Md. Senate committee hears fracking fee bill

ANNAPOLIS, Md. — Opponents of using new hydraulic fracturing drilling techniques in western Maryland joined state officials Tuesday in asking lawmaker to support a fee to fund a study of potential environmental impacts.

Industry officials, meanwhile, turned out in Annapolis to warn members of a Senate committee not to turn away what could be an economic boon for two western counties.

The $10-an-acre fee would apply to lands leased for hydraulic fracturing, a drilling method that extracts the gas by blasting through layers of shale rock with a combination of water and chemicals. The bill would use the fee to pay for a study commissioned by Gov. Martin O'Malley.

Sen. Brian Frosh, a bill sponsor, said the governor has asked a state panel to examine the impacts "but it can't fully do its work because it doesn't have the money."

Frosh told the Senate's Education, Health, and Environmental Affairs Committee that the bill authorizes the return of any money that isn't used.

The bill, however, also says owners can be asked to pay more if the study costs more than the fee raises.

Drew Cobbs of the Maryland Petroleum Council told the panel he was concerned the bill could hurt the state's ability to compete with surrounding states. West Virginia and Pennsylvania are already seeing a boom in the new drilling technique, but also complaints about its impact on the environment, particularly ground water.

Farmers who turned out for the hearing took both sides of the issue.

http://www.cbsnews.com/8301-505245_162-57392381/md-senate-committee-hears-fracking-fee-bill/

MarkWest JV to build Utica natural gas gathering system

MarkWest Utica EMG LLC, a joint venture of MarkWest Energy Partners LP and Energy & Minerals Group, signed a letter of intent with Gulfport Energy Corp. to provide gathering, processing, fractionation, and marketing services in the liquids-rich southern corridor of the Utica shale.

MarkWest Utica will develop a natural gas gathering system with Gulfport and other producers, primarily in Harrison, Guernsey, and Belmont counties in Ohio. The companies expect the gathering system to come online later this year.

MarkWest Utica will process the gas at its 200-MMcfd Harrison County processing complex, expected to enter service mid-2013, and will provide NGL fractionation and marketing services at the Harrison County fractionator, where NGL purity products will be marketed by truck, rail, and pipeline.

MarkWest last month announced two new processing plants in Harrison and Monroe counties and the 100,000 b/d fractionation, storage, and marketing facility in Harrison County (OGJ Online, Feb. 1, 2012).

NiSource Gas Transmission & Storage’s Midstream Services last week announced plans to build a roughly 90-mile, large-diameter natural gas gathering system extending through Ohio’s Columbiana, Carroll, Jefferson, Harrison, Belmont, and Monroe counties (OGJ Online, Mar. 2, 2012).

http://www.ogj.com/articles/2012/03/markwest-jv-to-build-utica-natural-gas-gathering-system.html

Landowners dig in, sue over shale leases

Chesapeake Energy Corp. has nabbed a tidy sum from selling just a portion of the oil and gas leases it owns in Ohio's shale fields. But the leases also are causing legal pain for Chesapeake, which is the object of a lawsuit by angry landowners who maintain the energy company enriched itself by failing to compensate them properly for the rights they signed away to the natural resources under their property.

Thirty-three landowners in Columbiana County who have leases with Chesapeake are suing the company. In a single lawsuit, they claim they got less than 1% of what they should have received in up-front bonus payments when they signed their leases, and that the true value of their holdings were hidden from them. In addition, the suit alleges the landowners were not fully informed of the disruptions that would take place on their property, and so did not seek protection from them in their leases.

According to the suit, filed last Monday, Feb. 27, in Columbiana County Common Pleas Court, those landowners signed leases with an agent for Chesapeake, Denver-based Anschutz Energy Corp., between 2008 and 2010, before the value of Utica shale resources widely was known. 

Land agents “concealed and/or actively misrepresented and/or failed to disclose the much greater surface, subsurface, and operational disruption as well as dramatically greater profit potential and value of oil and gas drilling rights that Columbiana County landowners owned,” the suit states. 

The landowners are suing several employees of Anschutz, along with Oklahoma-based Chesapeake. 

In a separate lawsuit, filed Jan. 25 in U.S. District Court in Akron, Chesapeake is suing 95 other Ohio landowners for attempting to get out of their leases and sell them to another bidder. 

Chesapeake declined to comment on the lawsuit against the company, and an Anschutz spokesman did not return a telephone call to discuss the case. 

However, Chesapeake did say it risks its own money in finding and proving underground reserves. 

“The bonus payment should not be viewed as equal to the value of the commodity that exists within the acreage,” Chesapeake director of corporate development Keith Fuller in a Feb. 27 email to Crain's Cleveland Business. “Remember, the financial risk of drilling remains solely with the operator as the reserves are still unproven. The landowner, while assuming no financial risk, retrieves monetary gain.”

Chesapeake hasn't been shy about bragging about the deal it got on its Ohio leases, though — at least not to the investment community.

An 'exceptional' return

In speaking to analysts and investors about its 2011 results in a Feb. 22 conference call, Chesapeake CEO Aubrey McClendon said his company had paid about $2.2 billion for leases in Ohio's Utica Shale. It then sold a 20% interest in those same leases to outside investors in order to raise capital for drilling and production, and got more than five times what it paid for them initially, Mr. McClendon said. It sold a 20% interest in its Ohio leases, mostly to foreign investors, for $2.3 billion, he reported. 

http://www.crainscleveland.com/article/20120305/SUB1/303059993

Fracking firms eye pipeline to D.C. market

The project, dubbed the Commonwealth Pipeline, would transport gas from the state’s Marcellus Shale region to major markets along the East Coast, including Philadelphia and Baltimore. An exact route hasn’t yet been determined, but the 200-mile line, if built, would begin in rural Lycoming County in north-central Pennsylvania and continue south near Harrisburg.

At maximum capacity, it would transport about 7.8 million cubic feet of natural gas each day - nearly four times what the entire country currently uses per month.

The companies involved - Pennsylvania’s UGI Energy Services andCapitol Energy Ventures Corp. and Kansas City, Mo.-based Inergy Midstream L.P. - hope to complete the project by 2015. Inergy would build and operate the pipeline, while UGI and Capitol would own equal equity interests in it, the companies said in a joint statement.

Click to read more ...

Guest column: Public forum just a publicity event in support of fracking

Claims of energy independence are undercut by the fact companies are contracting to sell the gas to Europe and China, and even the Ohio Department of Natural Resources' own literature admits that the available gas will satisfy demand for only about 14 years ("Environmental Regulatory Basics," July 2011). Investment in renewable energy would move us toward independence faster.

Accidents from horizontal fracturing are well documented. In Pennsylvania, 13 percent of fracked wells resulted in contaminated ground water; in Dimmock, Penn., the figure was 33 percent. You-Tube videos from there reveal an industrial wasteland. In Pennsylvania, Wyoming and Colorado people who lived near drilling sites lost all the value of their property because of water contamination. The EPA found evidence of hazardous chemicals including 2-butoxyethanol, benzene, acetone, toluene, and naphthalene at 50 times their safety levels. The claim that these chemicals should be considered innocuous because they can be found in household products is disingenuous because as products they are sold in small quantities and contain warnings about serious effects from ingestion. Even if the exorbitant claims of wealth and jobs bear some truth, neither compensates for threats to health.

n the event of environmental damage, the burden of proof is on individuals against big energy companies with massive resources. Even Republican Attorney General Michael DeWine recommends that stronger regulations be put in place before more drilling permits are issued.

http://www.mansfieldnewsjournal.com/article/20120219/OPINION02/202190317

Shale Boom: Economic impact

"We had our attorneys develop a lease that we felt we could be comfortable with, that would approach and address some of the issues that potentially could be harmful to the environment and that's where we started," Rea said.

That lease has become a national model that presses gas companies to do better than the state of Ohio's regulations.

For example, according to the Ohio Department of Natural Resources gas companies can drill at least 200 feet away from a residence. Under ALOV's agreement, it's 500 feet.

Rea says, "That simply comes because you do have a number of people who are willing to sign a lease at the same time. Strength in numbers certainly benefits us."

The agreement also holds the company responsible for damages to the water supply.

That it will bear the burden of restoring water quality and quantity to its pre-existing condition. And it will provide potable water during that restoration process.

Click to read more ...

Chesapeake gets OK for 3 new fracking wells in northeast Ohio

Chesapeake gets OK for 3 new fracking wells in northeast Ohio

(NYSE:CHK) has gotten permits for three new wells to explore for natural gas in Ohio’s Utica shale field, the Youngstown Vindicatorreports.

The Oklahoma City-based company’s Chesapeake Exploration LLC affiliate said the Ohio Department of Natural Resources granted the wells in Columbiana County, the paper reported, where it plans to look for resources using fracking.

Columbiana County now has 14 wells approved for fracking, the paper said.

http://www.bizjournals.com/columbus/morning_call/2012/02/chesapeake-gets-ok-for-3-new-fracking.html