Posts Tagged ‘ANDREW MAYKUTH’

By ANDREW MAYKUTH The Philadelphia Inquirer

The state Department of Conservation and Natural Resources signed a $6.15 million agreement Monday with Chesapeake Energy Corp., giving the company the right to drill the Marcellus Shale under a seven-mile stretch of the Susquehanna River in Bradford County.

Under the lease, which applies to 1,500 acres of river between Towanda and the Wyoming County line, Chesapeake is permitted to access the shale with wells drilled on either side of the river. No well bores will penetrate the river itself.

Horizontal-drilling technology makes drilling for gas beneath the waterway feasible. With wells that reach laterally for thousands of feet, operators can capture gas under a large area from a remote location.

The state Department of Environmental Protection says that under-river gas exploration poses no more risk than any of the 1,400 other wells drilled into the Marcellus formation, which is a mile below the surface. The lease is separate from the state’s offering in January of 32,000 acres of state forests, which generated $128.5 million to help close the state budget gap.

The $6.15 million raised by the Susquehanna River lease will help keep open 24 state parks that had been threatened with closure because of the budget crisis, said Christina Novak, DCNR spokeswoman.

DCNR’s Susquehanna River lease may conjure memories of the 1959 Knox Mine disaster in the Port Griffith section of Jenkins Township, when the Susquehanna broke through a coal mine that was dug just below the river bottom. A dozen miners died in the flood.

Geologists say subsidence is not an issue with gas exploration. The well bores are only a few inches in diameter.

Copyright: Times Leader

N.J. gas firm eyes $300M income

ANDREW MAYKUTH The Philadelphia Inquirer

A southern New Jersey gas firm that bought a $2 million Marcellus Shale interest in 2008 says it might generate $300 million in income over its lifetime.

South Jersey Industries Inc., the Folsom, N.J., company that owns South Jersey Gas and several nonutility energy businesses, disclosed to analysts that its purchase of mineral rights in northern Pennsylvania could pay off handsomely.

Chief executive officer Edward J. Graham, speaking to analysts about the company’s annual earnings, said two horizontal wells in which South Jersey Industries has a stake will begin producing income this quarter.

He said the gas operator, St. Mary Land & Exploration Co., of Tulsa, Okla., was still tying the wells to a pipeline, but feels “really good about the prospects.”

Two more wells are planned for this year on the 21,000-acre property in McKean County.

In early 2008, South Jersey Industries paid $2 million for an interest in a partnership that owns the deep-gas rights on the property, Stephen Clark, the company’s treasurer, said in an interview. Since then, the value of mineral rights has skyrocketed.

South Jersey Industries estimates that its combined royalties and ownership rights will net 10.25 percent of the value of the gas produced — the company’s share would be about $300 million, based on an average price of $6 per thousand cubic feet.

“It has the opportunity to be very productive for us,” Clark said.

Graham told analysts that it was premature to estimate earnings, which depend upon the number of wells drilled and the price of natural gas. Production could take years, or even decades, to realize.

The estimates illustrate the huge potential in the Marcellus Shale, which lies under much of Pennsylvania and several surrounding states.

Copyright: Times Leader