Tuesday, July 31, 2012

Ohio issues 36 more shale drilling permits, mostly to Chesapeake Energy


Carroll County got the most drilling permits from the state of Ohio in June.

Portage County
Permitted: 8
Drilled: 3
Completed: 1
Producing: 0


Noble County, 4 permits
Guernsey County, 3 permits
Jefferson County, 2 permits
Mahoning County, 2 permits
Belmont County, 1 permit
Wayne County, 1 permit

Carroll County continued to be Ohio’s hot spot for shale drilling, with the state issuing 11 new permits there in June.

The Ohio Department of Natural Resources issued 36 new permits in all for horizontal drilling in the state’s shale play last month, the news service reported. The second-most popular location for drilling permits was Columbiana County, with seven, and Harrison County, with five.



Information obtained through the Hanna Report
                                                       Hanna News Service, Inc.



Rally for Freedom from Frack Waste - Conf. Call Thursday

Hello,

Building on the energy generated in Washington, DC last Saturday, local groups all over Ohio and beyond are going to observe a Day of Freedom from Toxic Frack Waste. These simultaneous, local rallies will effectively capitalize on the power of local and national media. 

Regardless of people’s position on drilling, no one wants fracking waste - toxic chemicals, radioactivity, heavy metals, injection wells, earthquakes, and  disposal into water treatment plants, rivers, and landfills. 

Let’s say: “Not in my back yard, not in your back yard, not in anyone’s back yard. No one should have to put up with this!”

Please join the conference call on Thursday at 7 pm to discuss rally ideas, venues, and permits, and share information with organizers throughout the state.

Call in number: 641-715-3300
Code: 1097024#

Looking forward to having you on the call on Thursday,

NEOGAP
Frackfreeamerica.org

Thursday, July 26, 2012

Reminder, the planning call is tonight. I hope you can attend!! The call-in number is:

Imagine the impact - Local protests against toxic frack fluid and injection wells, all across Ohio...and many other states...all on the same day!

With your help, this day of outrage against the generation and disposal of toxic frack waste will send a powerful message to citizens and officials about the long-term devastation to our communities’ shared resources – water and air. 

The first phone call will be Thursday July 26th at 7 pm.  We hope you can call in. This movement will be made up of all the local groups throughout Ohio and will show real grassroots strength.
Our message? Enough is Enough! With one voice we need to say to our local and state governments and to the oil and gas industry:

"We will NOT be a Dumping Ground for Toxic Fracking Waste from Other States, and we want ALL injection of Toxic Frack Waste into the Ground beneath our feet to STOP NOW!
Enough earthquakes! 

Enough putting our drinking water at risk!
Enough putting our air at risk!"

Conference Call information is:
Conference Dial-in Number: (641) 715-3300
Participant Access Code: 1097024#

Convenors:
NEOGAP
Frack Free America

Tuesday, July 24, 2012

On July 16, there was a gas well fire in Bolivar, Ohio, resulting in one death. Information on Blowouts

A wild well is often called a “blowout,” with consequential unrestrained flow at the surface. It often catches fire from a momentary spark. You see scenes on TV of flames engulfing the drilling rig, reaching 100 feet in the air, and smoke erupting as it does from a building fire.

A blowout can occur on any well due to surprise penetration of high-productivity oil- or gas-bearing strata if the crews are not well trained of if they do not react quickly enough. Intense training on this subject is required of specific members of the on-site drilling team, including practice on a “well control simulator.”

All blowouts — or “well kicks,” as we call them it if we prevent the blowout — are preceded by warning signs. Proper training makes all of the crew members sensitive to these signs; supervisory personnel are required to take tests demonstrating their ability to recognize warning signs, as well as how to expeditiously control the well before it becomes a blowout.

One example of a warning sign is noting that more fluid is coming out of the well than is going in. Obvious, isn't it? The crew gets that signal because mud tanks supply the drilling fluid being pumped into the well, and these tanks catch the returning fluid coming back out while drilling. So, a “tank gain” while drilling means extra fluid is coming from down hole. It is a warning sign, because it takes time for that excess flow to reach the surface.

When we see the tank gain start, we close a very large valve on the “blowout preventer” (BOP) that seals around the pipe to prevent flow. We place a check valve inside the top of the drill pipe to keep flow from coming up inside the pipe. Thus the well is contained, inside and outside the drill pipe. The crew initiates a “kill” procedure that circulates heavier fluid to replace the lighter fluid which is heavy enough to hold down the flow.

These procedures are not just learned in a classroom; rules require a test on a simulator that behaves exactly like a real well with the new downhole flow coming in. It is similar to the simulators used to test airplane pilots or car driver reaction time. Essentially, all blowouts can be traced to inadequate attention to warning signs or slow reaction to those signs.

This blowout preventer as well as the crew's reaction ability is regularly tested on the drilling site. The practice tests are not always announced. The device indicating a tank gain can be manipulated to register a gain falsely. This allows management or regulatory personnel to note how quickly the crews respond and complete the well control procedure without announcing it as a practice drill. State regulatory bodies specify the frequency of testing the BOP as well as the degree of training and re-training required of the rig crew and supervisory personnel.

When drilling shale wells as in the Marcellus and Utica formations in Ohio, the geology is now well known and surprise penetrations of potential flowing zones are practically non-existent. Before “fracking,” the shale by itself won't support sustained flow or a blowout. The well has essentially no potential for blowout until stimulated by the first frack job. Any flow before that will be a few bubbles in the drilling fluid, not enough to support flow or cause a catastrophe.

Once the well has been stimulated, it has the potential for a blowout. Any later operation on the well, often referred to as “completion” or a “well intervention” or “workover,” has the potential for a blowout.


Information obtained from Jim Rike Blog, Rike Services

Monday, July 23, 2012

NEOGAP Conference Call for GRASSROOTS Strength

Greetings, Everyone,

Imagine the impact - Local protests against toxic frack fluid and injection wells, all across Ohio...and many other states...all on the same day!

With your help, this day of outrage against the generation and disposal of toxic frack waste will send a powerful message to citizens and officials about the long-term devastation to our communities’ shared resources – water and air. 

The first phone call will be Thursday July 26th at 7 pm.  We hope you can call in. This movement will be made up of all the local groups throughout Ohio and will show real grassroots strength.
Our message? Enough is Enough! With one voice we need to say to our local and state governments and to the oil and gas industry:

"We will NOT be a Dumping Ground for Toxic Fracking Waste from Other States, and we want ALL injection of Toxic Frack Waste into the Ground beneath our feet to STOP NOW!
Enough earthquakes! 
Enough putting our drinking water at risk!
Enough putting our air at risk!"

Conference Call information is:
Conference Dial-in Number: (641) 715-3300
Participant Access Code: 1097024#

Convenors:
NEOGAP
Frack Free America
 
Coalition:
Your name here!

Thank you.  Please participate!

Tuesday, July 17, 2012

Chesapeake is revising leases with "if you don't agree..".


Chesapeake Energy Corp. CHK +0.10%is pushing Ohio landowners to accept revised lease contracts that would help the cash-strapped driller save money while holding on to its prized oil and gas fields.

The company's actions, documented in scores of property and court records, aren't the first time that Chesapeake has tried to change the terms of lease deals, or walked away from them. Since 2008, more than 100 lawsuits have been filed across the country by landowners, who claim the company breached contracts. In some cases, settlements have been reached, in other cases the litigation continues.

image
Ohio Department of Natural Resources
Ohio Department of Natural Resources

The company doesn't dispute that it has sought to renegotiate leases in Ohio. In cases in other states where Chesapeake has walked away from deals, it contends that it had the contractual right to do so.

Chesapeake, the country's second-largest natural-gas producer, has spent about $2 billion to lease the mineral rights to more than a million acres—about 5% of Ohio's land mass—in a bet that Ohio's Utica Shale fields will become a major oil producer. The leases contain deadlines by which the company must drill wells costing millions of dollars apiece or give up rights to the property.

Facing a cash crunch and mounting pressure from activist shareholders to trim spending, Chesapeake is seeking contract changes that would allow it to drill fewer wells while keeping the leases. It is generally required to drill at least one well on a specified group of properties known as a unit; it is trying to bundle leases into much bigger units, which will allow it to drill fewer wells but retain rights to more acreage.


The bigger units mean that each landowner's stake of any oil or gas produced is smaller, but they could potentially share in production from more wells.

Chesapeake's agents tell landowners that they will be shut out of the oil and gas boom if they don't agree to the changes, according to landowners interviewed by The Wall Street Journal, which reviewed more than 100 property records in Ohio filed over the past year detailing the changes.

Breaking News: OH Residents Blockade

Dear Neighbors:

We need to make our decisions about our property's mineral rights with regard for our own family's welfare.  I would encourage you to read about the frustrations this Trumbull County's residents are having with a recent fracking waste water spill in their community and the lack of response from the ODNR to help them.

Respectfully,
Gail Larson


 Sent: Tuesday, July 17, 2012 9:13 AM
 Subject: Ohio residents are blocking access to an injection well in Trumbull County
 


BREAKING: Ohio Residents Blockade Fracking Wastewater Injection Well Site
Ohio residents are blocking access to an injection well in Trumbull County this morning, protesting the failure of Ohio regulators to adequately test and monitor the dumping of toxic fracking wastewater in the state.
http://www.progressohio.org/blog/2012/07/ecowatch-ohio-residents-blockade-fracking-wastewater-injection-well-site.html#more

Thursday, July 12, 2012

Ohio has banned oil and gas drilling in Lake Erie!

Gov. John Kasich issued an executive order yesterday banning oil and gas drilling in Lake Erie, doubling a protection to Ohio’s Great Lake already provided by Congress.

Kasich signed the order in Port Clinton, where he attended the Fish Ohio Day luncheon and earlier in the day cast a line in the water with anglers. His order prohibits the Department of Natural Resources from “issuing any permit, license or lease allowing” drilling in or under Lake Erie.

The “in or under” distinction is important, Kasich spokesman Rob Nichols said, to prevent drilling that starts on the shore but continues under the lake bed. There is already a federal law prohibiting drilling in all the Great Lakes.

Nichols said the executive order Kasich issued was similar to the one signed by then-Gov. Bob Taft years ago, an order that was not renewed when Taft left office in early 2007.

The Republican Kasich received immediate — if brief — praise from across the aisle for his lake-drilling ban. Before the governor had even signed the order yesterday afternoon, Democratic state Rep. Nickie J. Antonio of Lakewood said in a statement, “While I applaud Gov. Kasich for issuing this executive order which bans drilling in Lake Erie, Ohio needs a long-term solution."

Antonio then urged passage of a bill she introduced last year to ban drilling in the lake.

The Ohio Environmental Council said Kasich’s order was legally significant because there is no guarantee that the federal ban would remain in place, given the country’s political climate. Julian Boggs, of Environment Ohio, also praised Kasich in a statement but then called for a moratorium on “ fracking” throughout Ohio — a proposal Kasich has routinely dismissed.

Kasich was joined on the fishing portion of his Lake Erie visit — which included 19 chartered boats — by former Gov. and U.S. Sen. George V. Voinovich. Kasich’s office said the state has an $800 million sport-fishing industry.

Last month, Kasich signed House Bill 473, designed to bring Ohio into compliance with the 2005 Great Lakes Compact that allows companies and farms to withdraw 2.5 million gallons of water per day, averaged over 90days, without a permit.

Kasich vetoed a Great Lakes bill a year ago that would have allowed 5 million gallons to be withdrawn from Lake Erie without a permit.

Kasich imposes new rules on injection wells

COLUMBUS - Ohio Gov. John Kasich on Tuesday issued an executive order that immediately imposed new state regulations on deep-injection wells used to dispose of chemically laced wastewater from oil and gas drilling.

The directive gives the Ohio Department of Natural Resources temporary authority to implement a list of rules announced after a series of Youngstown-centered earthquakes last year was tied to one such deep well off Salt Springs Road.

The official order signed by Kasich says the regulations will provide the greatest degree of citizen protection possible without causing irreparable harm to an important industry.

This is a step.  People are being heard.   ODNR reports that there are 175 injection wells in Ohio with 24 NEW pending permits.

We need to still review, stay informed and communicate our desire for responsible actions that preserve our communities not destroy them.

Robin L Brower
How safe is your water?

Tuesday, July 10, 2012

New Study: Fluids From Marcellus Shale Likely Seeping Into PA Drinking Water

New research has concluded that salty, mineral-rich fluids deep beneath Pennsylvania's natural gas fields are likely seeping upward thousands of feet into drinking water supplies.

Though the fluids were natural and not the byproduct of drilling or hydraulic fracturing, the finding further stokes the red-hot controversy over fracking in the Marcellus Shale, suggesting that drilling waste and chemicals could migrate in ways previously thought to be impossible.

The study, conducted by scientists at Duke University and California State Polytechnic University at Pomona and released today in the Proceedings of the National Academy of Sciences [1], tested drinking water wells and aquifers across Northeastern Pennsylvania. Researchers found that, in some cases, the water had mixed with brine that closely matched brine thought to be from the Marcellus Shale or areas close to it.

No drilling chemicals were detected in the water, and there was no correlation between where the natural brine was detected and where drilling takes place.

Still, the brine's presence – and the finding that it moved over thousands of vertical feet -- contradicts the oft-repeated notion that deeply buried rock layers will always seal in material injected underground through drilling, mining, or underground disposal.

"The biggest implication is the apparent presence of connections from deep underground to the surface," said Robert Jackson, a biology professor at the Nicholas School of the Environment at Duke University and one of the study's authors. "It's a suggestion based on good evidence that there are places that may be more at risk."

The study is the second in recent months to find that the geology surrounding the Marcellus Shale could allow contaminants to move more freely than expected. A paper published [2] by the journal Ground Water [3] in April used modeling to predict that contaminants could reach the surface within 100 years – or fewer if the ground is fracked.

Last year, some of the same Duke researchers [4] found that methane gas was far more [5] likely to leak into water supplies in places adjacent to drilling.

Today's research swiftly drew criticism from both the oil and gas industry and a scientist on the National Academy of Science's peer review panel. They called the science flawed, in part because the researchers do not know how long it may have taken for the brine to leak. The National Academy of Sciences should not have published the article without an accompanying rebuttal, they said.
"What you have here is another case of a paper whose actual findings are pretty benign, but one that, in the current environment, may be vulnerable to distortion among those who oppose this industry," said Chris Tucker, a spokesman for the gas industry trade group Energy In Depth. "What's controversial is attempting to argue that these migrations occur as a result of industry activities, and on a time scale that actually matters to humanity."

Another critic, Penn State University geologist Terry Engelder, took the unusual step of disclosing details of his review of the paper for the National Academy of Sciences, normally a private process.
In a letter written to the researchers [6] and provided to ProPublica, Engelder said the study had the appearance of "science-based advocacy" and said it was "unwittingly written to enflame the anti-drilling crowd."

In emails, Engelder told ProPublica that he did not dispute the basic premise of the article – that fluids seemed to have migrated thousands of feet upward. But he said that they had likely come from even deeper than the Marcellus – a layer 15,000 feet below the surface – and that there was no research to determine what pathways the fluids travelled or how long they took to migrate. He also said the Marcellus was an unlikely source of the brine because it does not contain much water.
"There is a question of time scale and what length of time matters," Engelder wrote in his review. In a subsequent letter to the Academy's editors [7] protesting the study, he wrote that "the implication is that the Marcellus is leaking now, naturally without any human assistance, and that if water-based fluid is injected into these cross-formational pathways, that leakage, which is already ‘contaminating' the aquifers with salt, could be made much worse."

Indeed, while the study did not explicitly focus on fracking, the article acknowledged the implications. "The coincidence of elevated salinity in shallow groundwater... suggests that these areas could be at greater risk of contamination from shale gas development because of a preexisting network of cross-formational pathways that has enhanced hydraulic connectivity to deeper geological formations," the paper states.

For their research, the scientists collected 426 recent and historical water samples -- combining their own testing with government records from the 1980s -- from shallow water wells and analyzed them for brine, comparing their chemical makeup to that of 83 brine samples unearthed as waste water from drilling sites in the Marcellus Shale.

Nearly one out of six recent water samples contained brine near-identical to Marcellus-layer brine water.

Nevertheless, Jackson, one of the study's authors, said he still considers it unlikely that frack fluids and injected man-made waste are migrating into drinking water supplies. If that were happening, those contaminants would be more likely to appear in his groundwater samples, he said. His group is continuing its research into how the natural brine might have travelled, and how long it took to rise to the surface.

"There is a real time uncertainty," he said. "We don't know if this happens over a couple of years, or over millennia."

Ohio Water Testing www.aquadata-OH.com
                                                       (888) 510-7222
                                                                                   
by Abrahm Lustgarten
ProPublica, July 9, 2012, 3 p.m.

NiSource, Hilcorp to develop shale in Ohio, Pennsylvania


Two Houston-based companies — Hilcorp Energy Co. and NiSource Gas Transmission and Storage — have announced plans to build a large natural gas processing plant and pipeline system in Northeast Ohio and western Pennsylvania.

The two companies said the project will come online in late 2013, when it will be able to process
200 million cubic feet of gas per day, fed to it by 50 miles of 20-inch pipeline that will be constructed for the project.

A total price tag was not disclosed, nor was the location of the proposed plant, which would process “wet gas” and remove from it valuable liquids used in industries such as plastics and petrochemicals. However, NiSource said the first phase of construction, to begin later this year, will cost about $300 million.

The two companies are forming a new venture, Pennant Midstream LLC, to construct and operate the pipeline and plant.

In addition, the two companies hold drilling rights in both Ohio and Pennsylvania and will combine them as part of the joint venture. A spokeswoman for NiSource said additional information on the drilling rights would be released at a later date.

The project is yet another sign of the economic draw of shale gas and other resources found in Ohio's Utica shale, as well as the Marcellus shale play in Pennsylvania. NiSource CEO Robert Skaggs called it “a tangible example of the various upstream and midstream growth options available to NiSource across the shale energy region.”

He added, “We will continue to build our inventory of growth and investment projects as development and delineation of the shale play unfolds.”

NiSource spokeswoman Chevalier Mayes said the processing plant will anchor the pipeline system by serving as its primary endpoint. The facility also will have the capacity to process gas from other sources. Ms. Mayes said the processing plant and pipeline network also can be expanded as drilling progresses in the region.

“The facilities can and will be expanded as Utica/Point Pleasant shale production grows in northeast Ohio and western Pennsylvania,” Ms. Mayes told Crain's in an email.

“The producers in the area are still acquiring and consolidating leasehold acreage positions and will begin drilling test wells this year,” she said. “Rapid development is expected to begin in 2013 once the science and engineering work is done to evaluate the play.”

NiSource, the parent company of Columbia Gas of Ohio and a national giant in the natural gas industry generally, has announced similar projects in Ohio and Pennsylvania this year. Among those projects are a 90-mile pipeline system in southeastern Ohio and a 70-mile pipeline in southwestern Pennsylvania.

By Dan Schingler
10:56 am, July 10, 2012

Monday, July 9, 2012

Interesting Read from July/August issue of Sierra Magazine

Dear Neighbors:

I received the article that is attached to this email from a friend in Geauga County.  The article was researched and written by Ed Humes, a Pulitzer Prize winning journalist. 

Gail Larson
Trumbull Township

 July/August issue of Sierra Magazine


://www.sierraclub.org/sierra/201207/pennsylvania-fracking-shale-gas-199.aspx

About Ed Humes:  Discover the journalist Ed Humes

Friday, July 6, 2012

It's getting closer.... Important Meeting Notice

At Tuesday's Hiram Township Trustees meeting, it was confirmedby the Mountaineer Keystone Drillers that they will begin drilling on UdallRoad in August.

If you can spare an hour to distribute information tohouses in Hiram Township and Hiram Village, please contact me immediately.

We want you and your neighbors to know that we're havinga meeting about getting water tested July 11, 7 p.m. at the Hiram Christian Church and the drillers offered to have a public meeting to answer all the questions neighbors have. 

WE WANT EVERYONE TO KNOW ABOUT THESE TWO MEETINGS.
AS SOON AS I HAVE CONFIRMED THE DATE, TIME AND PLACE,I will make up a flyer.
I WILL HAVE HALF SHEETS MADE UP WITH INFORMATION.  IFYOU AND A PARTNER CAN SPEND AN HOUR DISTRIBUTING THIS INFORMATION, WE CANCOVER MOST OF THE VILLAGE AND THE TOWNSHIP.

I CAN'T DO THIS ALONE. 

Can you please spend an hourdriving around the township or walking the village?  This is our community.  When the drilling gets going, we'll all be affected.
If you live in the village, let your village council know. Contact me if you have any questions.

Gwen
Gwen B. Fischer
Concerned Citizens Ohio
(based in Portage County)

Contact Gwen at concernedcitizensohio@gmail.com

Thursday, July 5, 2012

https://www.puc.state.oh.us/puco/

 

Thank you for your input

Please print this page or write down the following information.



It's an easy process.  Please make your comments known if you have an all electric home and are concerned with the high costs of electricity and their promise of an all electric discount.

Robin L Brower
Trumbull Township


Please review the previous post in the BLOG for more information.

ALL ELECTRIC HOME ENERGY ISSUES: Please read

Dear CKAP Friends,
 
If you recall, there has been some confusion regarding the expected bill increases to AE customer bills as a result of ESP3.   I have completed my calculations, and they have been confirmed by the OCC, and I am awaiting confirmation from FE later this week.   The part that was left out of previous calculations was the fact that we will start to lose our RGC credit beginning in Winter 2013.   To review, the RGC credit is roughly half of the total AE Discount we currently receive (about 3.5 cents) and as part of the 2011 PUCO AE Decision, will be phased out beginning Winter 2013. 
 
If you factor together the proposed ESP3 with the high capacity auction prices with our loss of RGC credit,  CEI (Illuminating customers can expect an overall increase of 31% over the next three years ending 2015/2016.   OE customers will fare better but still can expect an overall increase of 16% over the next three years ending in 2015/2016.  Once we reach this point, we still have 3 more consecutive years of increased bills on top of this until the RGC is completely phased out by 2018. 
 
I hope this inspires you to take a couple minutes and send comments into the PUCO Case Docket for this case.   Some of you may feel it is useless to complain to the PUCO; however, I can tell you having your comments logged on this case serve many purposes.   For instance, when the AE Crisis of 2010 hit, the PUCO defended their decisions that raised our rates by saying that no one had complained about projected rate increases and thus the PUCO had no idea AE customers would be negatively impacted. We cannot afford to let that happen again. 
 
Still only about 200 of you out of 3,000 have sent comments into the PUCO.    You don’t need to be an expert on the issue, you simply need to express your concern of rising bills as an all-electric customer.
 
To file comments, use one of the methods below and be sure to request your comments be filed in the case for FirstEnergy’s new ESP3 or Case # 12-1230-EL-SSO:
 
·         Online form via  https://www.puc.state.oh.us/secure/PicForm/index.cfm?intype=comment
·         By Fax (614) 752-8351
·         By Phone (800)-686-7826  8 am to 5pm
 
In the past, you could simply send an email to docketing@puc.state.oh.us with your concerns.  The PUCO doesn’t advertise this method anymore, but I believe it still reaches the docket.  You should include your name and address if you use this method, along with the Case #.
 
 
Sue Steigerwald, Founder
Citizens for Keeping the All Electric Promise (CKAP)
www.AllElectricHomes.info

Submitted by Gail Larson
                       Trumbull Township

Caution to private land owners who deal with Chesapeake

From Monday, June 25th, 2012


(Reuters) - Shares of Chesapeake Energy Corp (CHK.N) and Encana Corp (ECA.TO) tumbled Monday after a Reuters investigation showed that top executives of the two rivals plotted in 2010 to avoid bidding against each other in a state auction and in at least nine prospective deals with private land owners.

Following the report, the state of Michigan pledged to determine whether the two energy giants acted two years ago to suppress land prices there.

Top company officials discussed ways to divide counties in Michigan so that neither company would bid against the other for what they then considered prime oil- and gas-acreage, emails show. Some of the emails were between now-embattled Chesapeake CEO Aubrey McClendon and Encana USA president Jeff Wojahn.

Ed Golder, a spokesman for the Michigan Department of Natural Resources, which oversees state land auctions, said officials were "reviewing the allegations" in the Reuters report and had asked for assistance from the Michigan attorney general. "Our commitment is to ensure the integrity of the auction process, and to receiving fair market value for public land," Golder said. A spokesman for the attorney general's office declined to comment.

Encana's chairman also pledged quick action. "In accordance with Encana's policies, an investigation of this matter was immediately initiated," David O'Brien, chairman of Encana's board of directors, said in a statement. "Encana therefore will not provide any further information at this time."
Both Chesapeake and Encana acknowledged they had discussed forming a joint venture in Michigan in 2010 but said they ultimately decided against it. Chesapeake declined further comment on Monday.

News of the discussions to suppress land prices helped push Chesapeake shares down 8.5 percent to close at $17.03 on the New York Stock Exchange, making the company the worst performer in the Standard & Poor's 500 on Monday. Encana's stock closed down 3.7 percent, to C$19.61 in Toronto.
Analysts said inquiries by Michigan authorities could hamper efforts by both companies to sell or develop their holdings in the state.

Encana is looking for a joint venture partner to help develop its oil and gas acreage in Michigan's Collingwood shale formation. Chesapeake aims to sell about 450,000 acres of its holdings in northern Michigan as it works to raise money to meet an expected $9 billion to $10 billion cash shortfall this year, according to a prospectus released by one of its advisers earlier this month.
About 80 percent of Chesapeake's Michigan acreage is located on land it leased from the state. "I assume the state of Michigan will be fairly aggressive in investigating the alleged improprieties raised in the article, and similarly private landowners also appear to have some basis for seeking damages" if the companies conspired to keep land prices low, said Mark Hanson, an oil analyst with Morningstar in Chicago.

Encana controls 430,000 acres of land in Michigan's Collingwood and Utica shale regions. It moved into the state in 2008, assembling its initial 250,000 acre position there for an average price of $250 per acre. Its initial wells in the state were prolific, with one producing an impressive 6.5 million cubic feet of gas per day in its first month of production.

Chesapeake's Michigan prospectus was posted on the website of Meagher Energy Advisors, an energy-focused asset acquisition and divestiture firm that has sold assets for Chesapeake in the past. Bids for the Michigan assets are due on June 29; a decision is expected in late July, Meagher said.
But that timing may no longer be realistic. "In the short term at least, (the antitrust allegations) could cloud the assets. Nobody is going to want to buy these assets until they understand the potential liability," said Logan Robinson, a law professor at University of Detroit Mercy and a former general counsel for automotive-parts supplier Delphi Automotive.

(Reporting by Joshua Schneyer in New York, Anna Driver in Houston, Brian Grow in Atlanta, Scott Haggett in Calgary; editing by Blake Morrison, Martin Howell)

TODAY'S PRICE:
  • Chesapeake Energy Corp CHK.N
    $19.90
    +0.54+2.79%
  • Encana Corp ECA.TO
    $20.83
    +0.08+0.39%

Fracking permits are still on the rise

Chesapeake Paid Almost No Income Taxes On $5.5 Billion In Profits

Dear Neighbors:
This article indicates that the subsidy drillers get was appropriate in the past but is no longer necessary.  Perhaps we can encourage Congress to stop this out-dated subsidy and spend the increased revenues on our veterans, our children, our seniors and/or our infrastructure.

For more information, read the story posted in HUFF Business. 

One scandal-ridden company has managed to essentially avoid paying U.S. income taxes for more than two decades.

Since its founding 23 years ago, Chesapeake has paid about 1 percent in taxes of its $5.5 billion in pretax profits, Bloomberg reports. Because of the risk that oil and gas companies could drill into a well that ends up being dry, they are allowed a loophole to stave off paying taxes on a large percentage of income. Less than a single percent of Chesapeake’s wells turned up dry last year.
Chesapeake has been marred by scandal in recent months. Investors stripped Aubrey McClendon, the company’s founder, of his chairmanship last month after reports surfaced that he, among other corporate governance issues, accepted a personal loan from a company that was working with Chesapeake.
Gail Larson
Trumbull Township


One scandal-ridden company has managed to essentially avoid paying U.S. income taxes for more than two decades.

Since its founding 23 years ago, Chesapeake has paid about 1 percent in taxes of its $5.5 billion in pretax profits, Bloomberg reports. Because of the risk that oil and gas companies could drill into a well that ends up being dry, they are allowed a loophole to stave off paying taxes on a large percentage of income. Less than a single percent of Chesapeake’s wells turned up dry last year.

Chesapeake has been marred by scandal in recent months. Investors stripped Aubrey McClendon, the company’s founder, of his chairmanship last month after reports surfaced that he, among other corporate governance issues, accepted a personal loan from a company that was working with Chesapeake.

Still, Chesapeake isn’t the only major company to use a loophole in an aim to lower its tax bill. Thirty of America’s most profitable companies paid nothing in income taxes over the last three years, according to a November report from the Citizens for Tax Justice. In addition, nearly 300 companies paid an average tax rate of 18.5 percent between 2008 and 2010. The U.S. corporate tax rate is technically 35 percent.

HUFF Post Business

Tuesday, July 3, 2012

Re-fracking wells and why they want to do it.

Editor's note: Jim Rike is a well-known Louisiana-based petroleum engineer and a consultant to some of the world's largest energy companies.

The hydraulic fracturing (“frack job”) of a shale gas well is a process that uses hydraulic energy to create a split and expose extra surface producing area in the productive shale, thus making it economically profitable to drill. This extra surface area is directly related to more oil or gas being produced per day.

Think of it this way: If valuable fluid was dripping from the ceiling of your cellar, you would be a lot richer if you had acres of ceiling surface producing that fluid. If your ceiling had lots of cracks and ridges, its surface area would be increased dramatically. Similarly, frack jobs increase that productive surface of shale available to the well.

We know we drain the oil and gas from only a short distance away from the fracture surface. We don't know whether that is a few feet or a few hundred feet, and it probably varies a great deal from one shale area to another, or possibly from one well to another.

Drillers found economic success when we started drilling horizontal wells into the shale producing zone and created additional producing surface area with multiple fracks, spaced along the horizontal length of the well bore. After the bore of a well reaches the shale, thousands of feet beneath the surface, it turns and runs through the shale itself, often great distances. It is in this horizontal section within the shale that fracturing points are placed at intervals in order to produce cracks in the shale to release its hydrocarbons. Each fracturing point creates an oval of fissures through which gas and/or oil flows into the well bore.

Drillers started with one or two or three of these fracturing points, but have found that more and closer-spaced fracks made for more productive and more profitable wells. Today, some companies are considering up to 40 fracturing points in a single well. Trial and error results will provide the only definitive answer as to the correct number that maximizes profit in a given region or well.

If we find that more profit is available as the spacing between “frack ovals” decreases to, say, 100 feet or less, then it likely will become attractive in the future to add fractures to existing wells that presently have more widely spaced fracks. Each of those subsequent frack jobs is likely to require a similar surface pad and large assembly of equipment as well as lots of water. However, most won't require the high derrick and massive drilling rig used when the well was originally drilled.

Some of those previously completed wells may be made more profitable by re-assembling a drilling rig and drilling a new lateral hole from the existing well. With good expertise and planning, this can be more economical than drilling an entirely new well, yet generate as much new income as a result.

The oil/gas industry will develop new technology as opportunities arise.

Some experts are suggesting fracking with compressed gas. Carbon dioxide has been successfully used to frack wells, where carbon dioxide is available at high pressure and low cost. Some “dreamers” visualize taking nitrogen from the air and compressing it on site to accomplish a frack job. At present, fracking with liquid-based materials is far less expensive and safer than these gas frack alternatives.

There is little doubt that the wells we are drilling today will be revisited in the future to increase their productivity. But there is little evidence that indicates we will re-frack the same frack ovals that have been produced and depleted. The existing source rock does not get replenished with enough oil/gas within a lifetime to make that re-stimulation economically viable.

There will be cases where the first frack was poorly designed or executed due to lack of knowledge or experience at the time. When these instances are found with reasonable surety, a re-stimulation job on that well can be quite successful. We know a lot about fracturing; we know a lot about shale; we know a lot about Marcellus Shale, but the industry continues to learn more with each frack job completed. The Utica Shale adds a complete new mystery; it almost certainly won't behave the same way as the Marcellus Shale.

But one thing is about as certain as things get in the oil and gas industry: the wells we're drilling today will not give up all of their resources from their initial frack jobs — and will probably produce for years to come as we continue to learn how best to support their ongoing productivity.