Archive for Marcellus Shale News
PITTSBURGH, PA (AP) — Marcellus shale drillers need more pipelines to get their bountiful supply of gas to market, but improving the delivery infrastructure could cause them growing pains.
The challenge of growing the delivery network without pressuring prices with more supply is something on the minds of industry officials who are attending a conference in Pittsburgh this week.
“All these supplies that we’re growing on the gas production side are at risk if we can’t connect them to markets,” Alan S. Armstrong, CEO of the Williams Cos., a pipeline and processing group, told the Marcellus-Utica Midstream Conference & Exhibition on Wednesday.
The industry has made progress, especially in the past 18 months, at getting pipelines to more wells. But with gas production growing so fast, the pipeline investment will have to go on into the next decade and maybe longer to keep pace, experts at the conference said.
It’s a tricky balance that can cause hesitation for gas producers, said Bradley Olsen, managing director for midstream research at Tudor Pickering Holt & Co. in Houston. They commit to putting gas in these pipelines to help fund their expensive construction.
But if they commit big to help connect another part of the country where gas sells at higher prices, they risk the influx of Appalachian gas pushing down prices there, too, sticking the company with a bad investment for more than a decade, Olsen said.
“Producers don’t sign up for projects until prices get worse,” Olsen said. “It’s hard to do unless there’s some serious pain locally.”
That pain did hit big time in the fall. The growing local supply pushed prices down at natural gas hubs in Pennsylvania to $2 to $3.50 per unit below the national benchmark price, according to data from UGI Corp.
Three months after a new pipeline took Appalachian shale gas into Manhattan, industry experts said the local gas industry is going to have to keep pushing new links all over the country to sustain its growth.
“With all the promise of the shale revolution, it’s certainly not a slam dunk that we can make the most of it,” said Armstrong, referring to the challenges of connecting shale drillers to new markets. “It’s certainly going to take a long-term commitment.”
That’s likely to cost about $3 billion a year — maybe more — in Pennsylvania, Ohio and West Virginia, according to several estimates at the conference.
The threat of lower prices can make the gas industry look hard at connecting to broader markets, Olsen said. Pipeline projects to address it will take about three years, and that means the industry is probably vulnerable to price shocks and well shut-ins until 2016, he said.
The gas industry has made progress on this persistent problem in the last two years. In June 2011, 38 percent of the state’s unconventional wells were producing, many because they lacked pipeline connections, according to data gathered by the Penn State Marcellus Center for Outreach and Research. By 2013, two-thirds of all the wells in the state were connected and producing.
There have also been several new transmission pipelines, the superhighways of natural gas. Spectra Energy’s 30-inch line into Manhattan opened Nov. 1, making big news about doubling the island’s supply, according to Bloomberg. It quickly dropped prices there 40 cents per unit below the national benchmark price.
“Appalachian producers are very actively contracting pipeline capacity during project open seasons,” said Dave Messersmith a Penn State extension educator who was not at the conference, but tracks pipeline projects. “I can’t think of a midstream project in the Marcellus in 2013 that wasn’t booked soon after it was announced.”
Armstrong, the Williams CEO, warned of price volatility if the gas industry didn’t keep building up its pipelines to meet new customers. Price crashes lead drillers to pull back, either by slowing their drilling or shutting in wells they’ve drilled — common issues in Pennsylvania in 2011 and 2012. That can limit supply and cause prices to jump again. That up-and-down cycle can make new customers, especially big industrial customers the industry has been courting, skeptical about the reliability of natural gas, Armstrong said.
Coordination between drillers and pipeline companies is key, said Randall L. Crawford, who oversees midstream and commercial operations for Downtown-based EQT Corp., which has both production and pipeline arms. While there may be lags, producers and their pipeline companies are doing a better job of collaborating to ensure pipelines are ready to go to support development, he said.
“Most production companies … are economically driven, and the fact is that when you’re investing in these wells, it’s important to be able to get those returns, generate those cash flows by getting (gas) to market,” Crawford said. “I’m not going to say there’s not going to be lags because there needs to be a coordinated effort and a commitment to the pipeline capacity to get that gas to market.”
MURRYSVILLE, PA — The possibility of Marcellus shale gas drilling under Murrysville Community Park could become a reality.
Council is slated to discuss a proposed lease to the oil and gas rights at the park at their next meeting.
Murrysville Chief Administrator Jim Morrison confirmed that the municipality had been approached by an oil and gas producer regarding the natural gas rights at the park.
“The council at their next regularly scheduled meeting will discuss the proposed lease,” Morrison wrote in an email. “Council feels the input of the residents of the community is paramount in helping guide an appropriate course of action on this very important issue.”
Huntley and Huntley, a Monroeville-based drilling company, has approached officials about leasing the gas rights under the 262-acre park, but the company has not made a formal offer, said Mike Hillebrand, vice president and chief operating officer at Huntley.
“We’ve been in discussions for several years to determine interest,” Hillebrand said. “We’ve thrown some concepts around, for economics, to see if it’s even advanceable.”
The park along Wiestertown Road is one of two included in the municipal drilling district. No shale gas drilling has occurred in the municipality.
Hillebrand said Huntley does not intend to begin drilling in Murrysville for at least three more years. He said he would like to see more public discussions about drilling under the park.
“We’re inviting debate for the subject,” Hillebrand said. “I don’t know that either side is close to a definitive offer, but as things progress, good communication is important.”
Focus on Environmental Firms: Q & A with Chris Morgan, vice president of sales at MAX Energy Services
By Julie Benamati, MBC Editor
Last month, the state Supreme Court upheld the lower court’s decision to strike out a zoning preemption provision of Act 13, returning local zoning control of drilling activity to Pennsylvania townships just before Christmas.
Just after the new year began, a request from the Associated Press (AP) for data on drilling-related companies in four states found that despite admission that instances of contamination of private wells from fracking activities has occurred, pollution cases in Pennsylvania have continued to drop in the past five years.
The Marcellus Business Central conducted a Q & A with Chris Morgan, vice president of sales for MAX Energy Services, a division of Max Environmental, to discuss the role of environmental firms in the Marcellus shale play.
MBC: Please describe the various environmental services your company provides.
Morgan: We provide site, waste, water and wastewater sampling and analyses to determine conformance with state-wide remediation standards and waste classification requirements. We also provide waste supervision, handling, excavation/remediation, transportation, solidification, permitting and disposal, as well as hydroexcavating for midstream projects. We also provide drilling/completions containment, liners & site preparation, tank, equipment & rig cleaning/washing/remediation, and NORM/TENORM analysis.
MBC: Please explain your company’s environmental role in regard to the engineering side of the Marcellus shale play.
Morgan: We provide construction site services and partner with engineering consulting firms to support the construction of access roads, site grading for drilling pads and support structure, install liner and other containment for drilling pads and support structures, perform hydroexcavating work for pipeline installation and install and maintain erosion and sedimentation control structures at drill pad sites.
MBC: Many environmental firms in Pennsylvania are working for companies in the shale industry in some capacity. Do you bid on each contract or do you have exclusive contracts with certain companies in the industry? How tough is the competition for shale-related work from environmental firms outside the state?
Morgan: We typically bid each project or provide a rate sheet for services we provide. There is significant competition from other construction and remediation firms both in and out of state. Many companies that were active when the boom started a few years ago have not been able to maintain their business. Several small and some large suppliers and service companies have completely ceased their operations. The market has stabilized and the cream is rising to the top. Only the vendors that can innovate, adapt, and cost effectively meet the demands of their customers have remained competitive and profitable. We have worked hard to listen to what our customers need and have adapted our business to better serve their needs.
MBC: What is the typical turnaround time from bidding a project to actually starting it, assuming you are awarded the bid?
Morgan: It varies from project to project. Typically, in the oil and gas field, things move very quickly and work can commence in as little as a few days to a few weeks.
MBC: Why do you think other companies have failed, where you and others have survived and thrived?
Morgan: We abide by one simple philosophy: listen to the customer and find solutions to their problems. If the solution to the customer’s problem falls within our core competency, then we are positioned well to build a sustainable business relationship based around that solution. We adapt and build off our core competencies with complementary services that are a natural progression for us. Many other companies that have failed in this market have done so either because they are not focused on the customer’s needs, or they are trying to offer products or services that are outside of their core capabilities.
MBC: The shale gas industry has gone through some major changes over the past two years. When gas prices fell, so did the natural gas rig count as producers moved capital budget dollars and rig crews to crude oil. That shift resulted in a dramatic increase in the crude oil rig count, from 1,050 in January 2012 to 1,432 in January of this year. At the same time, there has been a decline in the number of new wells being drilled in Pennsylvania. Have these trends affected your business?
Morgan: We service regional rig site operations in Pennsylvania, West Virginia, and Ohio. Even though the rig count in the US has declined, and many of the drilling operations in northeast Pennsylvania have slowed dramatically, our primary clients continue to maintain their operations in southwestern Pennsylvania, Ohio and West Virginia due to the “wet gas” nature of the wells in the area. In fact, several clients have indicated that their plans include an increase in rig count for 2014 and 2015.
MBC: A big trend this year was the pipeline build-out – putting in place infrastructure to get gas to market. Has your company been involved in environmental work around pipelines, and if so, did this work increase this year?
Morgan: We have been involved in the midstream/pipeline work and the work has been fairly steady. There are several pipeline projects set to begin in the region in 2014.
MBC: Water quality has been a major concern ever since the industry began drilling for natural gas in Pennsylvania. At first, water was treated and returned to the streams or rivers, but then the brine was found to be too “salty” for water and hazardous to aquatic life, so frack water began to be recycled for use by gas companies. In addition, Act 13 of 2012 enacted stronger environmental standards. What kinds of water you test and have your testing methods or standards changed since the drilling boon began in 2008?
Morgan: We test all types of water and wastewater for classification to determine the proper way to manage — treat, dispose, recycle. The methods we use have remained consistent but have expanded to address regulatory agency needs, especially radiation testing.
MBC: Our understanding is that the law requires public water supplies to be tested, but not private wells that are used for potable water. In addition to the chemicals used in fracking, naturally occurring heavy metals, radioactive elements and other hazardous substances can come out of the ground through the flowback water. Do you test wells for residents near well sites? Do you test for these naturally occurring hazardous substances?
Morgan: We do not test private wells, but we do test for naturally occurring hazardous substances, primarily to determine if our own waste management facilities are capable of managing these wastes. These wastewaters are either solidified and disposed of, recycled, or shipped out of state for disposal if the NORM levels are too high.
By R. Brock Pronko, MBC Regional Business Analyst
Pennsylvania townships regained local zoning control of drilling activity when the state Supreme Court upheld the lower court’s decision to strike out a zoning preemption provision of Act 13 last month. Also known as the Oil & Gas Act of 2012, the law had been deliberated by the Court for 14 months before its decision was made on Dec. 19.
The provision sought to override local zoning laws for industrial activities related to natural gas drilling and replace them with a statewide uniform code, allowing gas companies to decide where they wanted to operate within municipalities, including residential zones.
While four concurring justices upheld the lower court’s decision, the reasons given in their 162-page opinion differed from that of the commonwealth court, except for Justice Max Baer, who agreed with the commonwealth court that the preemption provision violated the due process rights of citizens under Article 1, Section 1 of the state constitution, which deals with due process and the government’s police powers.
The Court ruled that placing industrial operations in residential areas is not a proper use of a township’s police powers to protect its residents, and thus it violated the state constitution and the citizen’s rights.
Chief Justice Ronald Castille and Justices Debra McCloskey Todd and Seamus McCaffery also voted in favor of the townships, but they found the preemption provision unconstitutional under Article 1, section 27, the Environmental Rights Amendment — a 1971 law that guarantees Pennsylvanians’ access to clean air and water.
Castille cited that the preemption provision “sanctioned a direct and harmful degradation of the environmental quality of life in these communities and zoning districts.”
An environmental provision in Act 13 that dealt with setbacks for streams and wetlands ordered DEP to waive the setbacks if gas operators were unable to meet the requirements but could develop a plan to mitigate impacts to those natural resources.
The Court ruled the streams and wetlands provision unconstitutional, which has left gas companies asking how the DEP will be able to continue issuing permits without the law being rewritten.
“The DEP contends that the Supreme Court misunderstood how the statutory provisions work
separately from each other, and asks the Court to direct Commonwealth Court to study that question as part of the other matters it must examine on remand,” said Governor Corbett’s General Counsel James Schultz in a press release.
Jordan Yeager, one of the three attorneys who represented the municipalities in Act 13 lawsuit, criticized the DEP for challenging the Court’s ruling.
“The DEP should be looking at standing up for the Environmental Rights Amendment rather than challenging it,” said Yeager.
In addition to the seven townships that sued the state over the preemption provision, David Ball, Peters Township councilman in Washington County, and Brian Coppola, Robinson Township Supervisor in Allegheny County, were plaintiffs in the case, both as elected officials and as individual landowners and residents of their respective townships.
The Commonwealth Court ruled that the value of Coppola’s and Ball’s homes was affected negatively and that in their capacity as elected officials of their municipalities, they were “aggrieved” because, under provisions of Act 13, they would be required to vote for zoning amendments they believe are unconstitutional.
“I’m very pleased that the state Supreme Court decided to defend the constitutional rights of citizens of Pennsylvania,” Ball said. “The decision was made on a constitutional basis, and the majority opinion very clearly ruled that the preemption provision was not constitutional, which was the primary argument we made in our lawsuit.
“Can you imagine a well site being developed 300 feet from your home, which was the set-back in the law, with tankers full of sand, chemicals and water traveling passed your property every 15 minutes during fracking operations?” Ball continued. “No other industry in the commonwealth has the right to operate in a residential area, and neither should the shale industry.”
Marcellus Shale Coalition president Dave Spigelmyer issued a statement on the Supreme Court of Pennsylvania ruling:
“Although we will continue to collaborate with communities across the Commonwealth, [the] decision is a disappointment and represents a missed opportunity to establish a standard set of rules governing the responsible development and operation of shale gas wells in Pennsylvania.
“This outcome should also serve as a stark reminder to policymakers of Pennsylvania’s business climate challenges. If we are to remain competitive and our focus is truly more job creation and economic prosperity, we must commit to working together toward common sense proposals that encourage – rather than discourage – investment into the Commonwealth.”
Gov. Corbett and legislative leaders said that the court’s ruling, which was written by Chief Justice Ronald Castille, had worrisome implications for business in the commonwealth.
“We must not allow [this] ruling to send a negative message to job creators and families who depend on the energy industry,” said Corbett in a press release.
“I will continue to work with members of the House and Senate to ensure that Pennsylvania’s thriving energy industry grows and provides jobs while balancing the interests of local communities.”
State Senate President Pro Tempore Joe Scarnati (R-Brockway) and State House Speaker Sam Smith (R-Punxsutawney), said in a joint statement: “Our fear now is that landowners and hardworking individuals will suffer because of this decision.”
Since the law was enacted, the Pennsylvania State Association of Township Supervisors (PSATS) supported the preemption provision.
According to PSATS Executive Director David Sanko, if the supervisors chose to reject the preemption provision, they would also be rejecting the impact fees, which the townships wanted.
PSATS, which represents 90 percent of the townships in Pennsylvania, passed a resolution at its 2012 annual meeting that opposed any law that “would remove, reduce, or inhibit local government local authority of existing subdivisions, land use, and zoning controls” and sent a signed copy to the state legislature. PSATS also filed a brief with the Pa. Supreme Court in support of the townships’ lawsuit.
“Local governments weren’t standing in the way of shale development, and the industry got along fine without preempting local ordinances for the past five years, so there was no real need for such a provision in Act 13, even though the industry keep insisting there was,” said Sanko.
“Saying that the preemption provision being struck from the law is going to hinder economic development in the state is clearly fear mongering, because we’re continuing to see gas production go up, pipelines networks are being built across the state to move the product to market, and as long as those things are being done safely, everybody wins,” Sanko added.
“At the end of the day, reasonable people do reasonable things, and as long as both parties are willing to make reasonable compromises, we’ll be okay. Even Washington seems to be finally coming around to that idea.”
Last year, Shell Oil, which has been considering building an ethane processing plant along the Ohio River in Monaca, Beaver County, stated that part of its decision to locate in Pennsylvania would be based on the outcome of the Act 13 lawsuit.
“If a company says, we’re not going to operate here because you’re going to enforce the state constitution, they should take a look at all the other industries that have successfully operated within the confines of our constitution, and all the established gas companies that have been acting in accord with the state constitution since they arrived,” said John Smith, Esq., solicitor of Cecil Township in Washington County, one of the seven townships involved in the lawsuit.
“I don’t think that anybody should apologize for defending the constitutional rights of the citizens of Pennsylvania.”
The Court sent several other provisions of Act 13 that were challenged but dismissed by the lower court, back to the lower court to review. One of those provisions is the “medical gag order.”
Mehernosh Khan, M.D., whose case was dismissed by the lower court, said the law prevents doctors treating people who may have been exposed to drilling-related chemicals from disclosing information on those chemicals to anyone, whether they are family, neighbors or co-workers.
Another provision the justices returned to the lower court deals with the special law section of Act 13, which states that if a gas company has a spill or release at a drill site, it is only required to notify the public water source of the spill, but not the owners of private water sources.
“We pointed out to the court that in the majority of areas where the drilling is taking place, residents get their water from private wells, not public reservoirs, so they also need to be in the loop,” said Smith.
Smith, Yeager, and attorney Jonathan Kamin, who were the attorneys involved in the Act 13 preemption challenge, will argue the cases returned to the lower court this year.
DANVILLE, PA (AP) — Almost two years after it began, a much-publicized plan to study possible health impacts from gas drilling is still in the process of collecting data.
Geisinger Health Systems here began seeking partners for the long-term project in early 2012. It’s secured at least $1.3 million in funding and has attracted a wide range of medical, environmental and academic partners. For now, the main goal is to build a data warehouse available to researchers.
Geisinger spokeswoman Patti Urosevich said in an email that the project has collected Pennsylvania data on traffic and accidents, air pollution emissions, and the locations of thousands of gas wells and more than 600 compressor stations, which feed the gas through pipelines.
Urosevich wrote that once the data warehouse is complete, researchers will be able to identify and investigate trends by merging health information with data such as geography, traffic, or the environment.
Guthrie Health, of Sayre, and Susquehanna Health are other major partners in the study, and as a group they have access to detailed health histories of hundreds of thousands of patients who live near wells and other facilities that are producing natural gas from the underground Marcellus Shale formation.
The Marcellus lies under large parts of Pennsylvania, West Virginia, Ohio and New York. While the boom in drilling has generated jobs and billions of dollars in revenue for companies and individual leaseholders, it also raised health concerns.
One public health expert welcomed the Geisinger work but said a bigger problem remains: the state of Pennsylvania isn’t doing enough to fund even basic research into possible health impacts of gas drilling.
It’s the state’s responsibility to collect public health data, said Bernard Goldstein, a professor emeritus at the University of Pittsburgh School of Public Health who is not part of the Geisinger project.
Goldstein noted that a state commission suggested two years ago that the Department of Health be given $2 million to create a statewide health registry to track illnesses potentially related to gas drilling. But representatives from Gov. Tom Corbett’s office and the state Senate cut the funding.
Alan Krupnick, an energy and risk management expert who’s on the Geisinger project executive committee, wrote in an email that health care providers “are sitting on a treasure trove of health data” that could be compared to shale gas development “to find out if and the extent to which these activities are affecting health.”
Krupnick is a researcher at Resources for the Future, a nonpartisan Washington, D.C. think tank.
In early December, the Geisinger project was awarded a $250,000 grant from the U.S. Geological Survey to survey and test 72 private water wells in Lycoming County, which has seen heavy drilling activity. Urosevich said that work should provide insights “into the possible effects of natural gas drilling, agriculture, leaking septic systems and industries on the groundwater.”
Geisinger researchers say they plan to study rates of asthma, premature births, and motor vehicle injuries in areas with heavy drilling activity, but there’s no specific schedule for publishing.
In a recent newsletter that discussed the project, lead researcher David Carey said timing is critical. “If we wait too long, it will be hard to get baseline data,” Carey said, adding that they need to move toward “doing some analysis.”
PITTSBURGH, PA (AP) — The natural gas industry and environmentalists in Pennsylvania both had reasons to cheer and jeer in 2013 over the boom in Marcellus Shale natural gas drilling.
Environmentalists were heartened by a state Supreme Court ruling at the end of the year that rejected significant portions of industry-friendly legislation. The state’s highest court ruled that Gov. Tom Corbett’s administration had gone too far in passing a law that gives the industry the right to operate almost anywhere it wants to, even if local municipalities object.
The justices also ruled that lower courts had erred by upholding a cumbersome set of restrictions on doctors who need information about chemicals used in the drilling process. The rulings were seen as a big win for environmentalists but won’t do much to change the gas that’s flowing from over 4,000 wells that are already producing.
The ruling also doesn’t mean new drilling will stop everywhere, since many communities welcome the jobs and royalty payments that come with drilling.
Not only that, gas continued to flow in record amounts.
The U.S. Department of Energy reported that Pennsylvania’s 2013 gas production could rank second in the nation, behind only Texas. That represents an enormous leap from just five years ago, when the gas production was almost meaningless on a national scale.
The regional production of about 13 billion cubic feet a day at the end of the year is the energy equivalent of about 2 million barrels of oil per day. For perspective, if the Marcellus Shale region were a country, its natural gas production would rank eighth in the world, and it now produces more natural gas than Saudi Arabia. More than 80 percent of the production is from Pennsylvania, with most of the rest from West Virginia.
The biggest question mark for 2014 is whether Shell Oil Co. will continue to explore the possibility of building a huge natural gas processing plant in western Pennsylvania. In March 2012, Shell chose a possible site about 35 miles north of Pittsburgh for the so-called ethane cracking, or cracker, plant. It would convert ethane from bountiful Marcellus and Utica shale natural gas into more profitable chemicals such as ethylene, which are then used to produce everything from plastics to tires to antifreeze.
Shell’s option to buy the site expires at the end of the year, but it could easily be renewed. Shell spokesperson Kimberly Windon said last week there’s no update on the plant.
Though the industry and environmentalists remained bitterly divided over many issues, there were also some preliminary efforts to seek a middle ground.
In March, several environmental groups joined major companies such as Shell and Chevron to form the Center for Sustainable Shale. It was billed as an attempt to create voluntary standards that go beyond existing state or federal regulations. But by the end of the year no company had yet been certified to meet the new guidelines.
In eastern Pennsylvania, some well-known critics of gas drilling said they were going to try to work with the industry to resolve problems. Members of Breathe Easy Susquehanna County said they aim to promote respectful dialogue with the industry to seek the lowest possible levels of air pollution. The nonpartisan group is based in Montrose, which is about 40 miles north of Scranton.
Meanwhile, many questions remained unanswered about exactly how drilling affects the environment and human health.
In February 2012, Geisinger Health System announced plans for a comprehensive study of health impacts on people who live in areas with heavy drilling, but so far the project has failed to secure most of the funding needed to accomplish all of its goals.
MONESSON, PA (AP) — Monessen council will soon acquire 264 tax-delinquent properties from Westmoreland County — a handful of which will be targeted either for rehabilitation or demolition.
The properties include 27 homes sitting in the county repository, according to city administrator John Harhai. Twelve of those homes can be fixed up, sold and put back on the tax rolls, he said. The other 15 will likely be put on the city’s demolition list.
The Monessen school board last week approved the acquisitions from the county’s Tax Claim Bureau.
Westmoreland County officials in October obtained $400,000 from Marcellus shale impact fees for the project, a procedure initiated during the administration’s “Monessen Rising” project. According to Harhai, the county used the city’s initial program request to apply for the money.
The county will receive $92,400 to cover administrative costs for the properties, he added.
“Part of the money must be used to demolish the unsafe properties and rehab the properties they choose to rehab,” Smith said.
The city will also budget $100,000 for demolition to come from 2014 Community Development Block Grant (CDBG) funds. The city receives a minimum of $300,000 annually in CDBG money, Smith said.
Part of the money must be given to the Mon Valley Initiative of Homestead to rehabilitate the old Eisenberg building on Schoonmaker Avenue, which it owns, Smith said. Harhai said there are tentative plans for six apartments to be installed on the building’s top floor.
“Once we approve, the county will go in and start to deed the properties over to the city of Monessen,” Harhai said. “That will probably take two to three months to complete. That was their estimate.”
The administration had planned to acquire the properties for $1 each earlier this year, but Republican Commissioners Tyler Courtney and Charles Anderson rebuffed the proposal.
The vast majority of the properties are vacant, Harhai said, but the city has been maintaining the properties at its expense.
The incoming administration, including new Mayor Lou Mavrakis and council members John Scott Nestor and Patty Bukowski, will determine whether to continue the program.
“It’s what we wanted,” Harhai said. “The problem is, if the next administration does not follow up, it’s all for naught.”
Five hundred million dollar acquisition increases company position to 210,000 acres in Pennsylvania
WEXFORD, PA – Chief Oil & Gas and working interest partners Enerplus and Tug Hill have acquired MKR Holdings LLC from Chesapeake Appalachia LLC for approximately $500 million.
The acquired assets include current month production of approximately 130,000 MCFD and approximately 40 operated wells waiting on completion or pipeline as well as undeveloped acreage. The acquisition includes leasehold in Bradford, Lycoming, Sullivan, Susquehanna and Wyoming Counties in Pennsylvania.
“With this acquisition we have significantly expanded our operational footprint in the northeastern Pennsylvania region,” stated Sam Fragale, senior vice president of operations for Chief Oil & Gas. “This acquisition comes with existing cash flow from current production, increases our working interest in wells we currently operate and provides additional development opportunities in a great area.”
Chief Oil & Gas had existing working interest in many of these wells and will be increasing its ownership percentage in these and future wells as a result of the acquisition. Chief Oil & Gas currently operates more than 100 wells in the Marcellus Shale and owns approximately 210,000 gross leasehold acres.
This asset purchase is another stage in the multi-phased growth plan for Chief Oil & Gas in the Marcellus Shale region.
The company is a privately held exploration and development company founded by Trevor Rees-Jones. Based in Dallas, Texas, with regional offices in Wexford and Williamsport, Pennsylvania, Chief operates primarily in the Marcellus Shale in northeastern Pennsylvania, but holds interests in oil & gas fields throughout the United States.
PITTSBURGH, PA – Range Resources Corporation vice president of government and regulatory affairs, K. Scott Roy, has been elected as the Marcellus Shale Coalition’s (MSC) next chairman by the organization’s board of directors. Roy previously served as the MSC’s vice chairman and treasurer. Heather Lamparter (Vice President, Legal, EXCO Resources (PA), LLC), Mark Hager (Senior Government Affairs Representative, Williams) and Gary Smith (Vice President and General Manager, EOG Resources) were elected to serve as vice chair, treasurer and secretary, respectively.
“Scott’s leadership and experience, and our board’s collective laser focus on critical legislative and regulatory issues, will continue to serve our entire industry and the Commonwealth well,” said MSC president Dave Spigelmyer. “Our leadership team also recognizes the importance of sustained public education and outreach to communities in each of our 67 counties to ensure questions are answered, concerns are addressed and that Pennsylvanians are more aware of the opportunities and benefits tied to shale development.”
Organized in late 2008, the MSC has grown from a several exploration and production companies to a robust organization with nearly 300 member companies that span the broad shale supply chain. MSC member companies were responsible for 96 percent of Pennsylvania’s shale production in 2012. And according to a U.S. Energy Information Administration report issued this week, “The Marcellus region, which produced less than 2 Bcf/d as recently as 2010, is expected to provide 18% of total U.S. natural gas production this month.”
“It’s an honor to have been elected by my colleagues to serve as the MSC’s next chairman,” said Roy. “As a lifelong Pennsylvanian who has seen the ups and downs of our region’s economy firsthand, especially our manufacturing sector, it is deeply rewarding to see the new opportunities tied to responsible shale development that are cascading from Erie to Philadelphia, Scranton to Southpointe and all points in between. Our industry certainly appreciates the great responsibility that we have to continue to make certain that shale-related benefits are fully leveraged and that Pennsylvania remains a shining example regarding environmental compliance and responsible development.”
According to the U.S. Energy Information Administration, production of natural gas in the Marcellus region, located in Pennsylvania and West Virginia, is expected to exceed 13 billion cubic feet per day this month.
This figure is a result of information from the EIA’s Drilling Productivity Report (DPR), which will be released later today.
The Marcellus region is expected to provide 18 percent of total U.S. natural gas production this month. The total natural gas production estimate is marketed production, while the DPR estimates gross withdrawals, so coming up with a precise percentage is difficult.
The rise of Marcellus production in both absolute terms and as a share of total U.S. production is a key development in a rapidly evolving U.S. natural gas market.
Growth in the efficiency of new wells has largely driven the continued increase in production volumes in the region. Although the number of drilling rigs in the area has remained relatively flat in recent months, production from new wells has continued to grow. Another contributing factor to the growth in production is the increased output from previously shut-in wells or wells that were operating at reduced volume because of constraints in takeaway capacity in the region.
Recent infrastructure upgrades in West Virginia and Pennsylvania have helped boost production volumes. Production growth in the region has driven the forward price of natural gas at the Columbia Gas Transmission Appalachia hub below Louisiana’s Henry Hub price, the benchmark for natural gas throughout North America. Natural gas pipeline expansion projects are expected to add takeaway capacity to the New York/New Jersey and Mid-Atlantic markets by 2015. Natural gas production in the region has reduced the flow of natural gas from other regions into the Northeast.
The full Drilling Productivity Report will include production estimates, rig counts, new well production, and monthly changes in production for six key oil and natural gas production regions. The report will be released later today.