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Tuesday, December 31, 2013

Utica Shale 3rd Quarter 2013 Production Report Show Major Gas Production in Belmont, Monroe Counties

We've had a little bit to look over some of the numbers from the production report released by the Ohio Department of Natural Resources for shale drillers in the third quarter of 2013, and here are some of the tidbits that jumped out.

As was noted in the ODNR press release, the total production was 1,332,477 barrels of oil and 33,606,075,000 cubic feet of natural gas from 285 wells (only 245 of which reported production results).  To put that in perspective, there were 87 wells reporting when the ODNR last gave us a production report.  That report covered all of 2012, and for the entire year there were 635,896 barrels of oil and 12,836,662,000 cubic feet of natural gas produced.  That means that over twice as much oil was produced from Ohio shale wells in the third quarter of this year than in all of last year.  There was also 261% more natural gas produced in the third quarter of 2013 than in all of 2012.

A couple further details:

  • The top 5 wells for natural gas production all are in Belmont County.
  • The 6th to 10th best producing wells for natural gas are all in Monroe County.
  • 6 of the top 10 wells for oil production are located in Harrison County.
  • Gulfport Energy has the top 5 gas producing wells and the top oil producing well.
  • Chesapeake Energy has 5 of the top 10 oil producing wells.
Here is how some of the numbers break down.  Note that the oil number tells you how many 42-gallon barrels were produced, the gas numbers tell you the cubic feet (the report from the ODNR shows those figures in MCF, but I think you get a better idea by looking at the actual cubic feet) and include natural gas liquids, and brine numbers are 42-gallon barrels. 


TOTAL PRODUCTION BY COUNTY

County Oil Gas Brine # of wells
Belmont 6064 4,708,115,000 38,407 13
Carroll 708,850 16,713,769,000 453,104 145
Columbiana 15,411 1,047,704,000 18,079 20
Coshocton 0 0 0 1
Guernsey 61,213 299,239,000 33,639 13
Harrison 383,698 3,647,357,000 317,291 42
Jefferson 0 1,175,394,000 6,239 11
Mahoning 2,594 340,490,000 10,865 5
Monroe 11,366 3,499,814,000 40,105 8
Muskingum 5,900 23,826,000 209 1
Noble 130,861 2,061,623,000 44,839 17
Portage 0 0 0 2
Stark 2,795 42,396,000 1,850 2
Trumbull 604 3,869,000 6,367 1
Tuscarawas 3,301 42,479,000 3,885 3
Wayne 0 0 0 1

TOP 10 OIL PRODUCING WELLS

County Well Name Barrels of Oil Days in Production
Harrison Boy Scout 2-33H 41,617 70
Noble Miley Unit 2H 25,899 33
Harrison Henderson South 10-12-6 5H 24,689 92
Carroll Gartrell 23-13-6 8H 22,638 74
Carroll Brace West 2H 22,239 80
Harrison Henderson South 10-12-6 1H 22,178 87
Harrison Addy 9-12-6 3H 21,645 90
Noble Wayne Unit 2H 21,490 41
Harrison Addy 9-12-6 5H 21,237 87
Harrison Boy Scout 4-33H 20,770 65

TOP 10 GAS PRODUCING WELLS

County Well Name Barrels of Oil Days in Production
Belmont Stutzman 1-14H 1,249,739,000 89
Belmont Shugert 1-12H 827,916,000 85
Belmont McCort 2-28H 826,255,000 88
Belmont McCort 1-28H 801,188,000 88
Belmont Shugert 1-1H 776,999,000 87
Monroe Et Rubel 2H 772,673,000 55
Monroe Yontz Unit 1H 741,608,000 47
Monroe Et Rubel 3H 697,367,000 52
Monroe Norman Unit 1H 670,426,000 47
Monroe Et Rubel 1H 512,305,000 49

That ought to be enough to get you started with digesting some of the production data.  You can view the whole report by clicking here.

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Ohio DNR Releases Shale Production Data for Third Quarter of 2013


COLUMBUS, OH - Production results from Ohio’s horizontal shale wells for the third quarter of 2013 were released today by the Ohio Department of Natural Resources (ODNR).
The report lists 285 wells, 245 of which reported production results. Forty wells reported no production as they are waiting on pipeline infrastructure. The 245 wells produced 1,332,477 barrels of oil and 33,606,075 Mcf (1,000 cubic feet) of natural gas.
Of those 245 wells:
  • The average amount of oil produced was 5,439 barrels.
  • The average amount of gas produced was 137,168 Mcf.
  • The average number of days in production was 55.

The highest producing oil well was the Gulfport Energy "Boy Scout" well in Harrison County at 41,617 barrels of oil during 70 days of production. The highest producing gas well was the Gulfport Energy "Stutzman" well in Belmont County at 1,249,739 Mcf during 89 days of production.
Passed in Sub. House Bill 59, and effective Sept. 29, operators of horizontal oil and gas wells in Ohio were required to submit production data quarterly instead of annually. Companies must submit the data to ODNR 45 days after the end of the quarter. The increased reporting provides ODNR, the industry and the public with more accurate and timely information regarding Ohio’s oil and gas industry.
Production data for the first and second quarters of 2013 will be made available as part of the 2013 oil and gas report. Moving forward, ODNR will release quarterly data online after it is compiled and verified for accuracy.
All horizontal production reports can be accessed at:
Ohio law does not require the separate reporting of Natural Gas Liquids (NGL). Gas reporting totals listed on the report include NGLs.

NOTE FROM THE DAILY DIGGER:  We are looking over the report and will post some of the interesting details we find a little bit later.

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Monday, December 30, 2013

New Pipeline Standards for Ohio Complete; Wastewater Recycling Regs Close

From NGI:
The Ohio Department of Natural Resources (ODNR) has updated its pipeline standard and construction specifications, and its work to finalize draft regulations on rules for wastewater recycling is nearly complete. 
Shale gas development continues to accelerate in the state and as a result midstream companies plan to spend about $40 billion on infrastructure projects over the next three to five years in Ohio, West Virginia and Pennsylvania, according to one analysis byMarcellus Drilling News (see Shale Daily, Oct. 25). At the same time, increasing volumes of fracking waste, mostly trucked in from out of state, and a desire from operators to recycle more of that waste for reuse found state legislators approving the use of wastewater storage impoundments over the summer, leading ODNR to craft new rules for the temporary pits and recycling facilities (see Shale Daily, Oct. 11).
You can read the rest of that article here.

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WHPacific Opens Office in Cadiz

From Columbus Business First:
Ohio engineering firms working in the Utica shale play have a new competitor with roots in the oil fields of Alaska.
WHPacific Inc., which describes itself as the largest Alaska Native-owned professional services company in the United States, said it has opened an office in Cadiz in eastern Ohio to serve the needs of oil and natural gas clients in the Utica and Marcellus shale plays.
Read the whole article here. 

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Anti-Drillers Ready to Push for Youngstown Fracking Ban Yet Again

Having failed twice to get voters on board with passing a fracking ban in Youngstown, activists are holding true to their promise to try again.

From The Morning Journal:
A spokeswoman says ban supporters in Youngstown and neighboring Niles are now gathering signatures for another ballot attempt in March 2014.
Spokeswoman and geologist Susie Beiersdorfer (BEERZ'-dohr-fuhr) said supporters believe they can win this time because public understanding of the issue is growing. She noted that voter support for the issue increased from spring to fall.
You can read more here. 

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Landmark Home Rule Case Set for February 26 by Ohio Supreme Court

We have been bringing you the latest on an important case that has steadily progressed to the Ohio Supreme Court for some time now.  Beck Energy is battling the community of Munroe Falls over the permits that the company is being required to obtain from the city, and the case has become a rallying point for the industry and anti-drillers alike.  Now the court has set a date for oral arguments in the case.

From the Stow Sentry:
The Ohio Supreme Court is scheduled to hear oral arguments Feb. 26 in connection with a case filed by the city last March challenging a state law on the drilling of oil and natural gas wells.
The case stems from an attempt by Ravenna-based Beck Energy to drill a well on private Munroe Falls Avenue property without building and zoning permits from the city.
You can read the rest of the brief article here.

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Air Quality Study to Be Conducted in Carroll County


From Carroll Concerned Citizens:

The University of Cincinnati (UC) and Oregon State University’s (OSU) College of Medicine are teaming up on a new air quality study to understand air quality impacts from shale gas operations. The National Institute of Environmental Health Sciences, a part of the Federal Government’s National Institutes of Health, has funded the study that will place passive air sampling devices near shale gas pads. These devices capture chemical readings for many of the air pollutants often associated with drilling, hydraulic fracturing, completion and ongoing production of shale gas wells. According to Erin N. Haynes, DrPH and Assistant Professor at UC’s Department of Environmental Health, “As Ohio’s shale gas boom continues, thousands of new pads will be installed many of which will be in close proximity to homes and businesses. Understanding if significant air quality changes occur during the various shale gas operations is important to understanding health risks for humans and livestock.”

Researchers are currently seeking a limited number of landowners in Carroll or surrounding counties willing to host the small passive sampling devices on their property. Targeted sites should either have a shale gas well currently being developed or be immediately adjacent to a new pad. Landowners interested in learning more or who would like to be considered for participation in the unbiased study should contact DrPH. Haynes by phone at 513-558-5427 or via email at Erin.Haynes@uc.edu.

Carroll Concerned Citizens is acting as one of the local non-profit partners to assisting in the study. Paul Feezel, the group’s chair added, “It made sense for UC and OSU to target Carroll County because of the volume of drilling activity in a small geographic area. The researchers can get the different sampling situations they are looking for without the logistical challenges and travel.” DrPH. Haynes will provide more details about the academic study and specific criteria for landowners interested in participating at Carroll Concerned Citizens’ upcoming meeting. It will be held on January 9 beginning at 7 pm at the Church of Christ 353 Moody Ave. Carrollton. The meeting is free and open to the public.
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Friday, December 27, 2013

Pipeline Companies Working to Improve Leak Detection

From Fuel Fix:
In a large green container in a climate-controlled warehouse in Canada, pipeline owners TransCanada and Enbridge are researching new ways to detect oil leaks. 
The companies are using the $3 million container, which is fitted with real pipe and filled with soil, to learn how oil spreads in different environments and how quickly the newest leak detection devices can sound alarms. 
The companies plan to fill the container with different soils as they progress through the tests, said Ray Philipenko, senior manager of leak detection for Enbridge, in an interview with FuelFix. 
“We want to be perfect in finding all leaks,” Philipenko said.
Read the rest of that article here.

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EPA Could Open Infamous Water Contamination Case

We've detailed the long story of Steve Lipsky and his claims that Range Resources contaminated his water well with their drilling operations in Texas - only to later have a court determine that he intentionally made a deceptive video in order to get the EPA involved - many times on the blog before (click here for a summary of the saga).

From the Huffington Post:
The U.S. Environmental Protection Agency was justified in immediately barring residents in North Texas from using water contaminated with explosive methane and cancer-causing benzene, but additional testing and work needs to be done to assess whether a risk still exists, according to an internal investigation released Tuesday.
The report by the federal agency's Office of Inspector General concludes a yearlong probe into a case that has been mired in politics and a persistent back-and-forth between Texas and the EPA over how to oversee oil and gas drilling operations. It also left residents in the affected area either using the same water wells or paying to truck in water from other sources.
But the report's findings could reopen the door to a case that appeared to have been closed in 2012, when the EPA settled with Range Resources, the gas driller it suspected had contaminated the water, and withdrew its emergency actions.
Read the whole article here. 

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Tuesday, December 24, 2013

8 New Permits Issued for Utica Shale Drilling Last Week


According to the latest weekly report from the Ohio Department of Natural Resources it was another slow week for Utica shale permitting.

8 new permits were issued.  4 of those were for Harrison County wells, 3 of which were to Aubrey McClendon's new company, American Energy Utica.  2 were issued for Columbiana County, and 1 each for Belmont and Monroe counties.

This activity brings the cumulative permit total to 1,030.  658 wells have been drilled, while the number of wells producing actually dropped 1 on this week's report, to 249.  The Utica rig count is 40.

View the report here.

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The Debate Continues on Proposed Severance Tax in Ohio

From The Intelligencer/Wheeling News-Register:
Industry leaders believe changing the way Ohio collects severance taxes for oil and natural gas production will promote more fracking in the state's vast Utica Shale field.
According to supporters of the measure introduced in the Ohio House this month, it could also lead to a break for those paying income tax in the Buckeye State by raising up to $1.7 billion over 10 years.
"We believe this will provide some much needed clarity for those who have invested in our state," Penny Seipel, vice president of public affairs for the Ohio Oil and Gas Association. "Some people are hesitant to invest because they are not sure about the tax rates."
Read more about this story here. 

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Carroll County Fracking Waste Plant Opens in Advance of Updated State Regulations

From The Columbus Dispatch:
Michael McKenzie couldn’t wait for the state to devise new rules and a permit for the fracking-waste recycling plant he wanted to build in Carroll County.
So the owner of Youngstown-based Iron Eagle Enterprises shared his plant designs with the Ohio Department of Natural Resources officials as they worked this year to draft regulations to oversee recycling operations. He said he wanted to meet the state’s standards before they were set.
“We didn’t want to have to reinvent the wheel with this,” McKenzie said of the plant, which can clean as many as 14,000 barrels of fracking wastewater per day.
Iron Eagle’s plant at Sherrodsville, east of New Philadelphia, started recycling last week. Natural Resources officials are still working on the rules.
Read the rest of the article here. 

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Midstream Giant Kinder Morgan Continues to Expand Utica and Marcellus Shale Presence


HOUSTON--(BUSINESS WIRE)--Kinder Morgan Energy Partners, L.P. (NYSE: KMP) and Targa Resources Partners LP (NYSE: NGLS) today announced they have signed a letter of intent to form a joint venture to construct new natural gas liquids (NGL) fractionation facilities at Mont Belvieu, Texas, to provide services for producers in the Utica and Marcellus Shale resource plays in Ohio, West Virginia and Pennsylvania.
“Targa’s market connectivity, storage, and expertise in fractionation and in LPG export infrastructure and services on the Gulf Coast may provide the Utica and Marcellus producers with maximum value and optionality at the largest NGL hub in the United States.”
In order to allow producers and shippers sufficient time to assess their Gulf Coast fractionation and pipeline needs, a binding open season currently under way for the Utica Marcellus Texas Pipeline (UMTP), a proposed joint venture between MarkWest Utica EMG, L.L.C. and KMP, will be extended until Feb. 28, 2014. The UMTP will involve the abandonment and conversion, subject to Federal Energy Regulatory Commission approval, of over 1,000 miles of KMP’s existing Tennessee Gas Pipeline system, currently in natural gas service, from Mercer, Pa., to Natchitoches, La., and building approximately 200 miles of new pipeline from Natchitoches to Mont Belvieu for fractionation. The facilities will be located adjacent to Targa’s existing fractionation facilities at Mont Belvieu and will provide fractionation services for customers of UMTP of up to approximately 150,000 barrels per day (bpd), and potentially serve up to 400,000 bpd of maximum pipeline capacity over time.
“The joint venture with Targa will provide our NGL pipeline customers with a fully integrated NGL solution from the tailgate of their processing plants in Utica and Marcellus to the ultimate consumer of the purity products along the Gulf Coast,” said Don Lindley, president of Natural Gas Liquids for KMP. “Targa’s market connectivity, storage, and expertise in fractionation and in LPG export infrastructure and services on the Gulf Coast may provide the Utica and Marcellus producers with maximum value and optionality at the largest NGL hub in the United States.”
“We are pleased to team up with Kinder Morgan to offer Utica and Marcellus pipeline customers the opportunity to obtain fractionation and related services at our expanding Mont Belvieu complex,” said Joe Bob Perkins, Chief Executive Officer of Targa. “We believe that this fractionation joint venture in combination with the Kinder Morgan and MarkWest Utica EMG pipeline project provides a solid long-term liquids solution for production growth in the Utica and Marcellus.”

Oil Industry Teaming Up With Disney for "Rocking in Ohio"

From the Huffington Post:
Radio Disney, "home of the hottest kids' music," is teaming up with Ohio's oil and gas industry to teach school kids that pipelines are awesome.
"Rocking In Ohio" is an interactive, game show-like presentation entirely funded by the Ohio Oil and Gas Association and presented jointly with Radio Disney. This "special partnership," as they call it, "highlights the importance of Ohio’s oil and gas industry, and why science, technology, engineering and math (STEM) are crucial in developing energy resources in Ohio," according to the association.
Hosted by a master of ceremonies and three staffers from Cleveland's Radio Disney affiliate WWMK, the hour-long event challenges kids, families and dads to head-to-head games that explain the science behind resource extraction and tout the benefits of products made from fossil fuels. Children run, dance and answer questions, and are given prizes from Disney movies and the Radio Disney brand.
Radio Disney broadcasts online and in more than 35 markets and positions itself as "the unrivaled broadcast radio network for kids and families." Nielsen ranks Cleveland as the nation's 31st-largest radio market.
The whole article can be read here. 

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Amish in Ohio Choosing to Take Future Royalty Payments and Leave the State with Tax Break

From The Columbus Dispatch:
ST. CLAIRSVILLE, Ohio — Amish farmers in this community who eschew electricity and most technology are among landowners capitalizing on a new financial trend in the United States energy boom: selling decades of future oil and natural gas royalties for an immediate pile of cash.
Gulfport Energy Corp., Chesapeake Energy Corp., Anadarko Petroleum Corp. and others have spent billions developing oil and gas reserves on land in Ohio’s Utica shale formation — often by agreeing to give landowners years of royalties, or a cut of future production, in exchange for the right to drill on their land.
Some Amish, traditionalist Christians numbering about 280,000 across the U.S., are sitting on prime drilling land in eastern Ohio, but many say the rapid development is encroaching on their pastoral way of life.
Already this year, several oil trucks have been involved in fatal collisions with Amish horse-drawn buggies on the region’s narrow and winding roads.
Read that whole article here.

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General Partner of Summit Midstream Partners, LP to Acquire Interest in Utica Shale Gathering System in Southeastern Ohio from Blackhawk Midstream

- Joint development with MarkWest Utica EMG of natural gas gathering infrastructure in the core of the Utica Shale play in southeastern Ohio

- Joint development with MarkWest Utica EMG Condensate of condensate transportation, storage and stabilization facility in the core of the Utica Shale play in southeastern Ohio

- Investment in Ohio Gathering substantially increases the inventory of assets available for future drop down into Summit Midstream Partners, LP

- Acquisition of equity interests in Ohio Gathering will be fully funded by Summit Investments, the General Partner of Summit Midstream Partners, LP

DALLASDec. 20, 2013 /PRNewswire/ -- Summit Midstream Partners, LLC ("Summit Investments"), the privately held company that owns and controls the general partner of Summit Midstream Partners, LP (NYSE: SMLP), announced today that it has executed a definitive agreement with Blackhawk Midstream, LLC ("Blackhawk"), to acquire its equity interest in two entities, Ohio Gathering Company, L.L.C. and Ohio Condensate Company, L.L.C. (together, "Ohio Gathering").  Ohio Gathering owns, operates and is developing significant midstream infrastructure in southeastern Ohio consisting of a liquids-rich natural gas gathering system, a dry natural gas gathering system and a condensate transportation, storage and stabilization facility in the core of the Utica Shale play.


Ohio Gathering Company, L.L.C. is currently owned by (i) MarkWest Utica EMG, L.L.C. ("MarkWest Utica EMG"), a joint venture between MarkWest Energy Partners, L.P. ("MarkWest") and the Energy and Minerals Group ("EMG"), and (ii) Blackhawk, a joint venture between Gulfport Energy Corporation ("Gulfport") and Wexford Capital LP.  Ohio Condensate Company, L.L.C. is currently owned by (i) MarkWest Utica EMG Condensate, L.L.C. ("MarkWest Utica EMG Condensate"), a separate joint venture between MarkWest and EMG, and (ii) Blackhawk.  The purchase of the equity interests in Ohio Gathering will be fully funded by Summit Investments and its sponsors.  The transaction is expected to close byJanuary 31, 2014.

The equity interests to be acquired by Summit Investments include an option to increase its ownership interest in Ohio Gathering to 40.0% at any time prior to June 2014 at a price based on the capital invested by the owners at the time the option is exercised.  Summit Investments expects to fully exercise the option in the second quarter of 2014.  Upon exercise of the option by Summit Investments, each of MarkWest Utica EMG and MarkWest Utica EMG Condensate will retain its respective 60.0% ownership interest in Ohio Gathering and will continue to operate and develop the gathering infrastructure.  Summit Investments intends to offer all or a portion of its interest in Ohio Gathering to Summit Midstream Partners, LP following the exercise of the option and the subsequent development of the assets.

Ohio Gathering is supported by fee-based gathering agreements and acreage dedications from producer customers that are actively developing Utica Shale positions throughout HarrisonGuernseyBelmont,Noble and Monroe counties in Ohio.  Ohio Gathering's customers currently include Gulfport, Rex Energy Corporation, PDC Energy, Inc. and other leading producers in the Utica Shale play.  Ohio Gathering's liquids rich gathering system serves as a critical inlet to MarkWest Utica EMG's Cadiz and Senecaprocessing complexes, the largest integrated rich-gas processing and fractionation facilities in the Utica Shale.      

Steve Newby, President and Chief Executive Officer of Summit Investments commented, "We are excited to announce an expansion of Summit's relationship with MarkWest, which has developed an industry leading midstream infrastructure position in the heart of the Marcellus and Utica shale plays.  We are equally excited about our new relationship with Gulfport, the anchor shipper on Ohio Gathering, which is one of the most active producers in the Utica with over 147,000 net acres under lease in the most prolific part of the Utica Shale." 

"Our participation in Ohio Gathering will significantly increase our scale and further diversify our cash flows from a customer and geographic standpoint while maintaining our focus on providing fee-based midstream services under long-term contracts.  This transaction provides Summit Investments with an immediate and large-scale presence in the core of the Utica Shale play, where Ohio Gathering anticipates developing more than $3 billion of midstream infrastructure over the coming years.  The acquisition and subsequent development of Ohio Gathering will substantially increase the inventory of assets available at Summit Investments to be offered to SMLP."

Additional presentation materials outlining the transaction can be found at www.summitmidstream.com.

Summit Investments engaged Barclays Capital, Inc. to act as its financial advisor and Vinson & Elkins LLP to act as its legal advisor on the transaction. 

Solid But Not Overwhelming Results Reported From 3 Monroe County Wells

From The Intelligencer/Wheeling News-Register:
According to Magnum, Triad Hunter drilled three wells on the Ormet pad. Approximate daily natural gas production rates for each of the three wells are: 2.68 million cubic feet per day, 5.1 million cubic feet per day and 3.88 million cubic feet per day.
In addition, Magnum states the wells are producing about 1,788 barrels of natural gas "condensate" per day.
Condensate is a hydrocarbon liquid dissolved in saturated natural gas that comes out of solution when the pressure drops below the dewpoint.
"The bulk of this is gathered at the well pad. Some of it drops off into the pipeline, while some drops off in compressor stations," Paul Weissgarber, senior vice president of Crosstex Energy said of condensate, further referring to the material as "a very light oil."
You can read that entire article by clicking here. 

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Central Ohio Business Finds Ways to Benefit From Shale Boom

From Columbus Business First:
Hull & Associates Inc. is a good example of a Central Ohio business that’s been able to stake a claim in the Utica and Marcellus shale plays, but the engineering firm’s strategy has always extended beyond just oil and natural gas.
Led by CEO Craig Kasper, the Dublin-based firm markets all its consulting services – waste management, environmental, brownfield redevelopment, alternative energy and oil and gas – instead of concentrating solely on shale development in eastern Ohio, western Pennsylvania and northern West Virginia.
“With all the investment happening in that region,” Kasper said, “just doing oil and gas really didn’t make sense. ... What we said was, ‘Let’s try to vertically integrate with the (oil and gas) industry and provide all the services it needs.’”
Read more about this here. 

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Saturday, December 21, 2013

Links for 12/21/13: Keystone XL Debate Continues, Ohio Updates Best Practices for Pipelines, and Much More

Oil Sands:  Five Year Anniversary: List of Reasons to Build Keystone XL is "Now Nearly as Long as the Pipeline Itself"

Ohio Department of Natural Resources:  Ohio Updates Best Management Practices for Pipeline Installation and Soil Health

Akron Beacon Journal:  Mogadore youngsters get dose of science from Radio Disney

Columbia Daily Tribune:  Group calls "fracking" study "inflammatory"

Telegraph:  Fracking report changed to include "more negative effects" following lobbying from green groups

Institute for Energy Research:  Is the Administration trying to regulate Hydraulic Fracturing through OSHA?

The Times-Tribune:  Chief acquires Chesapeake leases for $500 million

Energy in Depth:  Science Doesn't Back the Methane Blame Game

Project Syndicate:  Robert Skidelsky questions whether Larry Summers's "secular stagnation" thesis has teken adequate account of the rise of shale energy in the US

EPA:  Energy Company to Pay $3.2 Million Penalty to Resolve Clean Water Violations in West Virginia / Chesapeake Appalachia LLC to spend estimated $6.5 million to restore areas damaged by natural gas extraction activities

Akron Beacon Journal:  McClendon may face same conflicts in seeking new investors

Press release:  MarkWest Energy Partners Announces Sale of Common Units under Equity Distribution Agreement

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Friday, December 20, 2013

Utica Shale Test Well Expected in First Quarter of 2014 From 1st NRG

A portion of a release from 1st NRG:
The Company also previously announced an agreement for the development of prospective acreage in SE Ohio particularly seeking Utica Shale potential on an initial block of acreage of approximately 7,000 acres. The Utica shale play continues to grow. The State of Ohio has issued over 1,000 permits for horizontal drilling in the Utica since 2009, and 551 of those permits were issued in 2013. The Company will not operate, but will be carried in the initial vertical test well and participate in future development with a 20% working interest. Currently due diligence is being completed on the leasehold along with the drilling plan for the test well. The Company expects the test well to be drilled in Q1 2014.
 Read the rest of the release here.

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EQT Has Big Plans for Marcellus Shale, More Modest for Utica Shale



From an EQT press release:
EQT Production: 

EQT Production 2014 CAPEX is projected to total $1.9 billion, excluding land acquisitions. The breakdown is $1.6 billion for well development; $50 million for developmental geological and geophysical activities, and the remainder for capitalized overhead, well maintenance and compliance. The 2014 drilling program is expected to support 2015 sales volume of 575 – 600 Bcfe.
Marcellus Development
The Company plans to spend approximately $1.1 billion on Marcellus well development in 2014 – drilling 186 Marcellus wells with an average lateral length of 4,800 feet. All of the wells will be on multi-well pads to maximize operational efficiency and well economics. Approximately 90% of the Marcellus drilling program will focus on the Company’s two core development areas of southwestern Pennsylvania and northern West Virginia; with the remainder in central Pennsylvania to further de-risk this future development area. EQT Production owns approximately 560,000 net Marcellus acres.
Utica Development
The Company plans to spend approximately $145 million on Utica well development in 2014 – drilling 21 wells in its liquids-rich acreage located in Guernsey County, Ohio. The 2014 Utica wells are expected to have an average lateral length of 6,500 feet. EQT Production owns approximately 14,000 net Utica acres in Ohio.
Read the whole press release here. 

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Ohio House Considers Proposal for New Increased Severance Tax

From The Gateway News:
Columbus -- The Ohio House began deliberations Dec. 10 on legislation to revamp taxes charged on oil and gas produced in eastern Ohio's emerging shale oilfields.
House Bill 375 calls for lower taxes on existing conventional wells and increasing rates on those drilled horizontally, with excess proceeds devoted to plugging abandoned wells and potentially cutting income tax rates.
"I believe this comprehensive tax reform proposal is a fair and balanced approach that will provide oil and gas producers with more certainty," Rep. Matt Huffman (R-Lima) told members of the House Ways and Means Committee. "Certainty is an important factor to companies when weighing their tax burden and deciding whether or not to invest billions into energy exploration and development within our state."
He added, "Taxpayers, of course, will benefit from this proposal as the creation of two new offsets will impact royalty owners while additional revenues are earmarked for a reduction of the personal income tax."
You can read the rest of the article here. 

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Ohio Community Shifts From Banning Drilling to Voting in Favor of Pipeline

From the Tribune Chronicle:
NILES - City Council voted unanimously during Wednesday's regular meeting to allow a Houston-based driller to use a portion of city land for the installation of a pipeline.
Halcon Field Services was given access to about 60 feet of land near Salt Springs Road along the Niles Greenway Bike Path. It will stretch into Weathersfield Township, officials said.
Niles is one of several Trumbull County communities that was given a proposal by the driller for what is expected to be a 14-mile long pipeline stretching from Vienna to Lordstown.
Halcon will pay the city a total of $1,462 for use of the property, according to Mark Hess, the city's engineering, grants and development coordinator.
Read the whole article here.

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Ohio Department of Natural Resources Has Tripled Gas and Oil Regulatory Staff

From the Alliance Review:
Zehringer was brought on board by Gov. John Kasich a little more than two years ago, after previously serving as the director of the Ohio Department of Agriculture. "Ohio is blessed with natural resources. Along with gas and oil, we have coal, water and public lands," said Zehringer. "Our goals, as the division of the ODNR in charge of resources, are: 1) to safeguard the water quality; 2) clean up our 74 state parks; 3) and to regulate oil and gas responsibly, which is pretty important because we have to do this right. We have nine divisions in the ODNR, and Oil and Gas Resource Management is one."
Zehringer pointed out there has been a shift to southern Ohio recently, in Noble and Belmont counties in particular, in terms of oil and gas exploration and production, and he said there has been some pretty staggering results. Also, a new well in Monroe County is breaking records for oil and gas production, grossing $1 million per week. "That is just one well, and most wells don't gross anywhere near that amount," said Zehringer.
Zehringer said the ODNR projects the wells to be drilled in Ohio will take a large jump next year, with 625 drilled in 2013 and 1,180 predicted to be drilled in 2014. In 2012, only 215 had been drilled. So, as he pointed out, the activity is expected to go through the roof. In anticipation, the ODNR has beefed up its staff. In 2010, the ODNR had only 37 full-time people to regulate the oil and gas activity. "We have talked to other states to discuss lessons learned, and we've learned we have to have our regulatory staff in place," Zehringer said. "So, we've tripled our staff in the last two years. That includes 50 on the ground inspectors."
Click here to read the entire article.

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PA Supreme Court Sends Shockwaves Through Shale Industry With Controversial Ruling

From the Philadelphia Inquirer:
The Pennsylvania Supreme Court on Thursday struck down provisions of the state's Oil and Gas Act that stripped municipalities of the power to determine where natural gas drilling activity could occur within their boundaries. 
The long-awaited decision is a blow to a 2012 law known as Act 13 that was promoted by Gov. Corbett and the Marcellus Shale natural gas industry as a means to create a uniform statewide standard for gas development. 
By a 4-2 vote, the court ruled that the zoning provisions in the law were unconstitutional, though the court disagreed on the grounds for striking down the law. 
"The bottom line is that the majority of the court agreed that Act 13 is unconstitutional, and that local governments can zone oil and gas drilling like they do other activities," said Jordan B. Yeager, a Doylestown environmental lawyer who argued the case on behalf of several municipalities. 
Corbett, Republican legislative leaders, and the Marcellus Shale Coalition, the industry trade group, called the 162-page ruling a "disappointment" in separate statements. 
"We must not allow today's ruling to send a negative message to job creators and families who depend on the energy industry," Corbett said in a statement. "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."
Read the rest of the article here. 

Does this foreshadow a similar decision by the Ohio Supreme Court on the landmark Beck Energy vs. Munroe Falls home rule case?  It will likely be several more months before we find out.  In the meantime it will be intriguing to see what kind of fallout there is in Pennsylvania from the court's decision on Act 13.

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Magnum Hunter Resources Provides Operational Update


From a Magnum Hunter press release:
Appalachian Basin Drilling Update:
The Company has now drilled and completed three 100% (approximately) owned wells located on the Ormet Pad in Monroe County, Ohio. The Ormet 1-9H Well tested at 2,676 Mcf/d and 216 Bbl/d of condensate, the Ormet 2-9H Well tested at 5,117 Mcf/d and 816 Bbl/d of condensate and the Ormet 3-9H Well tested at 3,876 Mcf/d and 756 Bbl/d of condensate. Eureka Hunter is continuing to install gathering system pipelines to these wells which are approximately 80% complete. Additionally, sufficient surface liquids handling equipment has been ordered and is scheduled to be installed by mid-March.
On the Collins Pad located in Tyler County, West Virginia, the Company has drilled four 100% owned wells. The Collins 1118H Well has tested at 10,000 Mcf/d and 472 Bbl/d of condensate and the Collins 1119H Well has tested at 9,850 Mcf/d and 470 Bbl/d of condensate. The Company is in the process of moving this test equipment to the remaining two wells already drilled and completed, the Collins 1116H and 1117H, and will begin the testing of these wells sometime early next week. Due to the high liquids content of this region at both our Collins and Spencer Pads, operational upgrades are being made to the Eureka Hunter gathering system in order to appropriately handle all new liquids production.
Shortly after completion of the first well on our Farley Pad (Farley 1305) located in Washington County, Ohio which had a controlled blow-out, the Company began drilling the second well on the Farley Pad (Farley 1306). The Company is currently drilling the lateral section and anticipates TD at 7,600 feet (horizontally) sometime today. The Company anticipates fracture stimulation of this well in early January and expects to report initial production test rates by the end of February.
The Company has recently hit TD on the first Utica Shale well on the Stalder Pad located in Monroe County Ohio, and will commence fracture stimulation operations next week. Test results from this well are anticipated by the beginning of January. The first Marcellus Shale well drilled on the Stalder Pad is awaiting completion operations. Management has chosen to delay completion and testing of the Marcellus well on the Stalder Pad until late in the first quarter of 2014 to allow the Utica Shale well on this pad to flow to sales for an extended period of time.
Update on Leasehold Acreage:
The Company has continued to acquire mineral leases in both West Virginia and Ohio to increase its overall ownership position. Approximately 89,000 gross (83,000 net) mineral acres have been purchased in the Marcellus Shale and approximately 105,000 gross (97,000 net) mineral acres have been purchased in the Utica Shale. Of this acreage, the Company currently estimates that approximately 21% or 38,000 net acres are overlapping and provide potential drilling in both the Marcellus and Utica Shale Plays from dual pad sites.
Read the whole press release here. 


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