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:

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.