Wednesday, December 29, 2010

Wheeling Newspaper Highlights Dramatic Impact Of Marcellus Boom

The Wheeling Intelligencer/News-Register has published an article that highlights the significant impacts that the "boom" in Marcellus natural gas drilling and production is having on the economy and on local governments in the Upper Ohio Valley Region. Click to read article.

Wednesday, December 22, 2010

Natural Gas Leaders Urge Incentives For Ethane Cracker Plants

Natural gas leaders in West Virginia are encouraging state officials to consider developing incentives to attract investments in "cracking" plants that could use Marcellus natural gas liquids. Click to read article in the Charleston Daily Mail.

Tuesday, December 21, 2010

Region's Rich Shale Gas Deposits May Spur Manufacturing Investment

Bayer AG is looking into the possibility of building a new chemical plant in West Virginia so the company can use ethane, which is a natural gas liquids found in the region's rich shale gas deposits. The "cracker" plant would would convert ethane into ethylene, a key ingredient in plastics such as polyethylene. The company is exploring the use of property to build the plant at either its New Martinsville or Institute locations in West Virginia.

Click to read Bloomberg story.

Thursday, December 16, 2010

Latest U.S. Natural Gas Forecast Bullish On All Things Except Price

The U.S. DOE’s Energy Information Administration latest forecast on natural gas presents some mixed findings for the U.S. industry. The report, Annual Energy Outlook 2011 Early Release Information, finds there will be growing reliance on domestic natural gas, but this will not necessarily translate into higher prices.

The report notes that new shale natural gas discoveries have resulted in a doubling of natural gas resources in the U.S. “The technically recoverable unproved shale gas resource is 827 trillion cubic feet (as of January 1, 2009) in the AEO2011 Reference case, 474 trillion cubic feet larger than in the AEO2010 Reference case, reflecting additional information that has become available with more drilling activity in new and existing shale plays,” the report’s summary finds.

Consumption of natural gas is forecast to rise 16 percent over the next 25 years. “In the AEO2011 Reference case, U.S. natural gas consumption rises 16 percent from 22.7 trillion cubic feet in 2009 to 26.5 trillion cubic feet in 2035. The total in 2035 is about 1.6 trillion cubic feet higher than in the AEO2010 Reference case (24.9 trillion cubic feet).” The EIA notes that natural gas will represent 62 percent of new energy capacity by 2035.

The EIA notes that industrial natural gas demand is recovering, which will reverse the recent trend. “Industrial natural gas demand grows sharply in the near term from 7.3 trillion cubic feet in 2009 to 9.4 trillion cubic feet in 2020. This growth reverses the recent downward trend, as a result of a strong recovery in near-term industrial production, growth in combined heat and power, and relatively low natural gas prices.”

The share of electric generation from natural gas is forecast to go from 23 percent in 2009 to 25 percent in 2035, the report states.

The report finds, however, that natural gas prices (residential, commercial, industrial) will remain relatively flat for the next decade and then rise slowly.

Click to read more: http://www.eia.doe.gov/neic/press/press352.html

Wednesday, December 15, 2010

Legislative Subcommittee Postpones Work On Draft Marcellus/Horizontal Well Proposal

Due to a lack of a quorum Co-Chairman Herb Snyder of the West Virginia Legislature’s Judiciary Subcommittee A has delayed further review of proposed legislation relating to Marcellus/horizontal wells. The bill includes statutory (forced) pooling, water withdrawal and tracking and spacing.

Further review of the proposed legislation will continue during the January 2011 interim meetings, which will be held just prior to the start of the 2011 regular session on the West Virginia Legislature. The 2011 session begins January 12, 2011.

The West Virginia Department of Environmental Protection is also proposing legislation that is not as comprehensive as the subcommittee's proposed bill. Lewis Glasser and its affiliate LGCRGS have been involved in reviewing and commenting on both versions of the proposed legislation and will continue to participate in the subcommittee meetings and further discussions with WVDEP.

Tuesday, December 14, 2010

Legislative Subcommittee Continuing Work On Horizontal Well Proposal

Legal counsel for West Virginia Legislature Judiciary Subcommittee A has invited a small number of stakeholders to meet with the subcommittee to review proposed legislation relating to horizontal wells, including statutory forced pooling, water withdrawal and tracking and spacing. The West Virginia Department of Environmental Protection is also proposing legislation that is not as comprehensive as the Subcommittee proposed legislation. Third parties, such as surface owners groups and industry association groups, also are expected to propose legislation on various aspects of horizontal wells, including water use and spacing. Lewis Glasser has been involved in reviewing and commenting on the proposed legislation and will participate in the Subcommittee meeting.

Thursday, December 2, 2010

Legislative Committee To Prepare Forced Pooling Legislation

The House Judiciary Committee of the West Virginia Legislature is preparing legislation to authorize forced pooling and multiple bore holes on a single drilling pad. Current West Virginia law does not allow forced pooling for shallow formations, including the Marcellus Shale. Current spacing laws also require at least 1500-foot spacing and preclude multiple bore holes on a single drilling pad absent consent from the coal owner.

The West Virginia Department of Environmental Protection is proposing its own agency legislation that does not provide for forced pooling or for changes in spacing, which would allow multiple bore holes on a single drilling pad. Both proposals include new water use requirements.

LGCR has prepared a comparison for both proposals and has been in communication with the drafters of both proposals.

Saturday, November 20, 2010

Taxing the Working Interest

On Friday Nov. 19, 2010, the WV Assessors Association presented a resolution to the West Virginia Property Valuation, Training and Procedures Commission asking it to order the State Tax Commissioner to amend the W.Va. Tax Commissioner’s valuation plan for the appraisal of industrial property. The amendment included a detailed methodology for the appraisal of chattel real interests in producing mined mineral properties, which includes coal, for the tax year 2011 and subsequent tax years. The resolution was tabled, but the Commission expects to review this issue in the future...and it will be a topic before the 2011 session of the W.Va. Legislature. The effect of the resolution would be to value, assess and then tax as personal property mined minerals including coal from producing mines as chattel real property. The working interest in a producing natural gas well is currently taxed as chattel real property. The Assessors Association believes this is and has been statutorily and constitutionally required by West Virginia law to ensure fair and equitable taxation. Nick Casey of LGCR participated in the Assessors Association’s presentation to the Commission.

Thursday, November 18, 2010

Natural Gas Trade Groups Objecting To Proposed Permit Increases, Other Regulatory Changes

The state’s two natural gas trade groups are speaking out against possible substantial increases on permit fees imposed on natural gas drilling and production activities in West Virginia. The fee increases were discussed at a legislative interim committee meeting held this week. A legislative interim committee is examining possible changes to the state’s oil and natural gas regulations, and a draft of a bill was presented to the committee. The bill in question also proposes changes to spacing requirements, would impose new water use and disposal regulations and create added requirements to minimize adverse impacts on state roadways due to drilling activities and vehicles. Click to read article: http://www.wvgazette.com/News/201011180334

This latest legislative proposal on drilling and production activities is in addition to one that has been drafted the state Department of Environmental Protection. Deliberations on both are expected as the interim committee continues to meeting in advance of the 2011 regular session of the W.Va. Legislature, which starts in January. Lewis Glasser,and its government relations affiliated, LGCR Government Solutions, are closely monitoring these activities.

Tuesday, November 16, 2010

West Virginia Considering Added Drilling, Production Regulations

The West Virginia DEP is considering the establishment of significant new regulations on the state's natural gas drilling and production industry. DEP has developed a draft of legislation that, if enacted, would require operators to identify when, where and how much water they will withdraw from creeks and streams for drilling operations. The department also wants to require the reporting of the chemicals used in hydraulic fracturing, how much wastewater is produced, and when and where wastewater would be disposed. Lewis Glasser has a copy of the proposed legislation and is reviewing it.

Tuesday, November 9, 2010

API Economist Estimates Marcellus Shale May Be 500 Tcf

Another industry expert, this time from the American Petroleum Institute, is out promoting the benefits of Marcellus Shale production. In an article in the Charleston Daily Mail, API's Chief Economist John Felmy speculates that the Marcellus Shale may contain up to 500 trillion cubic feet of natural gas. Click to read the Daily Mail article.

Monday, November 8, 2010

Conference Highlights Economic Benefits From Marcellus Activity

Attendees to a recent conference on Marcellus Shale were told that leasing, drilling and production activity produced a $1.3 billion economic benefit to West Virginia in 2009. This also provided West Virginia state and local governments with an added $109.5 million. Click to read news article about the conference.

Thursday, November 4, 2010

State Supreme Court Clears Way For Drilling In Chief Logan

The West Virginia Supreme Court of Appeals has cleared the way for natural gas drilling to start in Chief Logan State Park in Logan County, W.Va. In a unanimous opinion, the high court rejected attempts by the state DEP and environmentalists who wanted to block drilling. The justices noted that a state law banning drilling in state parks did not apply in this circumstance. Click to read the Supreme Court's opinion.

Click to read news article.

Friday, October 29, 2010

National Geographic Magazine Profiles the Marcellus Boom In Pennsylvania

National Geographic Magazine has an extensive report on the Marcellus boom in Pennsylvania. Click to read the magazine's articles - "Special Report: The Great Shale Gas Rush."

Thursday, October 28, 2010

WV Public Radio Profiles LGCR's Natural Gas Blog

West Virginia Public Radio included a feature during this morning's news broadcast about the West Virginia Natural Gas Blog hosted by Lewis Glasser Casey & Rollins, PLLC. Click to listen to the radio story.

Tuesday, October 26, 2010

Natural Gas Industry Develops Horizontal Drilling Pooling Bill

A working group of the West Virginia Oil & Natural Gas Association, which included representatives from Lewis Glasser Casey & Rollins, has completed work on a horizontal drilling statutory pooling legislative proposal. The legislation is modeled on a statute that was drafted earlier by LGCR for the 2010 West Virginia legislative session. The proposed bill deals with unit size, statutory pooling of unleased interests, division orders and other issues essential to the expansion of horizontal drilling in West Virginia. The working group is forwarding the legislative proposal to the Governor’s nine-member natural gas select committee, and it is expected to be introduced for consideration in January in the 2011 West Virginia legislative session. For more information, please contact Nick Casey at gncasey@lgcr.com.

Wednesday, October 20, 2010

State's Natural Gas Industry Launches "Pro-Marcellus" Ad Campaign

The West Virginia Oil & Natural Gas Association has started an advertising campaign designed to showcase the economic benefits of natural gas drilling and production and to manage concerns that the public may have. Click to read newspaper article.

Tuesday, October 19, 2010

Producers Should Follow Lease-Signing Practice Tips To Avoid Potential Lawsuits

A lawsuit has been filed in federal court in northern West Virginia by a group of lease holders who are upset that a company has elected to cancel leases due to market conditions. Click to read an article about this lawsuit. The basic allegation in the complaint is that landmen hired by the producer made specific promises to obtain leases from the gas owners, which the plaintiffs allege the gas producer ultimately failed to fulfill, thereby damaging the natural gas owners.

There are a number of practice tips that natural gas producers should keep in mind as part of lease-signing activities. Here are some of these:
1. make certain your independent landmen or brokers are clearly advised as to the extent of their authority to bind the company;
2. make certain the above authority is clearly communicated in writing to the natural gas owners prior a lease being signed; and
3. communicate in writing with the prospective lessor as soon as possible if the producer has decided not to be bound by the lease.

For more information, please contact Richard Gottlieb at rgottlieb@lgcr.com.

Monday, October 11, 2010

Working Group Examining Forced Pooling Legislation

A working group has been meeting to develop a legislative proposal that would allow for forced pooling in West Virginia. The group, made up of representatives from the state’s natural gas industry and including attorneys with LGCR, is interested in developing a bill that could be considered during the 2011 regular session of the West Virginia Legislature. The legislation would address issues such as:
• creating a mechanism to develop the Marcellus Shale through horizontal drilling;
• properly compensating gas owners through regulatory recognition of "units" or "pools" of gas; and
• limiting the surface disturbance by the creation of these units.

Provided is a link to a recent newspaper article where a representative for surface owners expresses his support for “forced pooling” legislation.

For more information about this issue or the working group’s activities, please contact Richard Gottlieb at rgottlieb@lgcr.com.

Thursday, September 30, 2010

Natural Gas Pipeline Capacity Increasing In West Virginia

A number of pipeline construction and expansion projects are underway in West Virginia to meet new demands from drilling and production activities. Click to read AP story.

Friday, September 24, 2010

State DEP Forms Regulatory Review Task Force

The W.Va. Department of Environmental Protection has formed a nine-member task force to look at regulations of oil and natural gas drilling and production. This task force was formed to address the recent boom in drilling activity in the Marcellus Shale in West Virginia. It is anticipated the task force will recommend regulations that will recognize differences between the drilling of conventional vertical wells and the newer horizontal wells employing hydraulic fracturing to produce from the Marcellus and other gas horizons. Click to read news article.

Wednesday, September 15, 2010

EPA Holding Final Public Hearing On Fracking

The U.S. Environmental Protection Agency will conclude its public hearing today in Binghamton, N.Y. on the issue of natural gas hydraulic fracturing. Click to read more. This is the final of four public hearings that the agency has held.

Tuesday, September 7, 2010

Legislation Being Developed Regarding Horizontal Well Forced Pooling

During the 2010 regular session of the W.Va. Legislature, legislation was reviewed with key legislators that would create a new code section to deal with forced pooling under a new horizontal well board. LGCR developed the legislation along with key horizontal well drillers. WVONGA picked up on this legislative proposal, and for the 2011 legislative session the association has developed draft legislation to achieve similar goals. Meetings are ongoing to finalize the draft of a bill that will be presented during the 2011 legislative session. LGCR is substantially involved in this effort.

W.Va. May Implement Two-Tiered Regulatory System For Natural Gas Drilling, Production

The state's top environmental official says West Virginia will likely need a two-tiered regulatory system to properly permit and monitor the proliferation of Marcellus shale and other horizontally drilled gas wells, according to a story by the Associated Press. State DEP Secretary Randy Huffman said his agency's ongoing review of the Division of Oil and Gas also suggests the state needs more rigorous oversight of horizontal drilling operations because complying with industry-accepted best management practices isn't good enough. Read entire article - http://www.dailymail.com/Business/201009030250

Thursday, August 26, 2010

Governor's Forum Held On New DOH Rules Regarding Drilling Activities

The Governor’s forum held this morning at WVDEP included more than 50 attendees representing all parts of the natural gas industry as well as representatives from the environmental, surface owners and labor communities. Drilling oversight for both vertical and horizontal drilling including WVDOH's new bonding requirements for road use, water usage. Worker training and other issues were discussed. Paul Mattox of WVDOH, Randy Huffman of WVDEP and the Governor all made brief presentations. Huffman is to create a small working group of no more then 11 to seek consensus on any issues. LGCR continues to monitor the process and the working group. For more information contact kdettinger@lgcr.com.

Wednesday, August 25, 2010

DOH Policy Meeting Set For August 26

Officials with the Manchin administration and the WVDOH have scheduled a meeting tomorrow with representatives of the state's natural gas industry. The meeting is designed to discuss a new road/bridge impact and bonding policy issued recently by the WVDOH. Representatives from LGCR will be monitoring the developments and outcomes of the meeting. Contact Kurt Dettinger for more information - kdettinger@lgcr.com.

WVDOH Issues Revised Guidelines For Drilling Activities

The West Virginia Division of Highways has issued a revised road/bridge impact policy affecting oil and natural gas drilling and production activities in West Virginia. The revised policy differentiates between horizontal drilling and vertical drilling operations. Click to see memo from the DOH. This policy is an interim one, and will be subject to upcoming meetings between the industry and the WVDOH.

Monday, August 16, 2010

'Rule of Capture' Subject of News Story

"Rule of Capture" subject of Wheeling (W.Va.) newspaper story. Click to read

Wednesday, August 4, 2010

New York State To Halt Drilling?

Bloomberg news reports that New York lawmakers may impose a temporary ban on natural gas drilling activities. Click to read article.

Thursday, July 22, 2010

West Virginia Falling Behind Pennsylvania In Marcellus Production

Natural gas drilling in the Marcellus Shale formation in West Virginia has increased in recent years, but isn't keeping pace with production in Pennsylvania, according to an article in The Charleston Gazette - read article.

API Study: Marcellus Production Could Create 280,000 Jobs, $6 Billion in Tax Revenues

Natural gas production in the Marcellus Shale region — if developed — could create 280,000 new American jobs and add $6 billion in new tax revenues to local, state and federal governments over the next decade, a new study released finds. The study (click to read) was done by the American Petroleum Institute.

West Virginians Oppose Higher Taxes On Oil, Natural Gas Industry

More than six in 10 West Virginia voters oppose higher taxes on America’s oil and natural gas industry, according to a new 10-state poll released today by the American Petroluem Institute. The poll – which was conducted by telephone by Harris Interactive between July 15 and July 18, 2010, among 600 West Virginia registered voters – found that 67 percent oppose an increase, including 53 percent who strongly oppose. Only 24 percent support increasing taxes. Click to read.

U.S. Marcellus Shale Reserves Valued at $2 Trillion

The Associated Press is reporting that a new report done for the American Petroleum Institute says the vast Marcellus Shale natural gas reserves are worth at least $2 trillion to industry and billions in potential tax revenues to states. Click to read AP story.

Monday, July 19, 2010

Natural Gas Companies Considering Disclosure Of Fracking Fluids

Natural gas industry moving toward voluntary disclosure regarding frac materials? Click to read article.

Wednesday, June 30, 2010

Natural Gas Industry Responds to Gasland Documentary

The "documentary" Gasland aired recently on ABC News and on HBO. Here is a rebuttal to it:
http://www.energyindepth.org/wp-content/uploads/2010/06/Gasland-Fact-Sheet-FINAL-062110.pdf

Friday, June 25, 2010

MIT Study: Natural Gas Will Double Share of U.S. Energy Market

Natural gas will provide an increasing share of America’s energy needs over the next several decades, doubling its share of the energy market to 40 percent, from 20 percent, according to a report released by the Massachusetts Institute of Technology.

MIT Study - http://web.mit.edu/newsoffice/2010/gas-report-0625

Welcome

Welcome to the West Virginia Natural Gas Blog. This blog will contain information and news related to the West Virginia natural gas industry, as well as key federal and regional developments.