Posts Tagged ‘chesapeake energy corp’

What They’re Saying: Marcellus Shale Helping Small Businesses Reach “The American Dream”

Clean-Burning Marcellus Natural Gas Helping Small Businesses Reach “The American Dream”: Fred Raco is living proof that hard work plays a big role in reaching the American dream. … Raco is negotiating to purchase and refurbish a new facility in Richland Township, giving him three times more space than the city site. “We’re really gearing up for this,” he said of the Marcellus Shale. Raco currently has 23 employees working at his Johnstown laboratory and in the field. He expects his employment to reach 50 within two years. … Raco thinks Marcellus may allow more young people to stay at home. “They are by no means minimum-wage jobs.” Raco rejects the notion that the Marcellus jobs are going to workers from Texas. “There is a real misconception that all the jobs are being filled by people from out of the state,” he said. “We’re doing work with companies that are Pennsylvania-based that are manufacturing metering stations, manifold piping, that type of thing.” (Tribune-Democrat, 12/15/10)

Marcellus Shale Creating Jobs for America’s Veterans: A Penn State economic impact study predicted the industry will be an $8 billion boon to the state, with about half of that money generated in southwestern Pennsylvania. The study, commissioned by the Marcellus Shale Coalition, also projected that 88,000 jobs would be created in Pennsylvania this year. Those jobs are great opportunities for veterans, said Kathryn Klaber, executive director of the Marcellus Shale Coalition. Range employs dozens of veterans, Mr. Pitzarella said. “They’re ideal candidates,” he said. “They’re hard workers, team-oriented, natural leaders and have no issues with long hours.” … When Carl Dokter served another tour of duty overseas, Range held his job for two years and hosted a welcoming ceremony for him when he returned, he said. … Chesapeake Energy Corp. is another driller that employs a large number of veterans and is expanding its local footprint. The company employs about 150 military officers and servicemen, spokesman Rory Sweeney said. (Post-Gazette, 12/16/10)

Small Business Owner: “I am a Marcellus Overnight Success”: Three years ago, Larry Mostoller had two employees and was trying to develop a business park outside Somerset. Today, Mostoller employs 100 people and provides work for more than 30 subcontractors. He has gotten involved in the Marcellus Shale industry. “I am a Marcellus overnight success,” Mostoller said. Mostoller is co-founder and CEO of Somerset Regional Water Resources, a two-year-old company that provides nearly all general labor needs on a gas drilling site. … Mostoller is proof of Marcellus Shale’s role in changing the economic landscape. … One thing is certain: Marcellus is having an impact. … “It’s absolutely phenomenal. All of us are going to live better.” He is convinced that Marcellus Shale gas will continue to help meet the nation’s energy needs for years to come, and its development will take decades. “The person that drills the last Marcellus well has not been born yet,” Mostoller said. (Tribune-Democrat, 12/15/10)

Mayor: ‘Marcellus Multiplier’ Jobs Good “For The Entire Region” : For one Mon Valley municipality, drilling for natural gas into the Marcellus Shale will create dozens of new jobs. Export-based Dura-Bond Industries will open a 55,000-square-foot pipe-coating facility along the Monongahela River in Duquesne. It will serve to complement the company’s existing coating facility in nearby McKeesport. … Once opened, the facility will create between 75 and 85 new jobs in the Mon Valley, a fact that is not lost on Duquesne Mayor Phil Krivacek. “Well, anytime you can bring in a company that will create new jobs in the region is a definite plus,” said the mayor. “I think this a good thing for not only Duquesne, but for the entire region.” … “We are good stewards of the environment and will continue to be. It is imperative that the needs for job and energy production can meet with the needs of the environment.” (Post-Gazette, 12/16/10)

Small Business Owner on Marcellus Supply Chain Related Work: “We Were So Lucky”: Chesapeake has spent more than $94 million this year to pave or repair 300 miles of roads in Bradford and three other counties. That has benefited Leo Drabinski, who co-owns Calvin C. Cole Inc., a hard-rock quarry and construction company in Bradford County. He said demand for rock used for roads and well sites used by gas companies grew 10 times in the past year. He increased his quarry staff to 15 from six, and even started a van service to shuttle rig workers to their jobs. “We were so lucky,” Mr. Drabinski said. “We’re right in the heart of this natural-gas boom.” Business is also booming for truck dealerships, restaurants and motels. Some farmers have sold lease rights for $5,000 an acre, using the money to pay off debt, invest in new farm equipment or retire. … Chesapeake, whose Towanda offices are in a renovated department store, says it is working with local colleges so it can train an all-local work force. In the past year, the company increased its staff in the state to 1,100 from 250 and said more than 400 employees are state residents. (Wall Street Journal, 12/14/10)

Responsible Marcellus Development “The Region’s Gold Rush”: The Marcellus Shale is said to be the biggest natural gas field in the United States — spanning nearly 61 million underground acres under Ohio, West Virginia, Pennsylvania and New York. Southwestern Pennsylvania is called the “fairway” of the shale by industry experts, and its economic impact reaches beyond the energy in demand. Local politicians have described it as the region’s gold rush and the second coming of the coal and steel industries. (Post-Gazette, 12/16/10)

Economic Leaders: “Marcellus-Related Opportunities Have Meant Jobs in Various Areas”: Economic leaders…have been watching the Marcellus action to the west of the region and in the state’s northeastern counties. “JARI has identified the Marcellus Shale opportunity as one of the top opportunities for our region in the coming years,” Thomson said. … “The Marcellus industry needs just about anything and everything. It’s just amazing the amount of things that are needed.” … “The spinoff is where we’re going to see the economic impact,” Silka said. … Bradford County Commissioner John Sullivan said Marcellus-related opportunities have meant jobs in various areas. “They’re building three motels in the county,” said Sullivan. Sullivan has a friend who sells tires, and the Marcellus drilling has had a significant impact on his business. Another friend has a quick-lube shop and is overrun with business… Williamsport has seen 75 new businesses open during the past 18 months – since the surge in Marcellus drilling began there. … Kathryn Klaber, president of the Marcellus Shale Coalition said much of the economic benefit will be outside the direct industry. “The jobs story is starting to have a much broader reach,” Klaber said. … State Sen. John Wozniak, D-Westmont, said the Johnstown region is on the cusp of an improved economy. “It’s just beginning and there is a tremendous opportunity out there.” (Tribune-Democrat, 12/15/10)

Wall Street Journal Underscores Marcellus Shale’s Positive Economic Impact: A recent Penn State study estimates that Marcellus is the second largest natural gas field in the world. The study notes that Pennsylvania had $4.5 billion in Marcellus-related investment in 2009, generating nearly $400 million in state and local tax revenue and 44,000 jobs. … The drilling industry could compensate with new jobs in construction, trucking, engineering and a variety of attendant services. The industry also pays royalties and leases land from landowners, who pay taxes and buy goods. … The EPA and the Ground Water Protection Council, a nonprofit made up of state regulatory agencies, have published studies concluding that fracking is safe. While energy exploration is never risk-free, the Ground Water Council hasn’t found a single documented case of fracking having polluted local ground water. (Editorial, 12/16/10)

New Fed. Govt. Analysis Projects Rapid Growth in Clean-Burning Natural Gas

“DOE sees rapid growth in natural gas”: The Energy Department foresees a rapid growth in natural gas production over the next 25 years, according to a report from its statistical arm Thursday. … Natural gas will represent 62 percent of new capacity by 2035, EIA said. The greatest chunk of that should come from shale gas, which has already increased production 14-fold over the last decade. (Politico, 12/16/10)

“Shale-Gas Output May Double by 2035, Reducing Energy Imports, U.S. Says”: Production forecasts for natural gas locked in shale have doubled, which will help the U.S. become less reliant on imported energy, according to a federal agency. The Energy Information Administration’s annual long-term forecast shows gas from shale will play a bigger role in meeting U.S. demand, Richard Newell, agency administrator, said today in Washington. Production in 2035 is “twice the level that we had in last year’s outlook,” he said. … This year’s outlook more than doubles the estimate of U.S. technically recoverable reserves of natural gas from shale, a type of sedimentary rock, to 827 trillion cubic feet from 347 trillion cubic feet. New technologies that let natural-gas producers drill horizontally and fracture the rock formations with injections of water, sand and chemicals account for the increase, Newell said. (Bloomberg, 12/16/10)

“US doubles estimates for gas reserves”: In the first release from its Annual Energy Outlook for 2011, the EIA more than doubled its central estimate of the country’s technically recoverable reserves of shale gas, from 353,000bn cubic feet to 827,000bn cubic feet. The estimate would be enough to cover the entire gas consumption of the US for 36 years. The rapid development of shale gas production has already had profound effects on the US energy system, driving down prices and inspiring companies to invest in plants to produce supercooled liquefied natural gas that can be exported in tankers to Europe or Asia. (Financial Times, 12/16/10)

Bradford County woman sues driller over well problems

The Associated Press

 PHILADELPHIA — A Bradford County woman is suing natural gas driller Chesapeake Energy Corp. and two of its subsidiaries, claiming that drilling near her rural home has fouled the water with methane and other pollutants and created a rash of health problems since 2009.

Judy Armstrong’s lawyer, Peter Cambs, said Thursday that the lawsuit, filed in state court in Bradford County on Wednesday, asserts the woman has seen her water supply contaminated with methane, barium and other irritants that have left her with health problems.

Chesapeake senior director for corporate development Brian Grove said Thursday the company had not seen the lawsuit and he could not comment on it.

Also named in the suit were Chesapeake subsidiaries Nomac Drilling LLC and Chesapeake Appalachia LLC.

The state Department of Environmental Protection views the potential for contamination by methane, a highly flammable gas, as among the most serious risks of gas drilling in the Marcellus Shale formation.

The DEP said last month that at least six residential wells were tainted with methane believed to be caused by Chesapeake’s drilling operations.

View article here.

Copyright:  The Times Leader

Encana Oil & Gas discusses natural gas drilling at chamber breakfast

Published: August 26, 2010

WILKES-BARRE – Encana Oil & Gas continues its quest for natural gas.

The company remains in an exploratory mode as it drills two natural gas wells in Fairmount and Lake townships, said company Vice President Don McClure.

“It’s very dependent on what we find in those two wells as to what our next steps are going to be,” Mr. McClure said.

Mr. McClure and Brian Grove, senior director of corporate development for Chesapeake Energy Corp.’s Eastern Division, spoke about the impacts of drilling natural gas wells to more than 100 business leaders who attended the Greater Wilkes-Barre Chamber of Commerce’s CEO-to-CEO networking breakfast Wednesday at the Westmoreland Club.

Earlier this month, the Luzerne County Zoning Hearing Board granted Encana Oil & Gas conditional use to drill 10 more wells in Fairmount and Lake townships. Mr. McClure says the company is “being very conservative” with the drilling process.

“We’re only going to drill a couple wells and we’ll evaluate what they’re going to produce,” Mr. McClure said.

The company drills wells simultaneously to be efficient and reduce community impact, Mr. McClure said. The potential for water pollution are among the concerns arising from the increased drilling. Yet, Mr. McClure said he sees natural-gas drilling as a “tremendous opportunity” that could reduce dependence on Middle East oil from about 44 percent to 10 percent by increasing natural gas production.

“That’s substantial,” Mr. McClure said. “That’s the kind of impact that Marcellus Shale can have.”

Showing the company’s track record in the United States and Canada on a slide presentation, Mr. McClure said the company takes safety of people and the environment very seriously. As the second largest natural gas producer in North America, he said Encana’s goal is not to be the biggest but the “best we can possibly be.”

“We’re always pursuing a higher safety standard,” he said.

Both Mr. McClure and Mr. Grove touted benefits of natural gas drilling, which they said will be an economic development engine for job growth.

When asked how many jobs could be created as a result of Marcellus Shale, Mr. McClure said studies show for every one percent increase in natural gas production across North America, that correlates to 20,000 to 30,000 jobs.

More than 350,000 oil and gas wells have been drilled in Pennsylvania since the first commercial oil well was developed in 1859, according to the state Department of Environmental Protection.

When asked what the biggest misconception of drilling is, Mr. Grove was quick to respond, “Hydraulic fracturing.” Fears about hydraulic fracturing, or the process used in wells that results in fractures in rocks, have been driven by a “lack of knowledge,” he said.

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View article here.

Copyright:  The Scranton Times

Roustabouts wanted as companies rush to drill for gas

Published: Wednesday, August 18, 2010

Workers looking for jobs in the region’s booming natural gas industry may try their hand as a “roustabouts” — general laborers who work physically grueling 12-hour shifts for 14 consecutive days in all kinds of weather to build and remove drilling pads and assist production.

“It’s demanding labor, working long stretches without days off. You have to be ready to do quality work and do it a long time. Once they start production, they don’t stop,” said Richard Guenther, an employee relations specialist with Chesapeake Energy Corp. in Mt. Morris, Greene County.

Pay can range from $10 to $20 an hour, plus overtime.

The natural gas industry expects to create thousands of jobs in Marcellus shale gas development in this decade, and state agencies and colleges are gearing up to train workers to fill those positions.

The Marcellus Shale Coalition, a trade group of about 100 gas producers and suppliers, said the boom created 44,000 jobs in the state last year. It is predicting thousands more this decade — some from gas production and some at suppliers, service companies and the spending of dollars generated by the drilling activity.

One complaint is that many jobs, particularly involving production, are going to out-of-state crews from Texas, Oklahoma and Louisiana.

Last year, it was estimated that 70 percent of the jobs were being filled by out-of-state workers. Now, more local workers have been hired, and the percentage of out-of-staters has likely fallen to 50 percent to 60 percent, said Danielle Boston, a spokeswoman for the coalition.

Chesapeake has had success hiring workers from the region, which has a history of natural gas operations, Guenther said. The company had to bring in more out-of-state workers for drilling operations in northeastern counties than in Southwestern Pennsylvania, he said.

“We try to hire local workers,” Guenther said.

While Pennsylvania can supply engineering, technical, land acquisition and legal expertise needed by the industry, job training efforts are under way to make sure local workers have the skills needed to land production jobs.

The Western Area Career and Technology Center in Canonsburg has trained more than 100 in a roustabout training program since last year, and the Pennsylvania College of Technology in Williamsport graduated about 200 workers from its roustabout program since October. The Westmoreland County Community College plans to begin a three-week roustabout training program for 15 students on Sept. 13.

“We’ve had about 20 companies hire our students, and we’ve been running the program for a year. We’ve got to take care of that work force” by providing training, said Joseph Iannetti, director of Western Area Career and Technology Center.

Community College of Allegheny County is considering how it can tailor programs to meet the job needs of energy companies, said spokesman David Hoovler.

A group of five community colleges — called Marcellus ShaleNet — received a $4.96 million grant from the Department of Labor to conduct a three-year training program for the gas industry. The effort is to focus on low-skilled and low-income workers. The colleges include Pennsylvania College of Technology in Williamsport and Westmoreland County Community College, along with schools in northern West Virginia, eastern Ohio and western New York.

One worker trying to take advantage of a training opportunity is Jeff White of Delmont, who was laid off this spring from a natural gas industry job. He knows all about the special demands of jobs in natural gas production and wants to get back into the field. He registered for the roustabout program at Westmoreland County Career and Technology Center.

“Once you get the bug of being with the guys, it’s hard to get it out. It’s your second family,” said White, who worked at a drilling site where pipe is lowered 8,000 feet underground to the rich Marcellus shale gas reserves.

Another candidate, Tony Bannister of Masontown, wants to replace part-time work with a full-time job. Bannister, 59, said he has a long career as a heavy equipment operator and hopes that helps him land one of those jobs.

“They make a lot of money, and there is a lot of opportunity for advancement. I’m up for anything,” Bannister said.

The state has identified six high-priority production jobs which local workers can be trained to fill, including roustabouts, rotary drill operators, truck drivers and service unit operators. About one in 10 requires a commercial driver’s license. And about 20 percent will be entry-level roustabout jobs, Boston said.

The drilling of one well can require almost 400 people working in almost 150 occupations.

Wages for roustabouts go up to $20 an hour, plus overtime, said Jeffrey F. Lorson, director of the Marcellus Shale Education and Training Center at the Pennsylvania College of Technology. The state estimates that the average weekly wage for an oil and gas production job in Southwestern Pennsylvania is about $1,600.

Some students graduating from Western Area Career and Technology Center in Canonsburg have landed jobs related to gas production and are being paid annual salaries of between $50,000 and $60,000, said Iannetti, director of the career center.

Range Resources Corp., a Texas-based gas producer with offices in Cecil, Washington County, is working with Western Area Career and Technology Center’s roustabout training program. Range hired graduates and placed them with experienced crews to learn on-the-job, said Matt Pitzarella, a Range spokesman.

View article here.


Some legislators think natural gas tax is best answer

Gov. says drilling industry’s top issues will be dealt with separate from taxes.

MARC LEVY Associated Press Writer

HARRISBURG — Pennsylvania’s Legislature is a place where victory almost always arrives in the form of a hard-won compromise, and the state’s rapidly growing natural gas industry may be about to discover that.

So far, the industry has been successful in dodging efforts by Gov. Ed Rendell and many Democratic lawmakers to slap an extraction tax on the methane they pump from the rich Marcellus Shale reserve that lies underneath much of the state.

But the drilling companies will need help from those adversaries in addressing a wish list of changes in state laws they are seeking to make it easier for them to pursue the gas.

Paying a tax just might be the price.

“What we’ve said all along is that the conversation begins and ends with the extraction tax,” said Brett Marcy, a spokesman for House Majority Leader Todd Eachus, D-Butler Township . “We cannot even begin to seriously discuss some of the issues that the natural gas industry wants us to take action on until we get the necessary support for a natural gas extraction tax.”

The Rendell administration says the industry’s top issues — such as a law that could limit municipal zoning authority over where drilling can occur — will be dealt with separate from the pursuit of a tax.

“Those are apples and oranges in some respects,” said Rendell’s chief of staff, Steve Crawford. “We’re not willing to say, ’We will roll local governments in this state if you support a tax.”’

But Dave Spigelmyer, a Chesapeake Energy Corp. executive who is also vice chairman of the Marcellus Shale Coalition, said the administration has told the industry group that a discussion of drilling issues will include talking about a tax.

For now, talk is in the early stages and industry-backed legislation that encompasses the wish list has not been introduced.

Two of the top issues could be controversial.

One would essentially outlaw a municipality from using zoning to prevent the collection of gas from below the property of someone who wishes to sell it — a change opposed by the Pennsylvania State Association of Township Supervisors.

Municipalities “have the ability to properly zone different activities within the jurisdictions. With the industry being able to drill horizontally up to a mile, why do they need to have zoning done away with?” asked Elam Herr, the association’s assistant executive director.

The other would allow a state authority to force a holdout landowner into a pool with neighbors who wish to sell their mineral rights in a block to a drilling company.

The state would decide how the holdout is to be compensated for the gas, based on the agreements between the willing landowners and the company.

Copyright: Times Leader

Area races seeing little gas money

That situation could shift, says co-author of study of political donations.

By Andrew M.
Times Leader Staff Writer

While natural gas companies and their related political action committees have given millions of dollars to elected officials throughout Pennsylvania since 2001, the donations have not flowed as heavily into the coffers of politicians serving Luzerne County.

One of the authors of a report that looked at the correlation of campaign contributions and legislation related to the natural gas drilling industry predicted they soon will.

A study released this week by the non-profit organization Pennsylvania Common Cause, takes a look at the link between gas firms and political donations and finds that since 2001, the industry has contributed $2.8 million to political candidates in Pennsylvania.

The study, titled “Deep Drilling, Deep Pockets” also reports that since 2007 the industry has spent $4.2 million to lobby members of the state legislature and the Rendell administration.

“I think part of the industry’s success is cultivating people at the very top,” said James Browning, director of development for Pennsylvania Common Cause and one of two men who put the report together.

The report includes a list of the top 25 recipients of the funding from Jan. 1, 2001 through April of 2010. At the top of the list is state Attorney General Tom Corbett, a Republican candidate for governor. He received $361,207, according to the report. Two previous gubernatorial candidates also made the list – Mike Fisher, who lost his bid in 2002, accepted $98,386, and Lynn Swan, who lost his bid in 2006, took in $351,263. Both men are Republicans.

Gov. Ed Rendell is sixth on the list. The Democrat from Philadelphia has accepted $84,100 in campaign contributions over the past nine and a third years. Current Democratic candidates for governor Dan Onorato, $59,300 and Jack Wagner, $44,550, ranked seventh and 10th respectively.

Others on the list include current and former judges, a former lieutenant governor, a candidate this year for that same post, a former candidate for the state House and numerous current members of the General Assembly.

Not one of the seven state House members or four state senators who represent Luzerne County made the top 25 list. In fact, according to records on the Department of State website and those provided by Pennsylvania Common Cause, campaigns for four of the seven House members did not receive one dime from the gas companies. The four are: Jim Wansacz, D-Old Forge; Phyllis Mundy, D-Kingston; Eddie Day Pashinski, D-Wilkes-Barre; and Mike Carroll, D-Avoca.

Rep. Karen Boback, R-Harveys Lake, accepted $250 from Chesapeake Energy Corp. Fed PAC on Oct. 9, 2009. Boback said that money was accepted by mistake and returned two months later. She said it is her policy “not to solicit or accept contributions from oil or gas companies.”

Rep. John Yudichak, D-Plymouth Twp., accepted $250 on April 10, 2008, from the PAC affiliated with Dominion Energy. Rep. Todd A. Eachus, D-Butler Township, accepted $500 from EQT Corp. PAC on July 2, 2009; $500 from EXCO Resources PAC on Oct. 20, 2008; and $250 from Equitable Resources, Inc. PAC on Sept. 30, 2008.

Of the four senators who represent a portion of Luzerne County, Bob Mellow, D-Peckville, took in the most at $3,000. That encompasses eight total donations, four from the Equitable Resources, Inc. Political Involvement Committee totaling $1,750 and four from the NFG PA PAC, affiliated with Seneca Resources, totaling $1,250. He declined comment through a spokeswoman, saying that he had not yet seen the report.

Sen. John Gordner, R-Berwick, accepted three donations of $500 from Dominion PAC. One came in 2004, another in 2006 and the third in 2008. His term does not expire for another two years.

Sen. Ray Musto, D-Pittston Township, accepted $500 from the Marathon Oil Co. Employees PAC on Oct. 20, 2008. Earlier this year, the veteran lawmaker announced he was retiring and not seeking another term in Harrisburg.

Sen. Lisa Baker, R-Lehman Township, accepted three donations at $500 apiece. One came from Cabot Oil and Gas on April 22, 2009; another was from EXCO Resources PAC on Nov. 19, 2008; and on April, 22, 2009, she accepted one from NFG PA PAC.

Browning said that as pressure from the public is placed on officials to tax the industry and approve more regulations, the elected officials at all levels of government, even those in non-leadership positions, will begin to see the money.

“I will predict that as there are more votes and as drilling expands, the money will come,” Browning said.

It will not head to Baker anymore.

The senator, who is seeking her second term in office this year, said, “Because of the sensitivity of the issues revolving around gas drilling, I am not asking for contributions from the gas drilling interests, nor am I accepting them.”

Barry Kauffman, executive director for Pennsylvania Common Cause, said the report illustrates the “power of political money in the governing process.” He said that as discussions about securing access to state forest land for drilling and severance taxes on natural gas production have popped up the past two years, lobbyist and campaign contribution spending have increased. The results have been no taxes have been approved and the state leased state land for drillers.

Baker said that she votes in response to her constituents, not her contributors.

“My legislative decision-making takes into account a variety of factors, but campaign contributions are never one of them. If anyone who contributes believes they are gaining special access or assuring a result, they will be sorely disappointed. That no-connection principle applies irrespective of the size of the contribution,” Baker said.

Andrew M. Seder, a Times Leader staff writer, may be reached at 570-829-7269.

Coyright: Times Leader

Chesapeake aims to raise $5 billion

By MURRAY EVANS Associated Press Writer

OKLAHOMA CITY — Chesapeake Energy Corp. said Monday it plans to raise about $5 billion over the next two years in an effort to expand its investment in oil and natural gas liquids and to reduce its debt.

Oklahoma City-based Chesapeake announced a “strategic and financial plan” that includes the sale of up to a 20 percent equity interest in its Chesapeake Appalachia LLC subsidiary to investors within the next three to 12 months. Chesapeake is a key driller in the Appalachian Basin, with 24 operating rigs in the Marcellus Shale natural gas play.

Chesapeake also announced a private placement of $600 million of a new series of convertible preferred stock to investors in Asia. The investors, Maju Investments (Mauritius) Pte Ltd. and Hampton Asset Holding Ltd., will have an option for up to $500 million more shares within the next 30 days.

Of the $5 billion to be raised, Chesapeake said it plans to use $3.5 billion to pay off its debt and $1.5 billion to focus on drilling for oil and natural gas liquids.

Chesapeake also is looking at negotiating various joint ventures as part of its plan, which the company said is ultimately designed to achieve an investment grade rating for its debt securities.

Chesapeake is one of the top independent natural gas producers in the U.S. but has gradually expanded its oil and natural gas liquids portfolio in recent months. Company spokesman Jim Gipson said natural gas accounted for about 90 percent of Chesapeake’s production in the first quarter of 2010, down from 93 percent a year ago.

Chesapeake’s CEO Aubrey McClendon has spoken in recent weeks about the company’s interest in expanding its oil and natural gas liquids production, noting that oil prices are rising while the cost of natural gas is stagnant. Crude oil rose $1.69 to $76.80 per barrel Monday on the New York Mercantile Exchange while natural gas rose 15.5 cents to $4.170 per 1,000 cubic feet.

In a production update issued last week, Chesapeake said it is trying to identify more supplies of oil and natural gas liquids.

Copyright: Times Leader

Drilling under river is OK’d in Bradford Co.

By ANDREW MAYKUTH The Philadelphia Inquirer

The state Department of Conservation and Natural Resources signed a $6.15 million agreement Monday with Chesapeake Energy Corp., giving the company the right to drill the Marcellus Shale under a seven-mile stretch of the Susquehanna River in Bradford County.

Under the lease, which applies to 1,500 acres of river between Towanda and the Wyoming County line, Chesapeake is permitted to access the shale with wells drilled on either side of the river. No well bores will penetrate the river itself.

Horizontal-drilling technology makes drilling for gas beneath the waterway feasible. With wells that reach laterally for thousands of feet, operators can capture gas under a large area from a remote location.

The state Department of Environmental Protection says that under-river gas exploration poses no more risk than any of the 1,400 other wells drilled into the Marcellus formation, which is a mile below the surface. The lease is separate from the state’s offering in January of 32,000 acres of state forests, which generated $128.5 million to help close the state budget gap.

The $6.15 million raised by the Susquehanna River lease will help keep open 24 state parks that had been threatened with closure because of the budget crisis, said Christina Novak, DCNR spokeswoman.

DCNR’s Susquehanna River lease may conjure memories of the 1959 Knox Mine disaster in the Port Griffith section of Jenkins Township, when the Susquehanna broke through a coal mine that was dug just below the river bottom. A dozen miners died in the flood.

Geologists say subsidence is not an issue with gas exploration. The well bores are only a few inches in diameter.

Copyright: Times Leader

Much of Back Mt. leased

Partnership of two energy companies lines up area covering over 25,000 acres in the Back Mountain for gas exploration.

By Jerry
Business Writer

Just a few sites have been approved for natural gas drilling in Luzerne County, but a partnership of two energy companies has signed leases for more than 25,000 acres, primarily in the Back Mountain, to explore the Marcellus Shale formation that runs underneath.

Since September, Whitmar Exploration Co., of Denver, Colo., has been signing leases with property owners in nine townships and Harveys Lake borough. The company has been working with EnCana Oil & Gas USA Inc. in a joint venture to develop the properties. EnCana holds a 75 percent interest in the leases and is responsible for drilling.

Whitmar wanted to partner with an experienced operator, said Wendy Wiedenbeck, a public and community relations adviser for EnCana.

“This is what we do,” said Wiedenbeck. “We have a team working on this project that possesses deep experience gained from working on similar projects across North America.”

EnCana received approval Tuesday from the Luzerne County Zoning Hearing Board to sink a well in Lake Township and set up a natural gas metering station in Fairmount Township. In April, Lehman Township officials approved drilling for another well.

Wiedenbeck on Wednesday confirmed a map provided to The Times Leader was one EnCana prepared for the Back Mountain Community Partnership to show the extent of the leaseholds.

She cautioned that “the map is quite dated,” having been created in February. Whitmar has signed additional leases into April, according to a search of the county property database.

Wiedenbeck said EnCana’s presence will grow in the region. “As we move forward, EnCana is acquiring new leases.”

When pieced together, the leases cover large swatches of land in the largely rural northern and western sections of the county. The leaseholds range in size from under 1 acre to over 100 acres.

Fairmount Township had the most coverage with approximately 7,500 acres leased, according to the map. Lehman and Ross townships each had nearly 4,300 acres leased; Lake Township, close to 2,600 acres; Jackson Township, 2,400 acres; Huntington Township, 1,400 acres; Dallas Township, 1,300 acres; Hunlock Township, 700 acres; Union Township, 400 acres; Plymouth Township, 200 acres; and Harveys Lake, 50 acres.

The region has also attracted the attention of another major player in the natural gas industry.

Chesapeake Energy Corp. has signed 93 leases since August 2007. More than two-thirds of them were filed this year, according to county property records.

Copyright: Times Leader

Cleaner shale technology is being sought

DAVID WETHE Bloomberg News

HOUSTON — Halliburton Co. and Schlumberger Ltd., trying to forestall a regulatory crackdown that would cut natural-gas drilling, are developing ways to eliminate the need for chemicals that may taint water supplies near wells.

New Marcellus deal announced

Norwegian oil giant Statoil has agreed to pay Chesapeake Energy Corp. an additional $253 million for about 59,000 acres of leasehold in the Marcellus Shale, the company announced Friday. The average cost is $4,325 per acre.

Statoil negotiated the right to periodically acquire a share of leasehold Chesapeake continues to amass in the Marcellus as part of the companies’ $3.4 billion deal in 2008.

“This type of transaction … further validates the developing high potential of the play,” Chesapeake spokesman Jim Gipson said.

At risk is hydraulic fracturing, or fracking, a process that unlocked gas deposits in shale formations and drove gains in U.S. production of the fuel. Proposed regulations might slow drilling and add $3 billion a year in costs, a government study found. As one solution, energy companies are researching ways to kill bacteria in fracturing fluids without using harmful biocides.

“The most dangerous part in the shale frack is the biocide,” said Steve Mueller, chief executive officer at Southwestern Energy Co., the biggest producer in the Fayetteville Shale of Arkansas. “That’s the number-one thing the industry is trying to find a way around.”

House and Senate bills introduced in 2009 would force producers to get permits for each well. That and other proposed environmental measures would cut drilling by as much as half and add compliance costs of $75 billion over 25 years, according to the U.S. Energy Department.

Biocides are employed because the watery fluids used to fracture rocks heat up when they’re pumped into the ground at high speed, causing bacteria and mold to multiply, Mueller said. The bacteria grow, inhibiting the flow of gas.

“You basically get a black slime in your lines,” he said. “It just becomes a black ooze of this bacteria that grew very quickly.”

Halliburton said March 9 that it’s testing a process using ultraviolet light to kill bacteria in fracking fluid.

About 80 percent of gas wells drilled in North America, including virtually all of those in the Marcellus Shale in Pennsylvania, are stimulated or fractured in some way, Tim Probert, corporate development chief at Halliburton, said.

“It’s incumbent on the industry to continue to develop tools and technologies that are compatible with minimizing the environmental impact of the stimulation process,” Probert said.

Copyright: Times Leader