Thursday, December 18, 2014

First Attempt to Repair Monroe County Well Fails

From WTRF News:
"Today's (Tuesday's) operations at the Stalder 3UH location owned by Magnum Hunter Resources Corporation's wholly-owned subsidiary, Triad Hunter LLC outside of Sardis, Ohio confirmed that the first attempt at returning the well to normal by repairing the existing night cap failed.

This method was initially chosen as it was the fastest way to return residents to their homes and bring the well under control.
Tomorrow, (Wednesday) Wild Well Control will take a different approach to their operations. They will begin the process of replacing the well head, which is the most effective industry standard for well containment. This operation will take substantially more time and is estimated to last for the next seven days.

As of tomorrow (Wednesday), access will return to the same schedule as earlier this week. Residents will be allowed limited access to their homes during daytime hours 7:00am – 6:00pm with the assistance of Sardis VFD. The limitation also applies to air traffic. A NO FLY ZONE has been established for 5,000 feet and a 3 mile radius and will remain in effect throughout the operation. Accommodations for residents of the 30 homes evacuated continue to be provided.

WTRF 7 News Sports Weather - Wheeling Steubenville

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New York State Bans Fracking

by Abrahm Lustgarten ProPublica, Dec. 17, 2014, 3:12 p.m.

When natural gas companies first pressed into New York in 2008, state environmental regulators barely understood the process of "hydraulic fracturing." Today, six and a half years after ProPublica first raised concerns that the drilling could threaten both the state's water supply and its residents' health, Gov. Andrew Cuomo banned the process across the state.

The ban makes New York, which holds large natural gas reserves in the Marcellus Shale, the largest and most significant region to bow out of the nation's energy boom because of concerns that its benefits may be outweighed by the risk.

The decision comes after a long-awaited report from the state's Health Department this week concluded that the fracking would pose health risks to New Yorkers. It also follows an exhaustive state environmental review effort that began the day after ProPublica's first story in July 2008.

Since then, New York has walked an indecisive line on drilling, while an energy boom provoked by advances in fracking technology took much of the rest of the country by storm. Today's lower oil prices are due, in part, to an oil bonanza in North Dakota's Bakken Shale that had barely begun when New York first put a temporary halt to new drilling in the state. Likewise, the gas drilling waves that have rippled through states from Pennsylvania and West Virginia to Michigan, North Carolina, Maryland, Texas and Wyoming had yet to run their course.

But by delaying a decision on drilling for so many years, Cuomo also allowed a clearer picture of the impacts and changes that drilling activity would bring to emerge. That clearer picture ultimately dampened the enthusiasm for drilling in New York and validated many of the environmental and health concerns that anti-drilling groups have raised across the country.

Just across the state line from New York's Southern Tier, where the richest Marcellus gas deposits lie, Pennsylvania landowners dealt with one incident of water contamination after another. They complained of illnesses caused by both the water and new air pollution brought by the drilling. State regulators in Pennsylvania 2013 once enthusiastic boosters of the process 2013 wound up cracking down on drilling companies' messy practices and strengthening their own environmental laws as a result.

Across the country, similar stories emerged, many of them reported as part of a four-year-long investigation by ProPublica. From Texas and Louisiana to California, drilling waste was being spilled or leaking into drinking water aquifers and high pressures caused by fracking activities were causing wells to leak. Methane gushed from wells and pipelines. And residents' allegations that the drilling was causing symptoms from nerve disorders to skin lesions and birth defects began to be substantiated through peer-reviewed scientific research.

The potential payoff for such risks 2013 which the drilling industry long maintained were minimal 2013 was that drilling would bring huge economic benefits to rural regions long desperate for new jobs and an injection of economic vigor. That economic promise has been born out across many parts of the country, but in some instances, those who needed the financial benefits most have been denied them.

An investigation by ProPublica earlier this year found that landowners in Pennsylvania who supported drilling and signed leases with drilling companies in order to earn a share of the profits were instead being cheated out their payments, called royalties. In fact, the stories showed, energy companies had withheld royalty payments worth billions of dollars from both landowners and the federal government across states from Texas and Wyoming to Louisiana and Colorado, substantially blunting the prosperity that could come from allowing drilling to proceed.

All of this, it now seems, must have made Cuomo's decision this week a lot easier. But the ban also reflects the conclusion of a lengthy learning curve for New York State.

When ProPublica reporters, in a joint project with WNYC, first went to Albany to talk with the state's environment regulators, those officials couldn't answer basic questions about the process they were poised to permit: What chemicals would be pumped underground near drinking water supplies? Where would the waste be disposed of and did New York have facilities capable of handling it? State officials told ProPublica then that fracking had never once caused pollution to water supplies, and said they were unaware of the hundreds of cases brought to their attention by ProPublica where such damage had indeed taken place.

On the morning of July 23, 2008, then Gov. David Paterson called for those state environment officials to go back to the drawing board in their assessment of the risks of fracking before the state issued any new permits, effectively placing a moratorium on drilling that lasted until now.

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Copyright ProPublica. Republished with permission. View original article by clicking here.

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New York Governor Cuomo Shuts the Door on the Oil and Gas Industry

New York governor Andrew Cuomo
According to the industry he is indicating here the value he
places on property rights. According to activists it is
the number of contaminated wells the state will have
now that fracking is banned.
After a long process of delaying a decision until enough studies could be produced to support a ban, New York governor Andrew Cuomo finally made official his decision to outlaw fracking in the state yesterday.

The key report relied upon for justification of the ban is a public health review (click here to view the report) that was requested a little over 2 years ago which concluded:
As with most complex human activities in modern societies, absolute scientific certainty regarding the relative contributions of positive and negative impacts of HVHF on public health is unlikely to ever be attained. In this instance, however, the overall weight of the evidence from the cumulative body of information contained in this Public Health Review demonstrates that there are significant uncertainties about the kinds of adverse health outcomes that may be associated with HVHF, the likelihood of the occurrence of adverse health outcomes, and the effectiveness of some of the mitigation measures in reducing or preventing environmental impacts which could adversely affect public health. Until the science provides sufficient information to determine the level of risk to public health from HVHF to all New Yorkers and whether the risks can be adequately managed, DOH recommends that HVHF should not proceed in NYS.
Celebrities and activists applauded the governor's decision, saying that Cuomo let the science govern his choice.  Others disagreed, pointing out that Cuomo had previously ignored conclusions from the New York Department of Environmental Conservation and the New York Department of Health that fracking could be done safely.

Here is a sampling of the reaction and background offered after Cuomo announced the ban.

From The Washington Post:
Industry representatives reacted angrily to Wednesday’s decision, which was announced with little fanfare before the cabinet meeting began. 
“This is an ill-advised decision that denies New Yorkers the opportunity to take advantage of the many environmental and economic benefits that natural gas offers,” said Paul Hartman, the Albany-based northeast director of America’s Natural Gas Alliance, the industry trade group. “The decision to prohibit hydraulic fracturing is based on data that does not justify the Cuomo administration’s conclusions.” 
Democrats and environmental activists praised Cuomo’s decision Wednesday. 
“The Governor based his decision on the science — not the demands of oil and gas drillers looking for a quick buck,” Rep. Carolyn Maloney (D-N.Y.) said in a statement. “The public health risks posed by contamination of our air, land and water are too great to allow high-volume, horizontal fracking in our beautiful state.” 
Svante Myrick, mayor of Ithaca, N.Y., which sits atop one part of the Marcellus deposit, said fracking would upset the local tourism industry without bringing much economic benefit. 
“Our economy is strong because of our agriculture, tourism and education. Drilling pads dotting our hills, trucks pounding our roads, and the fear of soil and water contamination would threaten our success in all of those areas,” Myrick said. “The gains would be short-term.” 
The debate over hydraulic fracturing long predates Cuomo’s tenure. The state legislature passed a measure approving fracking and horizontal wells in 2008, but then-Gov. David Paterson (D) placed a hold on permits for those wells until the Department of Environmental Conservation could report on the impacts. The department issued a draft report in 2009, but Paterson ordered a second draft the following year. 
That second draft came in July 2011, after Cuomo had taken office. Martens, the DEC commissioner, said at the time that he believed fracking could be done safely. The DEC started the long process of crafting regulations that would guide high-powered fracking. 
But after environmental activists protested, Cuomo ordered another review, this one from the state Health Department, in 2012. The Health Department missed key deadlines in 2013, further delaying the DEC report. The report was still unfinished in October, when, at his only debate with Republican opponent Rob Astorino, Cuomo said it would be finished by year’s end. This Monday, Cuomo reiterated that the report would be ready by the end of the year.
The choice to ignore the report that concluded fracking could be done safely and instead direct a new report to be created is what many would point to as an indication that Cuomo wasn't simply interested in the truth revealed through scientific studies of fracking, but instead was interested in someone providing a report that would focus on science which would justify the decision he already wanted to make: to ban fracking.

From Forbes:
Some will argue that excess caution isn’t a problem, because banning fracking doesn’t impact anyone except oil companies. And their employees. And people who sell or rent them equipment. And people who use oil and gas. Or electricity. Or pay taxes. Or own mineral rights to prospective areas for drilling. 
But, hey, Governor Cuomo himself said it best. Per Newsday: ” ‘I get very few people who say I love the idea of fracking,’ Cuomo said, adding that proponents told him they supported drilling because they had ‘no alternative,’ economic opportunities.” 
In other words, regulation is a popularity contest, not science driven. 
Oh, it’s all to easy to make snide comments (“ Unsafe? Have you seen the food on sale on the streets of New York?”) but this gets to the very real issue of going for politics over science. The environmental and NIMBY elephants opposing fracking have labored hugely to prove that the practice is unsafe or even environmentally unsound and brought forth a mouse. Anecdotes about health problems and evidence that common pollutants can be found in areas with fracked wells (along with the rest of the planet).
 From Energy in Depth:
Immediately after the decision, Cuomo confirmed on social media that his actions were intended to appease the “ban fracking” groups that have been lobbying him not to allow development in the state. Through his official Governor’s account, Cuomo retweeted the praise that he received from some of the most vocal anti-fracking organizations currently active in New York:Sierra Club tweetRiverkeeper tweetNWF tweetFrom the beginning, Cuomo had ensured residents his administration would stick to science in making this decision. Yet today, his administration tossed out the vast amounts of data showing that hydraulic fracturing can indeed be done safely. The administration allowed emotional pleas from New York City and Hollywood actors to trump the property rights and economic concerns of residents of Upstate, many of whom have been in desperate need of jobs for several years.
Mark Ruffalo tweet
Governor Cuomo retweeted Hollywood actor and anti-fracking activist Mark Ruffalo’s praise of the Governor’s decision not to allow shale gas drilling. Source: Twitter
Worst of all, Cuomo’s team ignored previous reports from his own Department of Environmental Conservation (DEC), which stated in 2011: “we’ve concluded high volume hydraulic fracturing can be undertaken safely.” A 2012 report from the New York Department of Health also said fracking can be done safely. 
The Obama administration has also repeatedly touted the safety and importance of natural gas development. New York Democrats have also publicly supported the practice, as Senator Chuck Schumer stated earlier this year on Morning Joe:

“But overall, the Democrats throughout the country have supported fracking. The president has, most of us have, and it’s worked quite well.” – Sen. Chuck Schumer (D-NY)
A quick scan of the health report that the Cuomo administration relied upon to make its decision shows a heavy reliance on thoroughly debunked studies and assessments. Notably, the report cites research that hasn’t even received funding, much less proceeded substantively, such as the Geisinger Health Systems study in Pennsylvania. 
Another study included in the assessment looked at farm animals in proximity to well sites, authored by Dr. Robert Oswald and Dr. Michelle Bamberger. Although Cuomo’s team repeatedly touted “the science” in making its decision, here’s what Dr. Ian Rae with the U.N. Environment Programme said of that particular paper: 
“It certainly does not qualify as a scientific paper but is, rather, an advocacy piece that does not involve deep…analysis of the data gathered to support its case.” 
And yet, this report was used as a rationale for denying economic opportunity to real working families in upstate New York. Unfortunately, the other citations don’t offer any more clarity on how New York Health Commissioner Howard Zucker’s team reached its conclusions. 
Curiously, Governor Cuomo made no mention of the state stopping its usage of natural gas, which of course has to imported from areas where hydraulic fracturing is occurring, including neighboring Pennsylvania. So, New York will not allow development within its borders, but it will continue to reap the extensive benefits of affordable energy as the fifth largest consumer of natural gas in the country. 
Finally, it’s worth reiterating that New York City’s major shift to natural gas has improved the health and air quality of the city dramatically, as the following video shows.

Ironically, New York will continue to use increasing amounts of natural gas in order to improve public health, even as politicians in Albany claim that they cannot produce that gas locally, owing to so-called “public health” concerns.
ProPublica also weighed in after the decision was announced.  That article is posted separately on the blog, and can be viewed by clicking here.

So, what effect, if any, will this decision in New York have on shale activity in Ohio?  It's hard to say.  Undoubtedly it will be used as ammunition and will serve to embolden activists who have been fighting against the development that has been taking place.  Could it have any sort of influence on the matter of home rule, an issue still in limbo here in Ohio as the state's Supreme Court takes months and months to render a decision in the crucial Beck Energy vs. Munroe Falls case?

One thing is for sure: with the state that is the 5th-largest consumer of natural gas declaring that it will keep its supply of Marcellus shale gas locked in the ground, the need for going after the gas in other areas only increases.  So in that respect, drillers in Ohio likely will have to remain busy making sure the supply is there for all of the activists who successfully prevented fracking in New York while heating their homes with natural gas.

Besides, if all drilling stopped, environmental groups would lose a key source of the revenue that they use to attack the oil and gas industry.

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Wednesday, December 17, 2014

Environmental Groups' Reliance on Fossil Fuels Prompts Accusations of Remarkable Hypocrisy

From Gas & Oil:
America’s largest environmental group just admitted to earning millions of dollars each year from oil. 
The Nature Conservancy routinely guilt trips Americans about using fossil fuels. Yet its Texas prairie preserve is home to an oil well. And it has almost $23 million invested in the energy industry. 
This revelation is an example of a real “inconvenient truth” sweeping through environmental outfits. Many of the green groups that attack fossil fuels secretly benefit from oil and gas. These activists aren’t as green as they pretend to be - or as they expect others to be. 
The Sierra Club, for example, demands that universities divest from fossil fuels. Yet according to an audit by the accounting firm Grant Thornton, the Club’s pension invests in index funds that include a number of oil and gas companies, including Exxon, Mobil and Chevron. 
The National Resources Defense Council loudly opposes “dirty fuels.” Yet the group sees no reason to pull fossil fuel companies from its portfolio. Despite calling on the United States to stop using fossil fuels completely by 2050, the World Wildlife Fund has apparently not yet stopped earning money off of investments in oil and natural gas. When asked by The Nation whether the organization applies environmental screens to any of its $75 million in investments in publicly traded securities, the World Wildlife Fund refused to answer. 
Then there’s the Ocean Conservancy, which preaches against Arctic drilling and blames fossil fuels for ocean acidification. The Conservancy’s investment portfolio has stakes in “energy” and “utilities.” In other words, the group privately profits from the activities it publicly condemns. 
This hypocrisy would be amusing if the madness spewing from these groups weren’t so damaging. Their rhetoric informs public perceptions and translates into concrete public policy, which undermines job creation and economic growth.
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New Study Looks at Ways to Minimize Fracking Risks

From the Fraser Institute:
Decisions on hydraulic fracturing should be based on realistic appraisals of risk, so Canadians are not unnecessarily denied the benefits of their natural resources, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. 
The study, Managing the Risks of Hydraulic Fracturing, examines the economic potential of energy resource development via hydraulic fracturing (sometimes referred to as “fracking”) in Canada, and the often-repeated claims made by fracking opponents. 
“While there are risks associated with any type of oil and gas extraction, or any large-scale human endeavor, there’s no evidence of unmanageable risk associated with hydraulic fracturing that justifies a ban or moratorium,” said Kenneth Green, senior director with the Centre for Natural Resources at the Fraser Institute. 
And yet, there have been anti-fracking protests across Canada, and temporary fracking bans and moratoriums in Quebec, Nova Scotia, New Brunswick, and Newfoundland and Labrador.
You can read more about the study here.

And here is the study itself:

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Utica Shale Sees 15 New Permits, Jump in Rig Count

The Ohio Department of Natural Resources has released the latest weekly report on Utica shale permitting in the state.  The numbers continue to climb.

15 new permits were issued last week.  8 of those were for wells in Belmont County, all issued to Rice Drilling.  Harrison (3), Columbiana (2) and Monroe (2) counties were the only others appearing on the latest report.

With another week in the books, the cumulative totals stand at 1,700 permits issued, 1,258 wells drilled, and 704 wells producing.  The Utica rig count, which not that long ago was consistently at about 40, has climbed to 59 on this latest update.

No new permits were issued for drilling into the Marcellus shale in Ohio last week.

Click here to view the entire Utica shale report.

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Rulings on Four Dormant Mineral Act Cases Before Ohio Supreme Court Should Offer Clarity

From Gas & Oil:
There are currently four ODMA cases pending before the Ohio Supreme Court, and the Court could decide to hear additional cases in the next few months. 
  • Dodd v. Croskey is an appeal from Ohio’s Seventh Appellate District, which includes the majority of counties experiencing Utica development.  The propositions of law on which the Court will rule are: (1) Whether the recitation of a prior mineral reservation constitutes a title transaction under Ohio’s Dormant Minerals Act (“ODMA”); and (2) Whether a mineral interest owners filing of a preservation affidavit after a notice of abandonment acts to “cure” prior activity with respect to the mineral interest rather than only giving a right to “contest” the abandonment.  The Court’s ruling in this case will significantly alter how lower courts interpret the ODMA and could dramatically shift the playing field in favor of surface owners.
  • Chesapeake v. Buell is a case in which the Ohio Supreme Court accepted certified questions of law from the United States District Court, Southern District of Ohio.  Those questions are: (1) Is the recorded lease of a severed subsurface mineral estate a title transaction under the ODMA; and (2) Is the expiration of a recorded lease and the reversion of the rights granted under that lease a title transaction that restarts the 20-year forfeiture clock under the ODMA from the time of reversion.  Again, a ruling by the Supreme Court could expand on instances that could be interpreted as “savings events” under the ODMA, thus favoring the rights of mineral owners.
  • Corbin v. Chesapeake, LLC is another case in which the Ohio Supreme Court agreed to hear certified questions from the United States District Court, Southern District of Ohio:  (1) Does the 2006 version or the 1989 ODMA apply to claims asserted after 2006 alleging the rights to oil and gas and other minerals automatically vested in the surface landowner prior to the 2006 amendments as a result of abandonment; and (2) Is payment of the delay rental during the primary term of an oil and gas lease a title transaction and a “savings event” under the ODMA.
  • Walker v. Noon is another appeal from Ohio’s Seventh Appellate District.  The propositions of law to be decided by the Court all involve the ODMA interplay between the 1989 version and the 2006 version of the ODMA and whether surface owners can bring claims under the 1989 ODMA subsequent to the 2006 amendment of the ODMA.  Rulings in the Corbin and Walker cases could dramatically swing the balance of power under the ODMA in favor of the rights of surface owners.
 In addition to the foregoing cases, discretionary appeals to the Ohio Supreme Court have been sought in these cases:

Read this entire article by clicking here.

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Carroll County Continues to Attract International Attention Because of Shale Activity

From Business Journal Daily:
Carroll County, still mostly farmland, superficially, has become the heart and nervous system of the emerging oil and gas industry. While no well there ranks among the top-10 producers of oil or gas in the Utica shale, the collective energy production of the county is a force that has attracted notice from around the world. 
“For some reason, the BBC has me on its speed dial,” laughs Aaron Dodds, the county economic development director, referring to the international attention his community has drawn since 2010. That’s when energy companies descended on eastern Ohio in search of oil, natural-gas liquids and dry gas trapped millions of years 7,000 feet below. 
In addition to the British Broadcasting Corp., news agencies from Saudi Arabia, Abu Dhabi, Sweden and Germany have all contacted Dodds and inquired about his county, for obvious reasons. 
During the third quarter, the 313 producing horizontal wells in Carroll County yielded 1.122 million barrels of oil, more than one-third of all of the oil obtained from Ohio’s Utica shale during the period, according to the latest production records from the Ohio Department of Natural Resources. Natural gas production was also robust at 47.6 billion cubic feet. 
The impact over the last three years is clearly transformative, Dodds says. Farmers who once struggled have now paid off their debts, preventing foreclosure or sale of their assets. Cash flows at a rate never before experienced in the history of the county. Equipment dealerships, restaurants, service businesses flourish; manufacturers have moved into the area; and new construction is visible along the major business corridor in Carrollton. 
“People are starting to spend money,” Dodds says. “They’re no longer waiting for a knock on the door with someone saying they want their check back.” 
Although one-time bonus payments to landowners – some in excess of $5,800 an acre paid in return for leasehold agreements – made some wealthy overnight, Dodds says many people remained apprehensive. The real test was whether these companies, namely Oklahoma City-based Chesapeake Energy Corp., would actually drill and honor these leases with a steady stream of royalty checks – some commanding 20% gross production of a well – for years to come.
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