Penn State Study Finds Smaller Marcellus Jobs Impact; 'Still Big Numbers'

- Penn State Study Finds Smaller Marcellus Jobs Impact; 'Still Big Numbers'

Tuesday, August 30, 2011
Pittsburgh Post-Gazette
by Bill Toland

Jobs related to natural gas drilling in Pennsylvania's Marcellus Shale field were about half what previous studies had estimated for 2009, but the industry still supported about 23,500 jobs that year, according to a new study issued by Penn State researchers.

"It's still big numbers," said Timothy W. Kelsey, professor of agricultural economics with Penn State's College of Agricultural Sciences, and one of the study's authors.

"It's just not as big as what the industry is talking about."

The study, issued Monday by the Marcellus Shale Education & Training Center, a partnership of the Pennsylvania College of Technology and the Penn State Extension, also said that about half of the land being leased by drillers was owned by people living in those counties in 2009 -- the rest was owned by people or firms based out of state or elsewhere in Pennsylvania, or owned by the state itself.

That means much of the leasing and royalty money derived from drilling goes out of the county in which the drilling takes place, according to the study.

It's an economics phenomenon known as "leakage" -- money that looks as if it is benefitting a particular area is actually going elsewhere. And it's not an economic phenomenon native to gas drilling: Coal interests, limestone and gravel deposits and other mineral-related economic activity is subject to the same kind of leakage.

The study, "Economic Impacts of Marcellus Shale in Pennsylvania: Employment and Income in 2009," bills itself as the first paper to look at not just the number of jobs and amount of revenue generated by drilling but also where that money is going and how quickly it's being spent.

The jobs figure, as with previous studies, accounts for actual jobs created -- front office jobs, drilling jobs, engineering jobs -- as well as "induced" and "indirect" jobs, which are those not created by the industry itself but by the money the industry spreads around to local suppliers, hotels and restaurants, for example.

The study suggested that the industry generated around $3.1 billion in economic activity -- $1.2 billion in income and $1.9 billion in "added value."

Also of note was that locals who benefit from the gas play do not spend their lease and royalty checks immediately, meaning the money is not a direct, immediate benefit to the local economy. By surveying landowners in Bradford and Tioga counties, the study's authors estimate that leaseholders save or invest about 55 percent of leasing proceeds and about 66 percent of royalty payments in the year they are received, instead of spending the money.

The study's attempt to get a more accurate read on who -- and which areas -- benefit from drilling activity was hampered, Mr. Kelsey said, by the absence of any state or county database for who owns mineral rights (and thus owns the royalty rights to gas and shale deposits).

While it was relatively easier to find out who owns the land being leased -- about 51 percent of drilling plots are owned by people in that county -- it's far less clear who owns the rights to the gas below the surface and where those people live. The researchers, in calculating the economic benefits of the shale play, assumed an identical local ownership share (51 percent) for the mineral rights as well as the surface rights.

"We know that's not accurate," Mr. Kelsey said. "But there isn't anybody who has that data."

In many cases, mineral rights were separated from surface rights decades ago. It's more likely, he said, that the mineral rights owner lives out of state than the actual landowners, which means that it's also more likely gas royalty payments are going out of state.

But suspecting that and finding data to prove it are two different things, he said.

The state and county assessment offices need to do a better job of tracking that information if they want to have a more accurate picture of where mineral rights royalties are going, he said.

The study also surveyed 2,000 randomly selected businesses in Bradford and Washington counties to "identify the impacts they are experiencing from Marcellus Shale development." The responses "indicated positive economic impacts are occurring broadly across the economy in the communities where drilling is very actively occurring."

About 23 percent of Washington County business respondents said that natural gas drilling had helped to improve sales, while only 2 percent of respondents said that the drilling had hurt sales.

The full paper is available at http://extension.psu.edu/naturalgas/publications.

The study was paid for by funding from state Department of Community and Economic Development and money from Penn State and the Pennsylvania College of Technology.

(c)2011 the Pittsburgh Post-Gazette. Distributed by MCT Information Services.


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W.Va. Official Signs Emergency Marcellus Rule

- W.Va. Official Signs Emergency Marcellus Rule

Tuesday, August 30, 2011
Knight Ridder/Tribune Business News
by Mannix Porterfield, The Register-Herald, Beckley, W.Va.

While legislators toil on something permanent and vastly more comprehensive, Secretary of State Natalie Tennant signed an emergency rule Monday regulating Marcellus shale natural gas.

Two specific meetings are planned during Sept. 12-14 interims by a select panel formed by the Joint Committee on Government and Finance, and a co-chairman says he expects to see the final amendments put to a vote.

Legislation bogged down in the final night of the regular session March 13, but acting Gov. Earl Ray Tomblin recently produced an emergency rule that Tennant said didn't reach her office until about a week ago.

"I am disappointed this matter took so long to resolve," the secretary said after signing the rule.

"This is a huge development opportunity that would diversify West Virginia's economy that has to be done promptly and responsibly."

If the Legislature fails to provide a permanent rule within 15 months, the emergency rules will expire under state law.

Tennant had 42 days to approve or deny the filing by the Department of Environmental Protection and said she signed it in the belief there should be no further delay for the industry. The DEP is scheduled to file a permanent rule Sept. 8, allowing a 30-day public comment period. All comments are to be posted on the secretary of state's Web site.

"I recognize there will be differing opinions about this rule, but I remind all those concerned that I can legally only approve the filing of the emergency rule or leave the process regulated in its current manner," she said.

Marcellus shale was put on the back burner this month in back-to-back special sessions, giving the Legislature an opportunity to smooth out legal obstacles in a controversial House of Delegates redistricting plan.

A co-chairman of the select panel, Sen. Doug Facemire, D-Braxton, expects at least 13 amendments to be debated when members convene Sept. 12 and again two days later during next month's interims session.

"I'm confident we can probably finish this up in our September interims and have it ready to go back to our respective bodies and see if we can sell it to them," Facemire said in a recent interview.

Facemire said the panel is focusing on three major goals in seeking a workable piece of legislation -- protecting the environment, safeguarding the rights of surface owners, and giving the fledgling industry room in which to operate.

(c)2011 The Register-Herald (Beckley, W.Va.). Distributed by MCT Information Services.

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The Spin on Changing Marcellus Gas Estimates

- The Spin on Changing Marcellus Gas Estimates

Friday, August 26, 2011
The Philadelphia Inquirer
by Andrew Maykuth

So how much natural gas is in the Marcellus Shale?

The U.S. Geologic Survey on Tuesday estimated the formation contains 84 trillion cubic feet (Tcf) of natural gas, up from a mere 2 Tcf in 2002. Headlines exploded across the Internet: "Federal report boosts Marcellus Shale estimate."

But on Wednesday another federal agency, the U.S. Energy Information Administration, which just a month ago estimated the shale contained 410 Tcf, announced it was revising its number downward in response to the USGS estimate. New headlines: "U.S. Slashes Marcellus Shale Gas Estimate 80%."

Up? Down?

For adversaries in the increasingly politicized and polarized world of shale gas, the USGS's new assessment cuts both ways.

Anti-drilling activists said the EIA's downward revision supported their view that the industry has hyped the new discoveries to generate political and investor excitement.

"I remain concerned about the processes which lead to the original estimates, and I have additional questions about how this change will impact the outlook for shale gas," U.S. Rep. Maurice Hinchey (D., N.Y.) said in a statement.

But the Marcellus Shale Coalition, an industry trade group, touted the USGS's upward revision as further proof of the abundance of shale gas.

The issue is important because of the growing controversy about shale gas, which the EIA says accounts for about a quarter of the nation's natural gas production. The nation consumes about 25 Tcf a year, mostly for heating and power production.

The Securities and Exchange Commission and the New York State Attorney General's Office are investigating industry estimates of gas reserves, which are more optimistic than the federal projections.

Indeed, during recent sessions with investment analysts, four big Marcellus operators -- Chesapeake Energy Corp., Range Resources Corp., Ultra Resources Inc., and Cabot Oil & Gas Corp. -- estimated their combined 2.9 million acres contain 76 Tcf, nearly as much as the USGS estimates for the entire formation.

The EIA says it is waiting to set its estimate once the USGS provides more information about its assessment to understand where the agencies diverge. "We will not be able to be more precise until that work is completed," said Jonathan Cogan, an administration spokesman.

Even at 84 Tcf, the Marcellus still contains a lot of gas, more than any of other shale-gas plays, according to the USGS.

Just three years ago, Pennsylvania State University professor Terry Engelder and a colleague, Gary Lash, estimated the Marcellus Shale could contain as much as 50 trillion cubic feet of recoverable gas, a number so astonishing that it triggered a land rush.

Engelder later increased his estimate to 363 Tcf and then nearly 450 Tcf, based upon actual production data.

The Marcellus Shale Coalition argues that the USGS numbers are low because its methodology discounts undeveloped parts of the shale.

"Hence, during early development of a gas shale play when there is very little production data anyway, the USGS numbers will be commensurately low as is the case now," said Travis Windle, a coalition spokesman.

USGS says there are many reasons that assessments might disagree -- the use of different data, or proprietary information. Doug Duncan, associate program coordinator of the USGS's energy resources program, said the agency only makes its assessment after observing reliable production data over at least a 30-month period.

"We don't have a preconceived idea about what kind of answer we want to get," he said. "We try to get it right."

Without mentioning other estimates, the USGS asserted its primacy on the issue in its announcement Tuesday.

"USGS is the only provider of publicly available estimates of undiscovered technically recoverable oil and gas resources of onshore lands and offshore state waters," it said.

Copyright (c) 2011 The Philadelphia Inquirer

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EDS Welcomes New Area Manager for Marcellus Ops

- EDS Welcomes New Area Manager for Marcellus Ops

Wednesday, August 24, 2011
Environmental Drilling Solutions LLC

Environmental Drilling Solutions, (EDS), a leader in solids control, cuttings processing and zero discharge services, has named Richard Guillory Area Manager for Marcellus Shale operations.

Guillory will manage day-to-day field operations locally and be based out of the company's local office in Bradford County, Pa.

Guillory most recently served as Environmental Solutions Projects Manager with M-I SWACO where he developed new systems to manage growing numbers of projects in multiple locations.

"Richard has proven himself as an effective project manager with the ability to create more efficient operations," said Jake Garber, EDS Regional Manager. "His assignment to the Marcellus Shale region is an essential step toward meeting our growing demand in the area."

Guillory received a master of business administration in management and a bachelor's degree in mechanical engineering, both from the University of Louisiana at Lafayette.

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USGS Boosts Marcellus Estimates

- USGS Boosts Marcellus Estimates

Tuesday, August 23, 2011
U.S. Geological Survey

The Marcellus Shale contains about 84 trillion cubic feet of undiscovered, technically recoverable natural gas and 3.4 billion barrels of undiscovered, technically recoverable natural gas liquids according to a new assessment by the U. S. Geological Survey (USGS).

These gas estimates are significantly more than the last USGS assessment of the Marcellus Shale in the Appalachian Basin in 2002, which estimated a mean of about 2 trillion cubic feet of gas (TCF) and 0.01 billion barrels of natural gas liquids.

The increase in undiscovered, technically recoverable resource is due to new geologic information and engineering data, as technological developments in producing unconventional resources have been significant in the last decade. This Marcellus Shale estimate is of unconventional (or continuous-type) gas resources.

Since the 1930's, almost every well drilled through the Marcellus found noticeable quantities of natural gas. However, in late 2004, the Marcellus was recognized as a potential reservoir rock, instead of just a regional source rock, meaning that the gas could be produced from it instead of just being a source for the gas. Technological improvements resulted in commercially viable gas production and the rapid development of a major, new continuous natural gas and natural gas liquids play in the Appalachian Basin, the oldest producing petroleum province in the United States.

This USGS assessment is an estimate of continuous gas and natural gas liquid accumulations in the Middle Devonian Marcellus Shale of the Appalachian Basin. The estimate of undiscovered natural gas ranges from 43.0 to 144.1 TCF (95 percent to 5 percent probability, respectively), and the estimate of natural gas liquids ranges from 1.6 to 6.2 billion barrels (95 percent to 5 percent probability, respectively). There are no conventional petroleum resources assessed in the Marcellus Shale of the Appalachian Basin.

These new estimates are for technically recoverable oil and gas resources, which are those quantities of oil and gas producible using currently available technology and industry practices, regardless of economic or accessibility considerations. As such, these estimates include resources beneath both onshore and offshore areas (such as Lake Erie) and beneath areas where accessibility may be limited by policy and regulations imposed by land managers and regulatory agencies.

The Marcellus Shale assessment covered areas in Kentucky, Maryland, New York, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia.

USGS is the only provider of publicly available estimates of undiscovered technically recoverable oil and gas resources of onshore lands and offshore state waters. The USGS worked with the Pennsylvania Geological Survey, the West Virginia Geological and Economic Survey, the Ohio Geological Survey, and representatives from the oil and gas industry and academia to develop an improved geologic understanding of the Marcellus Shale. The USGS Marcellus Shale assessment was undertaken as part of a nationwide project assessing domestic petroleum basins using standardized methodology and protocol.

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Noble Energy Pays $3.4 Billion For 50% Stake in Consol's Marcellus Assets

- Noble Energy Pays $3.4 Billion For 50% Stake in Consol's Marcellus Assets



Aug 18, 2011

Noble Energy (NYSE:NBL) agreed to pay $3.4 billion to Consol Energy (NYSE:CNX) for a 50% interest in Consol's Marcellus Shale assets.

The two companies will create a joint venture to develop Consol's 663,350 acres in the region.

In early trading, Consol rose $1.80, or 4.24%, to $42.22. In spite of the deal between Consol and Noble, most companies with property in the Marcellus region are declining along with the broader market.

Noble Energy (NYSE:NBL) has a potential upside of 33.4% based on a current price of $83.39 and an average consensus analyst price target of $111.25.

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Noble, CONSOL Team Up in $3.4B Marcellus JV

- Noble, CONSOL Team Up in $3.4B Marcellus JV

Thursday, August 18, 2011
Noble Energy Inc.

Noble Energy has signed definitive agreements which create a joint venture partnership with CONSOL for the development of their Marcellus Shale properties in southwest Pennsylvania and northwest West Virginia.

Under the arrangement, Noble Energy will purchase a 50 percent interest in 663,350 net undeveloped acres for $1.07 billion, payable in three equal annual installments beginning at closing. In addition, the Company will fund $2.13 billion of CONSOL's future drilling and completion costs. This funding obligation is expected to extend over an eight-year period and is limited to one third of CONSOL's drilling and completion costs with an annual cap of $400 million and a suspension of disproportionate funding at natural gas prices below $4 per million British thermal unit (MMBtu). The acreage value of $3.2 billion equates to a discounted present value of $7,100 per net acre. Noble Energy will also acquire a 50 percent interest in 70 million cubic feet equivalent per day (MMcfe/d) of existing Marcellus production and infrastructure for $219 million. The payments are anticipated to be funded from cash on hand and the Company's currently undrawn revolving credit facility. The effective date of the transaction is July 1, 2011. Closing is expected to occur by the end of September 2011, subject to customary adjustments and conditions.

Key operational aspects of the joint venture include:

• Acreage estimated to contain 7.4 trillion cubic feet equivalent (Tcfe) risked resources net to Noble Energy's interest, of which 400 billion cubic feet equivalent (Bcfe) were proven reserves at year-end 2010
• More than a decade of development activity anticipated, which includes the drilling of approximately 4,400 gross well locations
• Net production to Noble Energy's interest has the potential to reach 600 MMcfe/d in 2015 and is expected to continue growing into the next decade
• Leasehold position is over 85 percent held by production, almost entirely operated with close to 100 percent working and 88 percent net revenue interests
• A pre-defined long-term development plan forecasts drilling activity to increase from 4 rigs to 16 rigs in 2015
• Operations to be shared between the partners with Noble Energy's initial focus on the wet gas portion of the acreage
• Sharing of midstream infrastructure and access to water handling capabilities

Charles D. Davidson, Noble Energy's Chairman and CEO, commented, "Noble Energy is excited about the opportunity to establish a position in the Marcellus Shale, which is considered to be one of the most economically attractive developments in North America due to its enormous resource potential, its proximity and access to premium markets, and its competitive cost structure. This transaction will complement and further strengthen our U.S. portfolio by adding a high-quality asset with a substantial growth profile. The Marcellus, combined with our ongoing developments in the DJ basin and deepwater Gulf of Mexico, will provide important balance to our rapidly expanding international programs. Spreading the transaction costs over an extended time horizon creates better partner alignment on investment decisions and maintains our strong balance sheet."

David L. Stover, President and COO, added, "Noble Energy is fortunate to be partnering with CONSOL, a well-known and respected Appalachian operator. The joint oversight and operations are designed to create value through the sharing of best practices and expertise. Both companies are committed to operating in a safe, environmentally responsible manner while maintaining a good working relationship with the local communities."

J. Brett Harvey, CONSOL's Chairman and CEO, commented, "We are extremely pleased to have Noble Energy as our partner in the Marcellus. Noble Energy is a world-class operator that shares CONSOL's dedication to safety and compliance and they bring a strong technical and operational expertise to this partnership. This agreement will benefit the regional economy, the communities in which we operate, our employees, and our respective companies. Together we will be able to accelerate the development of this significant resource safely, efficiently and economically."

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Marcellus Shale Driller Fighting South Fayette Ordinance

- Marcellus Shale Driller Fighting South Fayette Ordinance

Wednesday, August 17, 2011
Pittsburgh Post-Gazette
by Erich Schwartzel

Range Resources made a significant move Tuesday in what is likely the first step in a legal challenge to the wave of small-town regulations on natural gas drilling in the Marcellus Shale.

The Fort Worth, Texas-based company filed an appeal to the zoning hearing board of South Fayette that calls its drilling ordinance an "illegal" infraction against the company's business pursuits.

Range Resources says the township's zoning ordinance enforces buffer zones around schools, hospitals and certain commercial areas that force a de facto moratorium on drilling throughout the entire township.

That violates the portion of Pennsylvania's Municipalities Planning Code that requires all municipalities to "allow for reasonable development of minerals" as part of any zoning ordinance, the company said.

The matter is before the zoning hearing board because the drilling regulations involved the township's zoning ordinance.

A date for the zoning hearing has not been set, but Range Resources spokesman Matt Pitzarella said his company will take the issue to the Court of Common Pleas and up the legal ladder if it is rejected by the South Fayette authorities.

If Range Resources wins a ruling in a higher court, it could create a precedent and threaten to overturn scores of small-town ordinances across Pennsylvania.

Throughout Western Pennsylvania, townships have passed ordinances that further regulate drilling beyond state law or take steps to mitigate side effects like road damage or noise control.

Range Resources owns approximately 4,000 acres in South Fayette but has not drilled any Marcellus wells. The ordinance was approved last November after more than a year of public hearings and input from energy companies, including Range Resources.

South Fayette solicitor Jonathan Kamin said the ordinance still allows drilling in "many zoning districts" throughout the township -- they just might not be in the convenient areas that Range Resources would prefer.

"Everyone has recognized that this is a use that cannot be banned," said Mr. Kamin.

Local communities like South Fayette have drafted conditional use ordinances to deal with natural gas drilling, which require every well site to undergo an approval process prior to drilling.

Energy companies say the site-specific requirements make as much sense as requiring a new driver's license in every town, and that the process slows predictability in an industry that plans years in advance.

"It's death by a thousand paper cuts," said Mr. Pitzarella.

The South Fayette ordinance enforces regulations that are already in place as part of the Pennsylvania Oil and Gas Act, and Range Resources says that regulatory double-dipping is illegal.

"[South Fayette] unlawfully seeks to achieve the same purposes and to regulate the same features of the development of oil and natural gas which are regulated exclusively and comprehensively by the Commonwealth," the appeal states.

Range Resources said the conditions of the ordinance are a "de facto taking" of land that make it impossible to drill. The company says this violates the Fifth Amendment of the U.S. Constitution, which says private property cannot be taken for public use "without just compensation."

With the ordinance in place, Range Resources calculated the potential loss to the company and its leaseholders in South Fayette to be nearly $200 million.

Range Resources has already challenged local ordinances that it interprets as going too far. During deliberations for a conditional use ordinance in Mount Pleasant last April, the company sent a letter to residents threatening to move into "more cooperative communities" should the ordinance pass.

That ordinance did pass in June, and Range Resources has kept its promise to not drill any new wells in Mount Pleasant as long as it stays in place.

The appeal filed Tuesday in South Fayette is the latest in a series of recent challenges to local drilling regulations. Earlier this month, Pittsburgh Mayor Luke Ravenstahl refused to sign a city council measure that would have banned drilling within Pittsburgh city limits, and a similar ban in Morgantown, W.Va., was overturned by a judge last Friday.

Copyright (c) 2011, Pittsburgh Post-Gazette

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GTI Boosts Marcellus Presence with Pittsburgh Office

- GTI Boosts Marcellus Presence with Pittsburgh Office

Tuesday, August 09, 2011
Gas Technology Institute

Gas Technology Institute (GTI) on Wednesday announced the opening of the organization's newest office in Pittsburgh, PA. Headquartered in the Chicago suburb of Des Plaines, IL, GTI has field offices across the country, and the new office in Pittsburgh represents GTI's local commitment to the natural gas industry in the Marcellus Shale fairway and the surrounding region.

GTI's continued growth in this region will be achieved by generating effective technology development and services based on customer needs, and through partnering to develop technology, create collaborative opportunities and achieve strategic business results. The efforts led by the Pittsburgh Office will advance the development of innovative solutions to the region's most pressing challenges.

"We're excited about establishing a stronger presence in this important region," says David Carroll, President and CEO of GTI. "We are committed to the future of natural gas and see tremendous opportunity for growth in the shale market where GTI has performed analysis since the 1980s. Our new office location will help us provide the continued high-level customer service and technology developments that will help meet today's complex energy and environmental challenges."

The Director of the Pittsburgh office is Patrick Findle, who has worked for GTI earlier in his career and has returned to help establish a strategic beachhead for business growth. He brings many years of technology business development in the natural gas industry that will help GTI build industry relationships and facilitate new business.

Notes Findle, "Along with growing global demand for natural gas, there is a correlating demand for new technologies to enable and ensure its responsible production, distribution, and use. The opening of the Pittsburgh Office is evidence of GTI's commitment to become a valued resource and partner to the natural gas industry as it transforms this region."

The GTI PA office can be found at 800 Old Pond Road, Suite 706 B, Bridgeville, PA 15017; 412-319-7249.

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National Fuel Deems Marcellus JV Unlikely

- National Fuel Deems Marcellus JV Unlikely

Friday, August 05, 2011
National Fuel Gas Co.

Today at the quarterly earnings teleconference of National Fuel Gas Co., Chief Executive Officer David F. Smith will make the following statement about the possibility of a joint venture (JV) involving the Marcellus Shale assets of its subsidiary Seneca Resources Corporation:

"That brings me to an update on a potential joint venture. Our future growth prospects – and the fact that we're not capital constrained or up against a schedule of lease expirations – sets a pretty high bar. As a result, while we have been relatively close with two different parties over the last two or three months, we ultimately chose not to consummate either of those particular transactions. While they were good and serious offers – we determined that they just weren't good enough. And while discussions do continue with a few potential partners, as we've said in the past, unless a Joint Venture enhances shareholder value, unless it produces significant advantages above and beyond our existing robust plans for growth, which as I said is a pretty high bar, we will simply move forward on our own. At this point that's the likely outcome.

"With or without a JV, our prospects are compelling. We have the resources – financial and human – and the assets to deliver exceptional value to our shareholders for years to come."

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EDITORIAL: W.Va. Should Welcome Marcellus Shale Action

- EDITORIAL: W.Va. Should Welcome Marcellus Shale Action

Thursday, July 28, 2011
Knight Ridder/Tribune Business News

The Wall Street Journal wrote tellingly Tuesday of the differences between two other Marcellus shale states, Pennsylvania and New York, which it called "a case study in one state embracing economic opportunity, while the other has let environmental politics trump development."

In short, Pennsylvania "set up a regulatory framework to encourage and monitor natural gas drilling. In New York state, green activists "raised fears about the drilling technique known as hydraulic fracturing and convinced politicians to enact what is effectively a moratorium."

West Virginians should be aware of the economic results of such decisions.

In Pennsylvania, more than 2,000 wells have been drilled since 2008, and gas production rose from

5 billion cubic feet in 2007 to 81 bcf in 2009.

According to a study by University of Wyoming professor Timothy Considine for the Manhattan Institute, the economic benefits of a typical Marcellus well include:

• 62 jobs
• $2.8 million in direct economic benefits from gas company purchases, $1.2 million in indirect benefits from companies in the supply chain, $1.5 million from workers spending wages or landowners spending royalty payments, and
• $2 million in federal, state and local taxes.

Pennsylvania's Department of Labor and Industry reports that Marcellus drilling:

• Has created 72,000 jobs,
• That the average wage is about $73,000, and
• That 857 oil and gas companies paid $238 million in taxes in the first quarter of this year -- $20 million more than the total for 2010.

"And all of this with no evidence of significant environmental harm," the Journal said.

"Then there's New York."

Indeed. People in Broome County, N.Y., can look across their border with Pennsylvania and see the benefits they are not getting because of economically suicidal state policy.

West Virginians love their lush green state, and their concerns about its environment are understandable.

But given Pennsylvania's experience -- no evidence of significant environmental harm -- state residents should weigh the alarmists' warnings carefully.

West Virginians do not love being 49th in per capita income, and they have a chance to change that.

Copyright (c) 2011, Charleston Daily Mail, W.Va.

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Gastar Tests Marcellus Wells in West Virginia

- Gastar Tests Marcellus Wells in West Virginia

Thursday, July 28, 2011
Gastar Exploration Ltd.

Gastar provided an update on its recent Marcellus operational results.

Gastar has completed the drilling and stimulation of its first two horizontal Marcellus wells in Marshall County, West Virginia, the Wengerd 1H and 7H, with lateral lengths of 4,700 and 5,700 feet, respectively. These two wells have been tested at a combined stabilized rate of approximately 15.5 MMCFD of 1285 Btu natural gas and 1,100 barrels of condensate per day ("BCPD") while each well was flowing at approximately 1200 psi of flowing casing pressure and each well was producing over 150 barrels of frac water per hour. The Wengerd 1H and 7H are expected to be placed on sales in mid-August following delivery and installation of separators capable of handling the condensate volumes. Gastar owns a 44.5% working interest ("WI") and 37.5% net revenue interest ("NRI") in these wells.

Gastar currently has three drilling rigs running in the play. We are currently drilling on two multi-well pads in Marshall County and we will commence drilling on a third multi-well pad in Marshall County in early August. Also, we have recently completed the drilling of the Hickory Ridge 2H well (GST 100% WI) in Preston County, West Virginia on the acreage that was acquired in December 2010 and plan on a mutli-stage fracture stimulation of the Hickory Ridge 2H well in the second half of August.

J. Russell Porter, Gastar's President and CEO, commented, "We are extremely pleased that the initial test results from the Wengerd wells have confirmed our assumptions for reservoir characteristics in this portion of the play and may exceed our individual well assumptions on deliverability and condensate yield. We currently have 72 additional locations within the immediate vicinity of the Wengerd wells. We collected a full array of micro-seismic data during these completions and we anticipate using that data to improve our results and become more efficient with our completions."

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EDS Names Marcellus Manager

- EDS Names Marcellus Manager

Wednesday, July 20, 2011
Environmental Drilling Solutions LLC

Environmental Drilling Solutions (EDS) has named Jake Garber Region Manager for Marcellus Shale operations.

Garber has more than 14 years experience in the solids control business and most recently served 10 years as MI Swaco's Gulf Coast Environmental Services Area Manager.

"Jake provides additional senior management within our company as we position ourselves for continued growth in the various shale plays and offshore markets," said Chad Hollier, EDS President. "His experience in facilitating new technologies along with sales and customer support make Jake a strong asset for the company's continued growth."

Garber earned a Bachelor of Science in Geology from the University of Louisiana at Lafayette. He is currently a member of the American Association of Drilling Engineers (AADE), Society of Petroleum Engineers (SPE) and the American Petroleum Institute (API).

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Baker Supports Marcellus Initiative with New Office

- Baker Supports Marcellus Initiative with New Office

Tuesday, July 19, 2011
Michael Baker Corp.

Michael Baker has established a new office in Towanda, Bradford County, Pa., in support of its Marcellus Shale initiative and growing client base across the Marcellus Shale region from Pittsburgh to north central Pennsylvania to south central New York.

Baker's Matthew Natale, P.E., assistant vice president, said, "Opening the Towanda office allows Baker to provide both staff and services more efficiently to current Marcellus Shale clients in northern Pennsylvania. It will also accommodate growth of shale service areas currently provided out of other Baker offices in Pennsylvania and West Virginia."

"With nearly 1,000 professionals based in offices across the entire Marcellus Shale region, Baker is well-positioned to provide a considerable range of services including surveying and geospatial, well pad design and permitting, pipeline and facilities design, roadway rehabilitation support, and construction management/construction inspection services," added Christine S. Mayernik, P.E., PMP, vice president and coordinator of Baker's Marcellus Shale services. "The new Towanda office further demonstrates our commitment to the region and support of our membership in the Marcellus Shale Coalition."

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Endeavour Expands Marcellus Shale Footprint

- Endeavour Expands Marcellus Shale Footprint

Monday, July 18, 2011
Endeavour International Corporation

Endeavour International Corporation has entered into purchase and sale agreements with SM Energy Company and certain other minority owners to acquire the leasehold and producing interests held by SM Energy and its partners in the Marcellus shale in north central Pennsylvania, as well as a pipeline and related facilities for aggregate consideration of $110 million. The transaction provides Endeavour with significant production and reserve potential on acreage that is adjacent to the Company's existing Marcellus acreage and is readily available for development in one of the most economically attractive shale gas plays in the United States.

The assets include the following:

Approximately 50,000 net acres of leasehold with 100 percent operated working interests in McKean and Potter counties; Current production from three existing wells of approximately three to four million cubic feet of natural gas per day, including the Potato Creek #3H well that initially flowed 11 million cubic feet of gas per day and is expected to recover in excess of 4 billion cubic feet of gas;
100 percent ownership of Potato Creek LLC, which owns a midstream gathering system and related facilities in southern McKean County, including a 10-mile 16" trunkline connected and flowing to Tennessee Gas Pipeline's 24" mainline; and Proprietary and fully processed 3-D seismic survey covering the entire Potato Creek lease block.


Following the completion of the transaction, Endeavour's leasehold interests in the Marcellus Shale will total approximately 93,000 gross (68,000 net) acres. A new 7-year lease will be issued at closing on the key 21,000 net acre Potato Creek block that requires only five wells to be drilled in the first three years. Minimal capital is required over the next three years to hold all acreage in McKean County, including the key Potato Creek leasehold. The transaction is expected to close within 60 days and is expected to be financed with proceeds from the issuance of convertible debt securities.

"This acquisition represents a significant step forward in the growth of our domestic onshore business in a play that offers some of the highest returns in the United States today," said William L. Transier, chairman, chief executive officer and president. "The acreage is located on trend with several major industry developments and complements our existing acreage position in Cameron County immediately to the south. Our development model indicates recoverable natural gas potential from 1.0 to 1.3 trillion cubic feet with more than 300 identified drilling locations on our McKean and Cameron County leasehold. As operator of these assets, including the gathering infrastructure, we have the opportunity to accelerate our development plans in an effort to realize the value of our investment while expanding our position in this three county area."

Operational and Financial Update

Bacchus Update

The Rowan Gorilla VII rig has arrived at the Bacchus field and has commenced drilling operations for the three planned development wells. The Bacchus development is located in the Central UK North Sea and Endeavour has a 30% working interest in the field.

Senior Term Loan

In support of the Company's growth plans, Cyan Partners and certain lenders under the Senior Term Loan have amended the terms of the Company's Senior Term Loan and agreed to expand the facility by $75 million. Endeavour intends to use this additional capital to accelerate its development activities throughout the Company, particularly its Greater Rochelle development and its expanded position in Pennsylvania following the Marcellus acquisition.

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Gov. Regulates Marcellus Drilling Activities

- Gov. Regulates Marcellus Drilling Activities

Wednesday, July 13, 2011
Office of the Governor Earl Ray Tomblin

Gov. Earl Ray Tomblin, joined by West Virginia Department of Environmental Protection (DEP) Cabinet Secretary Randy Huffman, Legislators, and natural gas industry representatives announced the filing of an executive order that directs the DEP to promulgate additional environmental regulations governing Marcellus Shale drilling activities.

"This executive order is the first step in my long-term plan to ensure responsible development of Marcellus Shale," Gov. Tomblin said. "The good-paying jobs predicted with this development must include the protection of our public's health and safety as well as that of our environment. I want to thank our citizens who have voiced their concerns about Marcellus Shale drilling and want to assure them that I recognize this emerging segment of the natural gas industry warrants my immediate attention to ensure responsible development."

By directing Secretary Huffman to use his existing emergency rule making authority, Gov. Tomblin is calling for additional regulations concerning: water withdrawals, stream and groundwater protection, and public notice.

Executive Order 4-11 outlines several requirements of natural gas companies including but not limited to:

• Marcellus Shale drilling applicants seeking to drill within the boundaries of a municipality must file a public notice of intent to drill.
• Surface land use that will disturb 3 or more acres must be certified by and constructed in accordance with plans certified by a registered professional engineer.
• Companies withdrawing over 210,000 gallons of water a month must file a water management plan with the DEP and adhere to certain specified standards.
  • Before fracking begins, such companies must also provide a list of additives that will be used in the frack fluid, and after fracking is complete, the additives actually used.
• When using water from a public stream, a company must identify the designated and existing uses of that stream.

"I am pleased that the natural gas industry supports my decision to pursue reasonable environmental regulations to ensure responsible development of the Marcellus Shale," Gov. Tomblin said. "Regulatory certainty is important not only to the industry, but also to our great citizens."

The executive order also instructs the DEP to further review the agency's overall authority over drilling activities related to horizontal wells.

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Marcellus Group Develops Middle School Curriculum

- Marcellus Group Develops Middle School Curriculum

Thursday, July 07, 2011
Knight Ridder/Tribune Business News
by Jodi Weigand, The Pittsburgh Tribune-Review

A jobs curriculum funded by the Marcellus shale industry could be in Western Pennsylvania middle schools as early as fall.

Four Marcellus shale drilling companies donated most of the $65,000 that the nonprofit Junior Achievement of Western Pennsylvania spent to research and develop its new Careers in Energy program, said Bill Lucas, JA's chief development officer.

The Energy Corporation of America Foundation, the grant arm of the Denver gas and oil well drilling company, donated $25,000, the largest amount. Other money came from Cabot Oil & Gas, Talisman Energy, Chesapeake Energy and the Marcellus Shale Coalition, a Cecil-based trade group.

"We all realized that no matter what side of the fence you're on, these jobs are here, and if we don't educate our kids about them, we're doing them a disservice," Lucas said.

Marcellus shale gas drilling has been touted as an economic boon for the area. But concerns abound about the impact that the drilling, which uses millions of gallons of water to extract the natural gas, could have on land, water and air.

Junior Achievement assembled an 18-person committee of representatives from the drilling industry, environmental groups and local and state governments to review the final version of the curriculum to ensure it is balanced, Lucas said.

"The one thing we wanted to make sure was that this was going to be completely unbiased," he said. "From an educational point of view, schools wouldn't let us teach it if it wasn't."

Nathan Sooy, a campaign coordinator for Clean Water Action of Pennsylvania, which opposes Marcellus shale drilling, is wary.

"If the industry is going to exist in Pennsylvania, it's going to need to, and probably should, make its way into the vocational school curriculum," he said. "I think the appropriateness of it being in the curriculum depends on what that looks like."

Junior Achievement needs about $35,000 to complete the rollout of the curriculum to about 11,000 middle school students. Marcellus shale gas drilling-related jobs will be among the many the energy industry offers, Lucas said.

Industry-funded curriculum is not unusual for Junior Achievement, which teaches more than 61,000 K-12 students in Western Pennsylvania about work force readiness, entrepreneurship and financial literacy through hands-on programs. It relies on business representatives, parents and other volunteers to teach the lessons.

JA's in-school and after-school programs are free to schools. Locally, Pittsburgh Public Schools and numerous Catholic schools partner with JA.

Careers in Energy is one of two industry-funded educational initiatives in the region. The other is a traveling energy education exhibit funded by the Drake Well Museum, in Titusville, which touts the benefits of oil and gas drilling.

Outside the industry, teachers, an independent nonprofit environmental group, state agencies and the Pennsylvania College of Technology have completed or are working on lessons about Marcellus shale.

What's pushing the effort, said Jeannette Carter, director of outreach for K-12 education at Penn College, which is part of Penn State University, is the desire to impart background knowledge about Marcellus shale like many people have about the steel industry.

"We're ... not understanding the occupations, science and geology of Pennsylvania," she said. "We don't have the knowledge we need to make fact-based decisions about the industry."

Penn College is working with vocational technical teachers to incorporate into existing lessons the skills students might need if they choose a career in Marcellus shale gas drilling. It's also working to include additional lessons in chemistry or geology to touch on things specific to Marcellus shale.

The challenge is keeping the lesson fact-based.

Teachers can pose questions like, "What do we know? What does the research show? What do people think? And then ask students to take a position and support it," Carter said.

The Pennsylvania Geological Survey, overseen by the state Department of Conservation and Natural Resources, recently released a fact-based lesson plan for middle and high school students about the natural-gas-rich rock formation that includes the history of drilling and how it works.

The state Department of Environmental Protection plans to develop its own lesson plan that schools and communities can use detailing the more controversial aspects of water contamination and other environmental issues, a spokeswoman said.

The Junior Achievement program will teach younger students about the science of energy, where it comes from and the pros and cons of both renewable and non-renewable forms, Lucas said. For older students, it will focus on the economic and job side of the industry.

The program takes an approach similar to that of the Drake Well Museum's Mobile Energy Educational Training Unit. The museum, which is located where Edwin Drake drilled the oil well that launched the petroleum industry, is seeking a more substantial place in public education.

Right now the unit travels to fairs, community meetings and vocational technical schools, but project manager Joe Hulsizer said the museum wants to winterize the 44-foot trailer so it can travel during the school year.

The trailer has three sections, with the first focusing on oil well drilling, the second showing artifacts from the Drake museum and the third covering all forms of energy sources, including Marcellus shale.

"There are so many people who don't understand what's involved with all the products we use every day," Hulsizer said. "We wanted to educate the kids because it's going to be up to them to create new forms of energy."

Chartiers Valley Middle School English teacher Lisa Schultz is one local teacher who has taught students about Marcellus shale drilling.

She asked her students to create impartial websites presenting the facts, pros and cons of drilling. She directed them to sources such as the Penn State Cooperative Extension for information.

"I guess I did a good job (of being impartial) because I'm opposed to it in Allegheny County, and most of the students were in favor of it," she said.

Copyright (c) 2011, The Pittsburgh Tribune-Review

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Westmont to Boost Production at Marcellus Wells

- Westmont to Boost Production at Marcellus Wells

Wednesday, July 06, 2011
Westmont Resources Inc.

Westmont Resources has completed the review of the June 2011 production revenue for operations in our 3,400 acre leaseholds in the Marcellus Shale region in the southwest tier of Pennsylvania and northwest tier of West Virginia. Preliminary production on the leaseholds has 41 working wells, of the 120 currently drilled on the properties, producing .6 to .9 barrels of oil per day per well. Total daily production is averaging 29.93 barrels of oil per day from these 41 working wells. June production totaled 891 barrels or $112,526.30 in gross revenue from production.

Westmont began implantation of Phase 1 of it operations plan to increase production to over 3,500 barrels per month by the end of the 2011 calendar year. Westmont anticipates placing into production an additional 12 wells by the end of July 2011 for a total of 53 working wells. We anticipate revenue to increase to over $145,000 per month by the end of July 2011 from the production of these first 53 working wells. Upon completion of the first phase of our production program, Westmont anticipates having 170 of the 212 existing wells in production earning estimated gross revenues of $321,300 per month based on current oil pricing in excess of $90 per barrel.

"Our specialty is applying cutting-edge technology in order to 'wring additional value from' long-lived, low risk natural gas and oil properties - To squeeze more oil out of mature basins. These new Pennsylvania and West Virginia assets are an excellent fit with our existing core areas and will expand our portfolio. Phase 2 of our production program will include the implementation of our patented, proprietary technology to increase production by a factor of 6 with anticipated production in excess of 5 barrels a day per well. Our estimated monthly gross revenue would increase from an estimated $321,300 to over $2,295,000 after implantation of our technology on all existing wells," said Glenn McQuiston, Westmont's President.

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Penn Virginia Disappointed by Initial Marcellus Production Rates

- Penn Virginia Disappointed by Initial Marcellus Production Rates

Tuesday, June 28, 2011
Penn Virginia Corp.

Penn Virginia updated its activities in the Marcellus Shale.

Peak 24-hour production rates from our first three Marcellus horizontal wells, the Risser #A-1H, Risser #A-2H and Dunn #A-1H, were approximately 3.1, 2.8 and 4.0 million cubic feet (MMcf) per day, with an average rate over a 72-hour test period of 2.1, 1.7 and 2.7 MMcf per day, respectively. These three test wells are located in the central portion of our approximately 35,000 net acre position in Potter and Tioga Counties, Pennsylvania. Pipeline construction is in progress with sales expected to begin by early August. One additional well in the western portion of our acreage is currently waiting on completion. During the second half of 2011, we plan to test, initially with vertical wells, the eastern portion of our acreage, comprised of approximately 20,000 net acres.

H. Baird Whitehead, President and Chief Executive Officer, stated, "The Marcellus Shale test wells had initial production rates which fell short of our expectations. We will monitor longer term production once these wells are turned into the pipeline and determine if the reserves can support a development program in this immediate area. As important, we will begin testing our eastern acreage position during the second half of the year."

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Leading Marcellus Geologist Advocates Forced Pooling of Gas

- Leading Marcellus Geologist Advocates Forced Pooling of Gas

Monday, June 20, 2011
The Patriot-News, Harrisburg, Pa.
by Donald Gilliland

Opponents of forced pooling -- and that would include Gov. Tom Corbett -- should watch the movie "There Will Be Blood," according to the state's leading Marcellus Shale geologist.

Terry Engelder explained that the concept -- whereby drillers are allowed to remove natural gas from beneath properties of owners who refuse to lease their mineral rights -- originated with Upton Sinclair's expose of the oil industry, "Oil!", which forms the basis of the 2007 Academy Award-winning film.

Speaking to the governor's Marcellus Shale Advisory Commission on Friday, Engelder acknowledged up front that the concept bumps squarely up against traditional property rights.

But the benefits, he said, have been determined time and again to outweigh the risk of infringing on those rights.

Pooling is a common feature in the laws of nearly all the oil and gas states, including Pennsylvania.

Yes, Pennsylvania has a forced pooling statute -- 50 years old -- which makes it illegal to waste gas, said Engelder. But the law only applies to gas below the Onondaga Limestone. The Marcellus -- and most of the other gas-rich shale formations in the state -- are all above it.

At the moment, Engelder said, the state has the worst of all worlds.

While drillers cannot lay pipe under a property that has not leased its mineral rights, they can drill immediately adjacent to it and legally fracture the shale under that property and drain gas from it -- without compensating the owner.

That's the rule of capture.

What's more, hold-out owners can prevent drilling into areas where gas has been leased, thereby denying those lease holders the royalties that could be generated from their property.

Engelder showed an example from Lycoming County where he estimated 5 billion cubic feet of gas and $20 million in revenue had been stranded by one hold-out landowner.

"This is not what the oil and gas conservation law of 1961 intended as an outcome," he said.

Engelder said pooling "maximizes the economic benefit, minimizes wasteful stranded gas, minimizes the environmental footprint and provides just and fair compensation" to all.

Lt. Gov. Jim Cawley did not comment, but he did announce that the Commission members have submitted more than 200 policy recommendations, which are now being reviewed by the working groups in preparation for the Commission's final report to the governor next month.

Copyright (c) 2011, The Patriot-News, Harrisburg, Pa.

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