The Ohio Department of Natural Resources (ODNR) reports that during the week of December 16 through December 22, it approved 11 new horizontal well drilling permits regarding the Utica/Point Pleasant Shale, the majority of which were issued for operations in Carroll County, which leads the state in well permits issued for the year (177, through December 22, 2012). Other recently issued permits include one in each of Columbiana and Guernsey Counties, and two in Monroe County. Through December 22, the ODNR has issued 485 horizontal well permits, and 196 horizontal wells were drilled under such permits, 45 of which are in production. Additionally, the rig count for Utica Shale development has reached a total of 30 rigs.
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West Virginia and Pennsylvania are positioning themselves to be at the forefront of the nationwide movement to transition more of the country’s vehicles to natural gas as a fuel source. In an op-ed published in the Charleston Gazette earlier this month, former West Virginia governor Ed Wise cited Kanawha and Harrison counties’ efforts to add new natural gas-powered vehicles into their fleets as a showcase for the benefits of extraction of shale gas in the Appalachian Basin. In Pennsylvania, the Port Authority of Allegheny County, which manages Pittsburgh’s bus system, is considering the cost savings that would come from converting its fleet to compressed natural gas. Also, Pennsylvania’s Department of Environmental Protection announced this month it will begin accepting applications for its Natural Gas Vehicle Grant program, which will provide up to $20 million over the next three years to help pay for the incremental purchase and conversion costs of heavy-duty natural gas fleet vehicles.
On October 31, 2012, the American Clean Skies Foundation published a report highlighting, on a state-by-state basis, the positive economic impacts for consumers and supply chains from the increased development and production of natural gas. The report notes that, since 2007, the oil and natural gas industry will create up to 1.6 million new jobs across the country and will increase the U.S. gross domestic product by up to $245 billion by 2017. In breaking these numbers down, the report estimates that for every billion cubic feet of additional gas demand per day, 13,000 new drilling and pipeline jobs are created, plus thousands of additional new jobs in various downstream sectors that use natural gas. Significant benefits highlighted in the report include Shell’s construction of an ethane plant and up to 145,000 new jobs in Pennsylvania, and how the development of natural gas resources in Ohio has brought new life to Ohio’s steel industry as U.S. Steel and Timken plan to expand to meet the increased demand for steel pipe and other drilling materials.
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Tom Aluise, spokesman for the West Virginia Department of Environmental Protection (WVDEP), recently stated that WVDEP is still trying to fill several vacant positions in the Office of Oil and Gas. In June, WVDEP announced in a press release that the agency was seeking inspectors in the Office of Oil and Gas (OOG) to serve in northern West Virginia, in particular. Last week, a local news source reported that although WVDEP is receiving applications for the positions, the agency is struggling to identify qualified candidates. Applicants for inspector positions must pass a written examination and demonstrate that they have qualifying industry experience. The remaining open inspector positions would cover Doddridge, Tyler, Mingo, Cabell, Wayne, Lewis, Braxton, Gilmer, Pocahontas and Webster counties; OOG will have 21 inspectors when the vacancies are filled. WVDEP hopes to fill these and other vacant OOG positions by the end of the year.
On Monday, October 15, 2012, Carizzo Oil and Gas announced that Halcon Resources Corp. purchased a majority of their Utica Shale leases in Trumbull, Ohio, and Mercer and Crawford counties, Pennsylvania, for $43 million. An existing drilling pad and approved well drilling permits were also part of the sale. Carrizo will continue to own an undivided 10% interest, along with an option to increase its ownership to 50%, in nearly 26,000 additional gross acres, primarily in Guernsey County, Ohio, where the company said there were encouraging drilling results. Continue reading…
Citing concerns of negative impacts to forests, the U.S. Fish and Wildlife Service is opposing the proposed Constitution Pipeline carrying gas from Pennsylvania to New York. The Constitution Pipeline, a joint venture of Williams Partners and Cabot Oil & Gas, is a 30-inch underground pipeline extending 121 miles from Susquehanna County in Pennsylvania to Schoharie County in New York. In its comment to the Federal Regulatory Energy Commission, a Fish and Wildlife Service field supervisor called on FERC to evaluate whether existing pipelines carrying gas from Pennsylvania to New York are adequate. The comment also stated that the proposed project would fragment many tracts of forest, resulting in the loss or deterioration of habitat for interior species such as black bear and northern goshawk. The proposed pipeline has its supporters, however. In Delaware County, New York, one of the counties the proposed pipeline will cross, a majority of town supervisors passed a resolution on October 10 stating that the construction of Constitution Pipeline would have a positive economic impact. FERC, which has jurisdiction over the siting of transmission pipelines, extended the public comment period, originally expiring on October 9, to November 9.
Virginia is the latest state to join a multi-state initiative to convert government vehicle fleets to run on compressed natural gas (CNG). Virginia Governor Bob McDonnell announced on October 2, 2012 that he is now allied with the governors of 21 other states, including West Virginia, Ohio, and Pennsylvania, in an effort to equip the state fleet with CNG-powered vehicles. The participating states have signed a memorandum of understanding (MOU) designed to aggregate annual state vehicle procurements, and have sent automakers a request for proposals on vehicle purchase options. In conjunction with the MOU, state government leaders continue to examine how best to develop a refueling infrastructure that will support CNG-powered fleets. Companies across the Marcellus and Utica Shale region are responding to the increasing demand for a CNG refueling infrastructure.
Utica East Ohio Midstream has begun site preparation for a shale gas collection and processing plant, according to Cleveland.com. The site, located on 117 acres south of Hanoverton, Columbiana County, will be the home of the $400 million plant, which is estimated to have an initial capacity of 600 million cubic feet per day. The first phase of the plant is to be operational by May of 2013.
The Muskingum Watershed Conservancy District (“MWCD”) announced the authorization of short-term sales of water to the oil and gas industry. The authorization of water sales is limited to Clendening Lake in Harrison County and Piedmont Lake in Belmont County, and can occur only during the fall and winter months when the lake levels are in “drawdown stage” – the release of more than 6 billion gallons of water as part of flood reduction operations. The MWCD authorized the water sales to provide a convenient source of water for companies planning to drill in the area and to reduce truck traffic, thereby reducing damage to township roads. Read more ›
The Pittsburgh Business Times reports that Chesapeake Energy Corp. is in talks with Giant Eagle concerning a possible joint venture which would involve the installation of compressed nature gas (CNG) refueling facilities at Giant Eagle’s GetGo gas stations. Norman Herrera, Chesapeake’s director of market development, told the Business Times that Chesapeake may be involved as an investor in the infrastructure, and may also play a role in arranging agreements with local fleets to convert to CNG and commit to refueling at GetGos.
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On September 25, 2012, the West Virginia Supreme Court heard oral arguments for the case of Martin, et al. v. Hamblet, Docket No. 11-1157. The issue in this case is whether a surface owner is vested with the right to an administrative hearing on and subsequent appeal of a drilling permit for a shallow horizontal well. Currently, the West Virginia statutes provide such rights to coal owners, coal lessees and coal operators only. Under West Virginia law, surface owners may submit written comments in the drilling permit application process in regards to shallow wells and may recover for certain damages to the surface estate. Under current case law, they only have a right to an administrative hearing on and subsequent appeal of a drilling permit for a deep well subject to statutory pooling.
The Hamblet surface owner’s arguments rely on the due process and equal protection clauses of the West Virginia and United States Constitutions and a controversial West Virginia Supreme Court precedent, while the OOG and gas operator are arguing for the court to apply the plain meaning interpretation of the existing statutes.
A Supreme Court decision in favor of the Hamblet surface owner may blur the distinction between shallow and deep wells and exponentially increase a surface owner’s role in the permitting process.