NPR reports that two producers and the Department of Conservation and Natural Resources (DCNR) are negotiating the right to access sub-surface gas deposits in the Loyalsock State Forest. The Loyalsock State Forest consists of about 100,000 acres and stretches across Bradford, Lycoming, and Sullivan counties and sits above deposits of the Marcellus Shale. Anadarko and Southwestern Energy Company own the sub-surface mineral rights under about 18,000 acres where the DCNR owns the surface. There is an additional 7,000 acres in the Loyalsock State Park where the producers appear to own both the surface and sub-surface rights. The ongoing negotiations between the producers and the DCNR have riled environmentalists seeking the preservation of the special plants, endangered birds and animals that reside in the area. With heightened pressure on DCNR to respond, a public meeting on the drilling in Loyalsock will be scheduled for June.
Journalist Pam Kasey suggested, in a print article in the West Virginia State Journal dated May 2, 2013, that while it is possible for a surface owner to attempt to insist that a driller become certified under new certification standards set by the Center for Sustainable Shale Development (as described last week in our blog), the standards are more likely to benefit minerals owners as bargaining tools for parties signing leases for oil and gas development. If the mineral interests are severed from the surface estate, then the surface owner will have little ability to use the standards for their own benefit. Per the article, the surface landowner will derive the most benefit from the new standards in situations when the minerals and the surface estate are owned by the same party, allowing the landowner can attempt to negotiate the standards into a lease or other agreement affecting the property.
On May 7th the Fourth Circuit Court of Appeals rejected the arguments of Martha and Charles Wellman and upheld the validity of a “legacy” oil and gas lease. The lease provided for royalty payments on production and a flat-rate rental payment. The mineral owners alleged that Bobcat Oil & Gas, Inc. failed to produce oil or gas under the lease, and breached the lease by missing rental payments, resulting in forfeiture of the lease. As the West Virginia Record noted, the Fourth Circuit upheld the lease under its original 1933 terms, stating that the lease could be maintained solely by payments of the flat rental, and that the missed payments in this case were not such that warranted termination of the lease.
A copy of the unpublished opinion from the Fourth Circuit can be found here.
As profiled in an article by Pam Kasey in the West Virginia State Journal, Charleston-based Appalachian Basin natural gas operator Triana Energy, LLC has meet the stringent environmental standards required to achieve ISO 14001 certification. To achieve certification, Triana established a comprehensive environmental management system for its operations. The company claims to be one of the first oil and gas exploration and production companies in the U.S. to receive ISO 14001 certification, which requires internal environmental controls and standards that are more demanding than current regulatory requirements.
At its annual shareholder meeting today, Consol Energy announced that it intends to pursue – and focus on – additional drilling in the Appalachian Gas Fields. Financing for that drilling, the company indicated, may come from selling off and/or restructuring other pieces of its energy portfolio. The Post-Gazette has more on the company’s plans here.
The Republic reports that Senator Joe Scarnati, R-Jefferson, recently introduced Senate Bill 555. The bill would create a health advisory panel to review public health data for areas where shale gas extraction occurs and determine the health impacts and benefits such operations. The Governor’s Marcellus Shale Advisory Commission suggested creating a permanent health advisory panel.
Range Resources argued in the Court of Common Pleas of Washington County, Pennsylvania this week that it was improperly denied conditional use permits to place well pads in Robinson Township. Counsel for Range Resources argued that the Township Supervisors did not follow the correct process, actively sought members of the public to speak out against Range Resources at public hearings, and held the proposed wells to a higher standard than required by the Township for wells approved in 2010. The Township’s counsel stated in the hearing that Range resources did not provide enough information in its conditional use applications.
The West Virginia Department of Environmental Protection will present an Oil & Gas Workshop at the Charleston Civic Center on May 16th beginning at 8:00 a.m. Speakers will address a wide variety of topics of interest to operators, contractors, consultants and attorneys- including waste water issues, permitting, compliance, pipeline safety, and horizontal well issues. To attend the workshop, contact B. J. Chestnut at B.J.Chestnut@wv.gov by May 10, 2013.
The Center for Sustainable Shale Development (“CSSD”), a newly formed independent organization supporting best practices, announced 15 new performance standards for operators in the oil and gas industry. The CSSD will offer an independent, third-party evaluation process to certify companies that achieve and maintain these standards. The Post-Gazette reports that the standards address the protection of air, water and climate by implementing: (i) limitations on gas well flaring; (ii) requirements to use “green completion” activities; (iii) storage tank emission controls; (iv) development of groundwater protection plans; (v) reduction of toxicity of fracking fluids; and (vi) improvement of water recycling to at least 90 percent. The certification process, including a plan for comprehensive third-party auditing, is currently in development, and the CSSD anticipated accepting applications for certification later this year.
The Marcellus shale play reached a production rate of more than 7 billion cubic feet per day, making it the largest gas-producing play in the United States, IHS reports. This is despite the fact that due to low natural gas prices, the number of active drilling rigs in the Marcellus shale play declined by one-third to approximately 80 rigs during 2012. However, the Marcellus still has more gas-directed rigs running than any other play in the United States. The most active counties in the Marcellus shale play were Bradford, Lycoming, Susquehanna, Tioga and Washington.
According to the Charleston Gazette, Denver-based Energy Corporation of America (ECA) will build a three-story office building Northgate Business Park in Charleston. The building will have more than 5,000 square feet of space and house 100-200 employees. It will replace the company’s current eastern regional headquarters in the Kanawha City neighborhood of Charleston. ECA has operations in the United States and New Zealand, and is actively engaged in natural gas exploration and production in the Marcellus Shale play.
As reported in the Akron Beacon Journal Online, Chesapeake Energy has hit oil in West Virginia’s Ohio and Marshall Counties. Chesapeake reports that it drew an average of 290 barrels of oil per day from one Ohio County well in 2012
with another Ohio County well producing an average of 195 barrels of oil per day. Additional wells in Marshall County and across the Northern Panhandle are also showing strong oil production in addition to producing other liquids- such as ethane, propane and butane. Chesapeake released a report detailing its successes in the 2012 operating year showing year-end proven reserves of 15.7 Tcfe.
Geisinger Health Systems has announced that it was awarded a $1 million grant by the Degenstein Foundation to study health impacts of Marcellus shale drilling. The grant funds are expected to be primarily used to create data-gathering infrastructure, with the balance going to develop studies of the data gathered. Geisinger expects to collaborate on its efforts with Guthrie Health of Sayre and Susquehanna Health. Preliminary results could be available next year, with long-term results expected to follow in the coming years. AP has more.
The Pittsburgh Tribune-Review reports that certain environmental groups and drilling companies will soon collaborate to establish the Institute of Gas Drilling Excellence, an organization that will measure drilling companies’ performances against the best industry standards. The report lists the Environmental Defense Fund, PennFuture, The Heinz Endowments and drilling companies EQT and Shell as collaborators in the institute.
The assessed value of property located in Marshall County, West Virginia has increased by almost half in the past two years and has doubled since 2007, reports The State Journal. Chris Kessler, Marshall County Assessor, indicated that the increase in the property values can be largely attributed to the growth in the natural gas, coal, chemical and power industries, according to a news release on January 24. Mr. Kessler specifically listed natural gas drilling, processing, and pipeline activities in Marshall County as some of the items that have impacted the property values.