Too much Gas + Low Prices = Lease Shenanigans

As gas prices fell, drillers headed west from the dry Marcellus shale region to Ohio where the gas is "wet". Gas containing ethane and propane was, for awhile, bringing in more cash. But now that market, like the gas market, is saturated, notes a report in the Pittsburgh Post Gazette. This might be what you'd expect from an industry that is mired in continuous boom-bust cycles.

So maybe it comes as no surprise that one of those companies - Chesapeake - is withholding royalty payments in blatant disregard of the leases they signed. In January the company notified Pennsylvania landowners of its intent to deduct the costs of production from royalty payments. Those costs range from 70 cents to $1 per 1,000 cubic foot (mcf) of gas produced. Given the all-time low gas prices, that means that some royalty owners have seen their payments slashed by 90 percent or more this year, notes a recent report in Bloomberg.

Which leads me to wonder why Governor Andy Cuomo would be in a rush to allow hydraulic fracturing into the Southern Tier of NY.

1000-plus Protest Fracking in Albany

photo by Mark Dunlea; see more here

More than 1,000 people showed up in Albany yesterday to tell Governor Andrew Cuomo just what they think about fracking. The gist of their message: "No Fracking Way!" As one banner noted, how can Andy hope to become President if he can't protect New York's water?

You can see lots of photos, courtesy of Mark Dunlea, at http://bit.ly/NsAXme

and find local coverage here and here.

UPDATE:

At noon today there was another rally – this one in Binghamton. Congressional Candidate Dan Lamb (D-NY22) railed against Cuomo’s proposal to allow hydraulic fracturing in five Southern Tier counties. According to Lamb, the statewide moratorium on drilling should remain in place and comprehensive public health, environmental, and economic impact studies should be conducted. Furthermore, the federal government should eliminate the loopholes in existing law that allows the shale gas industry to “skirt” important environmental protections.

“New York’s Southern Tier should not be used as a guinea pig for the shale gas experiment,” he said. “If fracking is unsafe anywhere in New York, it is unsafe everywhere.”

Lamb is running for Congress in the newly created 22nd Congressional District, which includes all or parts of three of the five “Marcellus Shale” counties – those on Cuomo’s short list for fracking permits.  The incumbent, he points out, has voted time after time to maintain tax subsidies for the oil and gas industry and to weaken clean air and clean water act protections.

Sunday Funnies

Cartoon used by permission of Mark Wilson of EmpireWire.com

used with permission of LH Miller

Exporting Natural Gas is Fact, not Fiction

Cheniere Energy's Sabine Pass LNG terminal near Cameron, La.

Landmen are once again roaming the hills of the Southern Tier of New York, hoping to entice landowners to sign leases allowing drillers to extract natural gas. One of their mantras is that this fuel will provide domestic energy for US consumers and free us from dependence on foreign oil.

What they don’t say is that for the past couple of years these same energy companies have been lobbying the federal government for permits to build LNG export facilities – or modify import facilities so they can export the gas. So, let’s catch up on the news….

On Tuesday Reuters reported that Cheniere Energy is building a $5.6 billion project in Sabine Pass, Louisiana. The project, expected to be ready by 2015, is getting a $1 billion boost from China and Singapore.

“New technology,” writes Stephen Aldred, “has opened up supply of natural gas from previously inaccessible shale fields in the U.S., altering the global dynamics of the industry, and turning the country from an importer to a potential exporter.” He notes that Cheniere has already signed long-term commercial contracts to supply gas to India and Korea.

Then yesterday, a reporter from South Korea Public Television called a colleague in Pennsylvania’s GasLand to arrange a tour of PA gas fields and to speak with residents. “He said the US Chamber of Commerce and the US State Department went to his country to promote shale gas,” she says. “His country is considering importing natural gas.......liquified natural gas.......to meet their energy needs.”

Sunday Funnies

Jenny Lisak

And this one's for the Editorial Page:

by artist, nlee

If you haven't been keeping up with our state legislators... some of them are rakin' in the lobby cash.

How Far is "Safe" when Protecting Aquifers?

Like land use, making pro-gas political statements is within a town’s rights. And the Joint Land Owner’s Committee is encouraging towns to do so. But the impacts of drilling don’t stop at municipal borders. That means that neighbors in the next town – even a town with a moratorium or a drilling ban – may feel the impacts of industrialized drilling.

A couple weeks ago I asked Don Barber, supervisor for the Town of Caroline what it’s like sharing a border with a “pro-drilling” town. Last March the Caroline town board passed a moratorium, and tonight they’re considering a ban.

“We anticipate that drilling activity will take place around us,” says Barber. The moratorium and ban effort are to allow the town more time to “address a number of impacts that the SGEIS (Supplemental Generic Environmental Impact Statement) doesn’t address.” A big concern for Barber is road preservation. Most wells will be sited off a town road, he says. So those roads will see more traffic than ever before – traffic that the roads were not designed to handle.

 

Caroline also wants to look at site plan reviews, as drilling creates a lot of ancillary activities: transfer stations for drilling wastes and materials, gravel pits, staging areas and more. “These will be changes to agricultural land,” says Barber. “Our site plan review process needs to ensure that any development is done in a way that preserves the town’s character.”

Another big concern is groundwater protection. Whether there’s drilling in town or frack trucks passing through, there are many opportunities for spills and accidents, says Barber. So Caroline is developing an aquifer protection plan.

But part of Caroline shares an aquifer with Candor, a town that just last month passed a “pro-drilling” resolution. Drilling activity in Candor could potentially affect the water that Caroline residents drink, says Barber. “But there’s not anything we can do about it.”

As if to underscore this sort of quandary, some residents in Great Bend Township, PA found their water affected by drilling the next town over. The well is located in Liberty Township and feet from the township line. It is also about 2500 feet – a distance far enough that the affected residents were not notified about predrilling tests, nor did WPX, the drilling company, conduct any.

According to residents, their water turned black and stayed that way for at least three days. It eventually cleared up, but questions remain:

• Is there any contamination that residents should be aware of?
• If residents 2500 feet away are seeing effects, what about the protected aquifer areas along the Susquehanna River that is only 5200 feet away?
• And how far away is “safe”?

Climate Change hits Drillers (and others) with Water Woes

Fresh water impoundment, Bradford County, PA (photo by SRBC)

It takes a lot of water to frack a shalegas (or shale oil) well - millions of gallons. Even people who live in the relatively damp region of Marcellus shale have raised concerns over the millions of gallons drillers use for each well.

Some companies have been recycling their flowback fluids. Others have proposed using minewaste water and water from sewage treatment plants. But that's still millions of gallons of water going downhole that can never be used again. It's gone; out of the water cycle.

And this year, those recycling/re-use efforts simply aren't enough given the drought. Even water-rich NY and PA have seen the driest July on record, forcing the Susquehanna River Basin Commission to halt water withdrawals. Oil and gas drillers in the midwest are so desperate for water that it's becoming a struggle to see whether crops will be irrigated or wells drilled.

Check out this recent article from CNN Money: "Oil companies desperately seek water amid Kansas drought".

Oil and gas companies aren't the only energy companies feeling the heat from climate change. This past Sunday the nuclear power plant in Connecticut shut down one of its two units because the sea water used for cooling was too warm.

Louisiana Sinkhole keeps growing

The sinkhole above a salt dome used to store brine keeps on growing. It gobbled up another 20 or so feet yesterday. Here's what AP had to say about it yesterday:

When the sinkhole expanded Sunday, the owners of three natural gas pipelines at the edge of the liquefied area were asked to flare off and depressurize their pipelines as a precaution. Louisiana Highway 70 was temporarily closed and Gov. Bobby Jindal declared a state of emergency in Assumption Parish. At least 150 homes and several businesses were ordered to evacuate.

Read more - and see a video at the Clarion Ledger.

Sunday Funnies

Jenny Lisak

Cartoon used by permission of Mark Wilson of EmpireWire.com

Poetry Break

Every now and then we need to take a break from reading the reports and the news and the regulations and opposing views... so here's a poetic break by ... Dr. Frackenseuss.

You couldn’t have known or you wouldn’t have leased.

The rights to your land have effectively ceased.

As well as your rights to clean water and air.

And also your neighbor’s. 

I’m sure you must care

That because of your signature, there will now be

Thousands of truckloads of toxic debris,

Right past your neighbor who lent you his plow.

What can you possibly say to him now

That his health is at risk because you chose to sign? Air doesn’t stop at your property line!

And his deeded land value has greatly decreased.

You couldn’t have known or you wouldn’t have leased.

Is this what you pictured? An eight acre zone

With tankers of water and sand and crushed stone

And pipelines and access roads, chemicals stored?

Radioactive waste products ignored?

Is this what the ads meant by “Clean Natural Gas”?

Those promises made with such charm and such class,

Pretending that high volume drilling’s the same

Drilling we’ve done -- with a different name!

Lying that this will make our country free

From depending on those with whom we don’t agree.

With the lure of big money, you bought Corporate Rule.

You said, “Bring on a future of more fossil fuel!”

With your formal consent, our democracy ceased.

You couldn’t have known or you wouldn’t have leased.

Update on Louisiana Sinkhole

According to a report in today's Advocate, Louisiana Department of Natural Resources and Texas Brine Co. officials knew about problems since January 2011, and possibly earlier, that one of the company’s salt dome caverns may have developed problems that could be causing the sinkhole in Assumption Parish. They also admitted that there is an accumulation of radioactive scale from NORM (naturally occurring radioactive material) in the brine they stored.

4000 Pages and Counting...

New York’s “much-anticipated report on high-volume hydraulic fracturing” continues to grow, reports Jon Campbell. It’s about 4,000 pages and the review process has yet to be completed.

Back in September the “Revised draft” of the Supplemental Generic Environmental Impact Statement (SGEIS) weighed in at about 1,537 pages – that’s including the appendices. But a couple days ago Department of Environmental Conservation Commissioner Joe Martens told Campbell that the agency had already compiled “a couple thousand” pages of responses to issues raised during the public comment periods.

There is still more work to be done, he said, and there is no firm timetable on when a final report may be released. Till then, high-volume hydrofracking is on hold in New York until it is complete.

Or at least until Labor Day, speculates Fred LeBrun in recent commentary in the Times Union.

On the other hand, it could take well into next year. There are a number of practical considerations before drilling becomes reality. First, it could take weeks, even months for operators to apply or reapply for permits under whatever new plan takes shape. Then there are some legislative barriers: just how does a state go about permitting drilling when the permitting agency is understaffed and underfunded?

Then there are the economic barriers: a weak market and gas prices lower than ever.

Still, it seems Gov Andrew Cuomo still has a fracking plan on the table. Journalist Tom Wilber posts an excellent summary of  major points including when and where wells could be drilled, home rule considerations and a few niggling complications in the SGEIS, such as green completions which require pipelines and infrastructure to be in place prior to drilling. Oh yeah, and a needed but ignored health impact study.

One sticking point in the whole deal is funding. How does DEC permit, inspect and oversee shale gas development without boots on the ground. According to Wilber, the legislative fight to fund increased environmental enforcement will be epic.

Wilber would call it critical. “The best regulations in the world mean little if there are no resources to ensure their enforcement,” he writes. But go, read it for yourself. It is well worth the extra click.

Sunday Funnies

 

Jenny Lisak

Now for some light, editorial cartoon humor...

a Binghamton, NY resident sent this in.

With permission from the GAIA GRRRLS!

Assumption Parish, LA Disappearing down a Giant Sinkhole

At the end of June, some folks in Assumption Parish, LA,noticed bubbles coming up in the water in the Bayou Corne area. This is an area near where a blow-out occurred during earlier gas drilling, so people thought the bubbles might be methane.

Sure enough, testing showed that the bubbles were methane – but no one could figure out where they’re coming from: the gas well? The pipeline? Nearby salt caverns owned by a gas company?

Then yesterday a big sinkhole began to form. People complained of smelling diesel earlier, but no official action was taken. However, on Friday a the sinkhole began swallowing up several acres of trees, so Governor Bobby Jindal declared an emergency and ordered 150 homes evacuated.

The sinkhole is located about half a mile from the road but only 600 feet from the nearest pipeline. The nearest water well is 1300 feet away, the nearest home about 2500 feet. Photos here.

 

Is it related to the bubbling methane? Possibly – the sinkhole is only 1900 feet from the nearest bubbles. At the rate it’s growing, it might get there before too long; already it’s threatening storage wells of flammable hydrocarbons.

Texas Sharon is keeping an eye on things as they progress - the amazing thing is that there is little about this in the news.