Chesapeake, Partners to Build Ohio Pipeline

Chesapeake Energy Corp. said Tuesday that it and two partners plan to build a $900 million pipeline system in eastern Ohio to transport and process natural gas tapped from the Utica Shale.

Eastern Ohio is seen as the latest hot oil-and-gas producing region, and Chesapeake was one of the first large explorers to move into the region, snapping up drilling rights to some 1.3 million acres at a cost of around $2 billion.

While the discovery of vast natural-gas stores locked in shale formations has pushed prices to 10-year lows this year, energy producers are optimistic about the Utica Shale. They expect large swaths of the deeply buried rock formation to yield oil and natural gas liquids, such as propane, butane and ethane, which trade at a premium to methane, or natural gas.

As of late last month Chesapeake had drilled 42 wells in Ohio, but only seven were producing as the company waiting to be completed, or hydraulically fractured, and connected to pipelines. The company has said it plans to ramp up drilling in Ohio this year, but like other new production fields, the area lacks crucial pipelines and other infrastructure to carry oil and gas to customers.

The planned Utica distribution system will carry and process both natural gas and liquids, which are often used in manufacturing. The abundance of shale ethane, for example, has prompted Royal Dutch Shell PLC to plan a plant in the region that converts the liquid into ethylene, a core component of plastics.

Oklahoma City based Chesapeake, through its publicly traded subsidiary Chesapeake Midstream Partners LP, will own 59% of the pipeline project and operate it. M3 Midstream LLC will control 33% and EV Energy Partners LP, a Houston firm with which Chesapeake owns some of its Ohio drilling land, will have an 8% stake.

French oil giant Total SA, which paid $2.32 billion for a 24% stake in 619,000 of Chesapeake's Ohio acres, has the right to participate in the project, Chesapeake said. Should Total choose to do so, the stakes of Chesapeake and EV Energy Partners would be trimmed.

The system is expected to be operational by the second quarter of 2013.

It's main cryogenic processing plant will be located in rural Columbiana County, northwest of Pittsburgh, and will be able to initially handle 600 million cubic feet of gas per day. Once separated there, gas liquids will be transported to a rail-connected complex in a nearby county that will be able to store up 70,000 barrels.

http://online.wsj.com/article/SB10001424052702304450004577279920334359392.html?mod=googlenews_wsj

Appalachia banks on natural gas, chemical plants

The mining and manufacturing industries have a checkered environmental record in the Appalachians, with watershed contamination, chemical spills and river dumping.

Rivers and forests have been degraded by mountaintop removal mining in which the tops of mountains are shaved off to get to the coal below, sending debris into to the valley.

"Don't get me wrong, I want jobs, but I don't want an environmental wasteland when the chemical plants leave," said Steve Terry, a laborer in Moundsville, West Virginia. "I want this area to prosper, not go to hell."

Despite the plans, some are not convinced ground will be broken for the Shell chemical plant, citing decades of broken economic promises to Appalachia by politicians and corporations.

http://www.reuters.com/article/2012/03/12/us-appalachia-chemicalplant-idUSBRE82B06820120312

Judge's ruling limits shale developer's drilling rights

Nunner said while Chesapeake can vertically extract gas and oil from underneath the hunt club's 187 acres of woods and fields, the energy company can't use the land to drill sideways to get at reserves from adjacent land.

He ordered Chesapeake, a dominant player in Ohio's shale production, to stop horizontal drilling that extends beyond Jewett's property line unless it gets the club's permission to go ahead.

Extracting natural gas and oil from shale formations depends on lateral drilling to carry millions of gallons of water under intense pressure to fracture surrounding rock. Horizontal bores can extend up to 10,000 feet, or almost two miles, from the drill hole. Chesapeake already had poured a 12-acre concrete pad for rigs but has sunk no wells.

"They don't have a right to come in and destroy our surface without fair compensation," said Jewett club president John Harris.

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Fracking in New York: Risk vs. Reward

(CNN) -- The battle over hydraulic fracturing in the state of New York pits farmers against environmentalists, neighbor vs. neighbor, as gas companies wait to find out if they'll be able to unlock the natural gas trapped in the Marcellus Shale formation thousands of feet below the earth's surface.

As a panel appointed by New York's governor looks into whether it can be done safely in New York, landowners look with envy toward neighboring Pennsylvania, where gas companies are paying in excess of $1,000 per acre plus royalties for the right to drill for natural gas on a property.

Hydraulic fracturing, commonly known as fracking, involves injecting a mixture of water and chemicals deep into the earth. The pressure causes shale rock formations to fracture and natural gas is released in the process. The fluid is then extracted and the natural gas is mined through the well. Some fracking operations have been linked to the contamination of drinking water supplies, and that led to a moratorium on hydraulic fracturing in New York.

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Ohio prepares shale regulatory proposals

Ohio governor John Kasich is preparing to roll out a comprehensive new regulatory plan for oil and gas production in the state that will include an increase in severance taxes on operators.

Ohio is home to the largest swath of the red-hot Utica shale play, an area rich with the oil and gas liquids operators are increasingly chasing amid low North American natural gas prices.

Kasich, a Republican, said his plan, which his administration has been working on “for 16 or 17 months”, will “help the industry be successful but at the same time protect the interests of Ohio and protect the interests of the environment”.

“We’re getting ourselves in a position where we don’t have to choose between good environmental policy and job creation,” he told reporters at the IHS CeraWeek conference on Wednesday in Houston.

He said his proposals, set to be unveiled next week, will require companies to disclose the chemicals used during hydraulic fracturing and impose tighter rules on gathering lines and high-pressure pipelines.

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Ohio earthquakes linked to deep injection of Marcellus Shale drilling waste

COLUMBUS, Ohio — A dozen earthquakes in northeastern Ohio were almost certainly induced by injection of gas-drilling wastewater into the earth, state regulators said today as they announced a series of tough new rules for drillers.

View full sizeThe Patriot-News, 2009A towering gas-drilling rig is shown in Susquehanna County in September 2009.

The state announced the tough new brine injection regulations because of the report’s findings on the well in Youngstown, which it said were based on “a number of coincidental circumstances.”

For one, investigators said, the well began operations just three months ahead of the first quake.

They also noted that the seismic activity was clustered around the well bore, and reported that a fault has since been identified in the Precambrian basement rock where water was being injected.

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Niagara Falls says ‘no' to fracking wastes

A Niagara Falls water treatment plant won't accept wastewater from hydraulic fracturing after all.

The Niagara Falls Water Board, a public benefit corporation that provides water and sewer services to the city, had considered accepting fracking waste. They were examining the idea because of its revenue potential. In an article last month, the Associated Press said that there are no treatment plants in New York that can handle fracking fluid.� But an official at the Niagara Falls treatment plant told the AP that the facility, which was built to handle chemical waste, could handle fracking waste by adding some equipment.

Monday night, however, the Niagara Falls city council passed a law banning fracking-related activities, including the treatment of used fracking fluid, reports the Niagara Gazette. While the water board, not the city, operates the treatment plant, the ban would still prevent the treatment of fracking wastewater.

Niagara Falls has a long history of chemical production, and it has the infrastructure to go along with it. But the city is also the site of one of the nation's most notorious toxic disasters: Love Canal. If any place is going to be sensitive to new toxic activity, it's probably going to be Niagara Falls.

In fact, city officials have said as much. Consider this quote from City Council member Glenn Choolokian in an Associated Press article about the ban: "We can't be a test case. We've been through Love Canal. We don't want another Love Canal."

http://www.rochestercitynewspaper.com/news/blog/2012/03/Niagara-Falls-says-no-to-fracking-wastes/