Posts Tagged ‘gas’

Canonsburg, PA – A new study released yesterday sheds light on the robust economic impact that the responsible development of clean-burning, American natural gas continues to have throughout the Commonwealth. Conducted by Penn State University researchers, the analysis underscores how far-reaching, genuine and sustained the growth is associated with Marcellus Shale natural gas production, particularly for Pennsylvania consumers and taxpayers, as well as local small businesses along the supply chain that support the industry. Be sure to visit our Facebook page for photos from yesterday’s event announcing the study’s findings. Following are highlights from the release:

JOB CREATION, ECONOMIC GROWTH, TAX REVENUES

• “Penn State report even more bullish on Marcellus Shale”: An updated Pennsylvania State University economic study of the Marcellus Shale gas boom is even more bullish than past reports, projecting that Pennsylvania could supply a quarter of the nation’s natural gas by 2020. The industry-sponsored study, which will be released Wednesday, says that Marcellus natural gas production is outpacing predictions made only a year ago. Production from Pennsylvania wells, which already supply more fuel than is consumed in the state, could multiply eightfold by the end of the decade. “Our estimates suggest that in 2020 the Marcellus industry in Pennsylvania could be creating more than $20 billion in value added, generating $2 billion in state and local tax revenues, and supporting more than 250,000 jobs,” said the authors associated with Penn State’s department of energy and mineral engineering. (Philadelphia Inquirer, 7/20/11)

• “Marcellus shale added $11.2 billion to economy, report says”: Development of the Marcellus shale added $11.2 billion to the state’s economy last year and may mean a $12.8 billion boost this year, according to an industry-backed study detailed at a U.S. Steel facility in Duquesne. It also supports a growing number of jobs, 140,000 through last year with prospects for another 16,000 this year, according to the Penn State University study commissioned by the Marcellus Shale Coalition. “The Penn State study clearly highlights the impact (of natural gas production),” said coalition president Kathryn Klaber. (McKeesport Daily News, 7/21/11)

• “Penn State forecasts boom for Marcellus Shale”: Thanks to the Marcellus Shale development, the amount of natural gas produced in Pennsylvania could nearly triple within the next decade, according to an industry-funded report. … The Penn State report saidthe total tax impact from drilling in 2010 was $1.08 billion in state and local taxes and $1.43 billion in federal taxes. In 2010, Marcellus development in Pennsylvania accounted for $11.2 billion in so-called “value added,” according to the report. … During 2010, the industry supported nearly 140,000 jobs in the state, the report said. By 2020, that value-added figure could jump to $20.2 billion per year and the supported jobs could total 256,000 — all to produce more than 17.5 billion cubic feet of gas per day. (Pittsburgh Post-Gazette, 7/21/11)

New Marcellus Shale Study Featured on Fox News’ Special Report With Bret Baier

• “Marcellus Shale natural gas production jumps, as job opportunities skyrocket”: At its current rate of increase, the prolific Marcellus Shale of Pennsylvania could soon lead the United States in natural gas production while employing hundreds of thousands of people, according to a recent study by Penn State. On Wednesday, PennState released a study by the College of Earth and Mineral Sciences … showing a strong support for the regional economy and a major boost to jobs in the area. (Oil & Gas Journal, 7/20/11)

• “New industry report says Marcellus production up”: Investment in the Marcellus Shale natural gas field is growing faster than expected in Pennsylvania, with both the number of wells drilled and the amount of gas extracted soaring between 2009 and 2010, according to an industry-sponsored report released Wednesday. Gas production quadrupled during the one-year period. … The report estimates that this year’s production will be more than 2 1/2 times last year’s, and projects steady growth through 2020. … Total Marcellus spending is projected to rise to $12.7 billion this year from $3.2 billion in 2008, according to the report. It also claims robust employment growth, with about 60,000 jobs in 2009 growing to nearly 140,000 last year. The industry projects it will have more than 156,000 employees this year. (Associated Press, 7/20/11)

• “Growing industry Report spells out economic impact of Marcellus Shale”: By the year 2020, the Marcellus Shale could become the single largest producing gas field in the U.S., supplying one quarter of America’s natural gas. In just five years, the industry drilled 2,300 wells into Pennsylvania’s Marcellus. Estimates are that gas drilling will be a $12.8 billion industry this year, supporting more than 156,000 jobs, generating $1.2 billion in state and local tax revenue and paying about $1.6 billion in leases and royalties, according to an industry report released Wednesday. (Washington Observer-Reporter, 7/21/11)

• “Shale gas boom for PA, not NY”: An new industry-sponsored report of the economic opportunity from natural gas drilling in Pennsylvania has got to have all the various stakeholders — energy companies, reasonable environmentalists, lease-holders and of course politicians — smiling today. According to the Marcellus Shale Coalition, Pennsylvania could lead the nation in natural gas production by 2020. The total economic impact of natural gas drilling from the Marcellus Shale could exceed $12 billion for 2011, the report concludes. “In 2011, Pennsylvania could produce nearly 3.5 billion cubic feet per day of natural gas, making the Commonwealth a net exporter of natural gas right now. This development could support more than 156,000 jobs and generate $12.8 billion in economic activity in Pennsylvania alone. By 2020, according to the study, Marcellus development could support 256,420 jobs,” reports the study. (New York Post, 7/21/11)

• A study funded by the natural gas drilling industry on Wednesday said Pennsylvania’s economy will get a $12.8 billion boost from drilling this year, more than double the amount from 2009, while reaping nearly 140,000 jobs. … The study, funded by the industry group Marcellus Shale Coalition, measured investment and expenditures minus salaries at $4.7 billion in 2009 and $11.1 billion last year, forecasting a rise to $14.5 billion in 2012. (Reuters, 7/20/11)

“MARCELLUS MULTIPLIER” SUPPLY CHAIN

• “Study Examines Economic Impact Of Marcellus Shale Industry”: Drilling in the Marcellus Shale is generating tens of thousands of jobs, according to a new Penn State study. … The study estimates 140,000 jobs – directly and indirectly – are dependent on the industry. “These are all jobs that but for the presence of this industry would not exist,” Kathryn Klaber, a spokesperson for the Marcellus Shale Coalition, said. (KDKA-TV,7/20/11)

• The booming natural gas industry in Pennsylvania is benefiting U.S. Steel Corp., which makes line pipe, trucking companies like PGT Trucking Inc. of Monaca that transport it, and a host of other businesses, representatives said on Wednesday. “This is a really good story for a lot of businesses,” said Douglas Matthews, senior vice president of U.S. Steel’s tubular operations. “We’re starting to see an increase in jobs and a relocation of people back to Pennsylvania.” A supply chain of local manufacturers is developing to support the gas industry, Matthews said. … They are examples of a “cascading impact” on the state’s economy since 2009 from the explosion of activity in the Marcellus shale natural gas reserves, said Kathryn Klaber, executive director of the Marcellus Shale Coalition. …Another company that has benefited from the Marcellus shale boom, Dura-Bond Pipe Inc. of Export, plans to build a pipe-coating plant at the site of the former Duquesne steel mill, said Jason Norris, vice president of commercial tubular products. The operation will create about 75 jobs, Norris said. (Pittsburgh Tribune-Review, 7/21/11)

• Marcellus Coalition Executive Director Katie Klaber tells Gas Business Briefing the data show fewer wells being drilled that had been projected, but at a greater cost per well and with more gas, on average, flowing from each hole. … “But if you spend more per well that’s more money to the service companies and other businesses to create jobs.” (Gas Business Briefing, 7/21/11)

• “As the largest domestic pipe producer in North America, U.S. Steel is well positioned to serve customers who are working to develop shale natural resources,” said Douglas R. Matthews, USS vice president-tubular operations. (McKeesport Daily News, 7/21/11)

ENERGY SECURITY; CONSUMER, LANDOWNER BENEFITS

• “Penn. shale gas output to more than double in 2011”: Natural gas production from Pennsylvania’s Marcellus Shale should reach the equivalent of 3.5 billion cubic feet per day this year, more than double 2010’s output, according to new research by a trio of Pennsylvania State University professors. The study, released Wednesday, furtherestimates that production in the state from the deeply-buried rock formation will rise to the equivalent of 6.7 billion cubic feet per day in 2012 and 17.5 bcfe in 2020. That level of production would make the Pennsylvania basin the largest supplier of natural gas in the U.S., able to meet about 25% of the country’s demand, said Kathryn Klaber, who heads the Marcellus Shale Coalition, an oil and gas industry advocacy group. (Dow Jones/MarketWatch, 7/20/11)
• Fmr. PA DEP sec. John Hanger: “Pa Marcellus Production Numbers Are Humongous! No Ponzi Scheme”: The United States Senate held a hearing yesterday to review the charges made by the disgraced NYT gas reporter that shale gas is a ponzi scheme but meanwhile in the real world Pennsylvania Marcellus gas production will reach in 2011 3.5 billion cubic feet per day or approximately 6 per cent of total US gas supply. At least that is the conclusion of 3 researchers at Penn State University in a report with other eye-popping production numbers that was commissioned by the Marcellus Shale Coalition. … Pennsylvania is on course to produce 1.2 trillion cubic feet this year and clearly will reach annual gas production of 2 trillion cubic feet before 2014, the year that I thought the 2 trillion cubic feet milestone would be achieved. These are real and humongous production numbers. (“Facts of the Day” blog, 7/20/11)
• “New Numbers Show PA Gas Production Will Lead Nation”: Pennsylvania has become a net exporter of natural gas and could become the nation’s leading gas producer. A report released Wednesday by the Marcellus Shale Coalition, an industry group, says theirproduction for 2010 was higher than expected. Penn State University researchers conducted the study, which was commissioned by the Coalition. (State Impact/NRP,7/20/11)
• “Study: Marcellus gas could provide 25% of US supply by 2020”: Advanced well stimulation techniques used in the Marcellus Shale to “dramatically” increase well production have forecasters scrambling to keep up with just how massive levels of production could reach. In July 2009, a Pennsylvania State University study said Marcellus production could reach 4 Bcf/d by 2020. In 2010, an updated version of the study said 13.5 Bcf/d by 2020 was in play. Now, the third rendition of the Penn State study forecast that production could hit 17.5 Bcfe/d in 2020 if gas prices do not drop. (SNL Energy,7/20/11)
• Pennsylvania is now a net exporter of natural gas, and has the potential to account for 17.5-billion cubic feet of natural gas, per day.  President of the Marcellus Shale Coalition, Kathryn Klaber, says that would be one-quarter of the nation’s natural gas production. … Kathryn Klaber says PA’s shale industry has blown its projections out of the water.  “At the beginning of 2010, it was projected that Pennsylvania would be producing a billion cubic feet equivalent  per day by the end of 2010, and we saw that it was double that.” (Radio PA, 7/21/11)
• “Pennsylvania Gas Output Exceeds Expectations”: The explosive development of the Marcellus Shale gas formation has exceeded expectations and placed Pennsylvania on track to become the second largest producer in the country in the next few years, according to a new Pennsylvania State University analysis. At the end of 2010 there were nearly 1,500 gas wells in Pennsylvania — where most Marcellus activity has been concentrated to date — producing a combined total of nearly 2 billion cubic feet of gas per day. … Klaber’s organization touted the analysis as proof that the shale drilling boom is likely to benefit local economies, particularly in southwestern Pennsylvania. (Energy Intelligence, 7/20/11)
• “PA soon to be net exporter of natgas: report”: The report’s lead author, Tim Considine, director of the Center for Energy Economics and Public Policy at the University of Wyoming, says his projections are conservative. “The wells in Northeast Pennsylvania are tigers,” Considine tells GBB. (Gas Business Briefing, 7/21/11)
• Pennsylvania Marcellus wells produced an average of 300 million more cubic feet per day of natural gas and petroleum liquids in 2010. … They now estimate the Pennsylvania Marcellus could produce 17.5 billion cubic feet per day by 2020, “which would make the Marcellus the single largest producing gas field in the United States, if real natural gas prices do not fall significantly,” they wrote. … Marcellus Shale Coalition president Kathryn Klaber called the study results “dramatic.” She pointed to sections of the report that link the highest Marcellus production areas in the state to lower than average unemployment and higher than average local tax revenues. “Pennsylvania now is producing more natural gas than it’s consuming,” she said. “These findings underscore the longevity, the sustainability of this resource in Pennsylvania for generations to come.” (Citizens Voice, 7/21/11)
• That 17.5 billion would rank Marcellus Shale as the No. 1 supplier of natural gas in the United States, enough to provide one-fourth of the nation’s natural gas needs. … The report said that, as a result of Marcellus Shale development, natural gas prices in Pennsylvania dropped 12.6 percent in 2010. That decrease resulted in Pennsylvania consumers saving nearly $633 million on utility bills, the report said. (Pittsburgh Post-Gazette, 7/21/11)
• The study found that companies paid about $1.85 billion in lease and royalty payments in 2010. That figure is expected to fall this year to about $1.5 billion, and then rise again in 2012. (Associated Press, 7/20/11)
• The study found that in just five years, the Marcellus has become so profitable that by 2015 Pennsylvania Marcellus drilling could be producing more than 12 billion cubic feet of gas per day, second only to Texas in natural gas production, and transforming Pennsylvania into a major exporter of natural gas. Klaber said the industry is producing more gas with fewer wells and believes it is a direct function of longer laterals giving drillers the ability to reach higher yields. “With those higher yields come higher royalties paid to landowners,” she said. The study forecasts that by 2020 there will be nearly 2,500 wells with an output per day of 17.5 billion cubic feet. If natural gas prices do not fall significantly, the Marcellus will be the single largest producing gas field in the U.S.(Washington Observer-Reporter, 7/21/11)

NOTE: Click HERE to view the study, and HERE for a study fact sheet.

Posted at: MarcellusCoalition.org

Canonsburg, PA – At its one-year mark, Marcellus Shale Coalition (MSC) president and executive director Kathryn Z. Klaber provided the following update regarding the organization’s truly unique and momentous partnership with former Pennsylvania governor Tom Ridge and his team of subject matter experts and professionals:

“Gov. Ridge has provided valuable insight and leadership over the last year for our young organization. We are grateful for the strategic counsel and positive contributions that he and his team have offered to the MSC and our membership.

“An effective advocate for the responsible development of American natural gas, Gov. Ridge has helped bring national attention to the Marcellus Shale – the world’s second largest natural gas field.

“The governor, who played a leading role in developing our industry’s Guiding Principles, is always quick to remind us that ‘We do not inherit the Earth from our Ancestors, we borrow it from our Children.’ He’s absolutely right, and his thoughtful counsel – working with our more than 200 member companies – has helped ensure that our industry appreciates and embraces the deep, rich history of Penn’s Woods.

“Responsibly developing clean-burning American natural gas from the Marcellus Shale represents a historic opportunity to help put the Commonwealth and our nation on a path toward a cleaner, prosperous and more secure energy future. Gov. Ridge understands this, and has been instrumental in conveying this potential to the public. On behalf of our entire organization, we thank Gov. Ridge for his dogged commitment to the Commonwealth, our environment, our economy and our homeland.”

HARRISBURG — Lt. Governor Jim Cawley on July 22 released the final report of the Marcellus Shale Advisory Commission, which a state Department of Environmental Protection statement says takes the first step toward developing a comprehensive and strategic plan for responsible natural gas drilling in Pennsylvania.

Governor Corbett formed the 30-member commission in March, giving them 120 days to develop recommendations on all aspects of natural gas drilling. The commission held 21 public meetings, heard 60 expert presentations and reviewed more than 650 emails and letters from the public.

To see the full 137-page report, visit:http://www.portal.state.pa.us/portal/server.pt/community/marcellus_shale_advisory_commission/20074.

Report Summary

Stronger Regulations for Drilling.

Increase bonding amounts from $2,500 to $10,000 and more for deeper wells. up to $250,000 for blanket bonds.

Triple well setback distance from streams, ponds, and other bodies of water from 100 to 300 feet.

Posted at: Pike County Courier

Canonsburg, PA – Today, the U.S. Environmental Protection Agency (EPA) released a series of proposed air emission regulations surrounding the development of American natural gas and oil. The proposed regulations are a result of a “consent decree”, or settlement, stemming from a federal lawsuit brought forth by two groups – based in New Mexico and Colorado, respectively – opposed to the responsible development of American natural gas. Kathryn Z. Klaber, president and executive director of the Marcellus Shale Coalition (MSC) issued this statement in response:

“While we understand that EPA is required by law to periodically evaluate current standards, this sweeping set of potentially unworkable regulations represents an overreach that could, ironically, undercut the production of American natural gas, an abundant energy resource that is critical to strengthening our nation’s air quality.

“As this process moves forward, we look forward to providing EPA with fact-based information regarding our best practices and industry-leading operations, which are ensuring that the region’s air quality is not impacted. In fact, Pennsylvania Department of Environmental Protection studies have determined that Marcellus activities do not present any ‘air-related health issues.’

“Our state regulators are keeping an eye on the ball. However, it’s not clear if EPA is as well.”

BACKGROUND

PA DEP, 11/1/10: Southwest Pa. Marcellus Shale Short-Term Air Sampling Report

• Short-term sampling did detect concentrations of certain natural gas constituents including methane, ethane and propane, and associated compounds such as benzene, in the air near Marcellus Shale drilling operations.
• Results of the limited ambient air sampling initiative conducted in the southwest region did not identify concentrations of any compound that would likely trigger air-related health issues associated with Marcellus Shale drilling activities.

PA DEP, 1/12/11: Northeastern Pa. Marcellus Shale Short-Term Ambient Air Sampling Report

• Results of the limited ambient air sampling initiative in the northeast region did not identify concentrations of any compound that would likely trigger air-related health issues associated with Marcellus Shale drilling activities.

PA DEP, 5/6/11: Northcentral Pa. Marcellus Shale Short-Term Ambient Air Sampling Report

• Results of the limited ambient air sampling initiative in the northeast region did not identify concentrations of any compound that would likely trigger air-related health issues associated with Marcellus Shale drilling activities.

FLASHBACK: “EIA reports a record-setting 5.8-percent decline in U.S. greenhouse gas emissions in 2009”

• “There was also a decline in the carbon dioxide intensity of U.S. energy supply (CO2 per unit of energy) in 2009, caused primarily by a drop in the price of natural gas relative,” as “more natural gas consumed for the generation of electricity.” (EIA release, 3/31/11)

Posted at: MarcellusCoalition.org

Just a few weeks after the moratorium on new generation horizontal fracking for natural gas ended in New York State, the opposition held its second protest at Governor Cuomo’s office since. In addition, they have been calling the Governor every Monday and are holding another action next Wednesday. Fifty at the first protest (following hundreds two days earlier at Foley Square) at Cuomo’s since the moratorium ended, eighty people at the second, the movement in New York City has not shown to have accepted defeat.

The plan of the Governor and the DEC (Department of Environmental Conservation) is to ban fracking in public parks and forests, and in the New York City and Syracuse watersheds. The resistance in New York City did not in any way shrink; in fact it swelled, treating this deal not as a compromise but as an unequal and potentially insufficient (as regarding major watersheds) deal.

Mayor Bloomberg, who came out in support of the plan, also supports infrastructure that will bring Marcellus Shale gas to New York City. In November he sent a letter to the DRBC (Delaware River Basin Commission) in opposition to fracking in the New York City Watershed specifically, based on a report that he funded known as the Hazen and Sawyer Report.

The natural gas industry tends to defend fracking as a practice over sixty years old (and some companies deny that any contamination of water due to fracking has ever occurred, while Aubrey Mcclendon on 60 Minutes admitted to past accidents). However, the opposition is over new generation-fracking, specifically drilling for gas in shale rock, and using a new mixture of chemicals.

According to David Braun of United for Action, vertical fracking (new generation) is currently happening -since former Governor Paterson issued an executive order last spring- but horizontal fracking, which uses more water and more chemicals, isn’t expected to be able to happen in New York until this following spring. “They’re releasing the final version of the SGEIS,” (supplemental generic environmental impact statement), said Braun, which will serve as a “regulatory structure.” Following the release of this document, says Braun, there will be a 60-day public comment period.

Environmentalists stress that fracking breaks up methane from shale into above aquifers; the “frack fluid” could spill into waterways, and that the waste water can’t be disposed of safely in New York. The industry stresses that it will create thousands of domestic jobs and burns cleaner than other fossil fuels. Green jobs, efficiency and renewable energy often aren’t mentioned in the debate, but when they are, are told from very different points of view. New York State recently passed an On-Bill Financing Law to create thousands of green jobs, but relies on awareness of property owners.
Posted at: Exaimner.com

The dramatic increase in natural gas production from unconventional formations such as Pennsylvania’s Marcellus Shale, has driven down natural gas prices while crude oil prices have soared.

Cheaper natural gas could fuel policy shift

By Andrew Maykuth
Inquirer Staff Writer
Since the federal government deregulated natural gas prices in the 1980s, the prices of crude oil and natural gas have moved more or less in tandem.
But in the last three years, the prices have become unhinged. One reason is the dramatic increase in natural gas production from unconventional formations such as Pennsylvania’s Marcellus Shale, which has driven down natural gas prices while crude oil prices have soared.

When the two fossil fuels are compared on the basis of energy equivalency, natural gas is a bargain compared with oil. A dollar spent on natural gas buys more than three times the energy that a dollar spent on crude oil buys.
The U.S. Energy Information Administration believes the disparity could last for decades.

“We think we will have relatively reasonable natural gas prices over the long term,” said Philip Budzik, an analyst with the EIA. “That looks good to me because I use natural gas at home and I’m happy I don’t have to pay oil prices.”
The natural gas discount has more implications than a bonus for homeowners considering a switch from heating oil.

The price disparity is fueling a debate over whether the government should encourage electricity generators to accelerate the switch from coal to natural gas. And T. Boone Pickens, the Texas oilman, is lobbying Congress to subsidize converting vehicles to natural gas fuel.

Some believe that new demand for natural gas will invariably drive up prices.
“I suspect volatility will continue, and that the oil-vs.-natural gas price relationship will eventually move back to normal,” said Donald B. Marron, director of the Urban-Brookings Tax Policy Center in Washington.

A few skeptics doubt the shale-gas supply is as robust as advertised – whether it could be an Enron-like Ponzi scheme, as a New York Times article implied recently.

But shale-gas production continues to go up, defying the skeptics.
Shale gas will account for 25 percent of the nation’s natural gas supply by the end of this year, up from 2 percent a decade ago, according to the EIA. And a Pennsylvania State University study released this week reported that Marcellus production, which is still in its infancy, is outpacing last year’s estimates by 30 percent.

“The idea that shale gas is a flash in the pan is simply incorrect,” Kenneth Medlock III, a Rice University researcher, said this week after the release of a Rice study that called shale gas “perhaps the most intriguing development in global energy markets in recent memory.”

There is more to the pricing dynamic than shale gas.
Two decades ago, when oil and gas traded more synchronously, electricity producers were able to arbitrage the price difference by switching to the cheaper fuel. Fuel switching kept the prices relatively close.

But oil no longer is used to generate electricity – mostly it’s a transportation fuel. If natural gas is used in vehicles, it could drive up its price.
Natural gas prices are also based upon mostly a domestic market, while crude oil is governed by worldwide demand, including emerging economies.
Crude oil markets are influenced by traders who regard the commodity almost like a currency, said Ananthan Thangavel, managing director of Lakshmi Capital Management in Beverly Hills and author of a commodity newsletter.
“Natural gas, when you look at trading activity, is much more based on supply-and-demand characteristics than crude oil,” he said.

Not everyone is enamored of proposals to increase demand for natural gas by encouraging its use as a motor fuel.

George Biltz, a vice president of Dow Chemical Co., told the U.S. Senate Energy and Natural Resources Committee on Tuesday the abundance of natural gas could be a “game changer” for American petrochemical manufacturers that use natural gas as a raw material. But only if the price stays low.
He encouraged Congress to “exercise extreme caution” about jumping on the Pickens bandwagon. Using natural gas to make chemicals creates more economic value.

“U.S. manufacturers provide the highest value-add of any sector,” he said. “Using natural gas to make petrochemicals results in eight times the value over simply combusting it.”

From the Philadelphia Inquirer
July 22, 2011

Gushers highlight gas potential of Pa.’s Marcellus Shale; drillers boost production estimates

ALLENTOWN, Pa. (AP) — Two unexpected gushers in northeastern Pennsylvania are helping to illustrate the enormous potential of the Marcellus Shale natural gas field.

Each of the Cabot Oil & Gas Corp. wells in Susquehanna County is capable of producing 30 million cubic feet per day — believed to be a record for the Marcellus and enough gas to supply nearly 1,000 homes for a year. The landowners attached to the wells, who leased the well access, numbering fewer than 25, are splitting hundreds of thousands of dollars in monthly royalties.

“There was definitely excitement among the team that planned out these wells and executed their completion,” said Cabot spokesman George Stark.

Drilling companies knew the Marcellus held a lot of gas. They just had to figure out a way to get it out, and they say they’re getting better at it all the time.

The result is that the Marcellus, a rock formation beneath Pennsylvania, New York, West Virginia and Ohio, has turned out to be an even more prolific source of gas than anyone anticipated. Energy firms are boosting their production targets, not only because new wells are coming on line but also because they’re managing to coax more gas from each well.

Operators say they have a greater understanding of the complicated geology of the Marcellus, allowing them to land their drill bits in the sweet spot of the formation. They’re drilling horizontally at greater distances, giving them access to more of the gas locked within the rock. And they’re tweaking how they break apart the shale.

“It’s like batting practice,” said Matt Pitzarella, spokesman for Range Resources Corp. “The more you swing the bat, the better you get.”

Fort Worth, Texas-based Range has boosted its estimate of the amount of natural gas it will ultimately be able to harvest from its Marcellus Shale wells, telling investors this month that it plans to triple production to 600 million cubic feet per day by the end of 2012.

Another major player, Chesapeake Energy Corp., has likewise reported a dramatic increase in expected well production. Early on, the Oklahoma City-based driller predicted that each well would yield 3.5 billion cubic feet of gas over its life span. That amount has since doubled, to more than 7 billion cubic feet, and continues to go up.

“Growing confidence in reserve quality is a major reason why many of the largest, most-successful, domestic and international energy companies are heavily investing in the Marcellus and other American shale plays,” said Jeff Fisher, Chesapeake’s senior vice president of production.

Indeed, major oil companies like Chevron Corp., Exxon Mobil Corp. and Royal Dutch Shell PLC have placed multibillion-dollar bets on the Marcellus, a 400-million-year-old rock formation that geologists say holds the nation’s largest reservoir of natural gas and perhaps the second-largest in the world.

To unlock the shale’s riches, drillers combine horizontal drilling with hydraulic fracturing, a technique known as fracking that pumps millions of gallons of water, along with sand and chemicals, into the well to creature fissures in the rock and allow natural gas to flow up. Fracking has raised environmental concerns, and the U.S. Environmental Protection Agency is studying its impact on groundwater. The industry insists the process is environmentally safe.

The technology has unleashed a drilling frenzy in Pennsylvania — where more than 3,300 Marcellus wells have been sunk the past few years — and accounts for a twelvefold increase in U.S. shale gas production since 2000. Gas harvested from the Marcellus and other shale fields around the country — including the Barnett Shale in Texas and the Haynesville Shale in Louisiana — now represents a quarter of total U.S. natural gas production.

The new Cabot wells help illustrate why boosters believe the gas field could help steer U.S. energy policy for decades to come. They were also a nice bit of good news for Cabot, the Houston-based driller that endured two years of bad publicity after state regulators accused it of polluting water supplies in Dimock Township, Susquehanna County.

The wells — also located in Dimock — are “producing like gushers,” exulted Stark, the Cabot spokesman, helping to push the company’s daily production above 400 million cubic feet per day.

Like other drillers, Cabot has steadily increased the horizontal length of its wells, from an average of 2,100 feet in 2008 to 3,600 feet last year. It has seen a corresponding increase in capacity.

Capacity, though, does not always translate to production.

Cabot’s wells, and Marcellus wells in general, are not running at full tilt, mainly because the infrastructure required to take the gas from wellhead to market is not yet fully in place. An oversupply of natural gas and the availability of crews to fracture the wells are other limiting factors.

“We certainly have had to manage our pace of drilling with the installation of pipeline infrastructure and demand in the market,” Chesapeake’s Fisher said in a statement. “While some delays in production startups are common in the early phase of these large-scale plays, the industry is working hard to build the infrastructure that will enable Marcellus reserves to get to market for decades to come.”

The Marcellus isn’t the only shale formation in Pennsylvania that energy companies have their eye on. Drillers are just beginning to explore the gas-bearing Utica and Upper Devonian formations. The Utica is deeper that the Marcellus, and the Upper Devonian is shallower.

“It’s triple the resource potential under the same plot of land,” said Kevin Cabla, an energy analyst at Raymond James & Associates.

Posted at: Yahoo.com

Reports today note the Department of Environmental Protection is pushing for tougher regulations on gas drilling companies and drilling rig sites.  Environmental concerns with water and air quality are driving the proposed regulations.  In the meantime talks continue in Harrisburg regarding some type of taxation on the gas drilling rig companies.  Safety issues regarding truck accidents in Pennsylvania due to increased truck traffic volume and highway damage also continue to be discussed.

Canonsburg, PA – Pennsylvania leads the nation in recycling water used to produce clean-burning natural gas from shale formations – a process that has been refined, enhanced, and expanded widely over the past year. At the same time, Pennsylvania has regulations and laws in place to ensure water is managed effectively and in a way that protects the environment. These policies are clear, straightforward and the toughest in the nation. Arecent review of Pennsylvania’s oil and natural gas regulatory program by the non-profit, multi-stakeholder group STRONGER determined that the state’s oversight of Marcellus development is “well-managed.”

While the New York Times raised some valid points in Sunday’s story — particularly on the issue of increased radium testing, something the Marcellus Shale Coalition supports — the paper’s second installment on produced water recycling is woefully unbalanced and inaccurate. Meanwhile, and not to be outdone, the Associated Press, in a story also filed this week, lodges a host of misleading, out of context claims about Marcellus wastewater management.

AP Assertion: “Pennsylvania’s natural gas drillers are still flushing vast quantities of contaminated wastewater into rivers that supply drinking water…”

• Fmr. PA DEP Sec. John Hanger: “Here’s the reality: Every drop of tap water that was publicly treated is required to meet the safe drinking water standard.” (Allentown Morning Call, 1/5/11)
• “The new drilling wastewater rule…singles out drilling wastewater for the strongest requirements.” (John Hanger personal blog, 1/27/11)
• By design, the AP fails to mention this critical fact in its lead, but mentions these industry-leading regulations later in the story.

NYT Claim: “In Pennsylvania, for example, natural-gas companies recycled less than half of the wastewater they produced during the 18 months that ended in December, according to state records.”

• But later in the piece, the reporter concedes “the amount reported recycled in the past six months is roughly 65 percent of the total produced, up from roughly 20 percent during the 12 months before that.” As of October 2009, only one Marcellus operator was recycling water across their operations while others were still in the initial phases – so why does the Times focus on recycling data going back 18 months?
• “According to production reports due Feb. 15 and posted last week…Marcellus Shale operators directly reused 6 million barrels of the 10.6 million barrels of waste fluids produced from about 1,500 different wells between July and December. At least an additional 978,000 barrels were taken to facilities that treat the water and return it to operators for reuse.” (Scranton Times-Tribune, 2/27/11)
• “The amount reused or recycled is about seven times larger than the 1 million barrels of wastewater Marcellus Shale drillers said they directly reused during the 12 months between July 2009 and June, the first time the drillers’ waste reports were made publicly available on the website.” (Scranton Times-Tribune, 2/27/11)
• “The majority of companies are working toward reusing 100 percent of their flowback water for several reasons. Environmentally it makes sense, and economically it makes more sense,’ [Penn State hydrologist Dan] Yoxtheimer said.” (Pittsburgh Post-Gazette, 3/1/11)
• “Of the 10.6 million barrels of wastewater that gushed from the wells in the final six months of 2010, at least 65 percent was recycled, a dramatic increase from previous years, when little or no recycling took place.” (Associated Press, 3/1/11)

AP Assertion: “They are unable, however, to remove the salty dissolved solids and chlorides that the wastewater picks up as it travels through the shale beds. There have been concerns about the salt levels rising in some Pennsylvania rivers that supply drinking water.”

• “The water that’s coming out of the tap in Pennsylvania is meeting the safe water drinking standards when it comes to total dissolved solids,” said Hanger. “Every single drop that is coming out of the tap in Pennsylvania today meets the safe drinking water standard.” (KDKA, 1/4/11)
• “The new permitted limit for discharges of wastewater from gas drilling is 500 mg/L of total dissolved solids and 250 mg/L for chlorides. All new and expanding facilities that treat gas well wastewater must now meet these discharge limits.” (Hanger blog, 1/27/11)

NYT Claim: “More than 90 percent of well operators in Pennsylvania use this process, known as hydrofracking, to get wells to produce. It involves injecting water mixed with sand and chemicals at high pressures to break up rock formations and release the gas.”

• The fact is 100 percent of shale gas wells in the U.S. are hydraulically fractured to enhance the flow of gas. The 90 percent figure – just one of the many inaccuracies in the story – perhaps refer to the percentage of total oil and natural gas wells fractured in the U.S.
• In failing to provide proper context, the Times does not indicate the fact that more than99.5 percent of the fluids used in the fracturing process are water and sand. The small portion of additives used prevent bacteria and corrosion from forming in the well-bore, and reduce friction during fracturing operations.

NYT Claim: “Wells also create waste that is not captured by recycling, because operators typically recycle only for the first several months after a well begins producing gas.”

• All Marcellus shale natural gas sites in Pennsylvania are equipped with storage tanks that capture residual wastewater after the initial flow-back. Like all wastewater, this water is treated and disposed by reuse and recycling, deep underground injection wells or treatment and surface disposal.

NYT: Within hours, the Times was forced to make at least two factual changes to the story, including at least one direct quote:

• Original quote from Dr. Radisav Vidic, engineering professor, University of Pittsburgh: “The wastewater that comes up from the well will, without a doubt, increase to some degree in radium and other radionuclides with each new fracking.”
• Updated: “The wastewater that comes up from the well will likely increase to some degree in many contaminants such as salts and possibly radium and other radionuclides with each new fracking. But the data is very limited on this issue so not much is known.”
• Original statement regarding abandonment of natural gas wells in Pennsylvania: “Though the amount of wastewater decreases over time, the wells can continue to ooze for decades, long after many of them are abandoned.”
• Updated: “Though the amount of wastewater decreases over time, the wells can continue to ooze for decades after they have been hydrofracked. There are regulations, however, that govern how gas wells are plugged and abandoned.”
• Marcellus Sale natural gas wells do not “ooze” for any period of time. All liquids that flow to the surface as natural gas is produced are captured in DEP regulated tanks. When a well no longer produces, it’s plugged according to strict guidelines laid out by the Pennsylvania Oil and Gas Act, section 601.210 and 25 Pa. Code Sec. 78.91 et seq.

Copyright: Marcelluscoalition.org