Crosstex Energy has announced that it is constructing a third natural gas compressor station in Ohio. Crosstex previously announced in March that it would make a $50 million investment to build two compressor stations in Noble and Monroe counties. Now, Crosstex is spending another $25 million for a third facility in Youngstown area. The facility will be supported by a long-term fee based contract with Antero Resources.
Voters rejectedan anti-fracking referendum proposed by Frackfree Mahoning Valley by an unofficial count of 57-43. The proposal was denominated as the “Community Bill of Rights” and would have banned hydraulic fracturing inside of Youngstown city limits. Even if passed, a prohibition would not have any effect because drilling is regulated by the state and not cities. However, the vote demonstrates that there is public support for developing natural resources from the Utica Shale formation.
DTE Energy, Spectra Energy Corp. and Enbridge Inc. are jointly developing the proposed Nexus Gas Transmission Project, a proposed 250-mile natural gas pipeline which would connect production in eastern Ohio to the existing pipeline grid in southeastern Michigan. The proposed pipeline would serve distribution companies, industrial energy consumers and natural gas-fired power generators in the Ohio, Michigan and Ontario areas. Construction would follow existing utility corridors and 50-foot wide easements already acquired by the partners. Pending market demand and the necessary permitting and approval process, the project is expected to be operating as early as November 2016. For more information, click here.
Chesapeake Energy Corp. remains poised to take advantage of the Utica shale once the infrastructure is in place for gas transportation and processing. Chesapeake currently has 66 wells in production in Ohio, with 183 more awaiting either pipelines or completions. By year end, the company hopes to be producing 330 million cubic feet of gas per day. There are currently 14 Chesapeake rigs operating in Ohio.
The Ohio Department of Natural Resources (ODNR) recently issued two new unitization or “forced pooling” orders for the Utica Shale in Trumbull County, Ohio. The units included land already leased by other operators who were deemed “uncommitted working interest owners.” The orders provided for a 300% penalty to BP, the unitization applicant, should the uncommitted working interest owners fail to pay their share of charges, credit and expenses for the wells drilled therein, and also provided for a 15% royalty and $2,000 per acre payment to any unleased mineral owners within the unitized acreage.
The Muskingum Watershed Conservancy District approved the sale of water from Seneca Lake and Clendening Reservoir for use in Utica shale oil and gas wells. Antero resources will have the right to draw up to 184 million gallons of water from Seneca Lake in Guernsey and Noble Counties. Gulfport Energy Corporation received rights to draw up to 25 million gallons from Clendening Reservoir in Harrison County. Both deals limit the amount of water that can be drawn in case lake levels become low.
The House Natural Resources Committee recently heard testimony from representatives of Ohio, Texas and Utah on the necessity of federal regulation of hydraulic fracturing. Richard Simmons, Chief of the Ohio Department of Natural Resources, testified that Ohio is capable of regulating oil and gas production within its boundaries, and has been doing so effectively. He cited two recent examples of the department’s rapid response to illegal dumping and to earthquakes related to brine injection wells. Simmons believes that state regulation is more effective, efficient and economical than federal regulation. Representatives of various interest groups also testified in favor of strict federal regulation.
Typically, midstream or infrastructure investments by oil and gas companies follow drilling. But in Ohio billions of dollars are currently being poured into pipelines and facilities, including those currenlty under construction in Kensington and Scio, in anticipation of production of the Utica Shale formation. Given the estimated ultimate recovery projected for wells drilled in the Utica, and the recent surge in natural gas and oil production around the United States, experts predict that such investments will occur for the next twenty years. The midstream projects include laying more than a thousand miles of pipeline and the construction of processing facilities and compressor stations. In each kind of midstream project there are dozens of business opportunities that are providing jobs to local companies, ranging from biologists, arborists and chemists to construction specialists, mechanics, manufacturers and laborers.
Magnum Hunter, working through its subsidiary Triad Hunter, spudded its first horizontal well in Ohio’s Utica Shale formation. The well is located in Washington County, just north of Noble County. It is just the second well permitted in Washington County.
Magnum Hunter has approximately 79,000 acres in the Utica play with about half being in the “wet gas” window located in southeast Ohio. The Washington County well will be fractured and tested this summer.
The Winter 2013 edition of Chesapeake Energy Corporation’s quarterly newsletter, “The Play,” introduces a new technology to readers. Chesapeake subsidiary Nomac Drilling is using a new type of rig called a PeakeRig, which is able to “walk” on a multiwall padsite. This new capability increases efficiency, and reduces the cost of drilling multiple wells from a single site. Thanks to the PeakeRig, and other techniques and equipment, Chesapeake hopes the Utica play will achieve profitability faster than any other play.
On March 31st, energy companies must report data showing well production for 2012. Industry watchers say that the annual production report will provide the most insight yet about whether the Utica is the next big oil and gas play in North America. Some 50 to 60 new wells were drilled in Ohio in 2012. Unlike other states, Ohio publishes well data only once a year. The reports should be available to the public on April 2nd or 3rd.
PDC Energy Inc. will be sending its Utica production to MarkWest Utica EMG for processing. Under the terms of a new agreement, liquids-rich gas from Guernsey county will be processed in the Seneca complex in Noble County. PDC joins Antero Resources Corp., Rex Energy Corp. and Gulfport Energy Corp. as partners of MarkWest.
The Ohio Department of Natural Resources posted revised maps last week, indicating that drilling opportunities for oil and natural gas may extend further west and south than initially expected. Information gleaned from wells drilled last year, as well as samplings from test wells, indicate a new potential “hot spot” for production on the border between Marion and Wyandot counties. The revised maps also indicate that production may be greater than expected in Hancock, Hardin, Wyandot and Seneca counties.
Governor John Kasich recently proposed an increase in the severance tax rates on the production of oil and gas to 4% for oil and natural gas liquids and 1% for gas. This is up from the current rates of 20 cents per barrel of oil and 3 cents per 1,000 cubic feet of natural gas with no tax on natural-gas liquids. The proposal has sparked a debate in the Ohio legislature. State Treasurer Josh Mandel and Ohio House Speaker William Batchelder have publically opposed the severance tax increase. Batchelder decried the severance tax increase calling it “nonsense” and suggested that it will fail to be put in to law.
The Ohio House and Senate introduced legislation this week to impose tougher penalties for illegal dumping of oil and gas drilling wastes. If passed, the legislation will elevate illegal dumping to a felony and impose a minimum prison term of three years and a $10,000 fine. In addition, the legislation would revoke current permits and deny any future permits to individuals and companies convicted of illegal dumping.
A spokesperson for the Ohio Oil and Gas Association opposes the legislation and describes it as the “death penalty” for waste disposal operators.