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Wednesday, October 1, 2014

Hess Scores Partial Court Victory in Belmont County Case

From Bricker & Eckler:
The United States District Court for the Southern District of Ohio recently issued two companion decisions in Curtis v. Hess Ohio Resources, LLC, 2014 U.S. Dist. LEXIS 119584 (S.D. Ohio 2014), and DeRosa v. Hess Ohio Resources, LLC, 2014 U.S. Dist. LEXIS 119587 (S.D. Ohio 2014). On one hand, the court agreed with the producer, Hess Ohio Resources (“Hess Ohio”), that the oil and gas leases at issue were extended under two provisions: (i) the drilling-operations clauses; and (ii) the shut-in provisions. On the other hand, the court held that Hess Ohio violated the implied covenant to develop certain non-pooled acreage, and ordered that such acreage be released from the underlying oil and gas lease. 
Both cases arose in Belmont County and centered on two groups of landowners who signed identical five-year oil and gas leases in 2006. The primary issue was whether the actions of the current lessee (Hess Ohio) and/or prior lessee (Marquette Exploration (“Marquette”)) properly extended the oil and gas leases beyond their primary term. Specifically, the court analyzed whether: (i) the preparation of the well pad, spudding of the well, and completion of at least partial fracturing operations constituted being “engaged in drilling or reworking operations”; and (ii) whether the subsequent shutting in of the well from June 2011 through the present was reasonable.
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American Thinker: New Study Settles the Science on Fracking & Proves It is Safe

Is a new study enough to definitively declare fracking safe?
From American Thinker:
The science is settled, as the climate change supporters like to say.  Only this time, science confirms the safety of hydraulic fracturing.  According to a new study published by the National Academy of Sciences, fracking is safe.  End of discussion. 
Funded by the National Science Foundation and Duke University, a team of scientists at Ohio State and other universities conducted extensive research into the purported link between groundwater pollution and fracking.  (The full title of the report, available online, is “Noble Gases Identify the Mechanisms of Fugitive Gas Contamination in Drinking-Water Wells Overlying the Marcellus and Barnett Shales.”)  In an examination of 130 wells, the researchers found that, when properly conducted, no groundwater or aquifer pollution resulted from the practice of fracking itself. 
Among the 130 wells studied, the researchers found only a subset of cases, including seven in Pennsylvania and one in Texas, in which faulty well construction or cementing was to blame for the seepage of gases into groundwater.  According to Professor Avner Bengosh of Duke University, “[t]hese results appear to rule out the migration of methane up into drinking water aquifers from depth because of horizontal drilling or hydraulic fracturing.”  That is to say, in the rare cases where it occurs, gases are entering the water supply from outside the borehead as a result of faulty well construction or poor cementing, both of which are manageable problems.
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Tuesday, September 30, 2014

MarkWest Utica EMG, L.L.C. and Ohio Gathering Company, L.L.C. Announce Definitive Agreements with American Energy – Utica, LLC

DENVER--(BUSINESS WIRE)--MarkWest Utica EMG, L.L.C. (“MarkWest Utica EMG”), a joint venture between MarkWest Energy Partners, L.P. (NYSE: MWE) and The Energy & Minerals Group, and Ohio Gathering Company, L.L.C. (“Ohio Gathering”), a joint venture between MarkWest Utica EMG and Summit Midstream Partners, LLC, today announced the completion of definitive agreements with American Energy – Utica, LLC (“AEU”), an affiliate of American Energy Partners, LP, to provide natural gas gathering, processing, and fractionation services in the Utica Shale in Ohio.
“The Utica is one of the fastest growing shale plays in the U.S. and we are excited to support American Energy as they are quickly establishing a significant presence in this premier resource play”
AEU has acquired a significant acreage position in highly prolific Utica Shale and with the agreements announced today, has dedicated more than 60,000 net acres in the rich-gas and condensate windows to MarkWest Utica EMG and Ohio Gathering.
Under the terms of the agreements, MarkWest Utica EMG will provide natural gas processing services at its Cadiz complex in Harrison County, Ohio and its Seneca complex in Noble County, Ohio. Combined, these two large complexes currently provide 725 million cubic feet per day of total processing capacity to eight key producer customers in the Utica Shale. Based on previous announcements, the two complexes will be expanded to more than 1.3 billion cubic feet per day of processing capacity by the second quarter of 2015.
MarkWest Utica EMG will fractionate AEU’s natural gas liquids (“NGLs”) at its jointly owned Hopedale complex, which currently includes 60,000 barrels per day (“Bbl/d”) of propane and heavier NGLs fractionation capacity and will be expanded to 120,000 Bbl/d of capacity by the first quarter of 2015. MarkWest Utica EMG will utilize its 40,000 Bbl/d de-ethanization facility at the Cadiz complex to produce purity ethane on behalf of AEU for delivery to the ATEX pipeline.
Ohio Gathering will provide natural gas gathering and compression services for all of AEU’s gas produced from the dedicated area. Ohio Gathering’s system currently consists of hundreds of miles of low- and high-pressure pipelines and numerous compression facilities throughout southeastern Ohio, including Harrison, Guernsey, Belmont, Noble and Monroe counties.
In addition to AEU, MarkWest Utica EMG and Ohio Gathering have existing long-term, fee-based gathering and or processing and fractionation agreements with the majority of producers operating in the southern core area of the Utica Shale, including Antero Resources Corporation (NYSE: AR), Gulfport Energy Corporation (NASDAQ: GPOR), Rex Energy Corporation (NASDAQ: REXX), PDC Energy, Inc. (NASDAQ: PDCE), and others.
“The Utica is one of the fastest growing shale plays in the U.S. and we are excited to support American Energy as they are quickly establishing a significant presence in this premier resource play,” commented Frank Semple, Chairman, President, and Chief Executive Officer of MarkWest. “Just over two and a half years ago, MarkWest and EMG began developing the most comprehensive and fully integrated midstream system in southeastern Ohio, and, together with Summit, we continue to build critical assets to support our producer customers’ drilling programs for decades to come.”

Company's Facility to Wash Waste-Hauling Trucks Shut Down Pending Permit From ODNR

From The Morning Journal:
The truck washing facility used by Clear Creek at the corner of the M&S Truck Stop on state Route 14 ceased operations following a special Aug. 18 planning commission meeting in which the board determined it would not approve their operations without an ODNR permit, which is required. 
City Manager Lance Willard confirmed on Friday the company has not yet received the permit, and Bob Yallech, who is serving as Clear Creek’s legal counsel, said he is optimistic the company will continue operations there in the future. 
“We are waiting to get permitted. We have an engineer who is doing his work and our due diligence, and we expect once his work is done, to obtain a permit,” he said. 
The engineer he was referring to is one working for the ODNR, who will determine whether a permit should be issued.
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Royalty Checks Are Coming in For Columbiana County Residents

From Business Journal Daily:
Bob Crosser thought working 42 years as an Ohio Edison troubleshooter was enough, so in 2011 he chose to retire and spend his time tending the horses he raises on a farm along U.S. Route 30 here. 
But a recent turn of fortune might also have factored in his decision. 
“It’s been a gift, really,” Crosser says as his Chevrolet pickup truck bounces toward an operating natural gas well Chesapeake Energy Corp. drilled on his property almost three years ago. “This well’s been good to us. If it keeps coming in like this, I’ll be making a lot more than what I did at Ohio Edison, that’s for sure.” 
As such, Crosser is among the first residents in Columbiana County who are finally reaping the dividends in the form of hefty royalty checks from oil and gas leases they negotiated nearly four years ago. 
Many energy companies have abandoned the northern portion for more lucrative positions further south in Harrison, Belmont, Monroe and Noble counties.  
The lack of interest and overall poor well production in the north has led companies such as BP America and Halcon Resources to suspend drilling in areas of Trumbull and Mahoning counties. 
But the latest data show that wells in Columbiana County are in step with some of the results seen from wells drilled in the southern tier of the play.
You can click here to read much more about how the northern section of the Utica shale is proving that its demise has been overstated.

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Yet Another Look at the Claims of Shale Boom Being a Bubble That's Soon to Burst

From Reason.com:
A lot of folks are fervently forecasting that shale gas and oil production is a bubble about to pop, possibly producing an economic collapse similar to the one in 2008. Earlier this week, the left-leaning Center for Research on Globalization in Montreal dismissed the shale revolution as a "Ponzi scheme" and "this decade's version of the Dotcom bubble." In a column last year for The Guardian, Nafeez Ahmed of the Institute for Policy Research and Development cited studies predicting that U.S. shale gas production will likely peak in 2015 and oil production in 2017. In a July 2013 report for the Club of Rome—the same folks who brought us 1972's doom-mongering classic, The Limits to Growth—the University of Florence chemist Ugo Bardi declared that the "idea that a 'gas revolution' that will bring for us an age of abundance is rapidly fading" because "the data show that the gas bubble may be already bursting." A month later, Richard Heinberg of the Post Carbon Institute said, "It turns out there are only a few 'plays' or geological formations in the US from which shale gas is being produced; in virtually all of them, except the Marcellus (in Pennsylvania and West Virginia), production rates are already either in plateau or decline." 
So was President Barack Obama wrong in 2012, when he claimed, "We have a supply of natural gas that can last America nearly 100 years"? Perhaps not. 
The renaissance of oil and gas production in the United States has largely been the result of applying the technique of hydraulic fracturing (fracking), which releases vast quantities of hydrocarbons trapped in tight shale formations. The bubble theorists make much of the fact that production tends to drop more rapidly in fracked wells than in conventional ones, forcing the frackers to drill more holes just to keep up. They overlook the fact that drillers are working ever faster and cheaper and that newer wells tend to be more productive than earlier wells. How do we know this? Because the number of drill rigs has not increased in most shale fields, yet production continues to go up. 
So what about Heinberg's claim that "production rates are already either in plateau or decline"? He's just wrong. The September drilling productivity report from the federal Energy Information Administration (EIA) notes that since 2013, that gas production is up in every one of the "plays" cited by Heinberg. Production in the Bakken region of North Dakota grew 8 percent; the Eagle Ford, Permian, and Haynesville regions in Texas increased 15, 7, and 97 percent, respectively; the Niobrara region in Wyoming and Colorado rose by 29 percent; and the Utica and Marcellus regions in Ohio, Pennsylvania, and West Virginia surged 142 and 47 percent. "We've been tracking this for 10 years, and recovery rates have gone up dramatically," says EIA forecaster Philip Budzik.
Read the entire article by clicking right here.

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Ohio's Chief Geologist Talks About Potential of Upper Devonian Shale

From Business Journal Daily:
YOUNGSTOWN, Ohio -- The state's chief geologist says that the future of oil and gas exploration across Ohio might rest with improved technology and other shale plays that appear to have the same sort of rich organic content as the Utica/Point Pleasant shale, today a focal point of the industry. 
"We're investigating the Rhinestreet shale and the Huron shale," said Tom Serenko, Ohio state geologist, Tuesday. "If you look at the cores, you see the similarities to the Point Pleasant. We're dealing with very dark, organic-rich shale." 
The Rhinestreet and Huron plays are intervals that help make up the Upper Devonian shale in Ohio, which rests above the Marcellus shale. The Ohio portion of the Marcellus isn't likely to produce a significant amount of natural gas or oil because of its limited scope, Serenko said, but the Upper Devonian could hold promise.
Read the rest of the article by clicking here.

There have been some rumblings that the Upper Devonian could begin to attract some serious attention.  It will be intriguing to see if those plays can inject even further life into Ohio's shale boom.

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Does the Media Brush Aside Positive Reports on Shale Energy to Focus on Negative Ones?

From Natural Gas Now:
Fracking opponents would have us believe modern hydraulic fracturing technology is unstudied, or has only done so by “frackademics.” The term refers to scientists at universities often tainted solely because they they are located in Texas or because they are geologists. Saying geologists are tainted is like saying doctors are prejudiced in a medical diagnosis and it’s best to get a second opinion from a dentist. Or, in the shale “debate” context, the opinion of a rock star, fashion designer or movie star is as valid  – or greater – than those of scientists. 
Good Shale Gas News Tends to Sink Without A Trace 
No less than four recent academic studies have two things in common: Key parts of their conclusions are positive, and in the “conventional” media and thus to the eyes of the public, they sunk without a trace. This ensured Google News flow, which travels downstream to hundreds of local frack-free sites, remains overwhelmingly negative. 
It’s also worth pointing out how many frack-free locations people are setting up anti frack groups in. This is akin to the “nuclear free” zones of the 1980s rarely anywhere near the problem, but which energized the base and convinced others, sympathetic or not, that the movement was far larger than it actually was. 
When Frack Free this and that (fill in the blank) are set up in locations where olive oil production is equally prospective as petroleum (think Vermont), they have three advantages. Magnifying opposition is one, because internet search robots are unable to distinguish between Harvard or MIT and a cleverly named local group. Sites exist in the cloud, but poison the debate in the real world. 
The second advantage is that if there is no local shale developer, local activists won’t be challenged at all and that leads to the third. Most local papers, are likely to give greater credence to anyone simply because they’re local. This means any idiot can get in the local press and often does. It’s a key issue for the industry world-wide, and needs supra-national initiatives to inform the debate.
Read the whole article by clicking here. 

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