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Tuesday, March 31, 2015

Just Four New Permits Issued in Utica Shale During Slow Week; Rig Count Climbs by One

The Ohio Department of Natural Resources has made available the latest weekly permitting update, and it was a slow week in the Utica shale.

Only four new permits were issued last week.  Three of those permits went to American Energy Utica for their Krinke MTP JF 2H, 4H, and 6H wells in Jefferson County.  The remaining permit was for the Kurtz Unit 3H well in Monroe County, which is owned by Antero Resources.

There have now been 1,867 permits issued for horizontal drilling in Ohio's Utica shale.  1,414 wells have been drilled, 934 are producing, and the Utica rig count rebounded just a hair (going from 26 last week to 27 this week).

View the whole report below or by clicking here.


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Halliburton and Baker Hughes Announce Approval of Transaction by Stockholders of Both Companies

HOUSTON--(BUSINESS WIRE)--Mar. 27, 2015-- Halliburton Company(NYSE:HAL) today announced that its stockholders approved Halliburton’s proposal to issue shares of Halliburton common stock as contemplated by its merger agreement with Baker Hughes Incorporated(NYSE: BHI). In addition, Baker Hughes today announced that its stockholders adopted the merger agreement and thereby approved the proposed combination of the two companies. Each company’s special meeting was held earlier today.
Nearly 99% of the shares voted at Halliburton’s special meeting voted in favor of the proposal to issue Halliburton shares. Separately, more than 98% of the shares voted at Baker Hughes’ special meeting voted in favor of the transaction, representing more than 75% of all outstanding shares of Baker Hughes.
“We are extremely pleased Halliburton and Baker Hughes stockholders have shown overwhelming support by approving the pending transaction,” said Dave Lesar, chairman and chief executive officer ofHalliburton. “We are more confident than ever that this combination will create a stronger, more diverse organization with an unsurpassed depth and breadth of services benefitting our stockholders, customers, employees and other key stakeholders of both companies.”
Martin Craighead, chairman and chief executive officer of Baker Hughessaid, “Today’s results are an important milestone in our efforts to build a global leader in oilfield services that can deliver more benefits for customers, improved value for stockholders and more long-term opportunities for employees. We look forward to continuing to work collaboratively with Halliburton on the regulatory review process and the creation of a thoughtful integration plan that combines the best of both companies.”
The close of the transaction is expected to occur late in the second half of 2015, and remains subject to regulatory approvals, as well as other customary closing conditions.
About Halliburton

Belmont County Appreciative of Partnership With Rice Energy

Belmont County has done quite a bit of business with Rice Energy since the Utica shale boom has gotten rolling, and the county has seen the benefits.

The county has entered into multiple lease agreements with Rice, with the latest one bringing Belmont $8,200 an acre plus 20% royalties.

County officials are expressing their feelings about Rice Energy's presence and impact.

From The Intelligencer/Wheeling News-Register:
Coffland and fellow commissioner Mark Thomas recognize Rice as a company that will help the county for years to come. 
“That is an impressive amount of acreage in the county, but it is not a complete surprise,” Thomas said. 
“They have been very aggressive and active in seeking out leases with property owners. We wish them great success and prosperity because with their success, we will prosper.”
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Friday, March 27, 2015

Links of the Day 03/27/15: Shale Oil to Run Out Soon?, Fracking Critics Downplaying EPA Groundwater Study, and More

Seeking Alpha:  Kinder Morgan: The Sharks Have Begun to Circle   -   "Kinder Morgan (NYSE: KMI) has stated it will increase the dividend by 16% this year and 10% each year until 2020. These projections sound good in theory. Yet, the company will need to grow EPS in order to make good on..."

Gas & Oil:  Barnesville Schools to Join Utica Shale Academy   -   "The Barnesville Exempted Village School Dstrict is joining forces with a charter school to offer high school students a unique opportunity to get hands-on training in the burgeoning gas and oil industry next school year."

Akron Beacon Journal:  Groups Discover Unlicensed Frack Fluid Facility in Jefferson County   -   "As the oil and gas industry lobbies lawmakers to further consolidate power in the hands of the Ohio Department of Natural Resources (ODNR), the agency has shown itself to be ill-equipped to have more oversight of..."

NGI:  Drilling Fluids Provider Ordered to Close Ohio Site   -   "The Ohio Department of Natural Resources (ODNR) has ordered an independent oilfield services company to cease operations and remove equipment at a site in Jefferson County after it learned from grassroots organizations that the company was operating illegally. About two weeks ago, Anchor Drilling Fluids USA Inc., which was acquired by Calumet Specialty Products Partners LP last year, was given 14 days to shut down after an ODNR inspector discovered that the company was recycling drill cuttings without a permit, said..."

Forbes:  Stop Propping Up Zombie Oil Companies   -   "“Everybody says it’s going to be different this time — the city’s more diversified than it used to be. But oil still supports everything here, whether they believe it or not.” Perhaps most stunning: the number of lifelines thrown to troubled oil companies in recent weeks. Investors seem to be worried that they’re going to miss the opportunity to..."

Associated Press:  Despite Low Oil Prices, Recent Mishaps, DOE Advisory Council Pushes for Arctic Drilling   -   "The U.S. should immediately begin a push to exploit its enormous trove of oil in the Arctic waters off of Alaska, or risk a renewed reliance on imported oil in the future, an Energy Department advisory council says in a study to be released Friday. The U.S. has drastically cut imports and transformed itself..."

The Detroit News:  States Are the Best Fracking Watchdogs   -   "The rules issued last week by the Obama administration regulating hydraulic fracturing on federal lands should serve as fair warning to those states like Michigan that have already enacted adequate standards to regulate..."

CNBC:  Why Oil Could Be Going Back to $70   -   "Oil has fallen too far too fast, and benchmark Brent crude could be back at $70 or $80 per barrel, the CEO of Signal Investment Research said Tuesday. Stephen Davis said on CNBC's "Squawk Box" he sees oil prices bouncing $10 In the next three to six months and believes prices could go much higher. "The price of [Brent] oil has..."

SNL:  Trailblazing Company's Demise Clouds Future of Waterless Fracking   -   "With more than 5 million gallons of water shot down a typical shale well and millions more gallons later recovered and requiring disposal, a method to fracture oil and natural gas bores without water seems like an energy company's dream. GASFRAC Energy Services Inc., a small company that developed a method to use propane gel instead of highly pressurized water to crack rocks, looked as though it might have hit..."

Heartlander Magazine:  Why I am a Climate Change Skeptic   -   "I am skeptical humans are the main cause of climate change and that it will be catastrophic in the near future. There is no scientific proof of this hypothesis, yet we are told “the debate is over” and “the science is settled.” My skepticism begins with..."

Energy in Depth:  Why Are Fracking Critics Downplaying EPA's Groundwater Study?   -   "Inside Climate News (ICN) recently produced an article alleging that industry has somehow bought off the U.S. Environmental Protection Agency (EPA), particularly with respect to its forthcoming study on groundwater and hydraulic fracturing. ICN, which has a history of taking sides when it comes to covering fracking, attempts to lend credibility to a dubious allegation from drilling critics, citing “the agency’s [EPA’s] weakness relative to..."

Reuters:  U.S. Refiners Turn to Tanker Trucks to Avoid "Dumbbell" Crudes   -   "In a pressing quest to secure the best possible crude, U.S. refiners are increasingly going straight to the source. Firms such as Marathon Petroleum Corp and Delek U.S. Holdings are buying up tanker trucks and extending local pipeline networks in order to get more oil directly from the wellhead, seeking to cut back on blended crude cocktails they say can..."


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Activist Group Not Deterred by Ballot and Court Defeats for Home Rule

Lois Gibbs
From The Business Journal:
The female activist from the Love Canal neighborhood of Niagara Falls, N.Y., stood before the Northstar 1 injection well Friday afternoon to warn residents of Youngstown about the dangers to their health open injection wells pose. 
Lois Gibbs, the activist who, in the 1970s, led the Love Canal community against the Hooker Chemical Co. (since acquired by Occidental Petroleum Corp.), and the New York state and federal governments, warned Youngstown residents of the dangers of open injection wells. 
What happened in her community nearly 40 years ago could happen here, she said. The board of education in Niagara Falls bought the abandoned Love Canal that Hooker Chemical had used as a dump to bury toxic waste, Hooker not knowing just how toxic it was. Nor did the school board when it paid Hooker $1 for the site to build a school.
Read more of that article by clicking here.

Industry site Energy in Depth had plenty to say in response to Gibbs' statements in Youngstown:
The group invited New York activist Lois Gibbs to speak in Youngstown in front of the Northstar 1 injection well. To her credit, Ms. Gibbs at least admitted her true intentions in coming to Youngstown. According to the Youngstown Business Journal, she said, “The area’s economy should not involve fracking in any capacity.” 
Yet, even with this clear acknowledgment, it’s worth taking a look at some of her claims at the event (as well as the claims of Frackfree Mahoning Valley) and providing the facts: 
Gibbs claim: “‘Let’s not take radioactive material and put it on this land. This all goes into the aquifer and into people’s water.’ With the well unplugged, she said, rain, melting snow and runoff can mix with the residue and contaminate the aquifer underground.” 
Fact: In suggesting that the Northstar 1 well is putting water at risk, Ms. Gibbs’ claim goes directly against what the Environmental Protection Agency (EPA) has determined. 
In a recent report, EPA found:
“There are approximately 30,000 Class II active disposal wells in the United States used to dispose of oil and gas related wastes, many of which have operated for decades. EPA is unaware of any USDW contamination resulting from seismic events related to injection-induced seismicity. (emphasis added)
As EID has noted on several occasions, the state of Ohio has some of the most stringent regulations on Class II injection wells, even surpassing those of the U.S. EPA. Further, the U. S. Government Accountability Office (GAO) released a report last year, which found that states “have safeguards in their programs that EPA has deemed protective of underground sources of drinking water.”
You can read more of that article by clicking here. 

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Thursday, March 26, 2015

Poll Finds Americans Split on Support of Fracking

From Gallup:
The practice of hydraulic fracturing, or "fracking," has emerged as a divisive issue across the U.S., reflected in Americans' opinions about it; 40% of Americans say they favor the procedure, while 40% oppose it, and a substantial 19% do not have an opinion. This is amid the Obama administration last week announcing the first nationwide safety rules for fracking.
Fracking is a process of drilling and injecting fluid into the ground at high pressures to fracture shale rocks and release natural gas inside. Developed in the 1940s, fracking became much more widespread in the late 1980s, when oil operators began drilling horizontally, using hydraulic fracturing. In the 1990s, fracking was introduced into shale formations, and it is this practice on a massive commercial scale that is employed throughout the U.S. today. Many credit fracking with contributing to the current "oil boom," which has helped dramatically ramp up the production of oil in the U.S., and the U.S. even passing Saudi Arabia as the world's largest oil producer. It is also being denounced by environmentalists as causing potential hazards, such as water table pollution and earthquakes. 
This Gallup survey was taken March 5-8, before the U.S. Interior Department unveiled new rules regarding fracking on federal lands and Indian territories, but as the debate rages in states such as New York, Pennsylvania and Oklahoma. 
The survey asked Americans whether they favor or oppose "hydraulic fracturing or 'fracking.'" The survey did not further define the process, list pros or cons or measure the degree to which the public has been following the issue. But eight in 10 Americans are willing to give an opinion, with the results split evenly, along with 19% who explicitly said they didn't have an opinion.
See more by clicking here.

Fracking in the United States

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Chesapeake Energy Reduces 2015 Budget; Carl Icahn Increases His Stake in Company

From a Chesapeake Energy press release:
Chesapeake Energy Corporation (NYSE:CHK) today announced it has reduced its 2015 capital budget (including capitalized interest of $500 million) to $3.5 – $4.0 billion for 2015, which is a $500 million reduction from its previous guidance of $4.0 – $4.5 billion. Chesapeake plans to operate 25 – 35 rigs in 2015, which represents a decrease of approximately 55% from an average of 64 rigs in 2014. The company intends to spud and connect to sales approximately 520 and 650 gross operated wells, respectively, in 2015 (a decrease from 1,175 and 1,150 wells in 2014). As a result, the company is lowering its targeted 2015 production to 231 – 236 million barrels of oil equivalent, or average daily production of 635 – 645 thousand barrels of oil equivalent, which represents 1 – 3% production growth over the prior year after adjusting for 2014 asset sales. 
Doug Lawler, Chesapeake’s Chief Executive Officer, said, “We entered 2015 with a strong liquidity position and we intend to manage it prudently. In response to continued weak commodity prices, we are further reducing capital expenditures and associated drilling activity. As a result, we now forecast ending 2015 with approximately $6 billion in combined cash and borrowing capacity under our credit facility. With this budget revision we anticipate being free cash flow neutral by the end of 2015.”
Chesapeake's previously announced capital budget was already a 34% reduction from 2014, and now it is being slashed even more.

From Seeking Alpha:
Investors in Chesapeake Energy (NYSE:CHK) have finally managed to catch a break after a few very difficult months. The natural gas and oil producer has further reduced the capital expenditure plans for 2015 in order to preserve liquidity and limit the increase in debt. 
This news and the fact that prominent investor Carl Icahn has increased his stake has been welcomed by investors. Shareholders have seen a few difficult weeks after shares lost a third of their value over the past month. Despite the pullback in the shares, the outlook remains dire amidst very low benchmark prices and the huge discount at which the company is selling its energy.
Read that article by clicking here. 

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Wednesday, March 25, 2015

Court Decisions in Home Rule Cases Still Leave Question Marks for Ohio Towns

From Midwest Energy News:
Almost three weeks after Ohio’s top court struck down a town’s restrictive drilling ordinances, lawyers and local officials are predicting another round of court cases to settle how much control local governments have over oil and gas development. 
The state Supreme Court ruled that the Akron-area town of Munroe Falls could not require Beck Energy Corp. to get separate drilling permits, finding that only the state can issue drilling permits. But it left open whether cities can use zoning to control where drilling happens, and whether the outright drilling bans in some towns can continue to stand. 
In the weeks following the highly anticipated decision, attorneys have rushed to interpret how and when that issue will be decided. Will Ohio follow in the footsteps of New York and Pennsylvania, which have preserved some local powers over drilling; follow Colorado and Texas, which have taken a harder line; or chart a new path? 
“We’ve reached the first fork in the road, and it appears that the Ohio Supreme Court has generally decided which path they’re going to take: Legitimate local zoning regulations are unlikely to be wholly pre-empted,” BakerHostetler attorney Ryan Babiuch said. “There will be a new wave of litigation that could flesh that out.”
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Saudis Not Anticipating the Return of $100 Oil

From Bloomberg Business:
Oil is unlikely to rebound to $100 any time soon because higher prices would spur more output and prolong a glut, said Mohammed al-Madi, Saudi Arabia’s OPEC governor. 
Oil prices at that level “will let the high-cost producers come back again,” al-Madi said at a conference in Riyadh on Sunday. Saudi Arabia, the world’s biggest oil exporter, is pumping at a near-record level of about 10 million barrels a day, Oil Minister Ali al-Naimi said at the conference. 
Brent, a global oil benchmark, fell almost 50 percent in the past year as Saudi Arabia and others in the Organization of Petroleum Exporting Countries chose to protect their market share over cutting output to boost prices. While U.S. producers have idled rigs for 15 consecutive weeks, output is still running at its highest level since at least 1983. 
“Shale-oil companies are one of the high-cost producers that benefited from high oil prices,” al-Madi said. “We’re not against shale oil. We welcomed shale oil, but it’s not fair for high-cost producers to push low-cost producers out of the market.” 
Saudi Arabia can meet demand from any customer, and while global consumption is improving, there isn’t enough need to raise the nation’s production capacity beyond its current level of 12.5 million barrels a day, al-Naimi said.
Read the rest of the article by clicking here.

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Gulfport Energy Sues Village of Barnesville Over Water Withdrawal Agreement

From The Intelligencer/Wheeling News-Register:
Citing a potential loss of "millions of dollars," Marcellus and Utica shale driller Gulfport Energy is suing the village of Barnesville for the right to draw water from the Slope Creek Reservoir for its nearby fracking operations. 
Filed earlier this month in U.S. District Court for the Southern District of Ohio, Gulfport's lawsuit claims the Oklahoma City-based firm should be allowed to take water from the reservoir, located about five miles south of the village, unless the "health and safety of area residents and businesses are impaired." 
"Barnesville has frustrated Gulfport's right to develop minerals under the mineral rights agreement by refusing to provide Gulfport with water in violation of Gulfport's water rights," company attorney O. Judson Scheaf states in his complaint. "Barnesville has wrongfully maintained that Gulfport's water rights are limited by the 2014 water use agreement between Barnesville and Antero" Resources. 
Court documents show that on Aug. 17, 2012, Barnesville officials signed an agreement permitting Gulfport to buy water from the Slope Creek Reservoir at a price of one cent per gallon. The contract shows the firm would be able to draw the water until a point when the village would determine such action would endanger public health.
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Obama Cracks Down on Fracking on Federal Land, But GOP Plans to Fight Back

From The Hill:
The Obama administration is setting new standards for the controversial hydraulic fracturing process, the first major federal effort to crack down on the practice that has largely been behind the nation's oil and natural gas boom. 
The fracking standards only apply to drilling on leased federal land and land owned by American Indian tribes, which account for less than a quarter of the country’s oil production and 17 percent of its gas. The vast majority of fracking happens off federal land, regulators said. 
The long-awaited rules from the Interior Department’s Bureau of Land Management (BLM) are meant, in part, to ease public fears about a practice that involves pumping fluids miles underground to extract oil and gas from small pockets in rock. 
“This rule will move our nation forward as we ensure responsible development while protecting public land resources,” Interior Secretary Sally Jewell told reporters. “That’s good for the public; it’s good for industry; it’s good government.”
Another article from The Hill:
Republicans on Friday roundly rejected the Obama administration’s rules for hydraulic fracturing on federal land and pledged to fight them. 
The GOP warned that the regulations will hamper the nation’s economic recovery that has been bolstered by the boom in natural gas and oil production, much of which depends on fracking. 
“America’s energy boom is one of the best things going for our economy, and keeping it going should be one of the federal government’s top priorities,” Speaker John Boehner (R-Ohio) said in a statement. 
“Instead, the Obama administration is so eager to appease radical environmentalists that it is regulating a process that is already properly regulated.” 
Boehner promised to “do all we can” to stop attempts to impede the energy boom, including the fracking rules.

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Speakers at Conference Say That Utica Shale Has Created Only 8,000 Jobs in Ohio

Is the Utica shale falling well
short of the gaudy job-creation
predictions made in the past?
From the Akron Beacon Journal:
Shale drilling never produced as many jobs in Ohio as industry groups had earlier predicted, said several speakers at a Thursday shale conference in Wheeling, W. Va., organized by the Federal Reserve Bank of Cleveland. 
The number of jobs tied to drilling for natural gas and liquids in the Utica Shale in eastern Ohio is about 8,000, said Stephen Herzenberg, executive director of the Keystone Research Center in Harrisburg, Pa. 
Shale drilling also created an estimated 23,000 jobs in Pennsylvania and another 6,000 jobs in West Virginia from 2005 to mid-2014, he said. 
There were industry groups and studies that had predicted 200,000 new shale jobs in Ohio several years ago. Ohio State University in 2011 had predicted 20,000 new jobs. 
Those numbers were way off and the number of jobs will be measured in the tens of thousands, not hundreds of thousands, Herzenberg said in a daylong teleconference at Wheeling Jesuit University. 
"The employment impacts (from Utica Shale) are much more modest," said Dr. Mark Partridge, Swank chair in Rural Urban Policy at Ohio State University.
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Drill Capital Announces Expansion in the Utica Shale

From a Drill Capital press release:
Drill Capital LLC, an alternative asset manager focused on investments in the North American energy sector continued its expansion in the Utica shale formation with the opening of a three-story 80 room Wyndham hotel in the town of Caldwell, Ohio. The property adds to the firm's investment portfolio in the northeastern Ohio energy corridor. 
Drill is also pleased to announce that it has broken ground on a third project in the Utica shale located in the town of Cadiz, Ohio. The expansion in the area follows Drill's recent entry into the Utica Shale and the successful opening of a similar sized Wyndham property located in Carrollton, Ohio during the third quarter of 2014. 
Additionally, Drill will be moving forward with the next set of investment projects to be located in the Permian Shale, a major production hub in the US Lower 48. Similar to the Utica Shale portfolio, the future projects will capitalize on the demand for lodging accommodations within strategic locations across the west Texas and southeast New Mexico regions. 
"We are very pleased with the build-out and performance of our Utica shale portfolio and all the more excited as we set our eyes on our next set of development projects in the Permian shale for the second half of this year" said Mr. Guindo, Founder and Managing Partner of Drill Capital. "We continue to be very positive on the longer term fundamentals of the US energy industry and intend to strategically position our private investments in order to benefit from this mega-trend going forward."
View the original release here.

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Are Natural Gas Prices Going to Go Below $2?

From The Washington Post:
Bank of America Corp. says the selloff isn’t over and is telling clients to brace for the possibility of sub-$2 prices for the first time in three years. Gas output will climb to an all-time high of 78.39 billion cubic feet a day this year, an increase of 50 percent over 2005, led by shale reservoirs in Pennsylvania, Louisiana and Texas, government data show. 
The number of gas rigs has tumbled to the lowest level since 1993, yet supply has risen steadily because of improved techniques for extracting the fuel. Natural gas for April delivery settled at $2.92 per million British thermal units at Wednesday on the New York Mercantile Exchange, down from $4.456 a year ago. Futures were last below $2 in April 2012 and haven’t traded there for more than a handful of days since 1999. 
“Production has definitely surprised,” Francisco Blanch, head of global commodity research at Bank of America in New York, said in a March 10 phone interview. “We have $2.25 as our target for a normal summer, but we could see much lower prices with cool weather” that reduces utilities’ demand for natural gas. 
Break Even 
In part of the Marcellus reservoir in Pennsylvania, the nation’s most productive gas basin, the break-even price is 38 cents. Some producers in the nearby Utica shale can make money by selling gas at a loss because of profits earned from gas liquids that flow from the same wells, data compiled by Bloomberg New Energy Finance show. 
U.S. gas output has climbed to a record every year since 2011, driven by gains at shale formations from the Marcellus and Utica to Haynesville in Louisiana, and Eagle Ford and Permian in Texas. Operators in those basins have used techniques such as drilling multiple wells from the same pad to cut costs and boost production. The Energy Information Administration has raised its estimate for 2015 gas production 7.8 percent from a year ago, according to the monthly Short-Term Energy Outlook. 
Supply from the Marcellus may climb to 16.79 billion cubic feet a day in April, up 21 percent from a year earlier, the EIA, the Energy Department’s statistical arm, said March 9 in its monthly Drilling Productivity Report. Utica output may rise to 1.97 billion a day, more than doubling from April 2014.
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Berea and Clinton Sandstone Attracting Horizontal Drilling

From the Akron Beacon Journal:
Experimental horizontal wells in Ohio and surrounding states show great promise as a way for drillers to tap into the much-drilled Clinton sandstone, industry representatives say. 
Such wells are three times more costly than comparable vertical-only wells, but the horizontal wells are seven to eight times more productive, said Mark Lytle, CEO emeritus of Wooster-based Buckeye Oil Producing Co. 
The new wells are "not monster gas wells," but his company was very surprised at the volume of natural gas that was tapped, he said. 
His company has drilled a horizontal well in the Berea sandstone in West Virginia and hopes to drill one Clinton sandstone well in Ohio this year, he said Thursday at the Ohio Oil and Gas Association’s winter meeting. The three-day program attracted more than 1,000 people and it wraps up on Friday. 
David Hill, the president of the OOGA, hailed Lytel and the two other panelists, Greg Mason of the Newark-based Energy Cooperative, and Bob Trevail of Pennsylvania-based Dallas Energy LLC, for being pioneers in drilling the Clinton and other shallow sandstones. 
Such horizontal wells may well be the future of Ohio drilling, Hill said.
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Tuesday, March 24, 2015

Gulfport Energy Receives Petition to Protect Reservoir in Barnesville

From Gas & Oil:
BARNESVILLE, OH -- When the village of Barnesville announced an agreement to allow oil and gas drilling at the Slope Creek Reservoir, a number of Barnesville area residents voiced concern over the potential dangers of water contamination from hydraulic fracturing. 
Slope Creek is the largest of the three Barnesville reservoirs, representing 82% of the drinking water for about 13,000 people, including Bethesda, Quaker City, and the Switzerland of Ohio Water District, which includes Somerton, Malaga, Jerusalem, and Beallsville. 
Gulfport Energy has plans to place multiple well pads within 500 feet of Slope Creek Reservoir. Citing evidence of well casing and cement failures, contaminant spills, and other environmental disasters in the shale gas industry, concerned citizens asked the Village Council if the proposed well pads could be moved outside the immediate watershed of the reservoir. 
While the council expressed similar concerns and agreed to approach Gulfport about moving the proposed well pads, members of the community took action of their own, starting a petition that now has over 2,300 signatures. 
“We felt it was imperative that Gulfport fully understood how important this issue is to the communities served by Slope Creek“ stated Lacy Burkhart, one of the volunteers for the petition drive. The petition became a focal point for the newly formed Concerned Barnesville Area Residents, an organization dedicated to preserving the quality of local water resources, including water and air. The petition circulated in both paper and Internet formats over the summer and fall, with support coming from a broad spectrum of the community.
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CHEJ to Highlight First Responder Risks from Ohio’s Proposed Right-to-Know Changes

Carrollton Ohio: Ohio House Bill 490, sponsored by Andy Thompson (R), whose district includes Carroll County, seeks to stop direct reporting of hazardous chemical inventories to state and local emergency planners and fire departments for Ohio drillers. Instead the Ohio Department of Natural Resources (ODNR) would have sole discretion over whether, and to what extent, critical chemical information will be shared with first responders and citizens living near gas and oil wells.

Since 1986, the Federal Emergency Planning and Community Right-to-Know Act (EPCRA), sought to ensure that local emergency planning and firefighters be the lawful repository for emergency planning documentation for all industries. Paul Feezel, Chair of Carroll Concerned Citizens said, “Being at the center of Ohio’s shale gas boom, we thought it was really important to support our local first responders by having an educational meeting on this proposed change. After all, ODNR is not who answers when someone from Carroll County calls 9-11.”

At the Carroll Concerned Citizens April 2 meeting, Teresa Mills of the Center for Health and Environmental Justice (CHEJ) will provide an overview of the importance of EPCRA regulations for first responders--especially for rural southeastern communities seeing increased shale gas activities. She will use a June 2014 Monroe County well-pad chemical fire to demonstrate driller and ODNR failures. The StatOil fire engulfed 20 semi-trucks, triggered over 30 explosions, caused volunteer fire fighters to retreat, the evacuation of 25 nearby homes, and resulted in 54,000 gallons of chemicals spilled into a tributary of the Ohio River.

HB 490 seeks to carve out an EPCR exception for just one industry—gas and oil. Silverio Caggiano, a 31-year veteran of the Youngstown Fire Department and a member of several hazmat task forces will join Ms. Mills to share a brief first responder’s view of the proposed changes. The concern is that working under two sets of laws will cause confusion and put both first responders and communities at risk.

Teresa Mills’ presentation will be held at the Church of Christ – Christian Disciples located at 353 Moody Ave. Carrollton. It begins at 7pm and is free and open to the public.
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10 New Permits Issued Last Week as Number of Utica Shale Wells Drilled Reaches 1,400

The latest weekly permitting report from the Ohio Department of Natural Resources is now available, and the rig count continues falling even as new permits continue to be issued.

10 new permits were approved last week.  Five of those permits were for wells in Monroe County, three for Belmont County, and two for Carroll County.  The busiest operator was Antero Resources, which received four of the 10 permits.

The cumulative totals continue to climb, and there have now been 1,864 horizontal drilling permits issued for Ohio's Utica shale.  An even 1,400 wells have now been drilled, and 829 are producing.  The Utica rig count continues to slide, falling to 26 this week.

View the report here.


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Rex Energy Provides Operational Update

  • Placed into sales the four-well Powell pad at an average 5-day sales rate per well of 9.3 MMcfe/d
  • Completed drilling operations on four-well Renick pad in Moraine East Area
STATE COLLEGE, Pa.March 16, 2015 (GLOBE NEWSWIRE) -- Rex Energy Corporation (Nasdaq:REXX) provided an operational update on the company's Appalachian Basin operations.

Operational Update

Appalachian Basin - Legacy Butler Operated Area

During the first quarter of 2015, the company placed the four-well Powell pad into sales. The four-well Powell pad was drilled with an average lateral length of 5,500 feet and completed with an average sand concentration of approximately 2,300 pounds per foot. The four-well Powell pad produced at an average 5-day sales rate per well of approximately 9.3 MMcfe/d.

The company has also placed the two-well Hamilton pad into sales. The two wells on the pad were drilled with an average lateral length of approximately 4,700 feet and completed with an average sand concentration of approximately 2,300 pounds per foot. The two-well Hamilton pad produced at an average 5-day sales rate per well of approximately 7.8 MMcfe/d.

"We are very pleased with the performance to date of our two most recent pads in the Butler Operated Area," said Tom StableyRex Energy's Chief Executive Officer. "The results of the Powell and Hamilton pads support our belief that increased sand concentration utilized during the completion process results in higher IPs and better performance on our Marcellus type curve. Based on the 5-day sales rates, these two pads are on trend to meet or exceed our 2015 Marcellus type curve projections."

The company has released its second rig in the Appalachian Basin and expects to run a one-rig program through the remainder of 2015.

Appalachian Basin - Moraine East Area

In the Moraine East Area, the company has completed drilling the final well of the four-well Renick pad. The four wells on the pad were drilled to an average lateral length of approximately 5,820 feet. The company expects to begin completion operations on the four-well Renick pad at the end ofMarch 2015.

Appalachian Basin - Warrior North Prospect, Carroll County, Ohio

As previously announced, the company's first quarter 2015 production had been constrained, in part because of involuntary production curtailments in the Warrior North Prospect due to downtime at the Blue Racer compressor station. The issue at the Blue Racer compressor station has been resolved and the company does not anticipate future production to be constrained in the Warrior North Prospect.

Chesapeake Exec: Next Few Years is When "the Rubber Hits the Road" For Utica Shale

From Columbus Business First:
It's been a bit of a roller-coaster ride for people like Doyle. The first few years of Utica exploration focused on acquiring large swaths of land using the best geological information companies had at that time. Then the relative performance of the area started to be known and the "core" of the play was defined along a corridor of southeastern Ohio around Belmont and Monroe counties. 
"It probably migrated to the south more than some companies anticipated early on," said Doyle, executive vice president of operations for Chesapeake's northern division, "It's a fascinating process, going out there early on, testing it, learning from the rest of the industry and trying to find out how to best develop it." 
After spending so much time working in the Appalachian area, what does Doyle see for the next five years in Ohio? 
It's time for Utica companies to start proving themselves after years of spending big. 
"We're entering into a stage now in Utica development where companies are going to be asked to start delivering results," he said, with the caveat that commodity prices and a continued strain of infrastructure in the area could change plans. The next few years are when "the rubber hits the road." 
"This is where you will be able to separate the weak from the strong," he said.
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Professor Says Drop of Oil Prices Exposes Oil Industry's Failed Business Model

From the Huffington Post:
Many reasons have been provided for the dramatic plunge in the price of oil to about $60 per barrel (nearly half of what it was a year ago): slowing demand due to global economic stagnation; overproduction at shale fields in the United States; the decision of the Saudis and other Middle Eastern OPEC producers to maintain output at current levels (presumably to punish higher-cost producers in the U.S. and elsewhere); and the increased value of the dollar relative to other currencies. There is, however, one reason that’s not being discussed, and yet it could be the most important of all: the complete collapse of Big Oil’s production-maximizing business model. 
Until last fall, when the price decline gathered momentum, the oil giants were operating at full throttle, pumping out more petroleum every day. They did so, of course, in part to profit from the high prices. For most of the previous six years, Brent crude, the international benchmark for crude oil, had been selling at $100 or higher. But Big Oil was also operating according to a business model that assumed an ever-increasing demand for its products, however costly they might be to produce and refine. This meant that no fossil fuel reserves, no potential source of supply -- no matter how remote or hard to reach, how far offshore or deeply buried, how encased in rock -- was deemed untouchable in the mad scramble to increase output and profits. 
In recent years, this output-maximizing strategy had, in turn, generated historic wealth for the giant oil companies. Exxon, the largest U.S.-based oil firm, earned an eye-popping $32.6 billion in 2013 alone, more than any other American company except for Apple. Chevron, the second biggest oil firm, posted earnings of $21.4 billion that same year. State-owned companies like Saudi Aramco and Russia’s Rosneft also reaped mammoth profits. 
How things have changed in a matter of mere months. With demand stagnant andexcess production the story of the moment, the very strategy that had generated record-breaking profits has suddenly become hopelessly dysfunctional. 
To fully appreciate the nature of the energy industry’s predicament, it’s necessary to go back a decade to 2005, when the production-maximizing strategy was first adopted. At that time, Big Oil faced a critical juncture. On the one hand, many existing oil fields were being depleted at a torrid pace, leading experts to predict an imminent “peak” in global oil production, followed by an irreversible decline; on the other, rapid economic growth in China, India, and other developing nations was pushing demand for fossil fuels into the stratosphere. In those same years, concern over climate change was also beginning to gather momentum, threatening the future of Big Oil and generating pressures to invest in alternative forms of energy.
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Monday, March 23, 2015

Industry Says Severance Tax is "the Wrong Idea at This Time"

From Columbus Business First:
This time last year, Ohio's oil and gas industry was railing against Gov. John Kasich's proposed severance tax on drilling. They were upset, but commodity prices were high. Prices matched the general feeling of the industry. 
A year later, though, the industry and its Statehouse supporters who have fought tooth-and-nail against Kasich's proposals are still lobbing grenades at the governor's proposal. Now, though, they're using the downturn to hype up criticism. 
"Raising the severance tax is absolutely the wrong idea at this time," Ohio Rep. Andy Thompson, R-Marietta, told a group at the Ohio Oil and Gas Association's winter meeting Thursday.
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Anti-Fracking Studies Singled Out as Junk Science

From TheHill:
In her piece, Gibbs rehashes the discredited talking points of environmental activists who reflexively oppose any oil and natural gas production. 
As just one example, she claims a report from the Colorado School of Public Health “found air pollutants near fracking sites at levels sufficient to raise risks for cancer,” among other ailments, especially among pregnant women. But Gibbs failed to acknowledge that the study was swiftly condemned after its release. 
Larry Wolk, director and chief medical officer at the Colorado Department of Public Health, issued a statement warning expectant mothers “not to rely on this study as an explanation of why one of their children might have had a birth defect. Many factors known to contribute to birth defects were ignored in this study.” 
As is typical among anti-energy activists, Gibbs employs vague language to stoke unfounded fears. She says, “fracking fluids can be incredibly dangerous.” But anything “can be dangerous” in theory—you can get into an accident driving your car or overdose from drinking too much water. Gibbs’ framing sheds no light on the degree of risk involved in energy development. 
All energy sources carry a degree of risk, but science and experience consistently show that hydraulic fracturing poses minimal risks and offers substantial rewards. The Colorado Oil and Gas Conservation Commission, for instance, explains, “When properly conducted, modern fracing is a safe, sophisticated, highly engineered and controlled procedure.” Officials from Michigan, California, Pennsylvania, California and elsewhere, including the Obama administration, have reached similar conclusions
Gibbs’ other tactic is to try and pass off studies funded by agenda-driven environmental groups as dispassionate science. Take the “analysis” from the Physicians Scientists & Engineers for Healthy Energy. Gibbs fires off bullet points hyping “potential risks or adverse health outcomes” from hydraulic fracturing, but fails to disclose that this group is funded by the left-wing Park Foundation, which bankrolls a variety of anti-energy causes. The group also signed a “pledge of resistance” to hydraulic fracturing along with radical activists such as Bill McKibben and Josh Fox.
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Friday, March 20, 2015

OPEC Feels Strategy is Working, Says U.S. Shale Boom Will Fade by End of 2015

From RT Business:
OPEC is forecasting a possible decrease in US shale oil production by the end of 2015. The number of operating drilling rigs working shale deposits is likely to fall since the price of oil has more than halved since June 2014. 
The cartel questions the ability of US producers to withstand the dramatic collapse in oil prices and predicts that global oil supply will equal demand, it said in its monthly report published Monday. 
“Tight crude producers are aware that typical oil wells in shale plays decline 60 percent annually, and that losses can only be recouped by drilling new wells,” says the report. “As drilling subsides due to high costs and a potentially sustained low oil price, a drop in production [in the US – Ed.] can be expected to follow, possibly by late 2015.” 
Previously OPEC has been predicting US shale production would decline in 2018. 
Although the total US crude production hit a record 9.4 million barrels a day last week, OPEC insists that tight oil production is more cost-based and vulnerable to crude prices that have recently dropped below $45 a barrel for NYMEX futures contracts.
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Meanwhile, oilprice.com featured an article that said this:
Saudi Oil Minister Ali al-Naimi, the architect of OPEC’s strategy to regain market share by causing the price of crude oil to plunge, says his plan is working, and data from petroleum research firms seem to back him up. 
Making his first public comments in two months, al-Naimi told reporters in the southwestern Saudi city of Jazan that the markets have cooled off, and cited Brent crude, the global benchmark, as an example, noting that its price has stabilized at about $60 per barrel. 
He also pointed to data that inexpensive oil is driving up demand, notably in China and the United States, which eventually could lead to price stability or to a price rebound. 
But Al-Naimi warned naysayers not to upset this new balance. “Why do you want to rock the markets?” he asked. “The markets are calm. … Demand is growing.”
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Toll of Low Oil Prices: Over 75,000 Layoffs and Counting

From Forbes:
The Oil Bust of 2015 is making it cheaper to fill up our tanks at the gas station, but it is decimating our nation’s oil and gas workforce as companies slash spending in hopes of surviving the downturn. Just this week Talisman Energy has cut about 200 workers in Calgary, while Nexen Energy (a division of China’s Cnooc) slashed 400 jobs. On Tuesday, Quicksilver Resources filed for Chapter 11 bankruptcy protection. 
I received a very thorough spreadsheet from some well placed friends in the industry; it tabulates with more precision than I’ve seen anywhere else which companies have cut jobs, and how many. You can find the full list below. The conclusion: the worldwide oil and gas industry, including oilfield services companies, parts manufacturers and steel pipe makers, has laid off at least 75,000 so far. 
Considering that about 600,000 work in the U.S. oil and gas sector, this is a big hit. And it’s important to note that most of these are solid middle class jobs. There’s not many industries where a guy with little more than a high school education can make $100,000 a year, but that’s a common pay package for drilling rig workers. I’m told by people who operate a lot of drilling rigs that for every rig mothballed about 40 people lose their jobs. The U.S. rig count is down by more than 700 from this time last year. 
Indeed the average oil and gas worker makes $108,000, according togovernment numbers. The tremendous growth in these oil and gas jobs has been vital to helping the United States crawl out of the Great Recession. And keep in mind the add-on effect — every oil layoff means that much less money to be spent on meals, clothes, trucks, homes, and on and on.
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Report: Natural Gas Price of $3/MCF is Enough to Make Utica Shale Profitable

From SNL Financial:
Recent well results and fourth-quarter production reports out of Ohio indicate that the Utica Shale is profitable with natural gas prices in the neighborhood of $3/Mcf, RBC Capital Markets LLC said in a research report March 5. 
While activity in the shale has slowed with a 16% cut in rigs working the play, well results continue to improve, RBC said, particularly those of smaller drillers such as Antero Resources Corp., Gulfport Energy Corp. and Aubrey McClendon's privately held American Energy Partners LP
"Antero's liquids-rich wells were again quite impressive, with 16 new wells averaging 2,284 [barrels of oil equivalent per day] (6% oil)," RBC analysts led by Leo Mariani wrote after reading the latest fourth-quarter Ohio production report, released Feb. 25 by the state's Department of Natural Resources. 
RBC noted that 22 new Gulfport wells had fourth-quarter 2014 production of 1,367 boe/d, with 15% oil, and that "American Energy posted good results (8 wells at 886 Boepd, 44% oil), a 20% improvement" from the third quarter of 2014. 
The best parts of the play for dry gas, according to RBC, are Belmont and Monroe counties. Magnum Hunter Resources Corp. has had the top-producing well for a year, Stalder Unit A 3-UH, which still produces 3,848 boe/d, or 23,088 Mcf/d, after a year in production in Monroe County.
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Senator Bill Seitz Has Ideas to Improve Governor Kasich's Budget Proposal

From The Columbus Dispatch:
Seitz said he sent the memo after listening to Kasich’s State of the State speech. 
“What did he say? He said, ‘If you don’t like my plan, what’s your plan?’ So I was listening and here’s my plan,” Seitz said. “It’s intended to start a discussion.” 
Seitz proposed keeping the two largest parts of Kasich’s tax package – his 23-percent income tax cut over two years, and his proposed half-cent increase in the state sales tax, from 5.75 percent to 6.25 percent. 
Kasich’s proposed severance tax increase on fracking, Seitz argues, is too high and could hit drillers who are losing money. However, he said, the House-passed severance tax bill last session “was probably too generous in the opposite direction (particularly in allowing credit for CAT tax and ad valorem payments).” 
Seitz said a happy medium must exist somewhere. 
“I do not buy the argument that no increase can be considered due to falling oil prices,” Seitz wrote. “If properly designed, the tax will not take effect until after well costs are recouped, at which time prices may well have rebounded.”
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