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).
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."
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.
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.
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."
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.
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."
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.)]
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.
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.
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.
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.
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.
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.
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.
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.)]
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.
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."
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.)]
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.
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.)]
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.
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.
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.
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