Posts Tagged ‘company spokesman’

By MURRAY EVANS Associated Press Writer

OKLAHOMA CITY — Chesapeake Energy Corp. said Monday it plans to raise about $5 billion over the next two years in an effort to expand its investment in oil and natural gas liquids and to reduce its debt.

Oklahoma City-based Chesapeake announced a “strategic and financial plan” that includes the sale of up to a 20 percent equity interest in its Chesapeake Appalachia LLC subsidiary to investors within the next three to 12 months. Chesapeake is a key driller in the Appalachian Basin, with 24 operating rigs in the Marcellus Shale natural gas play.

Chesapeake also announced a private placement of $600 million of a new series of convertible preferred stock to investors in Asia. The investors, Maju Investments (Mauritius) Pte Ltd. and Hampton Asset Holding Ltd., will have an option for up to $500 million more shares within the next 30 days.

Of the $5 billion to be raised, Chesapeake said it plans to use $3.5 billion to pay off its debt and $1.5 billion to focus on drilling for oil and natural gas liquids.

Chesapeake also is looking at negotiating various joint ventures as part of its plan, which the company said is ultimately designed to achieve an investment grade rating for its debt securities.

Chesapeake is one of the top independent natural gas producers in the U.S. but has gradually expanded its oil and natural gas liquids portfolio in recent months. Company spokesman Jim Gipson said natural gas accounted for about 90 percent of Chesapeake’s production in the first quarter of 2010, down from 93 percent a year ago.

Chesapeake’s CEO Aubrey McClendon has spoken in recent weeks about the company’s interest in expanding its oil and natural gas liquids production, noting that oil prices are rising while the cost of natural gas is stagnant. Crude oil rose $1.69 to $76.80 per barrel Monday on the New York Mercantile Exchange while natural gas rose 15.5 cents to $4.170 per 1,000 cubic feet.

In a production update issued last week, Chesapeake said it is trying to identify more supplies of oil and natural gas liquids.

Copyright: Times Leader

PA American Water Co. to sample water from Huntsville Creek near natural gas well.

By Jerry Lynottjlynott@timesleader.com
Business Writer

A water company has begun inspecting a creek flowing from the Huntsville Reservoir as a result of a permit issued for a natural gas well in Lehman Township.

PA American Water Co. also will soon begin sampling water from Huntsville Creek, company spokesman Terry Maenza said Thursday.

The testing is to check whether drilling has affected the 1.9-billion- gallon reservoir that supplies drinking water to the utility’s customers. The reservoir is in the Back Mountain area of Luzerne County where more than 25,000 acres have been leased by companies planning to tap into the natural gas rich Marcellus Shale formation underground.

Technicians will go out once a week to take water samples, said Maenza, “so we have baseline data.”

Last month township officials approved a drilling permit for EnCana Gas & Oil USA Inc. It has partnered with Whitmar Exploration Co. to locate possible drilling sites within nine townships and Harveys Lake in the Back Mountain.

PA American has two reservoirs bordered by lease holdings. The 2.9 billion gallon Ceasetown Reservoir also is located in Lehman Township. In conjunction with Huntsville, Ceasetown supplies water to 100,000 people in the Wyoming Valley, Maenza said.

The reservoirs have 500-foot buffer zones around them where drilling is not permitted, he explained.

Maenza added that the water company relies on regulators and inspectors to enforce laws related to drilling and disposal and treatment of waste water used in the hydraulic fracturing or fracking, the high pressure injection of a mixture of water, chemicals and other materials to break up the rock containing the natural gas.

The utility frequently is in contact with the state Department of Environmental Protection on a number of issues, including permits issued for drilling. “They’re letting us know about it,” Maenza said.

Two other water companies that serve customers in the Back Mountain are leaving oversight up to DEP, the Susquehanna River Basin Commission and the state Fish and Boat Commission.

Donna Alston, a spokeswoman for Aqua Pennsylvania, said existing DEP regulations provide protection for the company that draws its water from wells. The company provides service to customers in Luzerne County through its White Haven Division. Statewide it serves 1.4 million people in 30 counties.

Still, Aqua is stepping up its own efforts.

The utility “will be monitoring water quality more frequently and extensively than required by regulation whenever drilling activity is occurring anywhere near one of its well supplies to detect and respond to any water quality changes that might occur,” Alston said.

What steps United Water takes depends upon how close a natural gas well is drilled to one of its water wells, said spokesman Bob Manbeck.

“If a permit for extraction was under consideration within a one mile radius of a United Water-owned well, we would intervene in the permitting process and attempt to ensure that the extraction points are an appropriate distance from our wells,” said Manbeck.

United Water has six wells in Dallas, two each in Dallas Township and Harveys Lake and one in Noxen Township in Wyoming County. It serves 10,000 customers in the Back Mountain.

Copyright: Times Leader

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

Drilling for natural gas in the Marcellus Shale that underlies much of Northeastern Pennsylvania is expected to create hundreds to thousands of jobs, depending on who’s doing the projections, and have other widespread economic effects.

Some of those new work opportunities will be with the drilling and gas companies, but others are expected to be with subcontracted services, from land surveying and engineering to hauling and construction. Legal and banking services also will be needed.

Chesapeake Energy has invested significantly in not only leasing land in Pennsylvania, but in doing business with private companies.

With 94 wells drilled in the state in 2009 and more than 200 additional wells planned for this year, the company has paid subcontractors and vendors in Pennsylvania $269 million since January 2009, company spokesman Rory Sweeney said in an e-mail.

Among the first employers to see the effects of natural gas exploration are law, surveying and engineering firms.

“We are seeing an increase in our business volume,” said Mark Van Loon, a partner with Rosenn Jenkins & Greenwald, a law firm with offices in Scranton, Wilkes-Barre and Hazleton.

“We’ve represented quite a few people in relation to the Marcellus Shale and land leases in Luzerne County, north to the New York border, and east and west from there in Susquehanna, Bradford, Luzerne and Lackawanna counties. There have been some in Wayne County, but not as much,” Van Loon said.

Lease holders also will also need to protect their financial assets, and that’s where banks come into the picture.

David Raven, president and chief executive officer of Pennstar Bank, said the financial institution is seeing a significant increase in business related to Marcellus Shale at branches in Susquehanna County.

“It’s specific to folks who receive lease (bonus) payments and eventually will receive royalties on the gas that’s produced,” Raven said.

In addition to landowners who want to protect their rights while negotiating the most lucrative deals, firms and individuals that enter into large contracts with the gas and drilling companies – engineers, construction firms, suppliers and haulers, for example – will want to have those contracts vetted before signing, according to Van Loon.

“If somebody has a contract that’s large enough, they’re likely to have it reviewed by their legal counsel because it involves too much risk for them not to. And there could be contractual disputes in relation to the delivery or performance of services,” he said.

Van Loon said his firm has five attorneys actively working on oil and gas lease issues, but at this point the partners have not seen the need to hire additional staff.

That’s not the case with Borton Lawson, an engineering firm based in Plains Township that also has offices in Bethlehem, State College and, as of two months ago because of the business generated by the Marcellus shale, in Wexford – a town in Pittsburgh’s northern suburbs.

Chris Borton, company president, has referred to the Pittsburgh area as “the heart of the gas and oil industry” in the region.

Last year, Borton Lawson laid off some of its survey crew workers as companies hurt by the recession cut back on land development. But over the last six months, the firm has hired six to eight people – including several surveyors – for jobs directly related to the Marcellus Shale.

And the company is looking for 13 more employees right now to fill positions such as environmental engineers and scientists, an electrical engineer, an automation engineer and a mechanical engineer.

Salaries for those jobs range from $40,000 to $80,000 depending on the type of job and experience of the employee, Borton said.

Borton said his firm is working with five natural gas companies in Northeastern Pennsylvania. The company will open a satellite office in the borough of Towanda, the county seat of Bradford County, on April 15 because of the extensive natural gas exploration and drilling in that area.

County drilling near

One of the gas companies – Encana Oil and Gas Inc. – has leased 25,000 acres of property in Luzerne County. The land is mainly on the north side of Route 118 in Fairmount, Ross, Lake and Lehman townships.

Encana so far has obtained permits for drilling one well in Lake Township and another in Fairmount Township and is seeking a permit for one in Lehman Township, said company spokesman Doug Hock. Hydrogeological studies are now under way, and officials hope to begin constructing wells by May.

“For every well drilled, that creates about 120 jobs, either directly or indirectly. … The bulk of these jobs as we begin operations are done by subcontractors,” Hock said.

Subcontracted work includes water haulers, truck drivers, construction crews for well pad grading and construction and rig hands after the wells are built. Local average wages could see a boost, given that salaries even for less skilled positions range from $60,000 and $70,000, he said.

Hock said Encana prefers to hire local contractors, “but it’s not always possible because of the skills available in the labor market.”

He couldn’t predict how many new jobs will be generated by Encana operations because officials won’t know how many additional wells – if any – might be drilled until they see the results of natural gas production from the first two or three.

“By the end of 2010, we’ll have an idea if we have a good program, something that’s economically viable that we can continue to develop,” Hock said.

Steve Mocarsky, a Times Leader staff writer, may be reached at 970-7311.

Copyright: Times Leader

Holdouts wonder if someday they’ll be forced to enter into natural-gas leases.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

With more than 150 acres between her and her parents, Maria Rinehimer’s family could stand to make a tidy profit off natural-gas leasing. But their banker won’t need to worry about clearing out room in the vault any time soon – the family’s not interested.

“I think it’s a really bad thing for the area. If something happens, like a spill or something, I don’t think they’re going to clean it up for us. I think we’re going to be stuck with it,” Rinehimer said.

In Union Township near Shickshinny Lake, Rinehimer, her husband, Kevin, and her side of the family, the Scalzos, sit squarely within the current area of focus for the two gas companies partnering on drilling activities in the county.

The family’s aversion to leasing highlights several growing issues with increased drilling in the Marcellus Shale.

First, residents of northern Pennsylvania, who’ve long harbored suspicion of wealthy interests exploiting local resources such as coal and trees, question whether gas companies can be trusted on the face value of their assurances or if they’re just another chapter in the sad litany of robber barons.

And second, will people who don’t want to lease be forced to if everyone around them is? It’s a practice called “forced pooling,” and while it’s not yet legal in Pennsylvania’s Marcellus Shale, there is a bill in the state House, according to Tom Murphy, an educator with the Lycoming County Penn State Cooperative Extension.

“That would make everything in the Marcellus and below fall in the forced pooling scenario, but at this moment it has not been passed,” he said.

The practice, which is legal in New York, is defended as a way to reduce land disturbance by maximizing the area each well drains.

House Bill 977 – which is cosponsored by, among others, Reps. Karen Boback, R-Harveys Lake, Phyllis Mundy, D-Kingston and Jim Wansacz, D-Old Forge – has been sitting in committee since March.

Rinehimer attended a September meeting held by WhitMar Exploration Co., which later teamed with EnCana Oil and Gas (USA) Inc. to propose three wells in northern Luzerne County.

“He (a company representative) kind of went around the answer, and didn’t really go right ahead and say if something does happen to your water system and you can’t drink it … they’re going to clean it up for you,” she said. “Nothing was really clear.”

EnCana’s is sensitive to the issue, company spokesman Doug Hock said.

Its policy in this area is to monitor all water supplies within a mile of wells before and after the drilling occurs. The company cases wells with several layers and pressure tests, he said, ensuring the integrity of each well.

“If there were a loss of fluid or a loss of gas, we would know through that pressuring testing process,” he said.

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

About 8,400 gallons of a gel used in drilling natural-gas wells was spilled on Wednesday at a well being drilled in Dimock Township for Cabot Oil & Gas, the state Department of Environmental Protection announced Thursday.

Spilled at the Heitsman well site, the substance affected an unknown amount of “shallow wetland,” said company spokesman Ken Komoroski.

DEP and state Fish and Boat Commission officials were on hand Wednesday and Thursday as a crew cleaned up and contained the material, said DEP spokesman Mark Carmon. It may have gotten into Stevens Creek, he said.

“What was done was the spilled material was immediately contained” using an eight-man crew, Komoroski said. “The gel was able to be removed by vacuum trucks.”

The spill occurred as Halliburton was using a fluid to fracture the Marcellus Shale and release the natural gas within it, he said. Baker Tank, the contractor responsible for tanking and piping for the “frack” job, allowed a pipe to come loose and release the gel, he said.

“This is certainly disappointing to Cabot that this occurred,” Komoroski said. “On the other hand, these are the types of things that are typically unforeseeable and it’s important to react to it when it occurs.”

The slippery substance is “relatively innocuous,” he said, but “does have the potential for eye, skin and respiratory irritation.” Used to help suspend sand particles evenly throughout the so-called fracking fluid, it’s made of “paraffinic material” and polysaccharides, or something like fluid wax and starch.

Copyright: Times Leader

The company hopes to see more than two dozen wells drilled on its property.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

MEHOOPANY — In October, drilling for natural gas will begin at the Procter & Gamble plant in Mehoopany, and, if geologic estimates pan out, the company hopes to eventually see more than two dozen wells drilled on its property, saving it “tens of millions” of dollars annually for years to come.

The Wyoming County plant consumes about 10 billion cubic feet of natural gas a year that is piped up from the Gulf Coast, company spokesman Alex Fried said. The hope is that drilling on its own property will alleviate much of that need.

“If the wells are productive, sure there’s the possibility. We’ve got enough property there,” Fried said. “If they can supply that, I’ll gladly take it because I’d rather get it from under my own ground.”

Located in Wyoming County, the plant sits in a potentially productive section of the Marcellus Shale, the layer of rock about a mile underground stretching from New York to Virginia that has natural gas locked within its pores. Though it was known about for decades, accessing the rock has only recently become financially feasible with advancements in technology.

Colorado-based Citrus Energy Corp. contracted with P&G to construct five well pads at the company’s 1,300-acre property on the bank of the Susquehanna River. The township gave approval for all five sites, as did the state Department of Environmental Protection for the erosion and sedimentation plans.

Additionally, Citrus got a permit in December from the Susquehanna River Basin Commission to withdraw 499,000 gallons of water per day from the river. It has been bonded with the Pennsylvania Department of Transportation to cross state Route 87 and signed a road-maintenance agreement to use Carney Cemetery Road to access the sites.

Citrus still needs drilling permits from DEP for two sites, but Fried said the sites currently aren’t necessary. “The (sites) at the westernmost and easternmost part of our property aren’t going to be built until next year,” he said.

Starting in October, a well will be drilled at each of the middle three pads. Next year, if the geological indications look good, the company will consider drilling the wells deeper by going horizontally through the shale seam.

After that, the focus will shift to the two remaining pads.

If that all works out, Fried said, P&G could lease land at a 300-acre warehousing site about a mile from the plant, where at least one more pad could be built. In all, Fried estimated, perhaps 30 to 35 wells could be drilled.

Fried declined to discuss the royalty deal struck with Citrus, but described it as “very competitive” because the company could offer a variety of advantages, including access to water, industrial zoning and a direct connection between the buyer and seller.

It also boasts rail access, which Fried said could be used in the future to haul away the contaminated fluid that’s used to break open the rocks and release gas.

The drillers “can haul away 35,000 gallons at a time on a tanker car,” Fried said.

Another benefit is that the gas doesn’t have to go far to get used. “The pipeline will bring it right to the plant, so we’ll still get our royalty, except it just will be a discount off the price of the gas that we’re purchasing,” Fried explained.

Fried said interest in inking a deal came from both sides. He began researching the possibilities at the beginning of the year, around the same time unsolicited calls started rolling in from gas companies.

Originally, the companies simply wanted to lease the land and sell the gas, but Fried had another idea – keeping the gas at home.

“In many cases, they just came in and said, ‘We want to lease,’ ” he said. When he told them how much gas P&G would be willing to buy each year, “their jaws dropped and hit the floor,” Fried said.

Copyright: Times Leader