Posts Tagged ‘energy prices’

More than a mile beneath parts of Pennsylvania lies a mostly untapped reservoir of natural gas.

Geologists and energy companies have known for decades about the gas in the Marcellus Shale, but only recently have figured out a way to extract it from the thick black rock about 6,000 feet underground.

Now gas drillers are looking to lease local land in an attempt to find and remove the gas, whose value increases as energy prices soar.

In January 2008 leases were being signed for values near $100 per acre. By May that value had increased to over $2000 per acre.

With lease values changing so rapidly, landowners are unsure at what price to accept a lease offer.

Kenneth L. Balliet, a forestry and business management educator with the Penn State Cooperative Extension, recently took a trip to Fort Worth to see the economic impacts of those deposits. He said leases are being signed for $18,000 per acre in areas where production has proven strong.

Though there are only about 20 wells in Pennsylvania so far, Balliet expects local production to eventually rival Texas’ Barnett Shale. He said a gas company confided it plans to spend $1 billion this year in leasing agreements in Pennsylvania.

Northeastern Pennsylvania is Where the Thick Organic-Rich Shale Intervals are Located.

Copyright: Geology.com
Copyright: Timesleader.com

DEP ordered partial shutdown of 2 drilling sites for not having permits.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

HARRISBURG – Reacting to regulation violations and some activities by companies exploring for natural gas in the Marcellus Shale, state environmental regulators on Friday held an unprecedented summit with gas drillers to define expectations for water and land protection.

The meeting came about a week after regulators took steps to rein in the burgeoning exploration industry and its increasing demand for water. The Susquehanna River Basin Commission warned drillers they needed water-withdrawal permits, and the state Department of Environmental Protection ordered the partial shutdown of two drilling sites for not having such permits.

Citing Pennsylvania’s coal and oil past and current commitment to renewable energies, DEP Secretary Kathleen McGinty assured the state “likes energy” and is “not allergic” to the effort required to extract it, but cautioned that her department will expend as much energy to protect the environment and natural resources.

“This is not about sending a signal that we don’t want to be a partner,” she said. “It’s just about some good rules for the road.”

Experts have known about the Marcellus Shale layer, which runs from upstate New York into Virginia and touches northern Luzerne County, for decades. They believe it contains enough recoverable gas to supply America’s natural gas demand for two years. However, technology has only recently advanced enough to tap the shale, which lies as much as 8,000 feet below the surface.

J. Scott Roberts, DEP deputy secretary in the Office of Mineral Resources Management, announced additions to the agency’s usual drilling permit specifically for Marcellus Shale that include detailed estimates of water use.

Paul Swartz, the river basin commission’s executive director, said companies need to make timely applications and factor the permitting process into their drilling timelines. Two permits were approved at the commission’s meeting on Thursday, he said, but another 84 – about a year’s worth of work – still await approval. Though there is a water-use threshold for requiring a permit, he said any work in the Marcellus would exceed that threshold and require a permit.

Exploration in the Marcellus is unlike gas exploration elsewhere in the state because deposits are vastly deeper, mostly unproven and necessary infrastructure, such as pipelines and water-treatment facilities, does not exist.

As energy prices continue to rise, drilling in the deep shale has become more enticing. DEP issued a record number of permits in 2004, 2005 and 2006. The rise leveled off in 2007 with 7,241 permits. So far in 2008, 2,510 have been issued.

Copyright: Times Leader