First Choice Energy

Wednesday, October 23, 2019

Utica Permitting Back on the Rise, Rig Count Holds Steady

WEEK ENDING 10/19/19



New permits issued last week: 10 (Previous week: 0)  +10
Total horizontal permits issued: 3187 (Previous week: 3177 +10
Total horizontal wells drilled: 2708 (Previous week: 2708)  +-0
Total horizontal wells producing: 2340 (Previous week: 2340)  +-0
Utica rig count: 13 (Previous week: 13)  +-0

Encino Energy Faces Lawsuit Over Underpaid Royalties

From The Review:
The lawsuit concerns leases landowners signed with Ohio Buckeye Energy or Chesapeake Energy from 2010 through 2012. Ohio Buckeye Energy later became part of Chesapeake. 
Last October, Encino Acquisition Partners bought Chesapeake’s Utica holdings in Ohio for $2 billion. EAP is a partnership between the Canada Pension Plan Investment Board and Encino Energy, a private oil and gas company based in Houston. 
EAP’s purchase included 900,000 acres and approximately 900 wells, with related equipment and property. Encino Energy’s Utica office is in Louisville. 
Royalty dispute
After the purchase, the Encino defendants began to significantly underpay royalties to landowners, according to the lawsuit. 
William G. Williams, an attorney for the landowners, said his clients initially couldn’t wait for Encino to take over because Chesapeake had been making large deductions from their royalties, a practice that is the subject of another lawsuit. 
High expectations changed to despair and disappointment when the landowners got their first Encino royalty checks this summer, Williams said. The payments were anywhere from 50 to 90 percent less than what Chesapeake had been paying.
Click right here to view the rest of the article. 

Report: Ohio Counties Have Received Nearly $142 Million in Real Estate Property Taxes from Utica Shale Production


Eight of Ohio’s top Utica Shale development counties collected more than $141.9 million in real estate property taxes on oil and natural gas production since 2010, according to an updated report by Energy In Depth and the Ohio Oil and Gas Association.
The Utica Shale Local Support Series report entitled, “2019 Update: Ohio’s Oil and Gas Industry Property Tax Payments,” analyzes the economic impacts of oil and natural gas real estate property (or ad valorem) taxes paid in these counties from 2010-2017: BelmontCarrollColumbianaGuernseyHarrisonJeffersonMonroe and Noble.
Data was collected through Freedom of Information Act requests, and builds on EID and OOGA’s previous 2017 reports on real estate property taxes and road use management agreements.
The Utica Shale Local Support Series shows the real dollars being paid to Ohio’s communities. As Harrison Hills Superintendent Dana Snider said:
“Harrison Hills has experienced a great working and supportive relationship with the oil and gas industry. Part of that support comes from the ad valorem tax, which in large part comes to the district. Those dollars have allowed us to reinvest in our students, staff and facilities to provide a state of the art, nurturing and creative learning environment that our community is proud of.”
Here are the key findings of the 2019 updated report:
To read the full report or view county specific information:

Court Ruling Finds That Ohio DMA and MTA Can Coexist Successfully

From Vorys' Energy & Environmental Law Blog:
The Seventh District Court of Appeals reaffirmed that claimants can use both Ohio’s Marketable Title Act (“MTA”) and Dormant Mineral Act (“DMA”) to extinguish and abandon, respectively, mineral interests. In West v. Bode, 2019-Ohio-4092, the appellant-surface owners attempted to extinguish a severed oil and gas royalty interest under the MTA. The holders of the royalty interest argued, in part, that the MTA did not extinguish the royalty interest because, as between the MTA and DMA, the DMA is the more specific statute with regard to terminating mineral interests and the DMA did not abandon the royalty interest. The Court rejected the royalty holders’ argument, as it had done in similar, prior cases. However, in its decision, the Court offered its strongest defense of the MTA to date.
Read the rest of this post by clicking here. 

New Well Spacing Regulations Put in Place in Ohio

From the Oil & Gas Law Report:
The Ohio Department of Natural Resources – Division of Oil & Gas Resources Management (DOGRM) recently revised its rules governing spacing of horizontal oil and gas production wells. The new rules, which became effective on Oct. 10, 2019, will bring Ohio’s horizontal well spacing regulations in line with what accepted science and drilling data indicates is a more efficient and productive spacing for horizontal wells in Ohio. 
Under the prior version of Ohio Administrative Code §1501:9-1-04, which applied to both conventional and horizontal wells, any oil and gas production well drilled into a pool located at least 4,000 feet in depth must be set back at least 500 feet from the boundary of the leased tract or drilling unit. That prior version of the rule also required a spacing of at least 1,000 feet between wells producing from the same pool. 
Effective Oct. 10, 2019, Ohio Administrative Code §1501:9-1-04 was revised to require only a 150 foot (+/- 10 percent) setback from the first and last “take points” of a horizontal well and the boundary of the drilling unit or subject tract. This change is consistent with industry practice of seeking a setback variance at the heel and toe of horizontal wells in order to more fully develop a drilling unit. Drilling data shows that well stimulation operations do not typically produce fractures that propagate more than 150 feet beyond the heel and toe of a typical Ohio shale well. Thus, the prior 500 foot setback requirement was excessive and left unproduced resources at the heel and toe of a well.
Click here to view the whole article. 

Friday, October 18, 2019

Encino Energy Donates $35,000 Toward Environment, Health and Safety Projects

An Encino Energy press release:
Encino Energy made major donations from the Encino Energy Community Partnership Program earlier today supporting environment, health and safety projects in Carroll and Jefferson counties. 
In Jefferson County, Encino was asked to provide funding for the Wintersville Fire and Rescue to purchase eight Conex shipping containers. These containers will be used to build a training facility for the Wintersville Fire and Rescue, which will be located adjacent to the burn building and to support hose line operations, search and rescue, roof operations, ladder operations, confined space rescue, rope rescue, sprinkler systems, and foam operations. The training center will be available for use by fire departments from Jefferson, Belmont, and Harrison counties. Encino invested $20,000 from its Community Partnership Program toward this effort. 
“These new containers are incredibly important—and Encino Energy was the first to answer our call for action to help make this happen. More important than the check, has been the partnership and collaboration we’ve had with Encino throughout this entire project, “said Rob Harrington, Fire Chief, Wintersville Volunteer Fire Department. “We look forward to continuing to work on ways we can partner together.” 
The second major investment made from the Encino Community Partnership Program supports the Carroll County Sheriff’s Department with a $15,000 investment toward a new state-of-the-art unmanned aerial system (UAS). Carroll County Sheriff Dale Williams originally made Encino aware of this need shortly after the county had experienced a series of critical events, where an unmanned aerial system could have significantly aided local first responders’ efforts. Encino was particularly interested in this callto-action after learning that one of the company’s employees was directly impacted by a recent highprofile missing persons fatality. The project was also appealing because the funding was a collaborative effort between the Carroll County Commissioners, the Carroll County Foundation, and several other local entities who also participated in the funding of the project. 
“As I said in my letter to Encino Energy, serving for years as your Sheriff, I felt that this state-of-the-art tool is vital for Carroll County,“ said Sheriff Dale Williams. “This drone will provide much-needed assistance to go where our police officers can’t go and most importantly improve the health and safety of the people we serve. Our community really came together to support this special operation and Encino’s support was a key driver to our fundraising efforts.” 
Encino’s Director of Environment, Health and Safety, Dave Edwards, advised that its newly formed Community Partnership Program is designed to provide investment in long-term, sustainable projects in the areas in which the company has drilling and production operations with an emphasis on environment, health and safety. Carroll and Jefferson Counties are among Encino’s “core assets” where it is actively drilling, completing and producing wells. 
“The protection of our environment, health and safety of the communities in which we live, and work is paramount to Encino’s core values and really is the heart of our Community Partnership Program, “said Dave Edwards. “These two projects are personal to us because we work with first responders on a dayto-day basis and rely on them to support our operations in time of need. The UAS project, of course, really hit home because we saw the value with our own employees living right here in Carroll County. The investments we are making through this program captures the spirit of company’s long-term vision, and we want to do our part to be a good neighbor.”
These investments follow the $25,000 Encino donated in July to assist in the completion of a new playground at Sally Buffalo Park in Cadiz.  It's nice to see the company that took over Chesapeake Energy's Utica acreage reaching out to have a positive impact on local communities.

Wednesday, October 16, 2019

Rig Count Back on the Rise in Latest Utica Permitting Update

WEEK ENDING 10/12/19



New permits issued last week: 0 (Previous week: 19)  -10
Total horizontal permits issued: 3177 (Previous week: 3177 +-0
Total horizontal wells drilled: 2708 (Previous week: 2707)  +1
Total horizontal wells producing: 2340 (Previous week: 2339)  +1
Utica rig count: 13 (Previous week: 11)  +2

Thursday, October 10, 2019

ODNR Releases Latest Utica and Marcellus Shale Activity Maps







After 2 Dead Weeks, Permitting Picks Back Up in Utica Shale as Rig Count Drops

WEEK ENDING 10/05/19



New permits issued last week: 10 (Previous week: 0)  +10
Total horizontal permits issued: 3177 (Previous week: 3162 +15
Total horizontal wells drilled: 2707 (Previous week: 2699)  +8
Total horizontal wells producing: 2339 (Previous week: 2320)  +19
Utica rig count: 11 (Previous week: 14)  -3

Saturday, October 5, 2019

USGS Increases Appalachian Basin Natural Gas Estimates, Moves Utica Ahead of Marcellus

From the USGS:
The Marcellus Shale and Point Pleasant-Utica Shale formations of the Appalachian Basin contain an estimated mean of 214 trillion cubic feet of undiscovered, technically recoverable continuous resources of natural gas, according to new USGS assessments.

“Watching our estimates for the Marcellus rise from 2 trillion to 84 trillion to 97 trillion in under 20 years demonstrates the effects American ingenuity and new technology can have,” said USGS Director Jim Reilly. “Knowing where these resources are located and how much exists is crucial to ensuring our nation’s energy independence.” 
Image shows a map of the Eastern United States with the boundaries of the Marcellus Shale superimposed 
The assessment unit map for the Marcellus Shale within the Appalachian Basin. Although it occupies similar areas as the Point Pleasant-Utica Shale, the Marcellus is much younger, having formed in the Devonian age.  (Public domain.) 
The Marcellus, Point Pleasant and Utica are extensive formations that cover parts of Kentucky, Maryland, New York, Ohio, Pennsylvania, Virginia and West Virginia. 
This is a significant increase from the previous USGS assessments of both formations. In 2011, the USGS estimated a mean of 84 trillion cubic feet of natural gas in the Marcellus Shale, and in 2012 the USGS estimated about 38 trillion cubic feet of natural gas in the Utica Shale. 
Significant amounts of natural gas have been produced from the Marcellus and Utica Shales since the previous USGS assessments. USGS assessments are for remaining resources and exclude known and produced oil and gas.
Click here to read the whole announcement.

Lordstown Energy Center Honored as POWER Magazine Top Plant

From POWER Magazine:
The cost of fuel is one of the most important factors affecting power plant profitability, but flexibility and efficiency are also vitally important to success. One impressive new plant in Ohio—the Lordstown Energy Center—is positioned to profit from inexpensive gas while utilizing proven technology to economically produce reliable power. The project is a notable POWER Top Plant award winner. 
The power industry has changed dramatically over the past decade. One of the driving forces behind the transformation has been the growth of shale gas production. Shale gas is natural gas—primarily methane—found in shale formations, some of which were formed during the Devonian and Ordovician periods of Earth’s history. 
According to the U.S. Department of Energy, the shales were deposited as fine silt and clay particles at the bottom of relatively enclosed bodies of water more than 300 million years ago. At roughly the same time, primitive plants were forming forests on land and the first amphibians were beginning to appear. Some of the methane that formed from the organic matter buried with the sediments escaped into sandy rock layers adjacent to the shales, forming conventional accumulations of natural gas, which are relatively easy to extract. But some of it remained locked in the tight, low-permeability shale layers, becoming shale gas.
Read more by clicking here. 

Ohio Judge Says Chesapeake Acted Legally with Scheme to Lower Royalty Payments

From Law360:
Chesapeake Exploration LLC properly calculated and paid oil and gas royalties to landowners, an Ohio federal judge ruled Monday, granting summary judgment in favor of the oil company in a certified class action that’s dragged on for nearly four years. 
Dale H. Henceroth, Marilyn S. Wendt and eight other landowners filed suit in 2015, alleging the Chesapeake Energy Corp. unit had breached its contracts with them by underpaying them on royalties. Specifically, the landowners said Chesapeake should be paying them royalties based on a higher price associated with the later-enhanced and more expensive gas further down the line. 
But U.S. District Judge Benita Y. Pearson on Monday found that Chesapeake was paying landowners “exactly what the parties negotiated for” in their leases. She granted the company’s motion for summary judgment and denied a competing motion for summary judgment from the plaintiffs. 
“The lease language is plain and unambiguous and the evidentiary record is clear: Chesapeake paid plaintiffs 1/8th of the proceeds it received from the sale of the oil and gas produced and marketed from the leaseholds,” Pearson said.
The landowners' suit is based on the fact that Chesapeake sold the gas to itself (through an affiliate company) at a deflated price, which is the price they paid out royalties on, and then resold the gas at higher prices.  But the leases that Chesapeake drew up were no doubt carefully prepared to allow them to do this, meaning the landowners are unlikely to win the legal battle (although the ruling has been appealed).  Just a note to any landowner out there who is considering signing a lease of any kind: get an attorney to help protect you from predatory practices like this.

Read the rest of the Law360 article by clicking here.

Utica Sees No New Permits for Second Consecutive Week

WEEK ENDING 09/28/19



New permits issued last week: 0 (Previous week: 0)  +-0
Total horizontal permits issued: 3162 (Previous week: 3162 +-0
Total horizontal wells drilled: 2699 (Previous week: 2698)  +1
Total horizontal wells producing: 2320 (Previous week: 2317)  +3
Utica rig count: 14 (Previous week: 14)  +-0

Consumer Group Finds Ohio’s Emissions Have Declined Faster Than the National Average

Despite its high energy demands and a surge in energy production, Ohio’s statewide emissions have fallen by as much as 94 percent since 1990

COLUMBUS, Ohio--()--Consumer Energy Alliance (CEA) today released an Ohio emissions brief that looks at key pollutants and the overall environmental improvements seen across the state. The brief offers further support for one of the great untold stories in Ohio and across the country, the United States is leading the world in environmental stewardship and emission reduction.

The brief comes as youth across the country marched in support of a healthier environment, and to seek answers from community leaders, policymakers and adults about what is being done to improve our environment while also meeting today’s growing demand for energy. This brief shows everyone that many of their questions have already been answered by ongoing innovation and technology in the U.S.
CEA’s brief found that even as Ohio increases its energy production and remains one of the nation’s largest energy consumers, emissions of key air pollutants and greenhouse gases have declined significantly across the state.
From 1990 to 2017, Ohio’s emissions of key pollutants have decreased across the board, with:
  • 72 percent reduction in nitrogen oxides (NOx),
  • 94 percent reduction in sulfur dioxide (SO2), and;
  • 66 percent reduction in volatile organic compounds (VOCs).
Additionally, from 1990 to 2016, Ohio’s carbon dioxide (CO2) emissions declined by 16 percent.
Moreover, while Ohio’s emissions of key pollutants and carbon dioxide were decreasing, the state saw a marked increase in energy production, boosting job creation and economic growth. Ohio production of natural gas increased more than 1,900 percent over the past decade.
“As Ohioans continue to voice their support for creating a healthier environment, and ensuring access to affordable and reliable energy, we are happy that data from the EPA and the WHO demonstrates that Ohioans can simultaneously have a cleaner environment and energy production,” said Chris Ventura, CEA’s Executive Director in Ohio. “This is due in part to the commonsense regulatory policies enacted by our elected officials and the voluntary actions that have been taken by companies across Ohio to the benefit of our communities. We should all be proud that Ohio is one of the leading states in the nation in realizing greater emissions reductions. Now, let’s keep this amazing progress going!”
This brief follows CEA’s Energy Savings Report for Ohio consumers, which found that families, small business and manufacturers across the state saved over $40 billion on their natural gas utility bills over the past decade. This is due to the prolific American Energy Revolution occurring in Southeast Ohio, and similar states across the country.
To view the brief, click here.
About Consumer Energy Alliance
Consumer Energy Alliance (CEA) is the leading consumer advocate for energy, bringing together families, farmers, small businesses, distributors, producers, and manufacturers to support America's environmentally sustainable energy future. With more than 550,000 members nationwide, our mission is to help ensure stable prices and energy security for households and businesses across the country. CEA works daily to encourage people across the nation to seek sensible, realistic, and environmentally responsible solutions to meet our energy needs. Learn more at ConsumerEnergyAlliance.org.