Friday, June 29, 2012

It's Time for More Links - Friday's Stories

Will a Sinopec deal with Chesapeake work out?

Editorial:  Science, not politics, needs to drive the fracking debate.

University at Buffalo offers half-hearted support of Shale Institute in wake of activist furor over study results.

Hess Corp. and Consol Energy complete Ohio Utica Shale joint development agreement.

Natural gas generated as much electricity as coal in April.

USA Today takes a look at shale boom and how it's moving along.

Connect with us on Facebook and Twitter!

Josh Fox and New York Times Writer Butt Heads Over Fracking

From the New York Times:
Josh Fox, the filmmaker whose “Gasland” documentary powerfully influenced debates about gas extraction from shale deposits, has started a conversation with me related to his new short video, “The Sky is Pink,” and my post supporting New York Gov. Andrew M. Cuomo’s signaled plans for the state’s gas resource. 
Here’s Fox’s video, which centers on Cuomo and on documents that Fox asserts open a new front in the fracking wars — pointing to established problems with long-term well integrity due to failures in the steel or cement used to line and seal the vertical well shaft:

 Here’s our exchange so far, which has played out in the comment string on my post on Cuomo’s choices:
Josh Fox, commenting on my reaction to a Jeff Goodell piece on the video in Rolling Stone:
I find it curious that you would choose to play into the “he said, she said” media debate by posting a comment addressing Jeff Goodell’s comments on my film, but not on the film itself. Why not investigate or opine on the troubling science featured in the film that the gas industry itself conducted, which points to huge and unpreventable rates of well leakage? Why not cite some of the actual investigative reporting on which my film is based, which, incidentally, came from The New York Times “Drilling Down” series by Ian Urbina? 
The industry documents that show that they know all about their contamination problems are here awaiting your commentary: [documents] 
To be clear: you are advocating drilling wells in massive numbers in New York which the industry itself admits will leak into groundwater aquifers. Is a few years of polluting fossil fuel based energy worth contaminating groundwater for centuries? Please respond to that. 
And if the New York Department of Environmental Conservation is so confident that the process protects the environment, why not put the first 100 wells in the New York City watershed? Or truck the first 1,000 truckloads of “treated” waste to the reservoir in Central Park? Or perhaps put the first gas refinery and compressor station in Scarsdale or Westchester? Why put it out in an economically depressed area with very little political clout?
I haven’t responded on the film yet because I’m doing precisely what you suggest — examining and reporting out the new assertions. That takes time. Glad to have the link to sources. Kind of hard grabbing the fast-flashed document names by pausing the video. 
One odd point for starters. You cast the Southwestern Energy animation of well casing problems as some kind of “gotcha” when they’ve been showing it on the Web for quite a long while (including at Pace University in a discussion recently). It’s creditable, to me, for a company to be pointing out bad practices even as it pursues better ones. You?
The exchange continues for a while (read the rest by clicking here), with Fox continuing to petulantly accuse Revkin of one-sided reporting (which makes a lot of sense, because obviously Fox is so fair and balanced in his viewpoints on natural gas drilling).  I found it amusing, although it's still a little frightening that someone who is so fanatical, extremist, and unreasonable is being relied on by so many as the beacon of truth on an issue with such far-reaching impacts.  Studies are being done, and who knows, fracking could be hazardous.  But to think that Josh Fox and his propaganda should be unconditionally trusted - as many fracktivists do - is every bit as unreasonable as believing everything the industry itself says about the effects of fracking.

Wouldn't it be interesting if the activists and the industry came together and both put up equal funding for a truly impartial study of the impacts of fracking - all impacts, including economic and environmental?  Every study seems to be funded by one side or the other, backed by a party with a stake in the results, and thus very fairly open to questions about how much the report was biased by the organization providing funding.

Of course, I don't see that happening, because the only way for each side to assure that they stay in business is to control the information themselves.  Activist organizations need the fear created by studies that say fracking is dangerous.  The drillers need the studies that say it's perfectly safe.  Neither side needs the truth, which undoubtedly lies somewhere between the two vastly differing stories being presented.

Connect with us on Facebook and Twitter!

Domestic Gas & Oil Accounting for More of U.S. Production

From the New York Times:
AMERICA needs a new political discourse on energy. This would recognize the emerging reality that the United States has turned around as an energy producer and is on a major upswing. And the impact will be measured not just in energy security and the balance of payments. Energy development also turns out to be an engine for job creation and economic growth — something that would hardly have been considered the last time we were electing a president. 
In 2008, the rise in oil prices was accompanied — and partly fueled — by a belief that an era of permanent scarcity was at hand. This mentality had deep roots extending back to the 1970s, when the United States went from being a minor importer of oil to a major importer. In the 2008 rendition, falling oil output was considered simply inevitable. The only questions were at what rate petroleum imports would rise and whether that rate would be slowed. 
The outlook was much the same for natural gas. Production would inevitably decline, and the country was on the way to spending $100 billion a year to import liquefied natural gas from West Africa, the Middle East, even Australia and Russia. The energy burden on our trade deficit would only increase, adding to our economic distress. 
But that is not at all how things are turning out. Technology made the difference. The natural gas market has been transformed by the rapid expansion of shale gas production. A dozen years ago, shale gas amounted to only about 2 percent of United States production. Today, it is 37 percent and rising. Natural gas is in such ample supply that its price has tanked. This unanticipated abundance has ignited a new political argument about liquefied natural gas — not about how much the United States will import but rather how much it should export. 
The oil story is also being rewritten. Net petroleum imports have fallen from 60 percent of total consumption in 2005 to 42 percent today. Part of the reason is on the demand side. The improving gasoline efficiency of cars will eventually reduce oil demand by at least a couple of million barrels per day. 
The other part is the supply side — the turnaround in United States oil production, which has risen 25 percent since 2008. It could increase by 600,000 barrels per day this year. The biggest part of the increase is coming from what has become the “new thing” in energy — tight oil. That is the term for oil produced from tight rock formations with the same technology used to produce shale gas.
Read the rest of the article here.

Connect with us on Facebook and Twitter!

Thursday, June 28, 2012

Links, Links: Catch Up on Some More of the News

An environmental consultant weighs in on the fracking debate.

CONSOL Energy is preparing for massive activity in five different Ohio counties.

New York paper seems to be accusing the state Department of Environmental Conservation of wrongdoing for revealing details of new fracking regulations to energy companies before they were put into place, but the truth is that state law requires the DEC to reach out to industries affected by new regulations for feedback before instituting them.

Chesapeake's new chairman to receive stock valued at $750,000 as well as cash compensation.

Connect with us on Facebook and Twitter!

UPDATED: Buell Well the Golden Goose of Utica Shale Production to Date, But Court Battle May Take Some Shine Off

UPDATE:  View the motion filed for a permanent injunction by Kenneth Buell right here:


The story of the Buell well in Harrison County is an ongoing saga.  For those who may not be aware of what is happening, here are a couple of things to help you get up to date.  The legal battle that is going on here is something that may be of interest to landowners who are getting squeezed out of lease payments because they don't hold mineral rights to their property.

First, a March story from the Akron Beacon Journal (read the whole article here):
In Ohio’s Harrison County about 40 miles southeast of Canton, the picturesque landscape is that of post cards. 
Unpaved roads roll over slopes and through woods of the Appalachian foothills where farmland gives way to hunting clubs and state forests. 
Kenneth Buell bought 243 acres here in 1979. A 73-year-old farmer from suburban Columbus, he leases the land to a friend who grows hay for livestock. 
Buell won’t say how much he makes on the lease, and that he doesn’t want to be a millionaire, but he thinks he could make more. Lots more. 
A little over a year ago, an Oklahoma City company moved onto his land with a drilling rig, punched a hole about 8,000 feet deep and more than a mile horizontally and opened what so far is the biggest oil and gas find in Ohio’s new energy boom. 
Some estimate that the volume of gas, oil and byproducts could be worth $41,000 in royalties each day. 
In the industry it’s known as “The Buell well.” 
But in spite of it bearing his name, Buell gets nothing. 
Like many other landowners in Ohio, the Utica shale energy bonanza is passing him by. He doesn’t own the mineral rights. 
So, when drillers with mineral rights show up on private property, they build a road, clear the land and pour a concrete pad. The owners have little recourse. 
“They never notified me. They just went in and started drilling,” Buell said.
Also in the same article:

Is it Time for Chesapeake to Hand McClendon His Walking Papers?

From Matt Koppenheffer at The Motley Fool:
In May, I wrote that Aubrey McClendon needed to be shown the door as Chesapeake Energy's (NYSE: CHK  ) CEO. Given the historical precedent of shareholders inexplicably supporting McClendon and his merry band of board members, I didn't think his departure was possible. Today, I'd be surprised if it didn't happen. 
A good deal has happened in two months. The most recent revelation -- that Chesapeake may have colluded with competitor Encana (NYSE: ECA  ) in land auctions -- wascovered by Brian Stoffel earlier this week. The accusation is no joke. Brian noted:
Colluding with a competitor to hold prices down for land would be in direct violation of the Sherman Antitrust Act and carry stiff penalties. Companies could be fined up to $100 million -- and individuals $1 million -- for each offense. Additionally, victims of the rigging can receive up to triple what they missed out on.
That follows a tsunami of other reports detailing questionable dealings by McClendon -- from borrowing more than $1 billion against personal Chesapeake well interests to running a commodity hedge fund while at the helm of the natural-gas producer. 
It's a laundry list of missteps that shareholders simply couldn't let slide, and as a result they've taken a hatchet to Chesapeake's board and governance practices. McClendon was stripped of his chairman title. Under pressure from the company's two largest shareholders --Southeastern Asset Management and Carl Icahn -- four directors were replaced by new directors named by Southeastern and Icahn. It was a massacre at the annual shareholders' meeting:
  • The two directors up for election, Burns Hargis and Richard Davidson, received 26% and 27%, respectively, of the votes cast. They both tendered their resignations.
  • Majority voting for directors was approved with 97% of the votes cast (replacing supermajority voting, which requires two-thirds of outstanding shares to vote for a change).
  • Approval of executive compensation was rejected with only 20% of the votes cast.
  • Approval of the annual incentive plan was rejected with only 31% of the votes cast.
  • Reincorporation in Delaware -- which would improve shareholders' rights -- was approved with 53% of votes cast.
  • Majority voting for all shareholder proposals -- again replacing supermajority voting -- was approved with 86% of the votes cast.
  • "Shareholder proxy access," which allows substantial, long-term shareholders to nominate directors for the company's board, was approved with 60% of the votes cast.
Clearly, shareholders were ready for a change.
Read the rest of the article here.

Connect with us on Facebook and Twitter!

Chesapeake CEO Aubrey McClendon Stops By North Canton

From Business Journal Daily:
NORTH CANTON, Ohio – Aubrey McClendon, the embattled CEO of Chesapeake Energy Corp., made an unannounced stop to the Stark campus of Kent State University Wednesday to address about 300 of the company's Utica shale employees. 
"He came into North Canton to meet with all of the employees in the Ohio Utica shale region," said Chesapeake spokesman Pete Kenworthy shortly after the meeting concluded just after 1 p.m.  The meeting was closed to the media and public, and security deterred reporters from conducting interviews before and after the private luncheon. 
The meeting was simply an opportunity for the CEO to meet with some of his workers in eastern Ohio, Kenworthy said, and that includes those employed in Chesapeake's midstream subsidiaries. 
Oklahoma City-based Chesapeake is the largest single leaseholder in the Utica shale, with more than 1.3 million acres under contract with landowners who stretch from Belmont to Trumbull counties. The energy company, the second-largest producer of natural gas in the United States, is also the most active driller for natural gas, wet gas, and oil in the region. 
McClendon arrived at roughly 11:15 a.m. after touching down at the nearby Akron-Canton Airport. The CEO, wearing a white open-collared shirt, stepped out of a black SUV and entered KSU Stark's University Center, where the meeting was held.
Read the rest of the article here.

Connect with us on Facebook and Twitter!

Ohio Communities Try to Balance Economy and Environment In Face of Shale Development

From Columbus Biz Insider:
Eastern Ohio businessman Mike Sliva is hoping a balance can be struck between the economic benefits of the state’s shale gas boom and environmental issues raised by critics of the drilling process used to force oil and natural gas out of the ground. 
I heard Sliva make that point Wednesday at a shale gas forum sponsored by the Columbus Metropolitan Club. He is branch manager for PNC Bank in Cadiz, a little town in the center of the Utica shale play. He also is president of the Cadiz Community Improvement Corp. in Harrison County, which sits up in the hills about 25 miles west of Steubenville and the Ohio River. 
“We need jobs greatly,” Sliva said, “but we’re not going to sacrifice the environment at the same time.” 
But he doesn’t want to put the brakes on shale gas development like many environmentalists do. 
“Our concerns are we need to do it right,” Sliva said, “but we’re moving forward. We don’t want to slow the industry. We need an open dialogue and to solve these issues.” 
He was part of a discussion on environmental issues involved in horizontal hydraulic fracturing, or fracking, in the Utica shale play. Keith Dimoff, executive director of the Ohio Environmental Council, took up the side of environmentalists, saying oil and gas wells are being drilled in eastern Ohio even though the state is playing catch-up to ensure fracking doesn’t damage the land, air quality and groundwater. 
“There are real environmental and health risks to citizens of Ohio,” Dimoff said. “We need to take a step back and ask if this is the right way to go.” 
But Sliva countered that Harrison County, once dependent on coal mining, needs the help that oil and gas development can deliver now after 25 to 30 years of hard economic times in the region.
Read the rest of the article here.

Connect with us on Facebook and Twitter!

Fracktivist in Alexander Township Facing Charges Following Protest

From the Athens News:
Shortly before noon Tuesday, a "fracking" protester who had secured herself to two concrete barrels at an oil and gas waste-water injection well in Alexander Township was separated from the barrels and hauled away by a sheriff's cruiser. 
After an appearance in Athens County Municipal Court Tuesday afternoon, protester Madeline ffitch (correct spelling) was released on her own recognizance. She has been charged with inducing panic, a fifth-degree felony.

Ffitch released herself from the barrels around 11:45 after talking to her attorney, Don Wirtshafter, and Athens County Sheriff's Capt. Bryan Cooper. Up until then, law enforcement had been planning to use power tools to remove her from the barrels. The situation attracted a heavy law enforcement presence, with multiple jurisdictions represented on rural Ladd Ridge Road about seven miles southwest of Athens. 
Ffitch is a 31-year-old landowners from Dover Township in Athens County. Law enforcement officials have indicated that they may seek reimbursement from her for the cost of their response to her protest. According to Wirtshafter, authorities have indicated that this may be in the neighborhood of $7,500. 
After her court appearance, ffitch explained that she had volunteered to be the person who committed civil disobedience to help draw attention to the issue of waste-water injection wells in Athens County. 
"I decided to do it because I thought it was important," ffitch said. She added that she was surprised by the massive law enforcement response she triggered. 
"I didn't quite expect that to happen, and it was a little bit intimidating," she admitted. She finally chose to unclip herself from the barrels voluntarily, she said, because of the potential charges she was facing, and the possibility that officials would get her arms out of the barrels by smashing the concrete. 
"At that point, I was intimidated by the idea of a jackhammer, and I was intimidated by the idea of a felony charge," ffitch said.
Read the rest of the article here.

Interesting way for a 31-year old woman to spend an afternoon, isn't it?

Connect with us on Facebook and Twitter!

Wednesday, June 27, 2012

Links on a Busy Wednesday

I apologize for the lack of updates this week.  We've been very busy getting the July issue of the Carroll County Energy News ready to go to print.  Here are some links to keep you caught up on the news of the day.

Ohio is seeing unemployment drop as shale development continues.

However, Ohio Senator Lou Gentile wants to keep better record of how many jobs are actually going to local residents rather than out-of-state workers.

Ethane prices collapse as supply outpaces demand.

Interior Secretary Ken Salazar says some states have zero regulations for drilling companies - but that isn't true.

Drilling boom reaches Wayne County.

Akron Beacon Journal runs down some of the latest oil & gas developments in Ohio.

A court battle is being waged by energy companies looking to drill in Allegheny National Forest.

Connect with us on Facebook and Twitter!

Tuesday, June 26, 2012

Chesapeake Coming Under Fire Again

From Reuters:
Under the direction of CEO Aubrey McClendon, Chesapeake Energy Corp. plotted with its top competitor to suppress land prices in one of America's most promising oil and gas plays, a Reuters investigation has found. 
In emails between Chesapeake and Encana Corp, Canada's largest natural gas company, the rivals repeatedly discussed how to avoid bidding against each other in a public land auction in Michigan two years ago and in at least nine prospective deals with private land owners here. 
In one email, dated June 16, 2010, McClendon told a Chesapeake deputy that it was time "to smoke a peace pipe" with Encana "if we are bidding each other up." The Chesapeake vice president responded that he had contacted Encana "to discuss how they want to handle the entities we are both working to avoid us bidding each other up in the interim." McClendon replied: "Thanks." 
That exchange - and at least a dozen other emails reviewed by Reuters - could provide evidence that the two companies violated federal and state laws by seeking to keep land prices down, antitrust lawyers said. 
"The famous phrase is a ‘smoking gun.' That's a smoking H-bomb," said Harry First, a former antitrust lawyer for the Department of Justice. "When the talk is explicitly about getting together to avoid bidding each other up, it's a red flag for collusion, bid-rigging, market allocation." 
The revelation of the discussions between Encana and Chesapeake, the second-largest natural gas producer in the United States, comes at a time when McClendon already is under fire. 
The company's board stripped him of his chairmanship after Reuters reported that he took out more than $1.3 billion in personal loans from a firm that also finances Chesapeake. The IRS and the Securities and Exchange Commission have launched inquiries. 
The talks to suppress land prices could prove even more damaging - for McClendon, Chesapeake, Encana and other top executives with both companies. 
Private industry cartels are forbidden in the United States, where price-fixing between competitors is illegal under the Sherman Antitrust Act. Violations carry stiff penalties.  Companies can be fined up to $100 million and individuals up to $1 million for each offense. Jail sentences - which are rare - can be as long as 10 years, and collusion among competitors can lead to prosecution or fines for mail and wire fraud. Victims of bid-rigging can also seek triple the amount of damages.
Chesapeake and Encana say they discussed forming a joint venture in Michigan but opted against it. Typically, such partnerships can defray the steep costs of shale development, which include amassing thousands of acres of land and drilling dozens of wells. 
In response to detailed questions from Reuters, Encana said it was undertaking an internal investigation, saying it "is committed to conducting its business in an ethical and legal way." It acknowledged that its U.S. branch "discussed, but did not go forward with, a joint venture with Chesapeake Energy," but added that it "cannot specifically address the questions posed at this time." 
Chesapeake spokesman Jim Gipson also said there had been discussions with Encana about "forming an ‘area of mutual interest' joint venture" in Michigan. But he said "no such agreement was reached between the parties…. Nor did Encana and Chesapeake make any joint bids." 
Antitrust lawyers said the fact that the companies discussed a formal joint venture wouldn't dispel legal concerns. 
"Nothing in the documents suggests any benefit to the joint venture other than making the price fall," said Darren Bush, a former attorney in the Antitrust Division of the Department of Justice and a law professor at the University of Houston. "If it has no other purpose, then it's just a shell and doesn't change the liability for illegal conduct."
There is much more information in the rest of the article, which can be read by clicking here.

It's another fun day for Aubrey McClendon and the freshly reconstructed board of directors at Chesapeake Energy.

Connect with us on Facebook and Twitter!

Links of the Day: 11 Oil & Gas Stories for Your Perusal

Another article counters Josh Fox's fracking propaganda with facts.

Yale study states the consumer surplus from shale gas in 2010 was $100 billion.

DEP investigating another case of possible methane migration in PA.

Has hydraulic fracturing gotten a bad rap?

Fracktivists favorite Cornell professors continue to reveal their anti-fossil fuel agenda, the bias which is the real reason behind their controversial study results.
Sticking to their guns despite the mountain of evidence that they are wrong about how natural gas compares to coal, and claiming bias for any study that conflicts despite the obvious bias influencing their own studies.

Energy in Depth asks the question that we asked last week: why does the Sierra Club oppose natural gas?  (Clue to the answer:  $$$$$$$$$$$)

The Muskingum Oil and Gas Coalition is looking to gain members and momentum.

Seismographic testing for oil and gas coming to Medina County.

President Obama plans to have more fracking regulations down the road.

Ohio educators learn about oil and gas development through special program.

Connect with us on Facebook and Twitter!

Four Opportunities for Fracking Education

Four events are coming up that will allow the public to take a look at what different groups have to say about fracking.

On Wednesday at 5:30 PM, there will be a special screening of Truthland at the Ohio Valley College of Technology in East Liverpool.  Along with the movie there will also be a discussion with experts, and Shelly DePue, the star of Truthland, will be in attendance.  There is no cost to attend.

Also on Wednesday, the Ohio Environmental Council will host an event from 3:00 to 7:00 PM at the Columbiana Public Library which will look at the potential environmental impact of fracking.  It is also free to attend.

On Monday another event will take place, this one at the Salem Community Center.  James R. Ladlee, associate director of the Penn State Marcellus Center for Outreach and Research, will have a presentation on shale development and production lasting from 8:00 AM to 5:00 PM.  The cost is $249, and interested parties can register at the center's website.

The Catholic Diocese of Cleveland will sponsor a panel on fracking from 7:00 to 9:00 PM Wednesday at St. Hilary Parish in Fairlawn.  It will feature pros and cons of fracking and a Catholic theological reflection, and is free to attend.

Connect with us on Facebook and Twitter!

EcoWatch Fans the Flames of Fracking Fluid Fear

...from fracking, according to activists
EcoWatch has published a couple of articles recently which, in line with the fracktivist methodology, attempt to incite panic in landowners over the possibility of frack fluid ending up coming into contact with their water through as yet unproven and unexplained migration through thousands of feet of impermeable rock, or through spills on the way to fracking sites.

From the first article:
Though most of the individual chemicals are less than one ton, there are larger amounts of certain ingredients. For instance, hydrogen chloride (hydrochloric acid) totals a whopping 41 tons. Other ingredients, such as a ‘carbohydrate polymer’ comprise 33 tons, and a ‘synthetic organic polymer’ makes up 21 tons of the fluid. Other high-amount ingredients include tetramethyl ammonium chloride (13 tons), ‘aliphatic polyol’ (11 tons), potassium hydroxide (5.5 tons) and hydrotreated petroleum distillate (3 tons).

Excerpt from FracFocus data sheet showing amount of hydrogen chloride (hydrochloric acid) used in Chesapeake frack. Amounts in FracFocus are given as total percentage of the frack fluid by weight, not a very meaningful way to present this information to the public.
The problem is the incomplete disclosure of these chemicals. Each ingredient I’ve listed in the above paragraph in quotation marks has a generic name, and is lacking a Chemical Abstract Service (CAS) number that specifies what the chemical really is. Counting the three ingredients I’ve already listed in this article (the aliphatic polyol, the carbohydrate polymer and the synthetic organic polymer) there are a total of six ingredients in this particular mixture that have no CAS number. Totaled, this means almost half of the chemicals listed (by weight) have been purposely unaccounted for. 

That's right:  65 tons of mystery chemicals trucked down narrow country roads past farms, homes and schools, and injected into the ground:
Then, based on that article, comes this dramatic video showing a virtual PA family allowing the drilling company to store all of the chemicals for a frack job in their yard.  Read the whole article here.

Are you scared yet?  Here is another article from EcoWatch, this one citing a study that says people are scared of fracking's impacts and more research needs to be done on the process.

And if that doesn't do it, how about this article that says earthquakes in California are caused by fracking tests that are being conducted there?

One thing can definitely be said about fracktivists:  they are doing a fine job getting their message of fear out through the media.

Connect with us on Facebook and Twitter!

Friday, June 22, 2012

Columbiana County Commissioners Re-Negotiate Lease and Double Their Money

Last month we posted a story about Carroll County commissioners failing to accept a $5800/acre lease from Chesapeake and then seeing Chesapeake pull that offer off of the table, leaving only a $3500/acre lease offer from Rex Energy as a consolation prize.

Columbiana County commissioners just did the opposite.

They originally were set to agree to lease 568 acres for $2,700/acre to DPS Penn, an agent for Chesapeake Energy, in August of last year.  That deal also included 17.5% royalties.  The commissioners never signed that lease agreement, however.

Now, they've signed a lease for $5,850/acre and 20% royalties on 548 acres - the highest lease fee paid to any government body to date.  The county will now receive $3.2 million, although $1.5 million will go into an escrow account to help the Buckeye Water District pay a $4.8 million-plus court judgment owed to the city of East Liverpool.

From The Review in East Liverpool:
So what do commissioners intend to do with the remaining $1.7 million after it is received? Halleck said they will begin having those discussions, "but first and foremost I would like to see a rainy-day fund instituted in this county again." 
Halleck was referring to a fund created during his first term in the 1990s when commissioners set aside unspent revenue in a special fund to use only in emergencies or for special projects. 
"We did that years ago and it came in handy," he said, adding some of the money may have to be spent to pay higher-than-expected claims under the county's self-funded employee health insurance plan. 
Although commissioners gave Halleck authority to negotiate and sign the lease, the board voted at Wednesday's meeting to officially enter the agreement into the meeting minutes. 
The county is also in line to receive additional shale-related money for entering into an easement agreement with a midstream company wanting to run a pipeline across county property. 
Just as they did with DPS Penn, commissioners authorized Halleck to negotiate an easement agreement with Cardinal Gas Services LLC of Oklahoma City, which wants to run a pipeline under the county farm property in Center Township, which is where the jail and dog pound are located. 
This represents the next stage in the shale gas boom under way in the county, as midstream companies hired by drillers seek easements from property owners for pipelines to transport natural gas coming from local wells.
Read the rest of the article here.

Connect with us on Facebook and Twitter!

What Would be the Ramifications of Sinopec-Chesapeake Deal?

From Forbes:
The rumors that Sinopec is nearing a deal with Chesapeake are even louder than those that preceded Carl Icahn‘s investment in the beleagured natural gas giant. And we know how that turned out. 
To get a sense of what Sinopec might want to buy, it’s worth looking at what Chairman Fu has already acquired in the U.S., both during his tenure at Sinopec as well as his days running Cnooc.So let’s assume that a deal will happen and that it will mean a few more billion towards Chesapeake’s remaining $7 billion funding gap for this year. 
Cnooc has done two JVs with Chesapeake. In 2010 it bought a 33% position in Chesapeake’s Eagle Ford shale position for $1.1 billion. Then in 2011 it added a 33% stake in Chesapeake’s Colorado acreage in the Niobrara shale for $1.3 billion. 
And since Fu joined Sinopec in mid-2011 he has also cut a big deal with Chesapeake’s cross-town rival Devon Energy. In January Sinopec agreed to pay Devon $2.5 billion for stakes in five plays: the Niobrara, the Utica shale in Ohio, and lesser-known positions in Louisiana, Oklahoma and Michigan. 
Taken together, these acqusitions give the Chinese state-controlled giants experience in many of America’s prominent liquids-rich shale plays. It would make sense that Fu wants to get a look at as many different geologies as possible. China is thought to have even more potential shale plays than the United States, and China’s best hope for efficiently unlocking them is to understand how American drillers have done it over here. With that in mind, it would make sense for Fu to make his next investment in a new region, such as the Permian basin of Texas, where Chesapeake has shown eagerness to sell its entire position for upwards of $6 billion. 
But would Sinopec (NYSE:SNP) want to take on the risk of buying a 100% stake in a big U.S. play? Not only would that be risky from an operational standpoint (it doesn’t yet operate any U.S. drilling campaigns itself), but from a political one as well. Recall the outcry in 2004 when Fu, then at Cnooc, attempted to purchase Unocal for $18 billion. 
But the world has changed since then. Neither the U.S. (nor Chesapeake) can afford to turn down Chinese investments. It only makes sense that the Chinese would want to exchange some of their $1 trillion in U.S. treasuries for more intrinsically valuable U.S. assets. Besides, in recent years we’ve seen a spate of foreign companies grabbing giant pieces of shale. BHP Billiton Petroleum in 2011 acquired Chesapeake’s Fayetteville shale position for $5 billion, then followed that up by gobbling Eagle Ford pioneer Petrohawk Energy for $15 billion. Statoil, the Norwegian state oil company, bought Brigham Exploration last year for $4.5 billion. Like Sinopec, Statoil is majority owned by its home government. If no one made a peep about Statoil’s deal, they can’t very well try to block Sinopec. 
Still, any big Chinese grab of U.S. oil and gas will trigger a circus. Politicians will fall over each other to demand that in exchange for approving the deal Sinopec must stop buying oil from Iran and abide by sanctions. A tough choice: Tehran or Texas?
Read the rest of the article here.

Connect with us on Facebook and Twitter!

Chesapeake Pays $1.6 Million for Methane Contamination in PA

From State Impact Pennsylvania:
The fam­i­lies, liv­ing along Par­adise Road, all signed leases with Chesa­peake Appalachia to drill beneath their land. But in July, 2010, the res­i­dents began to notice muddy water com­ing from their water wells. Chesa­peake sup­plied a fil­tra­tion sys­tem, which res­i­dents say did not work. 
O’Malley says his inves­ti­ga­tors con­cluded that a poor cement job resulted in methane migrat­ing from the Mar­cel­lus Shale for­ma­tion into the water sup­ply of nearby residents. 
Scott and Cassie Spencer, Heather and Jared McMicken, and Michael and Jonna Phillips filed suit in the Mid­dle U.S. Dis­trict Court of Penn­syl­va­nia, which was sent to arbi­tra­tion. Three days of tes­ti­mony took place before an arbi­tra­tion panel in Philadel­phia this week, pre­cip­i­tat­ing the two par­ties reach­ing an agree­ment on Thursday.

O’Malley says all three fam­i­lies signed leases that forced any dis­pute into arbi­tra­tion, which typ­i­cally leads to smaller finan­cial set­tle­ments than jury trials. 
“They deserved much more money,” said O’Malley. “With what they went through, you couldn’t pay them enough. But this is enough to get them out and into new homes.” 
Chesa­peake also agreed to buy the homes from the fam­i­lies, which is included in the $1.6 mil­lion. But the com­pany says their drilling prac­tices did not cause methane migra­tion. In a writ­ten state­ment, Chesa­peake says no pre-drill water tests were con­ducted at these homes, which leaves open the ques­tion of whether the methane was present before drilling occurred.

“The PA Depart­ment of Envi­ron­men­tal Pro­tec­tion cur­rently rec­om­mends pre-drill test­ing within a 2,500-foot radius of any oil or gas drilling oper­a­tion, and Chesa­peake meets or exceeds that rec­om­men­da­tion with its testing. 
All of these water sources are beyond that test­ing radius, and thus Chesa­peake had not col­lected pre-drill data for the water sources.” 
The state­ment goes on to say that the pre-drill test­ing done in other area homes showed methane con­t­a­m­i­na­tion before any drilling activ­ity took place.
Read the rest of the article here.

To summarize, this demonstrates something already known: methane migration can occur if cementing mistakes are made.  This is not the same thing as the idea that many activists are trying to promote: that fracking chemicals can migrate upwards into aquifers.

It's also important to note that methane in water does not typically pose a significant health threat.  There is the risk that comes from methane being flammable, and there is a risk if it builds up heavily in a poorly ventilated or confined area that it can cause health problems.  But methane evaporates out of water, so drinking water from a well contaminated with methane is not typically considered a health risk.

That being said, Chesapeake agreed to pay the money and they also did not make the families sign a non-disclosure agreement, despite the reality that with no pre-drilling tests to prove that the methane contamination didn't already exist the company could have continued to fight the suit.

It'll be interesting watching the anti-fracking community spin this, and it'll be interesting to watch the drilling industry spin back.  The bottom line is that the same questions that hang around all of the fracking debate are hovering around this story too: was the methane naturally occurring or was it caused by drilling?  The families and attorney who stand to benefit financially from proving that it's Chesapeake's fault say it's Chesapeake's fault.  The industry giant that doesn't want the notion that drilling is dangerous perpetuated says it's not their fault.  Who do you believe?  Probably whomever you want to.

Connect with us on Facebook and Twitter!

Josh Fox's Latest Propaganda Video Comes Under Fire

Despite anti-gas activist/Rolling Stone writer Jeff Goodell's glowing endorsement of Josh Fox's 18-minute propaganda film directed at New York Governor Andrew Cuomo, not everyone is greeting the video with champagne and roses.

Energy in Depth and former PA environmental regulator John Hanger have both addressed many of the claims Fox makes in the video, and the consensus between them is that Fox is far too distracted by his anti-gas agenda to actually account for reality in his films, however slickly produced and effectively horrifying they may be.

First, from EID:

They say that 82.3 percent of statistics are made up on the spot. Watching the video released by Gasland star Josh Fox this week – cleverly titled “The Sky is Pink” — one wonders whether that figure might be in need of a slight upward adjustment. 
Set aside the distracting, out-of-focus camerawork and characteristically creepy, overwrought narration, and the argument that Josh and his team attempt to put forth goes something like this: No natural gas well is safe. All of them fail and leak. And most damning: Industry studies and memoranda – memos previously buried in industry “drawers” — prove it. Memos so confidential, it took us a full three minutes to find them online (more on those later). 
In fairness, Fox doesn’t say that every well is destined for failure. In a column submitted to the USA Today last summer, Fox argued that five percent of wells experience “an immediate failure of the concrete casing.” Eight months later, in February, that figure had jumped eight-fold, with Fox telling DemocracyNow! that “casing that protects the groundwater cracks in 40 percentof the cases.” That same month, he suggested to Al Jazeera that the actual failure rate was closer to “50 percent” (20:16). In his new film (09:23), he settles on a new number: 16.7 percent. Hey, at least we’re improving, right? 
Of course, not mentioned anywhere in the new 18-minute film is the Aug. 2011 report issued by the Ground Water Protection Council (GWPC), a study that draws on real-world field data and case descriptions from regulators representing two of the most heavily drilled states in the country: Texas and Ohio. According to that study, more than 220,000 oil and natural gas wells were drilled and completed (fractured) in these two states over the past 25 years, 16,000 of them horizontal wells targeting deep shale formations. 
Take your pick from any of the failure rates that Fox has cited over the past year: If he’s right – or even close to right – shouldn’t there be thousands of confirmed cases of water contamination from faulty wells and compromised casings? Unfortunately for Josh (but fortunately for everyone else), the GWPC report tells a very different story.

Read the rest of that article by clicking here.

Next, from John Hanger's blog:

Thursday, June 21, 2012

Carroll County Family Files $1 Million Lawsuit Against Chesapeake

From Farm & Dairy:
Robert, Carolyn, James L. and Bruce R. Starkey, all of Mechanicstown, filed the lawsuit June 11 against Patriot Energy, Buckeye Oil Products, Bass Energy and Chesapeake Exploration.

They are accusing Chesapeake of using a lease that is not valid and breach of contract.
The Starkeys signed a lease with Patriot Energy Partners in 2008. The lease was then sold to Buckeye Energy, Bass Energy, Wimsatt Family, LLC. and Sonata Investment Company.
The lawsuit also lists PEP Leasing LLC, of Lisbon; Andrew W. Blocksom, of Lisbon; Thomas R. Blocksom, of Columbiana; and Robert Dickey, of Lisbon. (They are listed as being part of Patriot Energy Partners and PEP.) 
The lease was then sold to Chesapeake Exploration, LLC. for approximately $1,100 per acre and was given the “deep rights.”

Four percent royalty 
In addition, court documents filed with the Carroll and Columbiana county recorders show that Patriot retains an overriding 4 percent royalty interest on all wells and leases they originally leased. 
The lawsuit contends the lease was invalid because the leases were notarized by Andrew Blocksom, Thomas Blocksom and Robert Dickey despite each of them having an economic interest in the lease.
Read the rest of the article here.

Connect with us on Facebook and Twitter!

The Rundown - Links to the Ten Oil & Gas Stories of the Day

A small article with a different angle on why drilling on public lands may not be good, even for those who are pro-drilling in general.

Kristy Foster of Farm & Dairy looks at the Buell cautionary tale and warns about selling mineral rights too quickly.

CNBC examines some of the things fracktivists are doing to fight oil & gas activity.

Northeast Ohio Catholic dioceses to conduct programs on oil & gas drilling. columnist writes about why we can eagerly anticipate Gasland 2 "not [letting] the truth get in the way of a good story."

A Chinese petroleum company is weighing a bid on Chesapeake assets.

An article asks why there are so few fracking accidents on record if it is such a horrifically dangerous technology.

Rolling Stone's oil & gas industry hitman Jeff Goodell fawns over Josh Fox and his latest "documentary," a short film aimed at New York Governor Andrew Cuomo.

The Athens News continues to have questions about Larry Wickstrom's firing.

State of Ohio mulls over selling water for fracking.

Connect with us on Facebook and Twitter!

Activists Attack Truthland, State That it is Simply an Industry Infomercial

UPDATE:  Shelly DePue has responded to activists' claims regarding the drilling on her property and the problems that arose in connection with it.

Click here to listen to her explaining what happened.


Fred Davis of Strategic Perception LLC, makers of Truthland
Strategic Perception LLC's Fred Davis, political attack ad man and producer of Truthland 
Truthland, a 35-minute compilation of interviews with fracking proponents, is being promoted by the oil and natural gas industry’s PR arm, Energy In Depth, as an answer to the 2010 anti-fracking film Gasland. The advertising campaign for Truthland emphasizes that it documents the concerns of “a Susquehanna County mom, dairy farmer and teacher” who is “the real deal,” as opposed to Josh Fox, the writer and director ofGasland and “a spoiled avant-garde showman from New York City,” in the words of EID’s Northeast Marcellus campaign director, Tom Shepstone. 
While the new film’s protagonist, Shelly DePue, is indeed a farmer from rural Pennsylvania, the notion that Truthland is a depiction of her independently-planned road trip around the United States to “find out just what the truth was” became less and less believable the more we examined it. Rather, the film and its “full-scale website and social media campaign” was planned from start to finish by the natural gas industry. Even its web domain,, was registered by industry giant Chesapeake Energy: 
(Apparently, this instance of funding transparency was not intentional – on June 12, the Whois listing for the Truthland domain was updated to remove “Chesapeake Energy Corporation” and replace it with “MFL Holdings, ATTN TRUTHLANDMOVIE.COM, care of Network Solutions.” Our cached version of the Chesapeake registration, above, is from June 8.)   MORE AFTER THE JUMP...

Chesapeake Names New Chairman, 4 New Directors

New Chesapeake chairman Archie Dunham
Aubrey McClendon has officially been replaced as chairman of Chesapeake Energy.

The company has stated that Archie Dunham, former chairman of ConocoPhillips, will take over as chairman from McClendon, who remains the company's CEO.

In addition to naming Dunham chairman, four new independent directors are being named.  Bob Alexander, Brad Martin, and Frederic Poses were selected as directors by Southeastern Asset Management, which stands as Chesapeake's largest shareholder (13.9% stake).  Activist investor Carl Icahn (7.6% stake) named Vincent Inrieri as a director.

Richard Davidson, Kathleen Eisbrenner, Frank Keating, Don Nickles, and Charles Maxwell are the former directors whose seats are being filled.

McClendon remains a board member.  So does Louis Simpson and Merrill "Pete" Miller Junior.

Read more about the shake-up at Chesapeake by clicking here.

Connect with us on Facebook and Twitter!