Frack Check WV » revenues

Impacts of Unconventional Gas Wells Increasing

Duane Nichols — Sat, 28 Dec 2013 20:43:44 +0000

Truck Accidents Happen

Unconventional Gas Wells’ Impacts are Increasing

From the Article by Eric Poole, Ellwood City PA Ledger, December 27, 2013

Note: This is the second in a series focusing on the top stories of 2013.

The fracking revolution was late arriving in Lawrence County, Pennsylvania. But it’s here now.

Hydraulic fracturing — the practice of extracting natural gas from shale rock by pounding the underground shale with specially treated water — isn’t a new process. For several years, drilling companies have been fracturing along the Marcellus Shale layer, which runs from upstate New York through eastern Ohio and western Pennsylvania into Kentucky.

Production from fracturing is regarded as a central cause of a glut of natural gas and a decline in utility costs.

In Lawrence County — the state’s seventh-smallest in total area and smallest in Pennsylvania’s Marcellus Shale play — didn’t get its first operating well until 2011. But it’s been growing quickly ever since. Well companies added 18 more wells last year in Lawrence County and 12 this year, according to records provided by the state Department of Environmental Protection.

The wells are becoming more ubiquitous, particularly in the county’s rural regions. And the industry’s presence is being felt in other ways, for good as well as bad. In 2012, Ellwood City leased borough-owned property for drilling. This year, borough officials decided to use most of the initial lease payment to pay off a decade-old bond issue for repairs to Veterans’ Memorial Swimming Pool.

Supervisors in North Beaver Township approved plans to build a gas-powered electric plant, which is expected to go on line in 2016.

But not everyone in the area is pleased by the arrival of fracking in Lawrence County. Maggie Henry, a North Beaver Township farmer, has participated in several protests against hydraulic fracturing facilities, including a well less than a mile from her house.

Henry said fracturing — particularly the chemically treated water used to break underground shale deposits — pose a pollution and safety threat to residents near the natural gas wells.

One of Henry’s nightmare scenarios took place Aug. 1 along Pleasant Valley Road in Perry Township. A combination of early-morning light rain and exposed road tar conspired to force a truck carrying fracturing water off a road into a meadow, where it dumped much of its load. The water compound had a similar makeup to antifreeze, according to Wurtemburg-Perry Township fire personnel. The spill required removal of contaminated soil at the site, although no one was injured.

Drilling companies are in the process of building an infrastructure to deal with the natural gas being extracted in Lawrence and surrounding counties. There are more than 200 wells in neighboring Butler County. Plans are under way to build not only the electric plant, but also a pipeline network to carry natural gas.

This week, the owners of property earmarked for a natural gas refinery in Beaver County said Shell’s oil and gas department has extended its option to purchase the site.

And, as 2014 looms, the impact of drilling is expected to continue growing. Under current state law, the state’s Public Utilities Commission receives fees from drilling companies. Those funds are disbursed to counties and municipalities based on the location of individual wells.

The 12 wells initiated this year will be reflected in payments to the county next year. Pennsylvania is the only state in the Marcellus play that uses a fee system. All other states use a severance tax. And, if Ellwood City officials get their way, this state will soon change.

In December, Ellwood City Council adopted a resolution recommending the state change to a severance tax. However, Gov. Tom Corbett campaigned for office in 2010 on a platform that included opposition to a severance tax. Corbett is running for re-election this year, so repealing the fee in favor of a tax won’t happen until 2015 at the earliest.

Complaint Filed Against Penn State University with the Middle States Commission on Higher Education

Duane Nichols — Wed, 19 Sep 2012 00:10:38 +0000

: RDA files complaint . . .

Complaint filed by the Responsible Drilling Alliance

The Responsible Drilling Alliance, a nonprofit 501 (c) (3) organization in Williamsport, PA, has filed a complaint against Penn State University. They are asking the Middle States Commission on Higher Education to consider this complaint in the context of the accreditation review of Penn State currently underway. Like the issue that caused Middle States to begin its investigation into the universityʼs governance, this complaint also centers on the abuse of public trust by the university.

Penn State published three papers advocating for the shale gas industry which appeared to be independent research papers.

These papers contained greatly exaggerated projections of jobs, economic development, and tax revenues.

Coming from a highly regarded public research institution, the papers profoundly influenced the legislative debate in PA on taxes and regulation in favor of the gas industry. They became the rational for policy decisions by the former and current state administrations.

The three Penn State papers are consistent with similar works in other regions that the shale gas industry has commissioned and uses as a strategy to gain concessions.

The two lead authors have produced a series of similar papers, using their position in higher education, to advocate for narrow interest of the fossil fuel industry.

Penn State never distanced itself from the original paper and allowed its research reputation to be associated with the two subsequent releases after it became known that the authors and their work directly served the interest of the shale gas industry.

RDA is charging that Penn Stateʼs actions were unethical and constitute an abuse of the publicʼs trust.

Fracking Drillers Collected Huge Revenues from Marcellus Gas Wells in 2011

Duane Nichols — Sun, 06 May 2012 18:24:08 +0000

: Wet Gas Region Left of Dashed Line

PA gas drilling yields $3.5 billion in 2011 revenues, $1.2 billion in WV

Marcellus Shale gas wells in Pennsylvania generated about $3.5 billion in gross revenues for drillers in 2011, along with about $1.2 billion in West Virginia, according to an analysis by The Associated Press. However, the wholesale price for natural gas has dipped below $2.00 per MCF over the past few months.

This year less drilling and less revenue may result. The developing strategy is to drill for “wet gas” then separate out the valuable ethane, propane and other hydrocarbon by-products. In 2011 the Marcellus formation produced just over 1 trillion cubic feet of gas in Pennsylvania, and about 350 billion cubic feet in West Virginia. Ohio has almost no Marcellus production, but activities to drill into the Utica formation are underway.

Move to wet gas paying off for drillers

As reported by the Wheeling Intelligencer, natural gas drillers are earning substantially more revenue – up to three times more – for every “wet gas” well they complete compared to every dry well, according to Chesapeake Energy. Company information shows that for a typical dry gas well, the company makes an average of $13,000 in revenue per day.

However, for a “wet gas” well, the daily revenue more than doubles to $27,800 per day. Then, for a “wetter” gas well, such as those found in Marshall County, WV, they earns an average of $38,800 in revenue every day of production. Chesapeake spokeswoman Stacey Brodak said these amounts are for gas streams that keep the ethane with the methane, as opposed to separating and sending the ethane to cracker facility for even higher profits.

The process of keeping the ethane in the gas stream is known as “ethane rejection.” “Ethane rejection may occur when there is not sufficient market demand for purity ethane. Consequently, the ethane is left in the gas stream until increased demand is realized,” Brodak said. Along with the increased focus on natural gas liquids from wet gas, Chesapeake and its partners plan to open a $900 million natural gas processing complex with facilities in Harrison and Columbiana counties in Ohio by the middle of next year. Chesapeake will partner with M3 Midstream and EV Energy Partners to build natural gas gathering and compression facilities that Chesapeake will operate. M3 will operate some processing, natural gas liquids fractionation, loading and terminal facilities.

The processing facility to be located in Columbiana County will have an initial capacity of 600 million cubic feet per day. Natural gas liquids will be delivered to a central hub complex in Harrison County that will feature an initial storage capacity of 870,000 barrels. The Harrison County facility will also have fractionation capacity of 90,000 barrels per day, as well as a substantial rail-loading facility, according to Chesapeake. MarkWest Energy is building a $500 million natural gas processing complex for Harrison and Monroe counties in Ohio, as well.

The map shown above is from the Penn State Marcellus Center for Outreach and Research (MCOR), where other information and other maps of interest can be found.

Revenues from Marcellus Gas under Consideration State-wide in WV

Duane Nichols — Thu, 07 Jul 2011 14:19:52 +0000

Senator Douglas Facemire of the WV Select Committee on Marcellus Shale said the panel wants to hear from Tax Department officials and others in Economic Development to discuss the potential revenues for the state, and concerns abiding with the environmental community over possible harm to water sources. A power-point discussion on the workings of a gas well, how surface pipes function and the injection of chemicals is another topic Facemire wants to explore in the initial meeting, set for 6 p.m. Tuesday at the Capitol.

There’s a chance the select committee will meet again Wednesday to hear what Morgantown officials have to say about the logic behind a fresh ordinance that bans a fracking plant within 1 mile of the city, said the other co-chairman, Delegate Tim Manchin, D-Marion. He wants to combine a second committee meeting with the Joint Committee on Water Resources to explore the angle of environmental protection with regard to water supplies.

While Marshall County officials have spent the past year finding new ways to pay for issues related to Marcellus Shale drilling, the county has not received as much additional revenue as one might expect. However, through a combination of planning and conservative spending, the county will enter the new fiscal year with a surplus, officials said Tuesday.

According to Marshall County Commissioner Jason “Jake” Padlow, the county has received just $71,000 in gas drilling severance funds this year, an amount that has little impact on the county’s $13.3 million budget. “That doesn’t even pay a sheriff deputy’s salary,” he said.

Despite the recession, Marshall County is doing better than most counties in the state. It is now the #2 coal producing county in West Virginia. It’s also become a big draw for gas companies looking to tap the natural gas in Marcellus Shale deep underground. County Commissioner Donald Mason said this means big money for some residents. “We have seen several people in our county become instant millionaires with the signing of the leases and some of them are already producing. There are rumors that some people are getting as much as $60,000 a month from their gas wells,” Mason said. And the money from those lease checks is trickling into the community.