UGI Corporation has announced that it has partnered with Tenaska Resources LLC, an affiliate of independent energy company Tenaska, to jointly develop in the Marcellus Shale region, as reported by the Oil & Gas Financial Journal. Starting in late 2013 or early 2014, UGI Energy Services, Inc., will construct approximately 20 miles of new gathering pipelines and related processing facilities for wells that Tenaska intends to drill in Potter County, Pennsylvania. In additional to the gathering system, UGI has invested $25 million for an approximate 19 percent non-operating working interest in acreage that Tenaska operates in Tioga County, Pennsylvania.
CONSOL Energy Inc. announced today that it expects to invest $835 – $935 million in its gas operation in 2013. According to a press release from CONSOL, (i) an estimated $160 million will be used to maintain production; (ii) $600 million will be used to develop Marcellus Shale assets; and (iii) $122 million will be invested in the CONSOL/Hess Corporation joint venture in the Utica Shale. According to the press release, CONSOL projects its gas production to increase by 8 to 15 percent in 2013 to approximately 170-180 Bcfe.
Triad Hunter LLC, a subsidiary of Magnum Hunter Resources Corp., and Eclipse Resources I LP, of State College, PA, have formed a joint venture in order to develop 1,950 mineral acres in Monroe County, OH. Triad, as operator, will drill a total of 24 wells into the Marcellus and Utica formations over a three year period. Another Magnum subsidiary, Eureka Hunter Pipeline LLC, is expected to carry the production through a midstream pipeline, which is currently under construction.
Royal Dutch Shell plc and Horshead Corp. agreed to a six-month extension for Shell to acquire land for a proposed cracker plant that it is considering building in Beaver County. Shell had a December 31, 2012, deadline to buy the land in Center and Potter Townships, but obtained the extension to allow it more time to assess the project. The Tribune-Review reports that local and state officials remain optimistic that Shell will move forward with the plant. The cracker facility will be used to process ethane produced from the Marcellus and Utica shales, and the plant and associated businesses are projected by some to create up to 8,000 jobs for the local economy.
Hannibal Real Estate of White Plains, NY, and Carload Express of Oakmont, PA, plan to revive a 12 mile rail line serving Hannibal Industrial Park in Monroe County, OH. The partners hope the rail line, known as the Ohio Terminal Railway Co., will attract businesses that are participating in the Utica and Marcellus shale plays. Trains are expected to haul sand, concrete and other materials used in shale development to and from the 122 acre industrial park.
Stat Oil ASA, Norway’s largest oil and gas producer, has acquired approximately 70,000 acres of shale gas acreage in Marcellus states, including West Virginia, Pennsylvania and Ohio, for $590 million according to Fox Business News. With the finalization of this acquisition, Stat Oil ASA now operates production wells in all major shale plays across the U.S. Stat Oil ASA originally entered the Marcellus Shale play through a 2008 partnership with Chesapeake (CHK) which includes a significant interest (32.5%) in Chesapeake leases held in the Northern Panhandle of West Virginia.
MarkWest Energy Partners announced that it has commenced operations in its Mobley Gas Processing Plant in Wetzel County, West Virginia, according to Energy Business Review. The plant is the first of three gas processing plants in the U. S. planned by MarkWest, with the second facility to likely be completed in the first quarter of 2013, and the third to be completed in the fourth quarter of 2013. The first plant, capable of processing 200 million cubic feet of gas per day, is currently operating at 60% capacity, and is expected to reach its full capacity soon to accommodate the drilling success in the Marcellus Shale. The three plants are expected to have a capacity of 520 million cubic feet per of gas per day after completion.
The Pennsylvania Public Utility Commission and Governor Tom Corbett announced yesterday that Pennsylvania’s Act 13 impact fees have generated $204.2 million in revenue through October 15, 2012. $108.7 million dollars will be distributed directly to local governments in areas hosting unconventional wells. The remaining $72.4 million finances the Marcellus Legacy Fund, which supports several statewide funds that finance infrastructure, environmental protection, and recreation. This chart provides a breakdown of how the $204.2 million will be allocated, while this chart indicates the amounts that will be dispersed to each county and local government. Four Southwestern town townships, South Fayette, Cecil, Robinson and Mount Pleasant, will have their impact fees withheld while drilling ordinances they have passed are being reviewed by the state.
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.
Cecil Township, Robinson Township, Peters Township, and Mt. Pleasant Township, all in Washington County, and South Fayette Township, Allegheny County together filed a complaint in Commonwealth Court [add link to Complaint] arguing that Act 13 is unconstitutional. Chief among the issues raised by the municipalities is the explicit requirement that local ordinances “allow for the reasonable development of oil and gas resources”.
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On Tuesday March 20, Williams Partners L.P., a Williams Companies, Inc. affiliate, announced an agreement to acquire Caiman Eastern Midstream LLC, a midstream subsidiary of Caiman Energy, for $2.5 billion. Caiman Eastern’s holdings include existing physical assets such as a gathering system, two processing facilities and a fractionator. Expansions to the gathering system, processing facilities and fractionator are currently under construction. An ethane pipeline is also planned. The physical assets are supported by long-term contracted commitments for 236,000 dedicated gathering acres from 10 producers in West Virginia, Ohio and Pennsylvania. Through this acquisition, Williams Partners is able to establish a major footprint in the liquids-rich area of Marcellus shale. In coordination with this acquisition, Williams Partners is also announcing its intention to participate in a new joint venture with Caiman Energy to develop midstream infrastructure in the natural gas liquids and oil-rich areas of the Utica Shale, primarily in Ohio and northwest Pennsylvania.