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DECEMBER 23 2008   email from NWPOA.info

* Holiday greetings to you NWPOA Members!
I don’t plan to send out any additional updates before the holidays. It’s a blessing to spend the Holiday with family and friends that I love. Not that I don’t love all of you!!!! It’s just that I will be “busy” enjoying the holiday events. So your inbox will not be filled by me (unless something drastic happens). Christmas is at our home here on the farm. It’s a very special time for our family. So there is lots of preparation to do. We also put out candles on Christmas Eve if there are no threats of snow and 2 of our new lambs will go to the live nativity scene at the Damascus Methodist Church on Christmas Eve. If you are driving by Christmas Eve night you can feel free to stop in for Hot Chocolate or a glass of wine. The door is open.
This year I made the personal realization that everything that we do each day becomes part of our irrevocable past. So my goal is to make a past that I can be proud of. Certainly the NWPOA has a past it can be proud off!
CHK Landmen and other company landmen, will probably leave for the Christmas Holiday too! While we are still in discussion with Chesapeake, I don’t think anything will happen during Christmas/ New Year. CHK and NWPOA are content to take a Holiday recess! CHK has offered to fly back in for discussions early in Jan. We will continue to monitor the email board and LOOP and promise to let you know if anything earth shattering develops. The NWPOA has gotten 2 Holiday wishes as a group. One is from Hess Corporation and the other is from Chesapeake.
Marcellus Shale is still the “sweetheart” of the shales, a big wide sweetheart at that! More and more is being discovered about her. “Thumper Truck” reports abound. The trucks drive around and collect seismic data, which can be sold and used by exploration companies.
Below are articles that may be of interest: The economy is still having a rough time of it but credit markets may start to thaw a bit. 2 companies have talked of having discussions as we enter 2009. The price of fuel and gas have dropped thus dampening enthusiasm (refer to earlier gas update email loop too). Hess was waiting to see how their other global venture came in so I attached a copy of their latest results.
Everyone is feeling the cash crunch, DEP wants to raise its fees to help make up the short fall. SRBC is raising its fees and expecting the Industry to pay any supplemental fees and expenses with its permitting process. Tons of applications are streaming into the SRBC. DRBC is still trying to “just get started”. The governor of PA, Rendell, is looking to Gas exploration funds to help fund the deficits in the states budget too!
Companies are cutting their budgets for 2009 and trying to work with in their means since nobody is sure what the credit market will be like or what the new administration will do with Energy Policy. ( article below)
President Elect Obama is picking his energy cabinet and they will begin to form the new energy policy for our country. I am not sure of what that exactly will be but I think Natural gas will be in a good position moving forward. Certainly Coal might have more problems. Interesting to note there is more and more talk of switching electric power generating plants over to natural gas. That is a good plan for us. With cheap gasoline and oil and the collapse of the US auto industry, we wont see much talk of LNG fueled cars I am afraid unless it becomes a government mandate.
I do worry about Dr. Chu’s (Obama Advisor) ideas from a practical stand point. Coal and other petroleum fuels can not be dropped “cold turkey”. The electric prices are already going through a staged deregulation which will mean huge increases in our utility bill in the very near future as it is. With out coal and other traditional sources of generation the result would be disastrous not to mention almost unaffordable. I don’t think any of us are ready to live with out electric and huge increases in our bills won’t help this faltering economy either. Speaking of which, look around this holiday season and find someone near by you that you could help in some small way. If you don’t know of anyone donate to one of your local churches or your local food pantry or other favorite charity. The churches know local families in need and pantries always need help. We have a small pantry in our community and already have seen a large increase in need.
Government Officials closer to home are also taking Marcellus seriously as they struggle to bring clarity and commonsense to regulatory authorities with out squelching the economic opportunities it promises to bring to our area, in fact the entire state. We ( NWPOA) are also actively engaged with Law makers. Senator Lisa Baker called a few days ago to have a lengthy discussion. We are setting up an other sit down meeting for early January with as many as possible of our legislators present at once.
Many of you have seen the trucks and they all are reported to say “Dawson” on them. I have gotten numerous email loop responses. Below I am also copying an email about the Thumping to collect Data that is happening in the area. Last summer when some of you sent me Seismic contracts to review, my recommendation was that you not sign them. I said why should you get $25 per A to collect data when you could get 2000-3000 per A to do it all? I am not an attorney as you know but it seemed like common sense to me. If I were a Township Supervisor today and a company asked my permission to “thump” the roads I would have to say ’ No it is not with in my jurisdiction to grant that permission’. I am
sure that Texas Township, the township in Wayne county that granted permission, must have checked with their solicitor and found a better answer. My concern would be for those people who are not already leased. In the Dec 16th article of the Wayne Independent, it said :
“Texas Township -
Dawson Geophysical Company of Michigan has been granted permission to complete a vibration study in Texas Township in search of possible petroleum and/or natural gas. Douglas Holmes, a permit agent with Dawson, made the request at Monday night’s Texas Township Supervisors meeting, asking permission to survey a portion of Beech Grove Road, between State Route 6 and State Route 3032.”
I would be concerned unless every person on that route has a lease if I were a supervisor.
Seismic Study is part of responsible new development. You can’t expect the companies to go drilling willy nilly with out it. Just imagine trying to shoot a deer in the night time, how successful would you be literally taking a shot in the dark?
I know Frederick Scott who answers the Question posed below. I have found him very knowledgeable and helpful. I have no reason to doubt what he says!
Now I will wish you the best of family time if I don’t see you during the holidays enjoy them! Bless you all. Marian
Hi Marian, I'm not opposed to "thumping", but I am opposed to letting a company do it for free without sharing the data with you. As I understand it, from what you recently sent us Dawson is going to get seismic information about our properties that they can sell at a premium and aren't going to pay anyone anything. Even though seismic has been done in the past without the landowner's permission, this doesn't mean that it has to continue this way. Also, the townships/boroughs might not necessarily have the right to allow these seismic surveys along the roads without permission from the landowners because I believe all landowners own to the center of the roads in PA With all the interest in gas leasing in this area, I'm surprised that, even if Dawson isn't setting foot on individual properties, the landowners
aren't being approached and offered some kind of money. After all, the data that Dawson collects from individual properties is going to pay off handsomely (to Dawson and the gas companies) if the nat gas reserves are near what we are led to believe. Heretofore, landowners have been offered a gas lease without any seismic backup. If Dawson collects the data, this means that some landowners could be left out in the cold if the seismic data doesn't support gas drilling. And, contrarywise, other landowners could be courted royally and not offered what the lease might be worth because the gas company would know that they were sitting on a pile of gold; but the landowner would be none the wiser. I've checked on the internet (see below) and Dawson is paying people to carry out seismic surveys on their properties. So expecting money from them for a seismic survey would not be out of the ordinary. I also think that we should have some kind of say as to when these surveys would take place. Doing them in the middle of winter isn't the ideal time if something goes wrong (ie pipes break, septic fields are messed up, wells malfunction, electric lines break....) and has to be fixed. The vibrations are so strong that these things could happen; I guess that dishes rattling on our shelves could be the least of our worries. We should also be able to get access to the seismic data. One source suggested that the landowner ask to get access to the data after 5 years. I've attached some information that supports my suggestions. Please feel free to share or to disagree.... ****************
11/20/2008 Frederick M. Scott CMM 11/20/2008 Question I have been contacted by a company requesting permission to conduct a 3-D geophysical survey on my land. Their contract offers $25.00 per acre. The land is part of the Haynesville Shell in De Soto Parish LA. Does $25.00 per acre sound reasonable or should I ask for more? Also the contract does not state how long this contract would be good for. I do not want to sign a open ending contract for life with these people to come on my land any time they want. Any suggestions? Answer Ron, I'm not familiar with the going rates for seismic permits in LA, though it couldn't hurt to ask them for more, especially if you own a large amount of acreage. As for the term, I would get something stating an "end date" in writing. Perhaps give them one year to shoot at $25 (or whatever) per acre, with an option to extend that for six month for an additional $25 per acre. A year-and-a-half should give them time to get finished, though it's likely they won't even start until the weather is warmer, though of course in LA it doesn't get that cold in winter. Try to call some other landowners in the areas where they are doing seismic and see if they'll share any info with you. $25 per acre is not unreasonable in some areas of Oklahoma (where I live) but in others $150 per acre or more
copy of the results after five years if they'll give that to you. Those seismic reports are worth money to other companies and sometimes you can get a copy after a certain period of time, which you could then sell after a certain period of time if you could negotiate that in writing with the seismic company's client. Frederick M. Scott CMM *************************************************************************************************************************** My family owns approximately 48 acres on Hwy 54 along Keuka Lake in Yates county New York town of Barrington The property was purchased in the early 1970’s by my father and during most of the following years was in a gas lease by whatever local company was doing business in the area. The last lease expired in early 2007 and the lease rate from Columbia Natural Resources was $3.00 per acre. We were approached by Dawson Geotechnical in the winter of 2006-2007 to be included in a seismic survey of the area, to which we agreed and were paid a small amount (approx. $150).********************************************************************************************************************* would be the going rate. Can't hurt to ask for more, and heck, I'd even ask for a
UPDATE 5-Barclays sees drop in oil, gas spending in 2009
Fri Dec 19, 2008 4:08pm EST
(Adds quotation, paragraph 7-8)
By Matt Daily
NEW YORK, Dec 19 (Reuters) - Global spending on oil and gas exploration and production will shrink 12 percent to $400 billion in 2009 as the steep slide in energy prices and tight credit markets reverse a six-year trend of rising budgets, analysts at Barclays Capital said on Friday.
Those spending cuts threat to curtail growth in oil and gas output, potentially supporting energy prices that have been in a freefall since hitting peaks in July.
A steady stream of energy companies have been announcing budget cuts for 2009 as the price of oil slumped this week to its lowest levels in 4-1/2 years, and Barclays said that could be pushing spending even lower than its report showed.
Another analyst agreed, saying companies were being prudent during the economic crunch to protect cash reserves they had built up during the four-year run-up in energy prices.
"My guess is the (report) is probably overstating what is going to be spent," said analyst James Halloran of National City Private Client Group, which manages $26 billon in assets.
Analysts said that while the drop in spending threatens to slow down growth in world energy production, the impact depends on how the smaller budgets are used.
"It may be that a combination of higher utilization of more efficient rigs and lower costs of drilling will equal or more than compensate for the decline in the absolute amount of capital devoted to upstream expenditures," said Edward Morse, chief economist at LCM Commodities.
He added that oil firms may be negotiating with their suppliers and contractors to lower project costs.
The soft energy market has also darkened the world oil supply picture by leading OPEC to announce three rounds of cuts that would trim 4.2 million barrels per day of oil production, or 5 percent of global output.
Spending in the United States is expected to show the sharpest drop, falling 26 percent to $79 billion from the 2008 mark of $106 billion, Barclays analysts James Crandell and James West said in their semiannual report based on a survey of oil and gas companies. [ID:nN19339432]
In the United States, Chesapeake Energy (CHK.N: Quote, Profile, Research, Stock Buzz), the largest U.S. natural gas producer, is expected to cut spending by 51 percent, the analysts said, while Devon Energy (DVN.N: Quote, Profile, Research, Stock Buzz) is likely to cut by 44
percent, EOG Resources (EOG.N: Quote, Profile, Research, Stock Buzz) by 34 percent and SandRidge Energy (SD.N: Quote, Profile, Research, Stock Buzz) by 78 percent.
Oil prices peaked above $147 a barrel in July, but have tumbled more than 75 percent since then to trade near $35.75 a barrel as economic weakness hits fuel demand.
Shares of oilfield service companies face the greatest risks from the cuts in spending, since it is their drilling rigs, maintenance operations and other activities that energy producers reduce when budgets are slashed.
But those stocks have already been battered, Halloran said, and may see only a limited impact from new reports of spending cuts. The Philadelphia Oil Service index, which includes companies like Schlumberger Ltd (SLB.N: Quote, Profile, Research, Stock Buzz), Halliburton Co (HAL.N: Quote, Profile, Research, Stock Buzz) and Transocean Ltd (RIG.N: Quote, Profile, Research, Stock Buzz), has fallen 68 percent since July.
Still, the Barclays analysts said they recommended shares of Weatherford International (WFT.N: Quote, Profile, Research, Stock Buzz), Halliburton, Cameron International (CAM.N: Quote, Profile, Research, Stock Buzz), Oceaneering International (OII.N: Quote, Profile, Research, Stock Buzz), Tidewater (TDW.N: Quote, Profile, Research, Stock Buzz), Dril-Quip (DRQ.N: Quote, Profile, Research, Stock Buzz), Core Laboratories NV (CLB.N: Quote, Profile, Research, Stock Buzz) as the best sector bets.
REGIONS UNDER PRESSURE
Overall, companies' Canadian spending budgets will fall 23 percent to $22 billion, the lowest level since 1999.
Husky Energy (HSE.TO: Quote, Profile, Research, Stock Buzz) is likely to cut its spending 47 percent in Canada, while Devon's budget there will fall 71 percent, Talisman Energy (TLM.TO: Quote, Profile, Research, Stock Buzz) by 47 percent and EnCana Corp (ECA.TO: Quote, Profile, Research, Stock Buzz) by 16 percent.
Spending in the United States by Exxon Mobil (XOM.N: Quote, Profile, Research, Stock Buzz), the world's largest publicly traded oil company, is likely to drop 17 percent, or $450 million, to $2.15 billion, while its Canadian budget will shrink 14 percent to $375 million. Its spending elswhere will rise 14 percent to $14.98 billion.
The overall drop in spending outside North America is expected to be a more moderate 6 percent to $300 billion.
Russia, the UK North Sea, Saudi Arabia and Venezuela were expected to see some of the sharpest spending declines, while the rest of the Middle East, North Africa and Mexico were likely to post increases.
In 2008, spending rose about 22 percent globally, the analysts said. The analysts said the budget forecasts were based on average prices of $58 per barrel for oil and $6.35 per thousand cubic feet for natural gas. (Additional reporting by Matthew Robinson; Editing by Lisa Von Ahn)
***************
Hess Hits Two: Finds 500 Feet in Libya, 148 Feet in Egypt Hess Corp. 12/17/2008 URL: http://www.rigzone.com/news/article.asp?a_id=70801
Hess Corporation has announced the outcome of its recent exploratory drilling program in Africa.
In Libya, well A1-54/01 in the Arous Al-Bahar prospect was drilled to a depth of 11,077 feet in 2,807 feet of water. The well encountered a gross hydrocarbon section of approximately 500 feet (152.4 meters) at various intervals. Hess holds a 100 percent working interest in Area 54, which is located 38 miles offshore in the Sirte Basin.
In Egypt, the Dekhila-1x well in the West Mediterranean (Block 1) deepwater area, located 45 miles offshore within the Nile Delta Basin, was drilled to a depth of 8,881 feet in 3,883 feet of water and found a gross hydrocarbon section of 148 feet (45.11 meters) at multiple intervals. Hess holds a 55 percent working interest in the production sharing arrangement with the state company, EGPC. The company’s partners are RWE Dea (35 percent) and Kufpec (10 percent).
The results of Dekhila-1x will be incorporated into engineering studies for the wider West Med development.
In Ghana, Hess has completed drilling operations on the Ankobra-1 well, located on the Deepwater Tano Cape Three Points license, without encountering commercially significant hydrocarbons. The well was drilled to a depth of 13,000 feet in 5,682 feet of water. Hess holds a 90 percent interest in the license in partnership with Ghana National Petroleum Company. Hess is currently acquiring 625 square miles of new 3D seismic in anticipation of a well to be drilled in the unexplored western half of the license area.
John O’Connor, President of Worldwide Exploration and Production, said, “The results of our drilling in Libya and Egypt have been very positive and provide further encouragement as we pursue our high-impact exploration strategy.”
Hi Marion , i found this article on google. This article is from Alberta Oil magazine. It discusses cut backs in gas exploration and quotes the CEO of Chesapeake
http://www.albertaoilmagazine.com/?tag=gas-price
The following Permit Applications have changed as of Friday, December 19, 2008. Susquehanna County: Authorization # 753518 has been updated on 12/17/2008. Subfacility ID=981565 Name=J GRIMSLEY 1 eMapPA search Authorization # 753531 has been updated on 12/17/2008. Subfacility ID=981568 Name=ELK LAKE SCHOOL DISTRICT 1H eMapPA search Authorization # 753536 has been updated on 12/17/2008. Subfacility ID=981586 Name=H HENGLE 1H eMapPA search Authorization # 753552 has been updated on 12/17/2008. Subfacility ID=981593 Name=ELY 7V eMapPA search
The following Permit Applications have changed as of Wednesday, December 10, 2008. Susquehanna County: Authorization # 751051 has been updated on 12/8/2008. Subfacility ID=980390 Name=SIPE 1 eMapPA search Authorization # 751109 has been updated on 12/8/2008. Subfacility ID=980429 Name=K LANDES 1 eMapPA search Authorization # 752092 has been updated on 12/8/2008. Subfacility ID=980868 Name=GESFORD 4R eMapPA search Authorization # 754012 has been updated on 12/8/2008. Subfacility ID=981820 Name=PRICE 2H eMapPA search
Gov.: Use Drilling Fees to Plug Hole in Budget Others Prefer Better Uses for DCNR Funds
Wednesday, December 10, 2008 5:55 AM Times Tribune
Dec. 10--HARRISBURG -- Marcellus Shale revenues play a role in Gov. Ed Rendell's newest plan to plug the growing state budget deficit. The governor presented a proposal Tuesday to transfer $174 million in state revenues from the recent sale of oil and gas drilling rights on state forest land to the all-purpose state General Fund.
This transfer along with spending cuts, tapping the state Rainy Day Fund and a possible federal aid package to the states can be used to fill a newly estimated $1.6 billion shortfall in the current $28.3 billion budget, Mr. Rendell told a public forum attended by top legislative leaders.
He said the combination of revenue-shifting measures and spending cuts can make up for recession-caused revenue shortfalls this year, but the challenge of developing a fiscal 2009-10 budget in a time of economic uncertainty still awaits elected officials.
"This is a crisis," Mr. Rendell said. "Hopefully, it is a short-lived crisis."
Ever since the state Department of Conservation and Natural Resources announced earlier this fall that oil and gas companies bid a combined $190 million for drilling rights on 74,000 acres of state forest land, Mr. Rendell has referred to this bonanza in discussing state finances. His proposal would tap the lion's share of the revenue from those bids.
The money from drilling leases and rents currently goes to a special state fund that finances park, conservation, recreation, dam repair and flood-control projects. Lawmakers will have to approve any diversion of money from the Oil and Gas Lease Fund, said Mr. Rendell's legislative secretary Stephen Crawford.
Some lawmakers have their own ideas about how to use the Marcellus Shale drilling boom to the state's fiscal advantage.
Rep. Jim Wansacz, D-114, suggested it would be better to use revenues from the oil and gas lease fund to hire more inspectors for the state Department of Environmental Protection rather than just fill a budget hole.
That way, state permitting of gas drilling will accelerate and Pennsylvania will realize more tax revenue as more people are employed by the drilling industry, he said.
"All you are doing there (General Fund transfer) is sticking your finger in the dike," Mr. Wansacz said. "What is the best possible way to use that money to generate money?"
Republican lawmakers pledged a careful review.
"I think members will give it (transfer) a good, hard look," Stephen Miskin, spokesman for House Minority Leader Sam Smith, R-66, said.
He suggested the administration look for other gas leasing opportunities on state-owned land. Overall, Mr. Rendell is proposing $500 million in budget cuts, tapping $375 million from the Rainy Day Fund and an anticipated $450 million in federal aid to help plug this year's shortfall.
But the looming question for many is what happens with the 2009-10 budget if the recession lingers.
"I want to make sure we don't forget to invest in infrastructure, bridge repair and to lower the cost of inflation in health care," House Majority Leader Todd Eachus, D-116, said.
Contact the writer: rswift@timesshamrock.com
Energy secretary nominee sees coal as 'nightmare'
Dec 17 - McClatchy-Tribune Regional News - Ken Ward Jr. The Charleston Gazette, W.Va.
President-elect Barack Obama's pick for U.S. energy secretary isn't sold on the idea that technology to capture greenhouse emissions and pump them underground will save the coal industry.
Carbon capture and storage research is still in its early stages, said Steven Chu, a Nobel Prize-winning physicist announced by Obama this week as his nominee to run the U.S. Department of Energy. Real-world projects to pump millions of tons of carbon dioxide might also be rejected unless scientists show it can be done safely, Chu said during an April speech.
"Coal is my worst nightmare," said Chu, director of the Lawrence Berkeley National Laboratory and a Stanford University professor.
Chu noted that coal is the current "default option" for meeting growing energy needs in the United States, China and India. But coal is also firing continued increases in worldwide carbon dioxide emissions, even at a time when scientists say the need to dramatically reduce those emissions is critical.
"We have lots of fossil fuel," Chu said during a talk outlining his views on energy policy. "That's really both good and bad news. We won't run out of energy, but there's enough carbon in the ground to really cook us."
Chu said existing pilot projects involving a few million tons of carbon dioxide sequestration are far too small to tell if the process would work on the scale needed.
"It's sort of a research and development issue," he said. "I think we have to do this if we're going to go forward with coal, but it's not a guarantee that we have a solution with coal."
Late last week, when word began leaking that Chu was a likely Obama Cabinet choice, his comments about coal began circulating on the Internet, primarily after they were posted on a Wall Street Journal blog.
Bill Raney, president of the West Virginia Coal Association, said he had not seen Chu's remarks, but that they gave him cause for concern.
"What I'm concerned about is how many coal mines has he been to, and what is his thought about the coal mines and their families who rely on this industry?" Raney said. "That may be his personal opinion, but that's got to be sobered up a bit."
Other coal boosters were familiar with Chu's comments, but also insisted they were less concerned.
"Any remarks Dr. Chu has made over the years, whether positive or negative about coal must be viewed against specific public policy objectives laid out by President-elect Obama," said Carol Raulston, spokeswoman for the National Mining Association.
Raulston noted that Obama has emphasized "energy independence" and supports "the next generation of clean coal technology to capture and store emissions of carbon from coal-based generation."
She pointed to a presentation Chu gave to the Chinese Academy of Sciences in October 2007 in which he said, "Technologies for capturing and sequestering carbon from fossil fuels can play a central role in the cost-effective management of global carbon dioxide emissions."
Environmental groups and other advocates of swift and serious action to deal with the climate change crisis said Chu's comments on coal reflect a clear understanding of the scientific basis for concern and a practical view of the challenges for reducing the energy industry's greenhouse impacts.
"He isn't fooled by clean-coal claptrap," wrote Joseph Romm, an energy expert who edits the blog Climate Progress.
During the campaign, Obama pledged to reduce U.S. carbon dioxide emissions by at least 80 percent by 2050. In the near term, his campaign plan called for reducing emissions to 1990 levels by 2020.
United Mine Workers officials and some within the coal industry aren't as concerned about the 2050 target. But the near-term reductions scare coal industry backers. They say cutting back to 1990 emissions by 2020 doesn't provide adequate time to work out the long list of hurdles to implementing carbon capture and sequestration technology on coal-fired power plants.
Obama and Vice President-elect Joe Biden have also proposed to invest $150 million over 10 years on a variety of energy programs -- everything from plug-in hybrid vehicles to biofuels and "low-emissions coal plants."
They also said they would instruct the DOE to start a new public-private partnership to build five commercial-scale coal-fired plants that capture carbon dioxide emissions and pump them underground. But it remains unclear exactly how much government money Obama and Biden would chip in for those plants, or how much of the $150 billion "clean energy" program would go toward coal.
Chu said carbon dioxide controls on power plants could increase electricity bills by about 25 percent. But he said the higher costs are not the biggest challenge.
Carbon dioxide that is pumped underground could form a big bubble that finds its way out, or could turn acidic and create cracks in geologic formations that prompt leakage, Chu said. These potential problems, he said, are likely to bring lawsuits from residents where such projects are proposed.
"Why would there be a legal challenge?" Chu said. "Because there would be people saying I don't want this done in my back yard because if the carbon dioxide ever does bubble to the surface, it could actually kill people."
He also said that fly-ash emissions from coal-fired power plants amount to 100 times more radiation than is released by nuclear power plants.
"If you're concerned about radiation, coal might be worse than a nuclear reactor," Chu said. "It's worse in every other respect."
Reach Ken Ward Jr. at kward@wvgazette.com or 304-348-1702.
Environmental Quality Board Approves New Marcellus Shale Drilling Fees To Cover Increased Inspection, Permitting Costs
HARRISBURG (Dec. 16) – The Environmental Quality Board approved a Department of Environmental Protection request today to impose new fees for Marcellus Shale drilling
permits that will replace the flat $100 permit fee with a variable fee structure based on well depth.
The new fee structure will help ensure adequate funding to cover program expenses for permit reviews and well site inspections. The fee increase will also allow the department to hire additional staff in Meadville, Pittsburgh and Williamsport to process permits and monitor drilling activities in the northcentral and northeastern areas of the commonwealth.
“Due to technological advances in drilling and rising natural gas prices, gas exploration in the commonwealth has increased significantly with 40,000 new drilling permits anticipated during the next three years,” Environmental Protection acting Secretary John Hanger said. “Despite this substantial increase in workload, including permit review and inspection of oil and gas well sites, the department has not increased the $100 permit fee for oil and gas well permits since 1984.
“These permit fee increases will allow us immediately to hire additional staff to properly review Marcellus Shale permit applications and monitor drilling activities to ensure that our regulations are being enforced and our natural resources are being protected.”
Pennsylvania’s oil and gas act established a $100 permit fee for oil and gas well permits in 1984 and gives the department the authority to increase that fee to cover the cost of regulating the drilling industry.
The new fee structure sets a base permit cost of $900 for all Marcellus Shale wells up to 1,500 feet deep, and imposes an additional cost of $100 for every 500 feet of depth past 1,500 feet. The increased fees will take effect in early spring.
Permit applications for Marcellus Shale gas wells must be thoroughly evaluated before a permit can be issued. Extracting natural gas from the Marcellus Shale formation requires significant amounts of water to hydraulically fracture the shale formation.
The department requires permit applicants to submit water management plans that outline how and where the water will be gathered, how it will be stored at the site, and how waste water will be processed and treated.
“With nearly 8,000 drilling permits issued so far this year and drilling taking place in areas of the state outside our traditional oil and gas region, we need to make sure that we have sufficient personnel to properly manage development of Pennsylvania’s Marcellus Shale natural gas reserves,” Hanger said.
Among other actions taken at today’s meeting, the Environmental Quality Board:

• Approved a separate proposed rulemaking for public comment that revises fees for Marcellus Shale and traditional oil and gas wells.
• Approved a final rule to strengthen public notification requirements for community water systems to notify the public of imminent threats and situations that may impact public health and the safety of water obtained from a public water system.

• Approved publication in the Pennsylvania Bulletin of a 30-day public comment regarding a proposed storage tank rulemaking that would require tank operators to complete training on their duties and responsibilities, in accord with recent federal regulations. Properly trained operators will help to reduce and prevent future releases from underground storage tanks, and improve compliance with state and federal regulations.

• Agreed to provide notice in the Pennsylvania Bulletin for three public meetings and a 60-day public comment period on a proposed rulemaking limiting emissions of volatile organic compounds from adhesives, sealants, primers and solvents. The new rules would apply to manufacturing, sale and use of such products. VOCs are a precursor of groundlevel ozone.
Reducing groundlevel ozone would benefit people with respiratory problems and help the state meet federal air quality standards.
For more information, visit www.depweb.state.pa.us, keyword: Public Participation.
But an Exelon Power spokesman this morning said the utility is "looking at several sites" around Pennsylvania. Exelon spokesman Fred Maher said the utility will give an "overall conceptual presentation" for the public at the Fulton Township supervisors meeting at 7 p.m. Thursday, Feb. 5., at the township office. The plant would burn natural gas in a 650-megawatt facility — about the same output as TMI. It would be a "combined-use" facility capable of using steam to produce more energy.
Maher said he didn't know when a final decision would be made on a location to build the plant. River Hills is just north of the Maryland line. Aument said the township's three supervisors have met individually with Exelon — which also owns the Muddy Run pumped storage power plant in Lancaster County — about the project in the last two months. Fulton Township is directly across the river from the Peach Bottom nuclear plant and several miles northwest of the $200-million Rock Springs natural-gas-powered plant built on the Maryland side of the Pennsylvania-Maryland border by another utility in 2003. Aument said Exelon already owns the proposed plant site on a rise above the Susquehanna River and that it is near an existing natural gas pipeline and transmission lines coming from the Peach Bottom plant.
The site is off Slate Hill Road, just up the hill from the Peach Bottom Marina. It is several miles south of Susquehannock State Park. Asked if the supervisors favor or are opposed to a power plant in the rural township, Aument said, "I guess we'll see what the public says about it. It's not a nuclear plant — that's the first thing that was on our minds, I guess." Aument said Exelon has also been considering several possible sites in the Philadelphia area. He said the utility hasn't divulged if the Fulton site has been chosen as the preferred location.
The proposed gas plant would be near the Rock Springs Generation Facility in Cecil County, Md. Sixteen of the plant's 114 acres lie in Fulton Township. But all the development is in Maryland. The Rock Springs plant is owned by Virginia-based Old Dominion Electric Cooperative and Con Edison Energy of New York City. The 680-megawatt power station has four combustion turbines and is a "peaking" power plant, generating power for the Delmarva peninsula during the hottest and coldest days of the year. Aument acknowledged he and the township's two other supervisors had met individually in private with an Exelon official in the last two months. The private meetings were to avoid the requirements of the state's Sunshine Act, which would take effect if two or more of the supervisors had met with Exelon, he said. Several upset township residents queried supervisors about the project and the secret meetings at the supervisors' monthly meeting last Thursday. Staff writer Ad Crable can be reached at acrable@LNPnews.com or 481-6029.

 

 

DECEMBER 11 2008   email from NWPOA.info

More from Marion:

There are certain environmental groups who are doing everything in their power to stop natural gas drilling.  That includes putting out misinformation.
Below is a poster that the anti drilling  recently have put up.  It is safe to say that we are all concerned about the environment, our homes and our community. We all want  drilling and exploration to happen responsibly.

See the pictures below of the exact same site on the Matoushek farm were the rig stood. One shot is taken from the same spot were the photo in the poster was taken.  So now you are again "looking at the first drill site in Wayne County".  The Matoucheks were so good as to take a close up detailed shot of the equipment that got left behind at the well site.  Do you see the pipe sticking out of the ground?  That's it for now. Later that will be a bit taller but not much with  some connectors. It will then be called a "Christmas tree". It will take up about 6' X6' of space.  That is the well head.  With today's technology multiple wells can and do get drilled from this single pad.  You can see that the well head does to take up 5 acres of land.  There is plenty of usable space all around the well head and pad. The open space already existed before the pad site was created. Certainly you could still farm near or about this well head.  The anti drilling group has tried to impress upon this community that we will become heavily industrialized zone with rigs every 25 acres. This is not true. And the rigs don't stay! Hundreds of acres or more can be accessed from an initial pad leaving a much smaller foot print on the surface of the land. This efficiency will increase as the industry's knowledge of Marcellus Shale properties increase.

So lets look at the poster, what it implies and says:

Posters like this are just plain false and only serve to play on the fear emotions of everyday people like you and I. It is important to have accurate information and disservice to spread mis-information.

"You are looking at the first drill site in WayneCounty." 
Yes, that is a photo of the Matoushek Well Site drilled by Stone energy earlier this year. This photo appeared in the Wayne Independent in May. The WI did not ask for or get permission to take this photo. The shot was taken at the peak of the drilling stage. As you know, drilling is a fairly short period of time. 3-4 weeks generally. The big rig comes in along with all the supportive equipment.The drill derrick or "rig" was 120' tall.  A 3-5 acre piece is generally affected. The area is cleared off (if it needs to be), a pad of crushed stone is constructed, a road is needed to get access to the site. There is lots of traffic during this developmental stage. And then all of that leaves!

As soon as the drilling is finished everyone and most everything leaves!

 

Water: The drilling process does require water. From one to 5 million gallons. Some companies are having success with "air drilling". The company Equitable Production just completed 2 wells in PA using air drilling technology. The Gas Technology Institute just got a $1 Million grant from the federal government to perfect systems to re-treat and re-use the water from drilling. They are making great headway with that research.   Once the gas well is producing it does not use water. The gas comes out of the Marcellus under high natural pressure. The weight of the earth creates the pressure and pushes the gas up out of the Marcellus up the enclosed borehole and directly into a closed gathering line. The gathering line carries the gas to a major pipeline and eventually to market.  This well in the pictures  is not hooked up to a gathering line and therefore not a major pipeline. It is closed off or capped for right now.  The amount of water used will not affect the flow of the Delaware River!  Nor dry up our trout streams.  That is a myth. There are other users of water that use incredibly huge amounts of water out of the water shed without ill effects. If you do just a little research you will find this is verified. We have done numerous NWPOA Loops about water matters so I won't address that at this time. What I do want to say is that Pennsylvania is very fortunate. Of all the lower 48 states we have the largest amount of water!  And we are strict with it. It costs 4 times more to get the water in PA than the other gas and oil producing state in the Nation.

RIGS:  The rigs do run 24 hours per day during that drilling time. Time is money for the companies. So to make best use of the available rigs they are operated around the clock frequently with 3 shifts of workers to operate them. This +/- month of drilling is the shortest phase in the life of a gas well though.

EPA:  Regardless of why or how the EPA changed its regulations that does not mean that energy companies can go around irresponsibly polluting. There are stringent laws in place with in our state that address the same matters that the poster claims are now exempt.  PA has clean streams and air statutes along with other regulatory laws to protect the integrity of the state and it's citizens.  MSDS sheets ARE available and on file listing the chemicals used on site of gas wells.  In fact we have tremendous paperwork hoops for energy companies to jump through. By comparison a very short application to drill in Texas or Oklahoma becomes 400-600 pages in PA per well application.  We have the DEP, the River Commissions, The Fish and Boat Commission, The Pa Soil Conservation and the US Fish and Wildlife Dept all with varying or overlapping oversight in the permit process.

And so there you have it Folks. In a nutshell all is not as the poster portrays. Just because someone pays to print it doesn't make it true. 

By all means contact your legislators!  I have pasted a contact list at the end of this email for your convenience.  They have mostly been hearing from the vocal anti drilling groups.  Let them know how you feel. We all want clarity and efficiency not just in Oil and gas but all facets of our government. This is a strong economic incentive and investment in our state and can help move us into the 21 century. 70 % of the gas used in PA is currently imported from other areas, yet we are reported to be sitting on the "mother lode of gas".  Where is the logic there?  We are in a position to help lead this country into energy independence .

Talk to your Legislators. Tell them what you think and how it will affect you personally. You are the voter they will listen.  You should do it soon because they are planning to start discussing gas issues in January of 2009!  The NWPOA intends to invite them all for a visit in the very near future but notes from you always mean a great deal.

Good Luck to us all!  Marian

 

DECEMBER   11 2008    Hello Loop Members and congratulations to us all again!
 
Have you had a chance to hear the latest exciting news!  This well came in Huge!!!  Great Success congrats to Cabot. Its the biggest one that I can verify in our immediate area.  Good news like this further validates the entire area.
 

Well?  Cabot today announced the results of their1st horizontal at 6.4 MMCF IP.

http://phx.corporate-ir.net/phoenix.zhtml?c=116492&p=irol-newsArticle&ID=1233344&highlight=

We believe that is the highest, at least publically reported IP, of any Marcellus well today. That well is about

40 miles west of the center point of NWPOA lands. NWPOA lands consist of about 70k in N Wayne and 10k

 in Susquehanna.

 

That is,,,,,,,,,,, pretty exciting for we mere Appalachians!

 
 
Click the link above to read the entire press release from Cabot posted yesterday. For those of you on Dial up I have copied the important part.
 
Good Luck to us all!  Marian
 
 
""""""Cabot Oil & Gas Provides Marcellus Update, East Texas Waiting on Frac Proppant
 
HOUSTON, Dec. 8 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced that its Marcellus initiative in northeastern Pennsylvania is gaining momentum and is currently producing over 13 Mmcfe per day. Most recently, Cabot completed its first Marcellus horizontal well with a measured depth of 8,925' and a horizontal leg at 2,000' using a six-stage frac. The result was a 24-hour average initial production rate of 6.4 Mmcf per day. "Adding this to our series of vertical wells, which have been turned in line over the last five months and have a 30-day average IP of 750 Mcf per day, has allowed Cabot to exceed our original year-end Marcellus production target of six to nine Mmcf per day," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "We expect this to increase considerably over the next few weeks as we have nine additional wells (six vertical and three horizontal) ready to be completed or in the final stages of pipeline hookup."
To date, the Company has drilled 18 total wells in the field, four of these as horizontal tests. Five rigs are currently working with plans to increase to eight rigs in 2009. "Our 2008 program will be 16 vertical wells plus seven horizontal wells," added Dinges. Cabot has four vertical wells and three horizontal wells remaining to be drilled this year and will continue operations seamlessly into 2009. Total well costs range between $1.3 million to $1.5 million for a typical vertical well and $2.6 million to $2.9 million for a horizontal well. The average depth of a vertical well is 7,200'; the average horizontal leg is approximately 2,200'.
In terms of infrastructure, the Company has completed its first phase pipeline build-out totaling 10 miles and has started up its first compressor with a second unit on site and ready to be utilized once production volumes justify the need. "We continue to actively secure rights of way and gain permits to expand our pipeline infrastructure for our 2009 drilling program," commented Dinges."""""

 

DECEMBER  11 2008    Email words from our Neighbors in the Northern Wayne Alliance:   

Dear NWPOA,

 
It isn't even the beginning of the year (2009)  and activity both in the courthouse and on the street is picking up again with n gas activity and leasing.
Courthouse activity is mostly title searching and re assignments or housekeeping to fix flawed leases.
 
The landmen are approaching certain leaseholds and have list of addenda that they readily offer. All offers are for 10 years that I have been hearing of and per A price varies from 1000 per acre to 2500 per acre.  Let us know what you know so we can accurately keep our finger on the pulse out in the field.
 
The Alliance offer from CHK:
 
The Steering Committee members met and officially voted unanimously not to accept the offer CHK made to the Alliance.
 
The recent offer (which I will copy again below for your review) did not meet the goals the united property owners of this area set out to attain.  Discussions to consider a more favorable lease and terms are ongoing with CHK. The first part of a counter offer has been sent to CHK and includes a copy of the lease which was under negotiations in July 2008.  CHk has replied with more favorable terms but that discussion is still ongoing.
 
The recent offer CHK sent  that was not accepted was:

""We feel the NWPOA acreage would be a nice block for our drilling program, and propose the following options to you.

(1) $1,000/ac bonus and 13% royalty, or (2) $750/ac bonus and 14% royalty or (3) $500/ac and 15% royalty (all options are available separately to NWPOA members)

Because of the permitting and environmental issues we are currently experiencing in NE PA, and will no doubt experience for many years to come, in order for Chesapeake to maximize its investment and ability to develop the NWPOA acreage block, our leases must provide for a 10 year term on Chesapeake’s oil and gas lease form and addendum (copies attached)."""" 

 
Your Steering committee felt that just because the lease market has weakened and the financial world is frozen in this credit crisis, the gas resource below your feet has not become worthless. Regulatory matters are in a bit of a stew right now to with uncertainties looming on the horizon but all things will sort themselves out. ( we will all be talking to our legislators I hope)  Everyday there is more and more good news from the gas industry about our potential resource. Penn state has significantly upped the potential estimates of the reserve, the industry admits this is an astronomical find, calling it a once in a generation discovery and each well in the Northeast is releasing more and more exciting news that seems to prove that the North East PA region will be the sweetest spot of all!  ( DID YOU READ ABOUT CABOT'S LATEST WELL! WOW!) 
 
The Committee realizes that it is hard for some to wait. If you are in a mortgage crisis or starving you may well need to sign a lease to put food on the table and keep the roof over your head. Just let us know. We will remove you from the map and list.  We monitor the courthouse and every week we adjust the maps to reflect changes if there are any to keep an accurate record.  Amazingly this community has held together and very few of you have had to be deleted. That is our strength. The strength is in the numbers, in the block of land we collectively make up.  We are over 70,000 acres as one voice!  That is an amazing thing.
 
 
We never realized this would be such a long process and we could not have imagined the financial melt down in our country indeed the world. But we knew we wanted to do this carefully, making a historic difference for our State, communities, and our children.  The future looks brighter.
 
The CHK offer did not help us meet those goals. It allowed for things that were unacceptable such as pipelines, injection disposal wells, it did not protect our heirs and assigns and much much more.  To accept it would have been to sell out on what we all believe in. We feel we would have let all of the members down. The Alliance will not do that.  We are not the car dealerships where you can drive to Detroit and "buy one get one free". Your team is nowhere near abandoning ship.
 
Today the Penn State Natural Gas Summit is beginning and your  Alliance is also represented there. We continue to discuss with CHK and explore other opportunities for the NWPOA.
 
Good luck to us all! 
Your Marian

 

Email from Marion:

NWPOA,
 
Have the landman got you scared!!!!!!!!!!!!!!!!!!!!!!!!!!
 
Are they telling you that under Pa rule of Capture the gas will quickly be sucked away from your land and you willget nothing.
 
The truth is with out specific fracturing under great pressures the gas will hardly move. The Marcellus layer is dense. The gas is trapped in a tomb of concrete like material. The concrete like rock is called Marcellus. The geologists have known for a long time that it was there. They just had not perfected the technology until recently to economically get it to move. The marcellus is the source rock. It is the source of the gas.  They ran experiments to test it years ago. The results are below for your review. Without horizontal drilling and fracturing it is virtually worthless. It stays trapped in the source rock.
 
Also hot off the press tonight at 6:00 PM:
Chesapeake announces that it will not float those extra stocks to raise money. The investment people got very nervous and their stocks took a nose dive!  Aubrey McClendon the CEO of CHK says
"“The market response to our SEC fillings on November 26, 2008 was obviously very negative. We underestimated how the market would assess the purpose, implication, timing and magnitude of our filings. Our intent was to create broad financial flexibility for an uncertain economic and commodity market environment over the next few quarters. In retrospect, we made a mistake and we are terminating the Distribution Agency Agreements that permitted us to sell shares under a prospectus supplement and we are amending our acquisition shelf registration statement filed on Form S-4 to reduce the number of common shares registered from 50 million to 25 million." (see complete story below the Unfraced Piece)
Good luck to us all!
Marian

 

Unfraced Marcellus Gas Potential?
In the early 80s the US Dept of Energy sponsored the Eastern Gas Shales Project,
studying hydrocarbon potential of NE US Devonian shales. One well drilled as a result of
that project was Tiffany #1, Endicott, NY. Of course it was not hydro-fractured.
This is instructive, though the Marcellus formation at that site is 176 ft thick, lifetime
production amounted to only about 1.6 MMcf, less than 2 days worth of production from
a 2008 Cabot well hydro-fractured, located just 30 miles south.
Feeling threatened by PA law of “Rule of Capture”? How much Marcellus gas will
migrate from under unleased, unfraced land? Answer, Not Much!
Source: http://www.dec.ny.gov/cfmx/extapps/GasOil/search/production/index.cfm
NY API Well # 31107177880000 Tiffany #1
Year Operator
OIL
(Bbls)
GAS (Mcf)
Months in
Production
1985 Tiffany, Glenn O 0.00 1000.00 0
1987 Tiffany, Glenn O 0.00 1.00 0
1988 Tiffany, Glenn O 0.00 0.00 12
1989 Tiffany, Glenn O 0.00 73.00 0
1990 Tiffany, Glenn O 0.00 0.00 12
1991 Tiffany, Glenn O 0.00 73.00 12
1992 Tiffany, Glenn O 0.00 73.00 12
1993 Tiffany, Glenn O 0.00 73.00 12
1994 Tiffany, Glenn O 0.00 73.00 12
1995 Tiffany, Glenn O 0.00 73.00 12
1996 Tiffany, Glenn O 0.00 73.00 12
1997 Tiffany, Glenn O 0.00 73.00 12
1998 Tiffany, Glenn O 0.00 73.00 12
1999 Tiffany, Glenn O 0.00 0.00 12
C.O. Frederick, ngasfred@gmail.com - October 2008

 

Dear NWPOA Loop,
9 AM DEC. 8  JOIN IN THE CONFERENCE CALL>   FIND OUT HOW BELOW    ( MARION'S EMAIL FOR THE NORTHERN WAYNE ALLIANCE  )
> This Loop will mostly be about Chesapeake (CHK) because CHK is back in
> contact with landowners and members of the Alliance. They have even started
> making "housecalls" with landmen or brokers as they call them. They are
> making offers that are far lower than last summers offers. The basic
> starting offer that the landmen bring to your door is $1000 per acre for 10
> years at a 12.5% royalty in this area.
>
> The starting offer From CHK to the NWPOA is copied below. It was attached to
> a very basic company lease with a few addenda: CHK Quote:
>
> "We feel the NWPOA acreage would be a nice block for our drilling program,
> and propose the following options to you.
>
> (1) $1,000/ac bonus and 13% royalty, or (2) $750/ac bonus and 14% royalty or
> (3) $500/ac and 15% royalty (all options are available separately to NWPOA
> members)
>
> Because of the permitting and environmental issues we are currently
> experiencing in NE PA, and will no doubt experience for many years to come,
> in order for Chesapeake to maximize its investment and ability to develop
> the NWPOA acreage block, our leases must provide for a 10 year term on
> Chesapeake’s oil and gas lease form and addendum (copies attached)." from
> CHK
>
> Back to me again:
> The economy is very weak with more and more bad news almost on a daily
> basis. Not only for the Energy sector but across the board. This cycle is
> not your typical up and down cycle. This is deep and incredibly broad
> reaching. There is no credit to be had virtually speaking. Normally we
> would not even consider giving this offer a second thought. But with the
> economy as depressed as it is we did look it over. As separate members of
> the steering committee each of us offered our reaction. The consensus was
> that none of us seemed eager to accept this proposal. The proposal was very
> much different than what had been discussed this summer when CHK flew in to
> meet with the NWPOA. We have been asked to submit a counter offer. First
> thing next week the entire Steering Committee will meet to discuss the
> matter.
>
> South Western Energy is having its budget 2009 meeting and Cabot just
> finished theirs allowing 800million to Marcellus and 600 million for
> Acquisitions. Other company reports will follow and 4th Quarter reports will
> be out soon. But I don't want to give you false hopes. The economy has every
> one worried and the price of gas also worries the companies. These are
> indeed historic times. Some companies will be swallowed up by other company
> take overs. It will be several years before the expansion of the Tenn
> Pipeline gets up to speed to move vast amounts of gas from our region. We
> will not see the frenzied leasing competing until the price of natural gas
> goes up and the economy stabilizes. In the interim some wells will be
> drilled and that will further define the geology. Some areas will become
> more valuable, some less and some may become unattractive. I can't say what
> the future will hold or just how this will unfold. Even the Wall Street
> experts seem baffled. I do know that the gas resource is still ours. Had we
> been paid this summer we would have invested in a then strong market. And
> today we would have watched it slipping away. We would have been ashamed of
> ourselves for wasting our "windfall" gift.
>
> Chesapeake is wise to try to buy in this depressed market. They told us
> that we had a wonderful contiguous block that is very attractive to them.
> It's a pity they are not putting an attractive price and terms on it today.
>
> Important news about CHK is that they did find a company willing to partner
> with them in the PA Marcellus Shale. The company is from Norway, Its called
> StatOilHydro. Stat has given them 1.4 billion dollars. and has another 2
> billion promised to pay for drilling and development expenses in the next
> few years. Since CHk already borrowed a great deal of money and it is not
> easy to borrow more they are also filing to offer additional stocks as a
> possible way to raise money. That news got the stock market nervous. The
> price of natural gas and oil also got the stock market nervous. The end
> result is energy stocks went down again. CHK was especially hard hit.
>
> Just to help put it in perspective for those of us regular folks who dont
> follow the stock market or really understand it lets look at this summer.
> Oil was almost 150 dollars a barrel! Natural gas was almost 14$. CHK stocks
> were valued at $74 per share and they were about a 30 billion dollar
> company. TODAY natural gas went below $6. Oil is at only $40 a barrel and
> predicted to go still lower (maybe to $20-30 per barrel) and Chesapeake went
> below $10 per share and is today only a 5 Billion dollar market company.
> Fear in this day and age is breeding more fear and insecurity in the
> financials.
>
> In an effort to assure stock holders CHK will have a conference call on
> Monday DEc 8th. I was told it would be good news. You can listen to it if
> you want the article is below with instructions on how to hear it. I think
> they will explain how they have trimmed their budget, and stream lined their
> finances. I think they will tell the world they are going to slow down the
> Barnett Shale gas and other plays and how they will be putting lots of
> drilling effort into the Marcellus shale. They might tell the world that
> they will be taking the money they would have spent in the other plays and
> bring it here to PA because we are so close to the market. They might
> explain that even though natural gas prices are so low they can still eke
> out a profit on Northeastern gas because we are close to the market and they
> dont have to pay so much for transportation. I think they will explain how
> they made a super sweet deal with the Norwegian company. They will explain
> that even though it is expensive to drill this unconventional Marcellus
> Shale it wont be for them because they are experts but most of all because
> Stat Oil is going to pay for all of the expenses on the 32.5 % they own and
> then to top it off they will pay for 75% of all of CHK's expenses to boot!
> (see why I said a sweet deal) We will probably hear CHK top executives tell
> people that they got Marcellus land very reasonably priced. They might say
> that even though n gas is low they have advance sold plenty of gas at higher
> prices on contracts. They will probably say that they have a low cost to
> produce gas, among the lowest in the industry maybe they will put a number
> on it like say an average of $1.60 Mcfe. They will say they have gotten more
> and more efficient that their 3 year average was something like $2.90 per
> Mcfe. This will be the way they can justify that even if gas is worth $5.50
> per Mcfe they can still stay ahead of the game. They will tell that they
> will Shut in the wells in other parts of the country and lay down the rigs.
> If they say these things it would not be untrue. We will have to listen to
> hear what they actually say. It should be interesting!
>
> For those of you who like reading I have included below some of the
> articles that relate to these matters.
>
> Some Good news to share is that the Susquehanna River Basin Commission SRBC
> has approved numerous items to make matters more stream lined and efficient
> in the permitting process for the gas drilling industry. Most of us are in
> DRBC (Delaware River) But some of Wayne County and all of Susquehanna County
> will benefit from the revised SRBC process of permitting. Perhaps the DRBC
> can learn from the example that the SRBC sets in the permitting process.
>
> So all in all a positive week! Interest is heating up. CHK is back ( they
> were not gone long ) They did not bring back Long Associates yet:) SRBC is
> moving ahead. Heating oil prices are down as we go into the heating season.
> I heard lots of you got deer! For those of you who did not they are stillout
> there. We will let you know what happens at the steering committee meeting.
> GOOD LUCK TO US ALL!
> Marian
>
> N e w s R e l e a s e
>
> Chesapeake Energy Corporation
>
> P. O. Box 18496
>
> Oklahoma City, OK 73154
>
> FOR IMMEDIATE RELEASE
>
> DECEMBER 5, 2008
>
> CONTACTS:
>
> JEFFREY L. MOBLEY, CFA
>
> SENIOR VICE PRESIDENT –
>
> INVESTOR RELATIONS AND RESEARCH
>
> (405) 767-4763
>
> jeff.mobley@chk.com
>
> MARC ROWLAND
>
> EXECUTIVE VICE PRESIDENT
>
> AND CHIEF FINANCIAL OFFICER
>
> (405) 879-9232
>
> marc.rowland@chk.com
>
> CHESAPEAKE ENERGY CORPORATION SCHEDULES CONFERENCE CALL TO
>
> DISCUSS UPDATED FINANCIAL AND OPERATIONAL PLANS THROUGH 2010
>
> OKLAHOMA CITY, OK, DECEMBER 5, 2008 – Chesapeake Energy Corporation
>
> (NYSE:CHK) today announced plans to hold a conference call to discuss
> updated financial
>
> and operational plans through 2010 that will include a reduced capital
> expenditure budget
>
> and details of Chesapeake’s plans for building substantial cash resources
> over the next
>
> two years.
>
> The conference call is scheduled for Monday morning, December 8, 2008, at
> 9:00 a.m. EST.
>
> The telephone number to access the conference call is 913-312-1236 or
> toll-free
>
> 888-211-7383. The passcode for the call is 1193464. We encourage those who
> would like
>
> to participate in the call to dial the access number between 8:50 and 9:00
> a.m. EST. For
>
> those unable to participate in the conference call, a replay will be
> available for audio playback
>
> from 2:00 p.m. EST on December 8, 2008 through midnight EST on December 22,
> 2008.
>
> The number to access the conference call replay is 719-457-0820 or toll-free
> 888-203-1112.
>
> The passcode for the replay is 1193464. The conference call will also be
> webcast live on the
>
> Internet and can be accessed by going to Chesapeake’s website at www.chk.com
> and
>
> selecting the “News & Events” section. The webcast of the conference call
> will be available
>
> on our website for one year.

 

 

 

NOVEMBER 10 2008

 EMAIL from NWPOA, Marion S.

NWPOA,
 
Here is an update, as we have been able to get a message out in a while.  Talks with Gas companies continue as we approach the new year, and companies will be getting new budgets in place. When all the economic stuff hit the fan most companies froze spending, and it is going to take a while for things to calm down and retrun to normal. We have to assume that spending during the first quarter of 09 may be slow as budgets don't necessarily start Jan1st, and with a new political scene companies may wait to see effects before spending.
 
NWPOA Steering committee has meet several times during this slow period in leasing to insure that we are exploring all options in our efforts to obtain a favorbale lease. We have reps exploring new ideas and others are keeping up to date on existing companies. Some changes may be seen in the industry as a whole, smaller companies may not survive the economic turmoil, and get swallowed up by larger companies.
 
Rumors abound that Chesapeake has found a joint venture partner, while that has not been confirmed, some members are reporting to us that they have begun to receive lease offers in the mail again. These offers are about what offers were a year ago, and will likely raise as time goes bye, and resistance stays strong. Gas companies across the country are using the negative financial enviorment to lower bids and draw in those anxious to lease. However the reports on the gas continue to be positive, Cabot has reported they expect to be producing about 5 MCF/day into the Tenesse Pipeline by year end. They plan to drill 70 wells in 2009. The CEO of Chesapeake has publicly stated that though Barnett and Haynesville lease prices are way down, he expects Marcellus lease prices to stay resilient, because they were not that high to start. Obviously that conflicts with their leasing activity.
 
It is important to stress again the importance of sticking together as we continue. Doing this so far has caused many positive changes in lease terms, and economics. Moving forward it will continue to have that effect.  Companies that are looking to lease land in the Marcellus Region are finding that there isn't much land left. Thus making our 70,000+ acres very attractive especially since our land is mostly contigious. If we can keep it that way it will be very beneficial to a company and us the landowners.

 

 

NOVEMBER 7 2008

Email from Phil Pass Conservation Services LLC

Today, Cabot has 4 rigs running in Susquehanna County and just filed
> numerous DEP permits for our area.
> There seems to be great confidence for production in our area. See
> photos attached.

    

 

 

      NOVEMBER 5 2008

 

Email from: Rick Marquardt   PE    Conservation Services LLC

Gas is over $7/MCF. PNC Economist says oil to drop below $60/Barrel, but gas holds tight‏

Carrizo Oil & Gas forms Marcellus joint venture

 

HOUSTON -

Carrizo Oil & Gas Inc. and Avista Capital Partners said Tuesday they have formed a joint venture to buy and develop land in the energy-rich Marcellus shale region.
Each company will contribute up to $150 million in cash and properties for the joint venture, which controls about 155,000 acres in the region.
The Marcellus area - located in the Appalachians - is estimated to hold trillions of cubic feet of natural gas. On Monday a leading geologist said the area could yield seven times as much natural gas as he earlier estimated, meaning it could meet the entire nation's natural gas needs for at least 14 years.
Exploration and production in the region became financially feasible earlier this year as prices for natural gas rose above $10 per 1,000 cubic feet. Prices have since fallen below that mark.
Carrizo will operate the properties, and Avista will fund 100 percent of the joint venture's next $71.5 million in expenditures, which is expected to be spent over the next eight to 12 months.
The companies will share costs after those funds are depleted.
Shares of Carrizo closed Monday at $21.08 and have traded between $15.01 and $76.30 in the past 52 weeks.

 

 

OCTOBER 13 2008

Get out and enjoy the beautiful weekend!  It is going to be a very long hard winter!

The economy is crashing and how many more cracks in its fragile shell we will see I don't know.  I do know it is not over yet.  Everyday more serious news comes across the news media. Shocking news that no one would ever have expected. We felt so rich and strong as a Nation and suddenly we are humbled with just how fragile financially we are as we see
 deepening and spreading problems across all sectors of our economy. We have not seen events like this since the great depression.

Now is a tough time but remember this is the richest Nation in the world with natural resources. We have ingenuity and resourcefulness. Americans think and do things outside of the box. We will pull through.

How does this affect the NWPOA and negotiations for  a favorable lease?  It affects us severely. Capital has dried up for now.  Assets are frozen or have disintegrated. The energy sector has been very hard hit.  That means in everyday words that right now most of the gas and oil companies can not spend a dime on leasing. We think of them as being huge and rich but that makes them even more susceptible to the current financial crisis.  Many have lost 70% of their value in a few short weeks!

Lets look at one company just so you can understand what I am trying to explain. All of us have heard of or had contact with Chesapeake. So we will use CHK as an example:

We heard yesterday that Chesapeake's 25 % Marcellus Shale deal fell through. They needed that deal in the worst way especially now in this financial crisis. But probably because of the combined factors of the financial instability, being unable to get capital out of the market and the lower price of natural gas they were unable to get the deal done. The truth is in these times as the worlds finances are even slipping everyone would balk.

But Chesapeake really needed that deal to go through. The CEO of CHK had invested heavily and used his stocks in CHK as collateral to invest. He was "sure" that it would work to his advantage. So sure in fact that he used his company stock to buy on margin. Chesapeake's stocks were  at a high of $74.00 this year and just touched a low of $11.99 per share! See how drastic the swing is.

yesterday  he, Aubrey McClendon, was forced to sell all of his stocks involuntarily to cover the margin calls. What is astounding is that he is now the CEO that does not own stock in his company anymore. He lost it! See the articles below.

No one would have predicted turns of this magnitude but this is reflective of what is happening every where. Some companies are more conservative and will not be as severely affected. There is still some private equity money that may loosen up but for the most part finances have hit a brick wall. It will need time to find a way around that brick wall or build a door. Time.

The Steering Committee made a wise choice to hold and Stay the course.  Once you sign a lease, especially a company type lease, you are leased even if you do not get the money for the lease according to the terms written in the company lease. We dont want that for any of our neighbors. We are continuing to keep open communications with the energy companies expressing interest in our lands. There are even some companies that are actually to small to take on the alliance but that still have some private equity money available. We are in active discussions with them too. If they make an offer we will share it with all members who may want to consider that.  For now we feel the best bet is to keep owning our land and gas rights until the financial crisis resolves itself. The companies will have new budgets next year and perhaps by then the financial squeeze will begin to ease. This is a global financial crisis and the world needs to right itself.

Go out pick apples with your family gather in your winter squash, split your fire wood get ready for a tight winter. You have land. 70 % of your land will not disappear. It is real not a paper transaction. Hold tight we will survive and come out stronger.

Good luck to us all!

Marian

 

October 7 2008 Email Update:  Photos and a Note from Marion S. of the NWPOA.info

Southern Wayne County Pa Property Owners Alliance South Canaan Waymart Clinton Dyberry, Berlin, Texas, Cherry, Palmyra, Paupack, Salem, Sterling, Lehigh Areas Natural Gas Leasing     Southern Wayne County Pa Property Owners Alliance South Canaan Waymart Clinton Dyberry, Berlin, Texas, Cherry, Palmyra, Paupack, Salem, Sterling, Lehigh Areas Natural Gas Leasing

     

Happy days, check this out. They just fraced Ordie and Aline Price Well #1 last week. Its a Southwestern Well and it went beautifully.  They are flaring it off now as some of you have seen and reported in. But scroll down this email I have better than just an oral or eyewitness report to share with you. Arline and Ordie were good enough to share some great photos and information with us.

Each time the companies drill or frac this in this new Marcellus Play they get a bit more information to build on.  The Price Well #1 is level with  the southern portion of our NWPOA Collective Lands.  They are located in Susquehanna County but they are very much East in that county, (close to Wayne) . To give you some perspective they are about 12 miles west of Pleasant Mount and 22 miles west of Rileyville (both in Wayne County of course).

Congratulations to the Prices. We should all be pleased and excited because this well is quite far 'east' from the other wells. That serves to validate all of our properties further more!

Other details you should notice when you look at the photos are how neat the well pad site is. Those blue and green containers are the water trailers that were trucked in to bring the water to the site to complete this operation. They do not stay at the well site. Road tractors will come and hook up to them and simply drive them off the property.   All those red trucks clustered in the middle of the site are there to do the frac process. They have to build up the force and pressure needed to crack the Marcellus Shale stone layer that has the gas trapped tightly. The pressure that cracks the shale uses the water from the tanks and some fine sand particles. The idea is that the sand will stay trapped in the tiny cracks in the shale. They will act like wedges holding the cracks open so the gas can flow freely though the cracks and up the well bore and into a closed gathering pipeline. The pressure of the earth will push the gas out and up the vertical pipe.  The water they forced into the well is removed ( most of it anyway).  The well is 'Flaring'. That is what the burning flame is that you see. That is an important part for the company. They can do calculations and flow rate estimates and gather other valuable information. The flaring is only done for a short while. Then they will cap the well until they have a pipeline to flow the gas into so they can move the gas to market it.

It is exciting to see especially because it is so close to home.   22 miles west of Honesdale Pa

Good Luck to us all!  Marian

What is Going On and Its Implications for NWPOA
The comments that follow are an attempt to put the current situation in perspective and to build realistic expectations for NWPOA.  They require that one look at the current economic conditions, how those economic conditions relate to the gas situation, and only then, at how they can impact NWPOA.
I apologize in advance for sounding excessively professorial.  It simply reflects my forty-five years teaching at major universities.
The Economy
All corporate decisions must reflect both the current and expected national and international economic conditions. Thus, the starting point is admitting that we have a very serious financial situation at hand.  The media have adequately highlighted its seriousness and I will not dwell on its importance here.  It is more important to see how this situation can and will impact us.
This is not a new problem and it does not have an immediate solution.  It is structural and it has aspects within many parts of the domestic and international economies.  Some of my colleagues may disagree with the exact timeline below, they will agree with the big picture of how we got here.
Back in the ‘70s, financial institutions were looking for ways to make more money by expanding their credit card business.  Using sophisticated mathematical techniques, they discovered that the traditional approach to granting credit was missing most of the potential profit.  Up to that time, you got credit (loans, mortgages, credit cards) based on your stability.  If you had a steady income, paid your bills, and so on, you got credit.  The models showed that this approach missed the most profitable customers – those that run their credit cards up to the limit, pay the minimum, and really run up interest charges – and then get further overextended by getting more credit cards!  Thus the proliferation of credit cards that you find today.
The mortgage business was also ripe for profit-making.  Forget the days when your bank gave you a mortgage and then worked with you until it was paid off.  The large financial institutions found that they could bundle packages of mortgages and then they could, in turn, get loans from the financial community by using these bundles as collateral on bonds.  (We have all gotten letters from banks saying that ‘we transferred your mortgage to company and from now on you will be dealing with them.”)  This, in turn, gave them still more money that they could use to make loans – and the cycle continues.
Naturally, with growing deregulation, normal competition stepped in and the situation got worse.  More and more companies issued credit cards based on lower and lower standards.  They then bundled the credit cards and sold the accounts to others.  (Yes.  Sears sold your credit card account to a bank and they are almost totally out of the picture).  The same thing happened in the mortgage business, with the eventual issuance of mortgages at rates below the going market and to people who might not otherwise have been able to get credit.  (In case you are still feeling comfortable, let me further depress you by observing that we are also doing the same thing with the federal budget).
The economy that grew from this is interrelated and global.  Financial institutions and governments around the world buy and sell each other’s securities.  Moreover, the national and state economies are closely tied together.
This sequence appeared to help some people and the economy, but it also build a ‘house of cards.’   It created a fantasy economy built on a very soft foundation.
Getting this situation fixed goes beyond the so-called ‘bail-out’ bill.  It will require major, well throughout structural changes.  There is considerable uncertainty right now, in part caused by the current election situation.  One thing is certain.  No matter who gets elected, he will have to devote a significant effort to keeping the ship afloat, sorting out the mess and hopefully putting long term fixes into place.
Gas Exploration in Eastern Pennsylvania
Now, let’s move on to the gas situation in Eastern Pennsylvania.
There is no question about the presence of significant gas deposits in Marcellus Shale.  There is no question a about the advent of new technologies making it more cost effective to access this gas.  There is no question about the demand for gas in major population areas.  There is no question about the proximity of the gas deposits to these markets.
All of the above factors have been verified.  It is costing a lot to expand the pipelines.  This means that a lot of companies have had to do their research and validate the above claims, in order to raise the funds needed to finance the expansions that are currently going on.
There is also a lot of uncertainty present.  While the presence of gas deposits is know, their magnitude and the shape of the deposits is still being felt out.  The best places to drill are still being sought.  Some environmental issues are still being investigated.  The interest in gas exploration has outdistanced the administrative capacity of the regulatory agencies.  Ways are still being sought for dealing with potential road impact. 
The bottom line – lots of potential, lots of forward progress, but still considerable uncertainty.
Enter the gas companies.  We talk about them as if this is one group.  It isn’t!  The initial wave of gas companies were gas exploration companies.  They identify gas sites, potentially drill, and find markets for the gas.  These companies do not have to drill in order to make money.  They are in a paper game.  They sign leases, make sure that the leases are assignable and then …..  play Monopoly with the paper.  They trade among themselves to get larger plots.  As in the real estate case above, they also bundle the leases, sell them and use them as security for raising still more money.  What I am saying is that they make money without ever having to drill – it’s a paper game.
A second type of gas company has now entered into the scene.  They already have a need for gas for their operations – generators, power plants, gas stations, etc.  They are interested in the same gas deposits because they need this gas for their own businesses.  Unlike the companies described in the last paragraph, they are not starting with the gas and then looking for a market, they already have the market and they are trying to find more cost-effective raw materials for themselves and their already existing customers.    The important pint, here, is that the line of reasoning of the two types of companies is totally different.  In the first case it’s ‘let’s get our hands on the gas and we’re sure we can sell it to someone somewhere.’  In the second case, it’s ‘we need gas for our customers, we’re currently importing it or getting it from far away sources, let’s find a more secure local supplier.’  Their boards of directors look at their stockholder responsibility and hence they look to phased investments that get bigger as the investments are proven.  They are also more amenable to creative partnerships with their suppliers. 
The former companies are more volatile and look more like traditional oil companies.  The latter companies are more stable and conservative and possibly more reliable from our point of view.  
The current national economic crisis was foreseen by major companies.  This is why companies in lots of industries have been pulling back on large cash outlays and highly risky operations.  These same companies are caught in the middle of the debt crisis.  Traditional gas exploration companies are securitizing the leases and selling them to raise capital.  (You don’t always know who they are selling them to.  They are or will certainly be looking at Asian and Middle East investors).  The latter group is reacting to the crisis by slowing down their investments, but still keeping their eyes on their primary goal of finding better sources of supply for themselves.
Implications for NWPOA
NWPOA was initially formed to raise the bid price.  It quickly broadened its objectives to include sensitivity to our community, protection of our land, and finding a good balance between economic development and other community concerns.  Towards that end, it simultaneously embarked on negotiations with traditional gas exploration companies (the only players at the time) and development of a carefully crafted lease that reflected our research and objectives.  All of this took place while it was fending off the landsmen from the gas exploration companies who were daily trying to undermine this effort.
As an aside, I am very proud of the people, new friends that I made through this process.  The lease that ultimately evolved is one that I am very proud to be part of.
While NWPOA was bumpily negotiating with the gas exploration companies, the second group of companies (the ones driven by the need to meet their own raw material needs) came on the scene.  We started to have quiet discussions with them.  We were, quite frankly, very impressed with their forthrightness, openness to discuss flexible relationships, willingness to come up immediately to check out properties, roads, title, etc.  We were also very positively impressed by their willingness to keep us abreast of contingencies associated with their internal decision-making processes.
While all of this was taking place, many groups have been dealing with the various regulatory and environmental agencies.  The speed of events overwhelmed these agencies.  They had no policies and procedures and they were faced with a broad range of political pressures.  This situation is an obvious problem for all categories of gas companies.  It adds to their uncertainly and costs.  The good news is that these problems are being solved – maybe not a quickly as we would like, but they are being solved in a manner that reflects the objectives and values of NWPOA.
Here are my conclusions:

  • The interest in Eastern Pennsylvania gas is a long term interest.  The deposits are present and the national push for energy independence requires building on these deposits.
  • Nothing significant will happen in the next few months.  Nobody is going to do anything until they know how the debt crisis is being handled.  The short term fix in Congress is much less important than knowing how the next administration is going to address the structural problems.
  • There will be considerable volatility with already signed leases, as the gas exploration companies address their own finances and continue to build position.
  • The traditional companies that are focused on their own supply needs will become the more valuable partners.  They will continue to be interested in a large block like ours and they will be very interested in building an innovative relationship with NWPOA and its partner groups. 
  • It is essential that we stay calm, recognize why we are here, and recognize that this is a long term matter.  It is essential that we maintain a close and on-going relationship with the latter group of companies, letting them know that, as they are working through their evolving corporate strategies, we are willing to be part of the solution.

Mike Uretsky

 

 

September :  

The Gas Play has slowed down.  Some of the large Gas Companies have debt they can't pay and backed out of the Norhtern Wayne Alliance Play. REMEMBER  “ Going It Alone ” If you consider signing a contract from a Gas company many areas could be unfriendly.   This may affect you and your land for many decades. ( may include : payments, timeframe of payments, water table, land aesthetics, crops and livestock, ponds and lakes your neighbors water conditions and many more significant items ). 

 

Helpful Volunteers   

C. Coccodrilli 983-0709
J. Pavlovich…. 499-3077
T. Daschke ..937-4505
S. Chmielewski….937-4384
C. Galley….698-6032
M. Cichocki…654-9555   

R. Dragwa   488.6547

J. CERESKO   570,840.6400

AUGUST 2008

Southern Wayne County Pa Property Owners Alliance South Canaan Waymart Clinton Dyberry, Berlin, Texas, Cherry, Palmyra, Paupack, Salem, Sterling, Lehigh Areas Natural Gas Leasing   

Thank you for joining us. 

Pass the word: TELL YOUR NEIGHBOR to join our alliance, about this news  letter and to visit our website  LWPOA.INFO  for current updates and news  Our information is collected via the internet and speaking with neighbors. 

About Us Our Alliance is your neighbor,  a group of volunteers who have dedicated their personal time helping you, our  neighbors.

LWPOA Alliance :  Natural GAs drilling    beautiful land    PROTECT from Gas Co. unfriendly contracts   Provide Drilling Industry Updates   Awarness of bids from other Alliances

Negotiate a fair FRIENDLY contract    Experienced Professional Negotiators   Find a Friendly Environmentally Safe Contract

JULY UPDATE

     If you are able to wait , we believe we will all end up with a owner friendly contract .  So therefore,  “hold the course” and don’t panic regardless of the stories or rumors you may hear; the land brokers come up with outrageous information; they will tell you they are pulling out of your area, or they will say they are starting  a well next month and pay you top dollar today if you sign today .  Don’t be bullied or pressured, but  instead call one of our volunteers.  ( names above ).  Gas needs pipelines to be taken to  market, no one gets royalties until the gas can be moved.  This will take time.  Photo of Current gas wells in pa  

HOLD YOUR CURSOR OVER PHOTO -> CLICK SEE ALL 3 PHOTOS

   

 

JUNE UPDATE

Updates >     June  Seminar at Western Wayne High School was successful and Informative. 200 new neighbors signed up with a $25 donation.
July
 Committee meetings.  ( Let us know if you can attend or help at our meetings ).
~ All updates will be on our website ~ The Marcellus Shale area of Southern Wayne County is about 150 - 200' thick   ~ it is considered part of the  “core” and very desirable by all gas companies.  A well has been started near Red School House ~ Unfortunately the state of Pa does not require information to be released immediately.  Possible Horizontal Drilling could start soon.

Be Informed: Currently Landsman are being  very aggressive and will try to create a sense of urgency to get you to sign.    

  “ Going It Alone ” If you consider signing a contract from a Gas company many areas could be unfriendly.   This may affect you and your land for many decades. ( may include : payments, timeframe of payments, water table, land aesthetics, crops and livestock, ponds and lakes your neighbors water conditions and many more significant items ). 

* Disclaimer: We are a non professional group . * Your Donation Helps Us continue with our mailings / seminars, postage, ads, attorney fees- We volunteered to work  as a committee because our Alliance group would like to make Gas Leasing and Drilling Possible while preserving our environment. This information is collected from internet sources

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

HIDDEN PAST ARTICLES USE LATER IF NEEDED

 

 

Chesapeake joins with Norwegian firm to drill for gas

By Steve McConnell
Fri Nov 14, 2008, 04:53 PM EST
Story Tools:|  Print This Print This
Wayne County - Chesapeake Energy Corp., who holds the most keys to the natural gas kingdom in Wayne County, will enter a joint venture with the European natural gas giant, StatoilHydro.
The Norwegian-based company will acquire a 32.5 percent interest in Chesapeake’s Marcellus Shale lease area, which covers 1.8 million acres in Appalachia, Pennsylvania and New York included, according to a company press release issued Tuesday.
Despite this venture, lower natural gas prices are draining incentive to move ahead with operations.
The effect on the county’s lease holders, who signed deals with Chesapeake, hoping to reap lucrative natural gas royalties, is unknown today.
“Until the acquisition closes, we’re not providing any additional color commentary,” said Jim Gipson, director of media relations with Chesapeake, by phone on Friday.  “We probably would be willing to discuss more details” later.
StatoilHydro, the second largest natural gas supplier to Europe, will now own approximately 600,000 acres of Chesapeake’s total lease area, a 32.5 percent ownership interest.
Chesapeake, the largest U.S. natural gas producer, will retain ownership on its remaining 1.2 million acres.
The Marcellus Shale, a vast geologic formation stretching from West Virginia to New York, contains massive, mostly untapped, natural gas reserves.
The joint venture will cover more than 32,000 leases in Ohio, Pennsylvania, New York, and West Virginia.
Penn State University geoscientist Terry Engelder, a leading authority on the topic, has predicted that nearly 363 trillion cubic feet of natural gas could be recovered throughout the entire shale.
Wayne County is considered a “core” area of the shale, expected to produce significant quantities of natural gas once extraction begins.
Both companies believe the deal will enable them to drill 13,500 to 17,000 horizontal wells over the next 20 years.
There are more than 1,000 leases signed county-wide by Chesapeake and other industry players, including Cabot Oil and Gas Corp., a Houston-based energy company.
Today, however, there is only one natural gas well drilled in Wayne County, according to state Department of Environmental Protection records. That one was drilled by Stone Energy Corporation.

Less incentive to drill
Possible industry reluctance with converting natural gas leases to actual drilling could be due to lower natural gas prices on the energy markets, and broader national economic upheaval, said Dave Messersmith, of the Penn State Cooperative Extension office in Wayne County. (A lease is an intent to drill).
“There’s not as much incentive to produce the gas as there was in the summer” when natural gas prices where much higher, said Messersmith.
Prices then were $13 per thousand cubic feet of natural gas, where it is around $6 today, the 1999 national average, according to the federal Energy Information Administration.
“The break-even cost (for natural gas companies) is somewhere between $3 to $4 per thousand cubic feet,” he said. “These numbers aren’t encouraging for them to greatly expand.”
According to the terms of the joint venture, StatoilHydro will pay $1.2 billion in cash to Chesapeake when the acquisition closes.
StatoilHydro will also pay an additional $2.1 billion from 2009 to 2012 by funding 75 percent of Chesapeake's 67.5 percent share of drilling and completion expenditures
To earn this bounty, “Chesapeake is required to maintain a significant level of drilling activity,” according to the press release.
Also, StatoilHydro will have an investment interest in further lease acquisitions by Chesapeake. 
[Editor’s note: This is part of an occasional series of articles highlighting various aspects of the natural gas bonanza in the region. If you wish to comment on the issue or how it affects you, please contact the writer at (570)253-3055.]
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Nov 22 2008      Email from NWPOA

 
It would seem that Chesapeake has found an investor, giving them the capital to start leasing again. In case you haven't heard about it, here is some info on the deal:
 

Posted: 11 Nov 2008 08:39 AM CST

New Standard Set for Marcellus Shale Acreage

Well, Aubrey got 'er done. The long awaited joint venture in Chesapeake's Marcellus shale assets was announced this morning to my and most of the investment community's surprise. While the long term value of Chesapeake's acreage position was never really in question, its ability to do a deal under the current economic circumstances certainly was. Eventhough the proceeds are a little light of the last forecast, it's a good deal for Chesapeake. Fortunately, StatoilHydro took the long view and after a thorough analysis of the economics of the play, signed on for nearly $5,800 per acre at a time when Chesapeake and others are paying only $500-$2500.

Europe's #2 natural gas supplier, StatoilHydro, committed US$ 3.375 billion for 32.5% of Chesapeake's 1.8 million acre interest. $1.25B in cash will be paid at closing and $2.125B of drilling carry will be paid over the next four years to fund 75% of Chesapeake's drilling costs. The presentation from this morning's conference call shows that the company used mildly conservative economic assumptions in the decision: an average EUR per well of 3.1 bcf and drilling capex of $3.5 million per well. But, a rather aggressive drilling program over the next four years may prove an underestimated political risk. At $3,5 million per well, the drilling carry implies over 800 horizontal well completions during the next four years. Since the carry is a use it or lose it proposition, if Chesapeake is to use all of it, the number of wells would seemingly have to be even greater as drilling costs go down. The companies expect to ramp to an average of 40 operating rigs in 2012, so, at 10 wells per rig/yr, the plan is back end loaded. Also aggressive was the 87% net revenue interest assumption which seems to preclude the imposition of a severance tax in Pennsylvania.

Overall, StatoilHydro plans commit US$ 6.0B over the next four years including $ 2.63B to the joint venture for its 32.5% share of capex. This amount, as well as the drilling carry, will be somewhat variable as it is dependent on Chesapeake's completion performance, but it does imply that Chesapeake intends to spend US$ 8.0B of its own in project capex beyond its share of the drilling costs. Chesapeake plans to continue acquiring leasehold in the Marcellus Shale and StatoilHydro will have the right to a 32.5% participation in any such additional leasehold.

Press Release
StatoilHydro Presentation
 
 
Please keep this information in mind if any of you are approached to sign with Chesapeake for $500.00 per acre. They need to make money to operate their business, but $5,300.00 per acre is quite a profit margin for them.
 
Dean Jamieson
NWPOA

 

 

NOVEMBER 10 2008

 EMAIL from NWPOA, Marion S.

NWPOA,
 
Here is an update, as we have been able to get a message out in a while.  Talks with Gas companies continue as we approach the new year, and companies will be getting new budgets in place. When all the economic stuff hit the fan most companies froze spending, and it is going to take a while for things to calm down and retrun to normal. We have to assume that spending during the first quarter of 09 may be slow as budgets don't necessarily start Jan1st, and with a new political scene companies may wait to see effects before spending.
 
NWPOA Steering committee has meet several times during this slow period in leasing to insure that we are exploring all options in our efforts to obtain a favorbale lease. We have reps exploring new ideas and others are keeping up to date on existing companies. Some changes may be seen in the industry as a whole, smaller companies may not survive the economic turmoil, and get swallowed up by larger companies.
 
Rumors abound that Chesapeake has found a joint venture partner, while that has not been confirmed, some members are reporting to us that they have begun to receive lease offers in the mail again. These offers are about what offers were a year ago, and will likely raise as time goes bye, and resistance stays strong. Gas companies across the country are using the negative financial enviorment to lower bids and draw in those anxious to lease. However the reports on the gas continue to be positive, Cabot has reported they expect to be producing about 5 MCF/day into the Tenesse Pipeline by year end. They plan to drill 70 wells in 2009. The CEO of Chesapeake has publicly stated that though Barnett and Haynesville lease prices are way down, he expects Marcellus lease prices to stay resilient, because they were not that high to start. Obviously that conflicts with their leasing activity.
 
It is important to stress again the importance of sticking together as we continue. Doing this so far has caused many positive changes in lease terms, and economics. Moving forward it will continue to have that effect.  Companies that are looking to lease land in the Marcellus Region are finding that there isn't much land left. Thus making our 70,000+ acres very attractive especially since our land is mostly contigious. If we can keep it that way it will be very beneficial to a company and us the landowners.

      NOVEMBER 5 2008

 

Email from: Rick Marquardt   PE    Conservation Services LLC

Gas is over $7/MCF. PNC Economist says oil to drop below $60/Barrel, but gas holds tight‏

Carrizo Oil & Gas forms Marcellus joint venture

 

HOUSTON -

Carrizo Oil & Gas Inc. and Avista Capital Partners said Tuesday they have formed a joint venture to buy and develop land in the energy-rich Marcellus shale region.
Each company will contribute up to $150 million in cash and properties for the joint venture, which controls about 155,000 acres in the region.
The Marcellus area - located in the Appalachians - is estimated to hold trillions of cubic feet of natural gas. On Monday a leading geologist said the area could yield seven times as much natural gas as he earlier estimated, meaning it could meet the entire nation's natural gas needs for at least 14 years.
Exploration and production in the region became financially feasible earlier this year as prices for natural gas rose above $10 per 1,000 cubic feet. Prices have since fallen below that mark.
Carrizo will operate the properties, and Avista will fund 100 percent of the joint venture's next $71.5 million in expenditures, which is expected to be spent over the next eight to 12 months.
The companies will share costs after those funds are depleted.
Shares of Carrizo closed Monday at $21.08 and have traded between $15.01 and $76.30 in the past 52 weeks.

 

NOVEMBER 7 2008

Email from Phil Pass Conservation Services LLC

Today, Cabot has 4 rigs running in Susquehanna County and just filed
> numerous DEP permits for our area.
> There seems to be great confidence for production in our area. See
> photos attached.