City Council members in Brunswick, Ohio, the largest city in Medina County, are voicing concerns regarding state laws which give the Ohio Department of Natural Resources the sole authority to issue oil and gas drilling permits throughout the state. Council members are concerned that the laws do not take local zoning into consideration and effectively pre-empt any authority to regulate hydraulic fracturing operations at the local level. The mayor of Brunswick has urged the council to consider the economic benefits brought to the area by oil and gas exploration prior to voting on a proposed resolution which would formally voice their disapproval on the issue.
In response to the natural gas pipeline explosion in Sissonville, West Virginia last month, WCHS Radio 58 and West Virginia Public Broadcasting report that U.S. Senator Jay Rockefeller will hold a field hearing on January 28th in Charleston. The hearing, which will include regulatory officials, industry experts, and those affected by the explosion, will examine current laws and their implementation, as well as a recent report from the Government Accountability Office (GAO) on improving pipeline safety.
The assessed value of property located in Marshall County, West Virginia has increased by almost half in the past two years and has doubled since 2007, reports The State Journal. Chris Kessler, Marshall County Assessor, indicated that the increase in the property values can be largely attributed to the growth in the natural gas, coal, chemical and power industries, according to a news release on January 24. Mr. Kessler specifically listed natural gas drilling, processing, and pipeline activities in Marshall County as some of the items that have impacted the property values.
The Pennsylvania Department of Environmental Protection announced yesterday that it will undertake a study concerning naturally occurring levels of radioactivity in oil and gas drilling by-products. The study, which is expected to take 12 to 14 months, will sample flowback water, rock cuttings, treatment solids and sediments at well pads and wastewater-treatment and waste-disposal facilities. It will also examine pipes and well casings, storage tanks, treatment systems and trucks. DEP Secretary Michael Krancer called the study the “most comprehensive of its kind anywhere.” He also said that it will demonstrate “that states are best suited to responsibly oversee the natural gas exploration and production activities taking place in [their] respective borders.” The DEP retained Perma-Fix Environmental Services to assist in conducting the study, and the DEP announced that it will consult with “independent members of academia to peer review the project’s detailed study plan.” The Scranton Times-Tribune has more.
A Belmont County Common Pleas Court judge recently issued a temporary restraining order and a preliminary injunction against Oxford Oil Company prohibiting the company from constructing a well pad on a landowner’s property. According to court documents, the company had plans to construct an entrance and well pad on the property on December 11, 2012, but could not reach an agreement with the landowners regarding the location of the well pad. The landowners filed suit in December, and were granted injunctive relief temporarily stopping the construction plans.
Like many other “lease busting” lawsuits, the landowners also claim that the lease is void due to improper notarization and accuse the company of withholding information regarding the development of the Marcellus and Utica Shale that would have impacted their decision to agree to the lease in 2008.
The Ohio Department of Natural Resources (ODNR) reports that during the week of January 13 through January 19, 2013, it approved 3 new horizontal well drilling permits regarding the Utica/Point Pleasant Shale, all of which were issued to Chesapeake Exploration LLC for its operations in Carroll County. Through January 19, ODNR has issued 500 horizontal well permits for the Utica/Point Pleasant Shale, 212 horizontal wells have been drilled under such permits, and 48 wells are in production. Of the producing wells, Gulfport Energy Corp. has released production data from two new Utica Shale wells; one in Belmont county and one in Harrison County that are showing impressive numbers. Gulfport’s Stutzman well in Belmont County ranks fourth in production totals among all wells in Ohio, and its Clay well in Harrison County ranks eighth among all producing wells. Gulfport also operates Ohio’s most productive well, the Shugert well in Belmont County which reportedly is producing 7,482 barrels of oil equivalents per day, which includes 28.5 million cubic feet of natural gas per day, plus 300 barrels of oil and 2,907 barrels of natural gas liquids per day.
The Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a press release today indicating that the agency posted record enforcement numbers in 2012. According to the press release, PHMSA issued 116 final orders for the year, the second highest total in its history, and proposed a record $8.7M in fines for pipeline safety violations. The press release also notes that PHMSA has proposed over $32M in civil penalties and issued 509 enforcement orders since 2008. The recent reauthorization of the federal pipeline safety laws doubled the maximum administrative civil penalties that can be assessed for violations to $200K per day, per violation, not to exceed $2M for any related series of violations.
West Virginia, Pennsylvania, Ohio and New York could benefit from more than $10 trillion dollars in new economic activity as a result of the full development of the Marcellus and Utica shale plays, according to an analysis from New York-based Kroll Bond Rating Agency that was reviewed by Business First. Kroll’s economic prediction is based on the sale of shale gas and indirect economic benefits, such as higher employment, increased tax revenues and improved infrastructure.
The U.S. Government Accountability Office (GAO) released a report today concluding that the Pipeline and Hazardous Materials Safety Administration (PHMSA) needs to collect better data and provide additional guidance to improve the ability of pipeline operators to respond to incidents. GAO prepared its report to comply with a mandate in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, the most recent reauthorization of the federal pipeline safety laws. A separate provision in that law requires PHMSA to determine if new safety standards should be established for the use of automatic and remotely controlled shutoff valves on transmission lines. The advantages and disadvantages of using automated valves is one of the issues examined in the GAO report.
Marketwatch.com reports that most consumers living in West Virginia believe shale exploration will provide economic opportunity. Of those polled, nearly a quarter already reported seeing economic impact. The poll, conducted as Huntington Bank’s Midwest Economic Index, shows that populations with the most exploration activity, Pennsylvania, Ohio, and West Virginia had the highest expectation for economic opportunity. Huntington Bank predicts that natural gas production, particularly from the Utica and Marcellus Shale formations, will increase dramatically over the next 25 years and that job growth will continue as well. According to the report, Huntington plans to expand its commercial banking services to serve the energy sector to meet new demand in the energy sector.
Pennsylvania Department of Environmental Protection Secretary Michael Krancer took issue with a recent claim that the state undercounted unconventional wells for impact-fee purposes in a letter to the author of the study, the Post-Gazette reports. In the letter to Joel Gehman, Secretary Krancer argued that the study’s authors “misunderstood or misrepresented” the provisions of Act 13. The report, published earlier this month, contended that Pennsylvania had undercounted the number of wells subject to impact fees by 15,000 to 25,000.
Magnum Hunter Resources has announced plans to drill a minimum of four test wells in Ohio’s Utica formation this year. Magnum Hunter holds mineral rights to 107,000 acres of Utica potential in Ohio. It is currently building its first Utica pad in Washington County. The pad is designed for possibly drilling four horizontal Utica wells. Magnum Hunter expects highly productive results based on its own geological interpretations and the results of nearby operators.
Energy companies are expected to pour billions of dollars into Ohio’s Utica Shale this year, not only for drilling costs, but also for moving and refining the liquids and gases resulting from production. Companies have reportedly already budgeted more than $1.2 billion for drilling costs in Ohio this year, with a predicted $6 billion to be spent on drilling and completing wells by the end of 2014. Several projects have also been slated to improve the infrastructure necessary for the transport and refining of gas, in order to ease capacity concerns.
Industry experts believe that horizontal drilling of shallow wells could be an opportunity for small family-owned drillers, the Pittsburgh Tribune-Review reports. Shallow horizontal wells and fracking are more affordable than in the past due to improved technology and a larger workforce trained in the process. According to the Tribune-Review, PENNECO became the first company to horizontally drill and frack a well for oil out of a conventional formation in Pennsylvania when it completed a well in Lower Burrell in early 2011.
The Pittsburgh Tribune-Review reports that Allegheny County Health Department Air Quality Program subcommittee may conduct a preliminary vote today on whether to require developers to notify them at certain stages of drilling to allow the county to conduct air monitoring. The Pennsylvania Department of Environmental Protection and the Pennsylvania Independent Oil and Gas Association both submitted comments to the proposal and questioned the Health Department’s plan. Although Allegheny County has special jurisdiction over air quality within its limits, but it is uncertain whether it would allow the county to regulate drilling activities in light of Act 13, which the state enacted last year.
UPDATE: The Tribune-Review reports that the Air Quality Program Regulation subcommittee gave preliminary approval to the proposed rules yesterday.