TheUticaShale.com l A 360 Degree Perspective on the Utica Shale and the Energy Industry.

Shale gas fracking could rake in billions in taxes for Government

Taylor Tiano — Wed, 19 Jun 2013 14:39:19 +0000

Mirror

British Gas owner Centrica confirmed it was buying a 25% stake in the Bowland project in the North West

The Treasury could be set to rake in an £80billion windfall from a controversial new gas field.

British Gas owner Centrica yesterday confirmed it was buying a 25% stake in the Bowland project in the North West.

Cuadrilla, the other firm involved, reckons the 450 square miles of Lancashire between Blackpool and Preston could contain as much as 200trillion cubic feet of shale gas.

It’s expected drilling will take place in six locations over the next few years, beginning in 2014.

Experts believe that around 10% of the gas could be extracted.

At today’s prices, it means the field would be worth more than £130bn over 30 years.

The big winner would be the Government as it would take more than 60% of that in taxes, generating around £81bn for the Treasury

The project could also prove a money-spinner for Centrica, which is investing up to £160m in the project.

Mark Hanafin, managing director of the firm’s upstream business, said: “With North Sea gas reserves declining and the UK becoming more dependent on imported gas supplies, it is important that we look for opportunities to develop domestic gas supplies.”

But green groups are opposed to the field because it will involve fracking – blasting sand and water down wells – which they say pollutes the environment.

Tony Bosworth, Friends of the Earth’s energy campaigner, said: “Buying into Cuadrilla is about the only way Centrica could make itself even more unpopular with the public, who are fed up with the company raking in huge profits on the back of rocketing fuel bills.

“People are right to be concerned about the impact of developing shale gas.

“It undermines efforts to tackle climate change, poses a pollution threat to drinking water and, as even Cuadrilla admits, won’t cut fuel bills.”

According to the Institute of Directors, developing shale gas fields could reduce the percentage of gas that the UK needs to import from 76% of its needs today to 37% by 2030, while an annual investment of £3.7bn in the shale gas industry could sustain as many as 74,000 jobs.

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Harvard Professor and Former Clinton Administration Official: Fear of Fracturing Is Way Overblown; Embrace Fracturing For the Good of the Environment and the Economy

Taylor Tiano — Tue, 18 Jun 2013 20:19:45 +0000

Blank Rome LLP

MICHAEL L. KRANCER

Jeffrey Frankel has written a tour de force piece on natural gas and hydraulic fracturing entitled “Frack to the Future”. His message in a nutshell: the fear of hydraulic fracturing is way overblown, natural gas and fracturing is good for the environment, the economy and for national security: therefore, all of us, especially environmentalists, should embrace it. Frankel is currently a professor at Harvard University’s Kennedy School of Government and he is a former member of President Bill Clinton’s Council of Economic Advisors.

Please click here to read the full text of his article. First, Professor Frankel establishes the enormous environmental and economic benefits America is reaping from hydraulic fracturing and the natural gas obtained thereby. American carbon emissions have plummeted to the tune of 12% and are presently back to 1995 levels. This is a direct result of the increased use of natural gas obtained through hydraulic fracturing as a fuel for electricity generation. This decrease in carbon emissions, by the way, puts the United States at or better than the would-be limits of the Kyoto Protocol and at about the 2020 Waxman-Markey goal for emissions reductions. Some commentators claim this is as a result of the economic recession, but as Professor Frankel points out, these critics are mistaken. Frankel notes that the American economy has indeed been more sluggish than what would be ideal, but it has grown since 2009. America’s huge reductions in carbon emissions during this time of GDP expansion contrast sharply with Europe’s increasing carbon emissions since then.

Then Professor Frankel notes what we already know and see here in Pennsylvania—the natural gas industry is a prodigious job creator. In Pennsylvania alone, the Department of Labor and Industry attributes about 240,000 direct and indirect jobs to our natural gas sector. In fact, Chris Lafakis, a senior economist at Moody’s Analytics, reports that half of the jobs that have been created in the entire Commonwealth since 2000 have been in the energy industry—which is a remarkable fact. In addition, we are witnessing (as the American Chemical Council pointed out in testimony before Congress a few weeks ago) a rebirth of the American chemical and manufacturing industries. This is a phenomenon generally referred to as “re-shoring”—a word that was unheard of just a few years ago, prior to our American energy revolution. The “re-shoring” to the U.S. means that manufacturing operations are moving back to America from overseas because of the advantages offered by low-cost energy. Energy is one of the most significant costs of manufacturing production. Re-shoring is a big win for America and American competitiveness. It also makes America less subject to a fundamental economic risk to which it has been subject for decades: the risk of volatile world oil market prices.

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Housing an Energy Renaissance

Taylor Tiano — Tue, 18 Jun 2013 15:13:36 +0000

By Kristie Kubovic / Director of Communications – Shale Media Group

Chris Stroyne, Editor, Shale Media Group

Rarely does an area have more than one opportunity to flourish, but that is exactly what is happening in Pittsburgh and across Pennsylvania. After the decline of the steel industry, the outlook wasn’t promising for the city and region. However, the oil and natural gas industries have brought on a ‘second’ industrial renaissance. Pittsburgh, a city legendary for its steel, is now the energy capital of the United States. The region, in particular Allegheny and Washington Counties, is experiencing a resurgence due to the entire shale play.

Dan Weaver, Director of Public Outreach for the Pennsylvania Independent Oil and Gas Association (PIOGA), explained, “To see what it’s done for the market, just look at the growth of Southpointe in Canonsburg. [He also] points to the amount of hotels being built in Washington County to house the oil and gas workers.”

“Without question, Southpointe in Washington County has become the defacto home to many of these businesses operating in the shale gas industry. It’s fascinating because ten or fifteen years ago Southpointe was actually struggling. They certainly had businesses there, but Southpointe wasn’t on the map or radar for this industry. Today, it is the place to be if you want an office in the oil and gas industry” states R.T. Walker, President, Oil and Gas Division, Beynon & Co.

Many of the reasons the area prospered the first time around—the location, the rivers, the people, the resources—are the same reasons it is thriving today. Ironically, the oil and natural gas industry isn’t “new” to the state. The first well (and possibly most important), Drake Well, was established in 1859 in northwestern Pennsylvania. “This was one of the first successful oil wells that were drilled for the sole purpose of finding oil. […] Colonel Edwin Drake, the man responsible for the well, began an international search for petroleum, and in many ways eventually changed the way we live.” http://www.priweb.org/ed/pgws/history/pennsylvania/pennsylvania.html

Oddly, history is repeating itself 150 years later. Weaver, also a former Drake Well Museum Educator for 12 years, says, “This is nothing new. This is just like the oil boom of the 1860s and the boom towns that popped up because of it in northwestern Pennsylvania. A crowd would rush in and some towns would be built overnight.”

Now a days shale energy helps build the entire community. Many businesses are booming because of the industry. Walker explains, “The ancillary jobs and businesses are one of the most dramatic positives for the region. For every oil and gas job, there are seven ancillary jobs created. In the past four or five years the area has seen an influx of people moving in—engineers, accountants, construction. Whether they know it or not, a lot is due to the oil and gas industry.”

Oil and gas have had a profound impact on real estate sales. Beynon & Co., a 101-year old commercial real estate firm that specializes in landlord and tenant representation along with buying, selling and leasing commercial property, which includes office, retail and industrial space, previously focused primarily on the central business district of Pittsburgh. However, due to the shale growth, they created an oil and gas division in 2009, which exclusively pairs oil and gas landlords with companies needing industrial office and yard space. To date, the company has moved over 200 oil and gas companies.

In regards to what the shale play has done for Walker’s business, he explains, “Ninety percent of [his] business is associated with oil and gas. It has kept [him] busy 24/7 for the past five years.”

Walker explains, “It is crucial to know the market and how the Marcellus and Utica Shale plays fit in and that it is important to fit the right company with the right property and vice versa.” Ironically, Walker says, “The biggest challenge [he] faces is the lack of inventory—buildings, yard space and offices that accommodate the needs of oil and gas. Plus, the speed of the market is different than any other industry. It moves quickly.”

Walker believes, “We are still in an area of increased activity—we haven’t seen the peak or top of the market yet. Oil and natural gas are the reasons we will continue to see this region growing for the next 10 to 15 years. Pennsylvania, Ohio and West Virginia will all benefit and see economic growth and changes.”

One of the biggest changes from the oil revolution of the nineteenth century to the shale play of present day is longevity. Weaver explained, “Pithole, one of the larger boomtowns of the 1860s, only lasted around 500 days.” Luckily, we have already surpassed that this time around. Plus, the future looks very bright.

Kristie Kubovic is the Director of Communications at Shale Media Group. Shale Media Group (SMG) is a news and information resource on the oil and natural gas industry, featuring the latest news, information and mapping. SMG’s multi-media platforms include Internet, Publications, Radio, Video and Events. Check out shalemediagroup.com for access to all platforms. Contact Kristie at Kristie@ShaleMediaGroup.com.

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Ohio’s big experiment on safe shale-gas extraction

Taylor Tiano — Tue, 18 Jun 2013 14:52:54 +0000

TheSeattleTimes

By Neal Peirce- Syndicated columnist

Rhe real question in America today may not be the whether of shale extraction but rather the how, writes Neal Peirce. That’s why all eyes are on Ohio’s experiment with new fracking regulations.

Can a state do fracking right?

Can it use the new shale-gas drilling technology to deliver thousands of jobs, revive depressed industrial zones, spark new high-tech industries, feed state coffers — and still not mess up its countryside, imperil water supplies and possibly release dangerous amounts of methane gases?

It’s a big order, and environmental concerns remain real. But a strong cross-section of Ohio’s leadership — political (Gov. John Kasich), business investors and think tanks such as Cleveland State University’s Levin College of Urban Affairs — sees smart exploitation of shale reserves as key to a strong, opportunity-rich future.

By historic and geographic accident, the action is focused on Northeast Ohio, anchored in Cleveland, Akron, Youngstown and Canton. This was an early center of U.S. steel and the birthplace of John D. Rockefeller’s Standard Oil Company in the 1870s. But the economic action shifted south and west, and the area has been in or close to recession since the 1950s — forever yearning for a new break.

Could shale be the answer? Just maybe. Massive reserves of so-called Utica shale — a source of not just natural gas but also liquid petroleum products that can be feedstuffs for specialized fuels and chemical manufacturing — have been discovered in this very area (including a swath of territory running east and southeast to the Pennsylvania and West Virginia borders).

The claims are stupendous. Though actual startup on wells in Ohio has been slow, the soon-to-come statewide impact could easily reach $10 billion a year, plus $500 million in tax revenue, with oil and gas development creating 65,000 new jobs with average incomes over $50,000 a year — according to a Cleveland State study by energy expert Andrew Thomas and his colleagues released last year.

The “fit” could hardly be better for a region with an industrial heritage, a big reserve of unemployed or underemployed blue-collar workers, a related polymer industry focused in Akron, and significant scientific expertise (especially in its universities) to develop the shale for new chemical-based processes as well as fuel.

But environmental concerns are real with this new technology that digs wells thousands of feet deep and then branches out underground with horizontal drilling in processes requiring millions of gallons of highly pressurized water. Faulty well casings or surface spills raise concerns of risks to ground and drinking water.

Then there’s heavy truck traffic through towns, land clearance for several wells on each “pad,” and the potential of release of methane gas — a powerful CO2 emitter — without scrupulous oversight.

Aware of the ferocious opposition that fracking has generated in New York and Pennsylvania, the Ohio-based operators seem to be taking precautionary measures. Most supported the state’s shale development control rules — hailed by some as the nation’s toughest — passed last year. Critics also hail Kasich, a conservative Republican, for his decision to hire several hundred environmental regulators to track the new activity, and for pressing (despite opposition) for a state severance tax on shale production.

Now there’s apparently broad support in Ohio for the remarkable new agreement between drilling interests and environmentalists, embodied in 15 model standards for safe fracking production. Developed through two years of often contentious negotiations, the accord — to be enforced by a new Pittsburgh-based Center for Sustainable Shell Development — ranges from limits on methane emissions to careful rules on wastewater disposal and seismic testing before drilling can commence.

The agreement is not universally popular. The Sierra Club has harshly attacked the Environmental Defense Fund — a major player in forging the agreement — for its supporting role. But there’s little doubt about the integrity of the pact’s oversight board, including such figures as Christie Todd Whitman, former New Jersey governor and Environmental Protection Agency chief.

And realistically, the real question in America today may not be the whether of shale extraction but rather the how. In just six years, natural gas has grown from less than 1 percent of U.S. energy supplies to 23 percent, notes John Banks of the Brookings Institution. With it, natural-gas prices have hit historical lows, speeding retirement of coal plants. U.S. fracking, Citigroup reports, could make U.S. petroleum output rival Saudi Arabia and Russia within a decade.

The good news, says Edward “Ned” Hill, dean of Cleveland State’s College of Urban Affairs, is that the low cost of natural gas “is pushing coal” — the most toxic of fuels — “out of the marketplace.” Coal defenders talk about coal gasification, he says, but “that doesn’t make any sense if you have gas!”

And renewables such as wind and solar power? Gas advocates agree they’re on their way. But they are still far too expensive, and storing their energy to match demand remains a major technical hurdle. Near-term, they argue, natural gas — and the fracking to free it from the earth — is our future.

In the meantime, Cleveland State experts have been dispatched to Poland, Ukraine and Colombia to coach other world regions on the “how’s” of safe, community-sensitive shale development.

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GreenHunter Resources Reports First Quarter 2013 Financial and Operating Results

Taylor Tiano — Mon, 17 Jun 2013 17:42:56 +0000

Yahoo Finance

GRAPEVINE, Texas–(BUSINESS WIRE)–

GreenHunter Resources, Inc. (NYSE MKT: GRH)(NYSE MKT: GRH.PRC), a diversified water resource, waste management and environmental services company specializing in the unconventional oil and natural gas shale resource plays, announced today financial and operating results for the three months ended March 31, 2013.

Total Revenue Increased 279% to $8.6 million for the Quarter Ended March 31, 2013 versus last year’s first quarter results of $2.3 million
Total Disposal Volumes Increased 249% in the First Quarter 2013 to 1.1 million barrels (BBL) Injected compared to 317,100 BBL Injected in the First Quarter of 2012
Total Operating Salt Water Disposal Permitted Injection Capacity as of March 31, 2013 Exceeded 115,000 BBL per day representing a 1,455% Increase from March 31, 2012
The Company Operated Fifteen SWD Wells at March 31, 2013 Compared to Four at March 31, 2012

FINANCIAL AND OPERATIONAL RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2013

GreenHunter reported revenues for the three months ended March 31, 2013 of $8.6 million, compared to $2.3 million reported during the first quarter of 2012. The increase in revenues of 279% or $6.3 million was driven primarily by increases in daily salt water disposal volumes as a result of both organic SWD capacity growth and acquisitions that resulted in a 1,455% increase in permitted operating injection capacity compared to one year ago.

The operating loss for the three months ended March 31, 2013 was $(7.2) million, compared to an operating loss of $(0.4) million during the first quarter of 2012. Net loss to common shareholders was $(8.5) million, ($(0.25) loss per common share basic and diluted) for the three months ended March 31, 2013 compared to a net loss of $(0.8) million, ($(0.03) loss per common share basic and diluted), during the first quarter of 2012.

For the three months ended March 31, 2013, GreenHunter’s Adjusted Earnings Before Interest, Income Taxes, Depreciation and Amortization (“Adjusted EBITDA”) was negative ($1.0) million. Operating margins decreased resulting in an operating loss and loss to common shareholders due primarily to increased costs associated with increased scale of operations, decreased volumes of product accepted at the New Matamoras bulk storage and barge transloading facility in theAppalachia region due to adverse weather conditions, increase usage of company owned trucks and equipment, an impairment of asset value of $1.9 million due to a lightning strike and subsequent fire, and an impairment of goodwill of $2.8 million.

FIXED ASSET AND GOODWILL IMPAIRMENTS

A lightning strike at the Company’s Rhodes SWD well site in Oklahoma in April resulted in an impairment of $1.9 million to ground facilities at this location. The carrying value of goodwill for the White Top and Black Water acquisitions that were completed on December 31, 2012 was fully impaired at March 31, 2013 due to the recent decision of eliminating certain operating segments of White Top and Black Water.

TOTAL DISPOSAL CAPACITY AND INJECTION VOLUMES OVERVIEW

The Company’s total daily operating permitted SWD capacity as of March 31, 2013 was over 115,000 BBL representing a 1,455% Increase from March 31, 2012. As of March 31, 2013 the Company operated two SWD wells servicing producers in Oklahoma’s Horizontal Mississippian Lime play, four SWD wells servicing producers in the Eagle Ford Shale play in South Texas, nine SWD wells servicing producers in the Marcellus and Utica Shale plays in Appalachia and one bulk storage and barge transloading terminal on the Ohio River. Infrastructure upgrades to enable Frac-Cycle™ water treatment services at the New Matamoras Ohio River barge facility are almost complete and are scheduled to commence before the end of June, 2013. Management anticipates that this business segment will generate improved operating margins. Quarterly Injection Volumes by region are detailed in the table below.

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Zanesville to host series of shale seminars

Taylor Tiano — Mon, 17 Jun 2013 16:36:42 +0000

ZanesvilleTimeRecorder.com

Written by Hannah Sparling-Staff Writer

ZANESVILLE — Local businesses struggling to break into the Utica Shale supply chain might have a new in.

The Zanesville-Muskingum County Chamber of Commerce and the Dublin, Ohio-based Utica Resource Group are hosting a series of workshops in July called “Drilling Down: Supply Chain Strategy in the Utica Shale.”

The workshops are targeted toward any supply chain business, Tom Poorman, chamber president, said. The difference with this series, however, is that, at the end, participants will get to pitch their services to actual oil and gas companies looking for new partnerships.

That’s not to say every participant will walk away with a new contract.

“There’s definitely no guarantee,” Poorman said. “But at least they get in front of the right person and get a shot at it.”

Registration — open atwww.uticaresourcegroup.com/our-workshops— is $900 for chamber members and $1,125 for nonmembers. That’s a significant investment, Poorman said, which is why he recommends the series to people serious about the oil and gas industry.

“I guess that’s the key: If a company is really serious, not just curious, then this is an excellent opportunity for them,” he said.

This is the first such workshop, but URG is planning on hosting others throughout the state, said Kristy Hawthorne, URG business success coach.

Zanesville was a good location for the first because the timing coincides with the Ohio Oil and Gas Association’s summer meeting at the country club, Hawthorne said, meaning major oil and gas players will already be in the area to participate.

“We’re very excited,” Hawthorne said. “I think that the overall experience is going to be invaluable for the small business. Personally, I’ve been a small-business owner, and I’m excited about the opportunity for them to grow as far the whole workshop itself.”

Besides the meet-and-greet with supply chain companies, the seminar consists of four two-hour workshops designed to fine-tune a company’s approach to breaking into the shale market. Topics include marketing, staffing and safety requirements, among others.

“It’s a matter of developing an executable plan to enter the supply chain,” Hawthorne said. “We are not guaranteeing signed contracts after the Aug. 5 event, but the companies that participate in the workshop will have a concise plan and method” for entering the Utica market.

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Ohio seeks safer shale energy

Taylor Tiano — Mon, 17 Jun 2013 16:06:13 +0000

TimesDispatch.com

Neal Peirce

Can a state do fracking right?

By historic and geographic accident, the action is focused on Northeast Ohio, anchored in Cleveland, Akron, Youngstown and Canton. This was an early center of American steel production and the birthplace of John D. Rockefeller’s Standard Oil Company in the 1870s. But the economic action shifted south and west, and the area’s been in or close to recession since the 1950s — forever yearning for a new break.

The claims are stupendous. Though actual start-up on wells in Ohio has been slow, the soon-to-come statewide impact could easily reach $10 billion a year, plus $500 million in tax revenue, with oil- and gas-field development creating 65,000 new jobs with average incomes of more than $50,000 a year — according to a Cleveland State study by energy expert Andrew Thomas and his colleagues released last year.

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Economics, technology drive Utica Shale decisions

Taylor Tiano — Mon, 17 Jun 2013 15:19:26 +0000

Vindy.com

By Burton Speakman

COLUMBIANA

There are both economic and technological reasons to explain why companies are focusing on just a few Ohio counties within the Utica Shale, an energy representative says.

Harry Schurr, general manager of Utica operations for CONSOL Energy, said the western portion of the shale including Ohio counties such as Coshocton, Muskingum, Stark and Summit, which contains significantly more oil, is too shallow and does not contain enough pressure to economically extract the oil.

Schurr spoke Friday at a Columbiana Area Chamber of Commerce event at Das Dutch Haus.

In the eastern portion of the Utica, in counties such as Belmont and Monroe in Ohio and continuing into West Virginia and Pennsylvania, there is mostly dry gas, but extracting the dry gas isn’t as economical as extracting the dry gas in the Marcellus Shale because the Marcellus is geologically shallower than the Utica and therefore cheaper to drill and complete, Schurr said.

Oil and gas companies, therefore, are focusing on the condensate-heavy portions of the Utica play in Jefferson, Noble, Harrison, Guernsey and Belmont counties, he said.

Natural-gas condensate is a low-density mixture of hydrocarbon liquids that exists in the raw natural gas produced from many natural-gas fields.

“Condensate sells for about $90 a barrel,” Schurr said.

The best-producing well for CONSOL in Ohio is in Noble County. It produces 768 barrels of condensate per day, and about 12 million cubic feet of natural gas, he said. Conversely, a well less than two miles away produces only 10 barrels of condensate per day and 9 million cubic feet of natural gas.

“There are a lot of Wall Street analysts who say the Utica Shale isn’t as big as it was advertised,” Schurr said. “I think it’s more accurate to say we’ve identified the sweet spot.”

One of those analysts who has been critical of the Utica Shale exploration is Deborah Rogers, from Energy Policy Forum and a former investment banker and financial consultant.

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Why we should speed U.S. gas exports

Pracheta Trivedi — Mon, 17 Jun 2013 02:38:35 +0000

Washington Post

By John Barrasso on June 16, 2013 at 7:44pm

John Barrasso, a Republican from Wyoming, is a member of the Senate Energy and Natural Resources Committee and the Senate Foreign Relations Committee.

When President Obama meets with Russian President Vladimir Putin at the Group of Eight meeting this week, there should be a spotlight on our two nations’ drastically different approaches to natural gas exports. While Russia continues to export natural gas and dominate the European market, the United States continues to slow-walk approval for natural gas exports. Our slow and sluggish process is affecting U.S. economic and national security.

While traveling recently to Azerbaijan, the Persian Gulf and Eastern Europe to research energy issues, I witnessed the heavy hand of Russian influence and oppression.

Read the full story here.

http://www.topnews.in/files/gas_export.jpg

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Utica Shale Play Brings Ohio Native Home

Pracheta Trivedi — Mon, 17 Jun 2013 02:24:26 +0000

Times Reporter

By Jon Baker on June 16, 2013 at 10:00am

The Utica Shale play is proving to be the ticket home for natives of the Buckeye State who work in the oil and natural gas industry.

Andrew Cole, a maintenance technician who grew up in East Cleveland, went to work for Schlumberger, a major oil field service provider, when he got out of the Army 41⁄2 years ago. He got a position in Texas.

When he found out that his employer was opening a facility in Strasburg, his wife pushed him to apply for a transfer there. “The cards fell into place,” said Cole. He and his wife now live in Wooster.

Read the full story here.

http://4.bp.blogspot.com/-8ANR_ddLRFg/TZEGG_qmJCI/AAAAAAAAAFU/qmEUsyQwHPI/s1600/downtown-columbus-ohio.jpg

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Consol Has Big Plans for the Utica

Pracheta Trivedi — Mon, 17 Jun 2013 02:19:18 +0000

Farm and Dairy

By Kristy Foster Seachrist on June 14, 2013

COLUMBIANA, Ohio — Consol Energy has its roots in coal mining, but definitely sees a future in natural gas production.

Harry Schurr, general manager of Utica shale operations for Consol Energy, spoke June 14 at the fifth annual Columbiana Chamber of Commerce Business Breakfast. He said the company considers itself the “hometown player” since it began coal mining and leased the mineral rights to many acres in 1860s, meaning the company has leased local acres for years, starting with coal mining. He said that in some cases Consol has been involved with four generations of the same family on many parcels of land.

Read the full story here.

http://farmanddairy.lyleprintingandp.netdna-cdn.com/wp-content/uploads/2013/06/UticaWellsActivity_05042013-1024×400.jpg

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Good News for These Utica Drillers?

Taylor Tiano — Fri, 14 Jun 2013 18:13:08 +0000

Daily-Finance

by Arjun Sreekumar, The Motley Fool

For most of last year, companies drilling in Ohio’s Utica shale complained that there wasn’t enough gathering and processing infrastructure available in the play. As a result, many held back on bringing new wells on line, which kept production growth muted.

Going forward, however, things are expected to change as new infrastructure projects come online. Some $2 billion worth of projects have already been announced, while an additional $2 billion are expected to be revealed shortly. Let’s take a closer look at one major new venture and the Utica operators that stand to benefit from it.

MarkWest: a leader in Utica infrastructure
Late last month, MarkWest Utica EMG, a joint venture between MarkWest Energy Partners and The Energy and Minerals Group (EMG), announced an additional expansion of its natural gas infrastructure system in the Utica shale.

The company will be building an additional 200-MMcfd cryogenic gas plant at its Seneca processing complex in Noble County, Ohio — its third such facility in the region. The plant aims to support the rapidly expanding drilling programs of Antero Resources, Gulfport Energy , and other operators located in the southern core of the play.

Markwest’s first two cryogenic plants are slated to come online in the fourth quarter of this year and will support rich-gas production from Antero, Gulfport,Rex Energy , PDC Energy, Consol Energy, and others. Once all three cryogenic gas-processing facilities are operational, MarkWest’s Seneca complex should have processing capacity totaling 600 MMcf per day.

Meanwhile, MarkWest is also developing its Cadiz complex in Harrison County, which is heavily supported by production from Gulfport Energy. It also recently started up its 125-MMcfd Cadiz 1 plant, the first major cryogenic processing plant in eastern Ohio.

Currently, Markwest’s Cadiz complex can process as much as 185 MMcfd, including a 60-MMcfd interim refrigeration plant. By mid-2014, with the completion of Cadiz 2 — a 200-MMcfd plant — and the removal of an interim plant, the Cadiz complex should have a capacity of as much as 325 MMcfd.

Potential winners in the Utica
As you can see, MarkWest commands a dominant infrastructure position in the Utica, which will only increase over the next several months. By the middle of next year, its midstream system in the play will consist of “more than 300 miles of gathering, five processing plants totaling almost 1 bcfd, and 100,000 b/d of C2+ fractionation capacity,” according to a company statement.

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Secret behind 12% of Ohio’s oil production

Taylor Tiano — Fri, 14 Jun 2013 17:29:49 +0000

Stockhouse

David Fessler, Investment U

Reality of the Utica is finally surfacing

A Forbes 2011 cover story described him as “America’s Most Reckless Billionaire.” Conversely, former Houston mayor Bill White spoke of him as being “at the forefront of those heroes” of America’s natural gas exploration companies.
During his tenure, his company bought land in the nation’s largest shale gas plays. But this controversial CEO was hot on one shale gas play in particular. When he spoke of it, he compared it to the Eagle Ford in Texas and the Bakken in North Dakota.
“It’s the biggest thing to hit [this state] since the plow,” he said of the play a couple of years ago.
At the time, his company had leases on 1.3 million acres in this shale play. He claimed the stake held $20 billion of hydrocarbons. And projections showed the shale play held as much as $500 billion worth of oil.
Regardless of his stormy reign as CEO of Chesapeake Energy Corporation (NYSE: CHK), Aubrey McClendon made some great calls regarding natural gas.
But I’m not here to talk about Chesapeake. I’m here to introduce you to the proverbial sweet spot of this shale play. Few folks have any idea what’s going on… or how lucrative this opportunity could be.
Secret is out

Texas is usually the first state an investor thinks of when it comes to oil production. But these days it’s all about shale plays in Ohio. It’s the region’s Utica formation that McClendon was so excited about.

The Utica lies directly under the Marcellus formation throughout much of its region. But it comes closest to the surface in eastern Ohio.
After several years of secretive test drilling, the reality of the Utica is finally surfacing. In an article in Bloomberg, Argus Research analyst Philip Weiss had this to say about early Utica drilling data: “The results were somewhat disappointing. It’s not as good as we thought it was going to be.”
The acreage-buying boom has turned into an acreage-selling boom.
Wood Mackenzie analyst Jonathan Garrett has also studied the Utica. In the same Bloomberg article, he added his comments on the Utica: “People started to realize that, you know what, maybe the oil window of the play is not all it’s cracked up to be.”
The big problem isn’t that the Utica doesn’t contain the hydrocarbon riches once envisioned. In many cases, the rock formation is too dense. In other areas, there are insufficient underground pressures to allow the oil to flow.
Still, 11 companies are actively drilling in the Utica Shale.
What do they know that the analysts mentioned in the Bloomberg article don’t? A lot more than they’re willing to admit.
Take a look at the map below…

The area where the Utica begins to emerge from under the Marcellus formation represents the liquids-rich sweet spot of the Utica. That’s where most of the drilling took place in 2012. According to the Ohio Department of Natural Resources (ODNR), there were 87 producing wells drilled in the Utica Shale last year.
Hitting the sweet spot

Those wells produced 636,000 barrels of oil and 12.8 billion cubic feet of natural gas. And not one of the wells was in production for the entire year.
Of the 87 wells drilled, 76 produced oil and 63 are in commercial production.
But here is the figure that is turning heads…
Those 63 horizontal wells accounted for 12% of all the oil produced in Ohio in 2012. That’s a huge amount of oil from just 63 wells, especially considering the state has more than 60,000 conventional (vertical) operating oil wells.
Clearly, something big is going on in the Utica.
The numbers are fresh, which makes investing in the Utica formation riskier than buying into proven shale plays. But that’s what makes the opportunity so exciting. We’re witnessing the birth of what could be a huge money maker.
If this hotspot continues to pump out big numbers… somebody is going to get rich.

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Halcon Resources pleased with results from first eight Utica wells

Taylor Tiano — Fri, 14 Jun 2013 16:46:53 +0000

Ohio.com

By BOB DOWNING Published: June 11, 2013

From Texas-based Halcon Resources Corp. in a 2013 operational update released on Monday.

Here is what the company had to report on the Utica shale in Ohio and northwest Pennsylvania:

Utica/Point Pleasant

The Company has now drilled eight wells and is currently drilling its ninth well on its 140,000 net acre position inNortheast Ohio and Northwest Pennsylvania. These nine wells were drilled across approximately 70 miles and five counties. The status of each well is as follows:

The Phillips 1H (90% WI) in Mercer County, Pennsylvania, is now flowing to a sales pipeline and is undergoing flow optimization, including the installation of gas lift. This well was drilled to a total measured depth of 12,411 feet, had an effective lateral length of 5,360 feet and was completed with 20 frac stages.
The Allam 1H (100% WI) in Venango County, Pennsylvania, was the discovery well for the Northeast extension of the play and is currently shut-in awaiting infrastructure. This well was drilled to a total measured depth of 14,300 feet, had an effective lateral length of 5,580 feet and was completed with 21 frac stages.
The Brugler 1H (90% WI) in Trumbull County, Ohio, has been tested and is currently shut-in awaiting infrastructure. Production from this well should be placed into a sales pipeline in early July 2013. This well was drilled to a total measured depth of 10,959 feet, had an effective lateral length of 3,826 feet and was completed with 16 frac stages.
Testing on the Yoder 2H (90% WI) in Mercer County, Pennsylvania, commenced on May 30, 2013. This well was drilled to a total measured depth of 10,825 feet, had an effective lateral length of 3,810 feet and was completed with 14 frac stages.
The Kibler 1H (100% WI) in Trumbull County, Ohio, is currently resting and Halcón plans to begin testing the well on June 15, 2013. This well was drilled to a total measured depth of 14,257 feet, had an effective lateral length of 6,734 feet and was completed with 26 frac stages.
The Staab 1H (98% WI) in Crawford County, Pennsylvania, is currently resting and the Company plans to begin testing the well on July 11, 2013. This well was drilled to a total measured depth of 11,166 feet, had an effective lateral length of 4,374 feet and was completed with 17 frac stages.

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World Has 10 Years of Shale Oil: US Department of Energy

Pracheta Trivedi — Thu, 13 Jun 2013 16:50:35 +0000

CNBC

By Gregory Meyer on June 11, 2013 at 12:44am

Global shale resources are vast enough to cover more than a decade of oil consumption, according to the first-ever U.S. assessment of reserves from Russia to Argentina.

The U.S. Department of Energy estimated “technically recoverable” shale oil resources of 345 billion barrels in 42 countries it surveyed, or 10 percent of global crude supplies. The department had previously only provided an estimate for U.S. shale reserves, which it on Monday increased from 32 billion barrels to 58 billion.

The pace of oil and gas production gains has consistently surprised forecasters since horizontal drilling and hydraulic fracturing, better known as “fracking”, were pioneered in U.S. shale rock formations about ten years ago. Only the U.S. and Canada were producing oil and natural gas from shale in commercial quantities, the department said.

Read the full story here.

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YPE Presents Energy Industry Training Series: Act I, An Overview

Taylor Tiano — Thu, 13 Jun 2013 16:40:12 +0000

By Kristie Kubovic, Director of Communications, Shale Media Group

YPE Pittsburgh and Armstrong Search Associates held the first of twelve seminars in an educational training series about the Marcellus and Utica Shale play and key issues associated with it on Wednesday, June 5th from 9:00 am to 4:00 pm at the DoubleTree Meadowlands, 340 Racetrack Road, Washington, PA.

The first all-day training seminar of the series was an overview of the Marcellus and Utica Shale. It took an in-depth look at the changes of natural gas from 20-years ago to the present including the production, distribution and transmission. Employment and governmental impacts were also discussed in depth.

Ray Schmaus, President of Armstrong Search Associates, explained, “The education series is important because a lot of people have been in the business for 30 years. However, there is a gap. Now there are a lot of people in the field with limited experience. This series is a way to bridge that gap and give back to community. By partnering with YPE, this event is a way to educate.”

The seminar was open to the general public and designed for anyone who desired a better understanding of the industry; whether it was someone looking to enter the business or someone working in the industry looking to further his or her education. The event brought close to 50 professionals together. Many attorneys were represented along with geologists, engineers and ROTC. Most were local; however, some came from as far away as Cleveland and Harrisburg.

Washington County Chamber of Commerce President Jeff Kotula stated, “The Washington County Chamber of Commerce believes that continued education and training in the opportunities of the Marcellus Shale is crucial to the continued development of the industry and region. We are fortunate that this event was in Washington County, the energy capital of the east, and look forward to exploring additional opportunities for the industry and our workforce through events such as this.”

Upon registration attendees received a packet, containing a notebook, Natural Gas Glossary and a fact sheet and then treated themselves to a buffet breakfast. After settling in, attendees actively listened to presentations by prominent decisions makers in the industry, including keynotes: Dave Spigelmyer, Lead Chairman of Marcellus Shale Coalition and Vice President of Government Affairs at Chesapeake Energy; Mark Kempic, President of Columbia Gas in Maryland and Pennsylvania; and The Honorable Rich Fitzgerald, Allegheny County Executive.

Spigelmyer stressed that it is “absolutely critical that we educate the public. Everyone in this region has skin in the game. It is critical to educate folks as to what Shale Gas is and isn’t. There are a fair number of opponents to Shale Gas development. By speaking to the public and getting facts out, the goal is to get folks to use rational thought.” An interesting note to think about in regards to where natural gas is and where it is going, is that “nearly every consumer product that we use today is manufactured with the use of natural gas,” informed Spigelmyer.

Kempic believes “Infrastructure is key and public education is critical.” His presentation focused on the distribution of natural gas and the impact Marcellus Shale has on end use customers. He demonstrated how low cost gas leads to economic development and facilitates the modernization of Pennsylvania’s aging infrastructure. Because of the low gas costs from Marcellus shale, substantial investments in distribution facilities can be made without causing customers’ total gas bills to be unreasonably high. In fact, a residential customer’s total gas bill is about 20% less than it was 20 years ago after you adjust it for inflation. Making energy a smaller part of a family’s budget benefits and improves communities through multiple ways. Kempic states that Columbia Gas has created 850 good-paying jobs because of this cycle. He hopes that folks understand that infrastructure replacements constitute “a temporary inconvenience, for a permanent improvement that will benefit generations of our kids and grandkids and create more jobs in our communities.”

Fitzgerald spoke to the importance of where government and industry come together to benefit taxpayers and the community as a whole. He stated, “There is a future in energy. Energy is such a big part of not only our future, but our present, and our historical, industrial past.” Fitzgerald explained that he was frustrated that people were moving away from this area due to a lack of jobs. This was one of the reasons he got into politics. Now this region has become the energy capital of the U.S. He explained how the Consol Energy/Pittsburgh Airport deal is a “billion dollar deal” that will benefit the area in the form of job creation and improved infrastructure, without taxpayer money.

Now Fitzgerald says, “We have to make sure that we are weighing the costs and benefits together. We need to weigh real science versus hype to make good decisions to move this area forward. It’s about jobs and economic growth, keeping young people here and allowing them to grow here in a lot of different ways.” He also noted that it is “important we don’t do any environmental damage—one of the things we have learned from our century or more of industrial operations and other energy industries over the years. We might not have been so kind to our rivers, our streams, and our air quality in the past. We need to make sure we are as responsible as we can be—that our best practices are utilized.”

During the lunch break, attendees indulged in a buffet of southern style food and were able to network. Lunch was followed by a Question and Answer Session and a discussion of the day’s topics.

Matthew Rippin, an attorney at Goehring Rutter & Boehm, attended the event because he believes “this is where the future of this area is and where the industry is going.” As a young attorney, he wants to build his career and move forward. Geologist Robert Anderson attended because “it was local and [he] wanted a status update.” He stated, “People think things are booming”, and he wants to see exactly where we are.

Both Rippin and Anderson were also able to earn continuing education credits (CLE/AAPL credits).

Each event is worth 5.5 Continuing Legal Education Credits as well as 5.5 AAPL Recertification Credits for CPL/RPL/RL Designations. These apply to attorneys, geologists and engineers. The entire series is approved for 60 CLE/AAPL recertification credits.

Schmaus says he was “very happy with the first event. It was a great mix of people: landmen, attorneys, geologists and engineers. People are often pigeonholed in this industry with little communication. Attorneys typically work with attorneys at a desk. Landmen work in the field. This was a great start and kickoff to the series, where we were able to discuss unique items—the nuts and bolts of the industry and things we use in the profession.”

The next seminar is on finance and will be on August 29, 2013. It is titled: Oil and Gas Economics/Investing (A Practical Primer). The seminars will be every two months through April 2015. Other series topics will include Leadership, Permitting, Technology, Professionalism, The Lease, Public Relations, Due Diligence, Profound Impact, Landowner Rights and The Rig.

Future seminar keynotes will include: Lee Ann Wainwright of Chevron, Joseph Frantz of Range Resources, Barbara Dunst of EQT, Raymond Schmaus of Armstrong Search, Susan Oliver of WPX Energy, Mike Knapp of MDS Energy, Garrett Myers of Five Star Energy Capital and Robert James of Bricker Eckler. To register or for more information, visit http://ypepittsburgh.org/?page_id=591.

Kristie Kubovic is the Director of Communications at Shale Media Group. Contact her at Kristie@ShaleMediaGroup.com. Shale Media Group is a news and information resource on the oil and natural gas industry, featuring the latest news, information and mapping. Our multi-media platforms include Internet, Publications, Radio, Video and Events.

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Marcellus royalties rising

Taylor Tiano — Thu, 13 Jun 2013 16:15:45 +0000

Pittsburgh Business Times

Malia Spencer Reporter-Pittsburgh Business Times

A policy paper from the right-leaning Allegheny Institute for Public Policy estimates that royalty income paid to land and mineral rights owners in Marcellus Shale play have skyrocketed in recent years as activity has ramped up to an estimated $731 million last year. That’s up from an estimated $10.9 million in 2008.

Or for a different perspective, in 2008 royalty payments, when Marcellus exploration was still new, accounted for about 0.002 percent of the state’s personal income, which totaled at the time $513 billion, according to Bureau of Economic Analysis. Last year, these royalty payments accounted for 0.13 percent of estimated personal income, which was about $556.7 billion.

The amount of rents and royalties income reported on state tax returns was up 61 percent from 2006 to 2010, according to the numbers crunched by the institute. For Marcellus Shale counties it was up 119 percent. For counties without Marcellus activity royalty income was up 34 percent.

In Susquehanna county, $8 million in royalties were claimed in 2008 and by 2010 it jumped to $133 million, according to institute.

“The Marcellus Shale gas boom has produced major economic benefits to the Commonwealth of Pennsylvania,” wrote Senior Research Associate Frank Gamrat. “Beyond the growth in drilling related jobs and the jobs created in several supply and related industries, accommodations for out of state workers, restaurants and retail with the incomes associated, land owners who have lease and/or royalty payments are doing well indeed.”

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Moving America Toward Energy Independence

Taylor Tiano — Thu, 13 Jun 2013 14:11:35 +0000

By Kristie Kubovic / Director of Communications – Shale Media Group

The Nemacolin Energy Institute held the Fourth Annual Shale Energy Conference and Golf Invitational at Nemacolin Woodlands Resort on Monday and Tuesday, June 3th & 4th, 2013. The idea of the conference was to help America reduce reliance on oil imports and produce a long-term domestic supply of natural gas. The speakers and attendees were all in agreement that domestic shale energy provides a real opportunity to help America reduce reliance on foreign oil imports. However, to realize that potential, the creation of an enabling national infrastructure and responsible development of this domestic resource is required.

The Nemacolin Energy Institute’s 4th Annual Shale Energy Conference brought together industry leaders to discuss the opportunities and subsequent barriers in making the dream a reality for our nation. Nemacolin Energy Institute Advisory Board Member, Doug Benns, shared, “We are very pleased with the tremendous organizations that support this event.” Organizations and companies, such as Chesapeake Energy, Range Resources, Acme Power Systems, Pennsylvania Chamber of Business and Industry, Energy from Thorium Foundation, Coalition of Freedom,Capitol Integrity Group, J Connors & Company, Cleveland Brothers and Shale Media Groupamong others, were represented at the conference.

After registration, the conference kicked off on Monday in the Grand Ballroom with a Congressional Panel featuring U.S. Congressman Bill Johnson OH-06, U.S. Congressman Keith Rothfus PA-12 and U.S. Congressman Glenn Thompson PA-05.

The Honorable Tom Ridge, President and CEO of Ridge Global, Former Governor of Pennsylvania, and First Secretary U.S. Homeland Security, was the first presenter in a line of distinguished speakers. He heavily focused on exporting and why it is an important part of America’s natural gas domestic initiative. “We can be more engaged in American energy security if we export our abundant supply of resources,” stated Ridge.

He was followed by: Dr. Greg Smith, Associate Professor, Xavier University;Alexander Huurdeman, Senior Petroleum Specialist, The World Bank; Chris McGill, Vice President Policy Analysis, American Gas Association; Chris Wood, President & CEO, Trout Unlimited; David Spigelmyer, Commission Member, Governor Corbetts’ Early Learning Investment Commission and Vice President Government Affairs,Chesapeake Energy; and Dennis Yablonsky,CEO, Allegheny Conference on Community Development

The lineup was followed by a reception and elegant dinner, which included Keynotes: Kathryn Klaber, CEO, Marcellus Shale Coalition and Herman Cain, CEO and Co-Founder, Job Creators Network and Former Presidential Candidate.

Klaber’s keynote discussed the notion of Marcellus Milestones. She highlighted the Marcellus Shale Coalition’s top ten changes since 2009, which included topics such as: shale going global, energy being integral to U.S. products, the environment winning, the industry paying its “fair share”, standards, and protestors. Klaber stated “the Marcellus Shale Coalition has established itself as the leading organization, working with 96% of Pennsylvania gas members.”

Cain employed both song and charisma in his keynote, which primarily dealt with his views of the state of the nation. He established that he had “Some good news, bad news, and more good news.” He tied the booming oil and gas industry into ‘more good news.’ Calling it a “revolution” and he implored the audience to “be bold.” With enthusiasm, he asserted that the, “Shale Oil Revolution would bring down gas prices, increase manufacturing and help transportation.”

After dinner, an opening party and private concert was held with The Clarks. Attendees also took advantage of Nemacolin Woodlands Resort to mingle, network and discuss the conference.

Tuesday began with a breakfast in the Grand Ballroom, which was followed by speakers: James Roddey, Principal, ParenteBeard and Co-Chair, Shale Gas Roundtable and Diana Stares, Director Center for Energy Policy and Management, Washington & Jefferson College.

Herman Cain, Joseph Ferens, Joe Hardy, Dennis Noonan, Kathy Klaber

Attendees were encouraged to participate in a golf tournament with lunch at the famed Mystic Rock Golf Course, designed by the legendary Pete Dye. Afterwards a reception and dinner were held at Horizon Point. The dinner featured an awards ceremony from the golf tournament and Keynote Fred Kelly Grant, best-selling author and Constitutional Attorney.

“It is clear that we’ve turned the energy security corner. Most people present in this meeting grasp the significance and direction of the new energy economy. Each has recognized the potential and role they can play to help transform us back into a U.S. innovative engine,” explained Jim Smith, West Virginia University Professor and Director of the Center for Industrial Research Applications.

The Nemacolin Energy Institute continues to have events, such as this one, to spur further responsible development of the oil and gas industry. Their mission is to foster local, regional and national energy planning decisions based on facts and not misunderstanding by bringing key people together with the right information to address some of America’s most difficult energy challenges.

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EIA Says Worldwide Shale Oil And Gas Potential Is Huge

Taylor Tiano — Thu, 13 Jun 2013 13:56:24 +0000

MIT Technology Review

Kevin Bullis

A surge in oil and gas production from shale rock has transformed energy in the United States, helping reverse declines in oil production and prompting a massive shift from coal to natural gas electricity production that has led to a significant drop in carbon dioxide emissions (since burning coal releases more carbon dioxide than burning natural gas). A new report from the U.S. Energy Information Administration lends support to the idea that a similar transformation could take place outside the United States.

A map from a new Energy Information Administration report on shale oil and gas resources.

The map above gives a sense of just how widespread oil and gas resources are. The EIA report concludes that Russia has even more technically recoverable shale oil than the United States. Three countries have more shale gas—China, Argentina, and Algeria. Geologists have long known that some shale deposits contain large amounts of oil and gas, but it’s only recently that hydraulic fracturing and horizontal drilling technology have made it feasible to extract.

While other countries may have more of these resources than the United States, the impact in some of them may not be as great, or happen as quickly. It could take many years to develop resources in other countries because the geology is somewhat different—the techniques that work in the United States might not quite work elsewhere. What’s more, many countries don’t have the needed technological expertise. Some countries make it difficult for companies to set up and find ways to exploit the resources (see “China Has Plenty of Shale Gas, But It Will Be Hard to Mine”).

What’s more, the United States had a lot of spare natural gas generating capacity, which made it easy to switch from coal to natural gas. In a place like China, where energy demand is quickly growing, there’s little spare capacity. Natural gas production might only serve to slightly slow the growth of electricity from coal plants, not reverse it.

So far, the impact of increased shale gas production has been limited outside the United States. Because natural gas is relatively expensive to export and requires the construction of specialized infrastructure, prices for natural gas have fallen sharply inside the United States, but not outside the country.

But it has had one impact: increased natural gas production in the U.S. has led to increases in coal consumption elsewhere. Unlike natural gas, coal is relatively easy to export. When demand for it dropped in the U.S., it was shipped abroad, lowering coal prices and contributing to an increase in coal use—and carbon dioxide emissions.

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McClendon Seeks a Cool Billion to Build New Energy Giant

Pracheta Trivedi — Mon, 10 Jun 2013 21:10:43 +0000

Fool.com

By Matt DiLallo on June 10, 2013

ess than a month after “retiring” as CEO of Chesapeake Energy (NYSE: CHK ) , Aubrey McClendon decided it was time to get back to work. In going back to what he knows best, McClendon has come to the point in the process where his new venture, American Energy Partners, is lacking one important ingredient: money. That’s why it’s not at all surprising that Aubrey McClendon is searching high and low for that one critical component.

According to reports, McClendon is targeting a billion dollars in capital from private equity groups and sovereign wealth funds. McClendon would use this capital to fund his plans to build American Energy Partners into a best in class exploration and production company. It’s not yet known how much capital he has been able to secure, if any.

Read the full story here.

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