead, New York is considering a similar increase.  (Moved up.)]

• Email This
• Print

We have noted in previous posts the challenges presented in New York for producers looking at the Marcellus Shale.  One involves the possible use of a Supplement to the Generic Environmental Impact Statement (GEIS) applicable to natural gas and oil drilling issued by the NY Department of Environmental Conservation.  A draft of the Supplemental GEIS was published for public comment in October of this year, and included topics such as the use of water from surface and groundwater sources; and the removal and proper disposal of spent fracture fluids from the well site.  The public comment period closed this past Monday, December 15, 2008.

At least one congressman has urged the Department to delay issuing any new gas drilling permits in the shale until after completion of the Supplemental GEIS, according to this article in the Hudson Valley Press Online.  He has also introduced legislation to eliminate the exemption for hydraulic fracturing in the Safe Water Drinking Act.

• Email This
• Print

Not everyone is against development.  Last summer, NY imposed a moratorium on horizontal drilling in order to study its environmental impacts.  The NY Chemung County Chamber of Commerce  is encouraging Albany to finish the study and begin drilling, according to this report on WENY-TV.  Lost revenue and jobs is the concern - measured potentially in the billions of dollars.

[Update:  Is it driving development to Pennsylvania?  According to this article from Pressconnects.com, Fortuna is looking south to PA because of the regulatory matters in NY.  (Moved up from an earlier post.)]

• Email This
• Print

With an eye toward the Marcellus Shale, PA county commissioners are looking once again to assess oil and natural gas inventories for property tax purposes, according to this article in the Susquehanna Independent Weekender.

• Email This
• Print

According to this news release, Chesapeake has sold a 32.5% interest in its Marcellus Shale assets for $3.375 to StatoilHydro, including approximately 1.8 million net acres of leasehold (StatoilHydro now owns approximately 0.6 million net acres and Chesapeake owns approximately 1.2 million net acres).  It received $1.25 billion in cash at the closing and will receive the remainder through funding of its share of drilling and completion expenditures.

• Email This
• Print
• Comments
• Trackbacks

The downturn in the natural gas market, and the economy more generally, has dampened the zeal of natural gas drillers in Pennsylvania for exploring the Marcellus shale, according to this article in the Tribune Democrat.  Only months ago, local residents viewed it as a madhouse.

• Email This
• Print
• Trackbacks