Thursday, January 20, 2011

Up from the Landowners' Grassroots:
☮ drill a gas well, bring a soldier home ☮

I like this!  I like this a lot!

I like this new bumper sticker because it's sharp, and it's snarky, and it's surprising.

Get Enough for Your Whole Neighborhood
Mint Green, Evergreen, or Berry Red

 ☮  drill a gas well, bring a soldier home  ☮
[Update: Shortly after my original post, I've learned that the purely profit-motive-driven private sector has also seamlessly adapted in order to fill this perceived niche for pro-natgas merchandise.  Here, check this out!]
I like this message because it's contrarian, and it's counter-intuitive, and it's challenging to the conventional wisdom — at least to the conventional wisdom where I come from, which is upstate New York.  That conventional wisdom of late seems to be that we New Yorkers are fully entitled to continue receiving the vast majority of our energy needs from out of state, and from out of country, and from out of mind.

But never ever to produce it from hereabouts.

This is the default plan — even while thousands of our own fellow, land-owning citizens of New York impatiently wait, shortly after having found themselves suddenly sitting atop a mother lode of natural gas worth millions of dollars (at least in theory).

And this is the default plan — even while thousands of our own fellow upstaters struggle to economically survive, without decent pay, or without any work at all, or without even any gleam of future opportunity, so long as they keep hanging around their own hometowns.

This, for good reason, is what the Wall Street Journal called, "The Madness of New York."

There is a technological enterprise available to start changing this.  Americans invented it.  And Americans are already deploying it widely in Pennsylvania.  And West Virginia.  And now also Ohio.  And now also Michigan.  Possibly soon — even before New York gets a grip — in western MarylandChina and India are already on board.  They just had a big discovery in ArgentinaPoland's got two test wells already.  And the U.K. is on the cusp of its first frack.  It's called hydraulic fracturing, and it's called shale gas.  In the Northeast, it's called the Marcellus Shale, or the deeper Utica Shale.

Running forward, in the U.S., we could call it massive domestic supply.

☮  drill a gas well, bring a soldier home  ☮
☮  build a windmill, bring a soldier home  ☮

In fact, a lot of us New Yorkers have already knowingly or unknowingly invested in this new technological breakthrough — directly, or indirectly, down on Wall Street — in our IRA's, or in our 401k's, or our pension accounts, or what have you.  (If you're in pretty much any plain vanilla index fund or mutual fund, then you've got a blind stake in the future of energy — including fossil fuels, and including shale gas.)

And many, many, many thousands more of we urban-dwelling New Yorkers are quietly, cozily, smilingly benefiting from this technology — this very winter — heating our homes with clean-burning natural gas at price levels that completely demolish electricity, fuel oil, coal, or firewood.  (Funny, you know, I'm not hearing a lot of complaints in this area lately.  Why haven't I seen any stories about huddled consumers getting gouged by the evil energy industry?)

Through just geological fate — and dumb luck — it turns out that thousands of our land-owning, fellow New Yorkers also own massive quantities of this shale gas.  Due to a perpetually rolling state moratorium on shale gas drilling, however, New York has not yet even gotten started supplying its own energy needs from under its own ground — not much of it, anyway. 

At the farmer's market — when it comes to sweet corn, or cheese, or honey — we sensitive, compassionate, caring New Yorkers really like the idea of "buying local." 

But, when it comes to energy — not so much. 

☮  drill a gas well, bring a soldier home  ☮
☮  build a windmill, bring a soldier home  ☮
☮  grow some corn, bring a soldier home  ☮

With this shale gas thing — we New Yorkers need to study this first.  We are coming up on three years of study — and yet we may need still more time.  There was just an editorial in one of our big-city dailies the other day, sagely advising that New York should go slowly.  (Slowly!!!  Slower than zero!?!?!)

It turns out some of us think we might be too fragile for this.  Politically, it's true, we New Yorkers are very shaky.  Our environment seems extra precious, somehow.  Our water is extra sacrosanct, somehow.  We used to think we had a world-class state environmental agency, but lately — to hear people talk, at least on this topic —we're a little defeatist about the competency of our own regulators.  We know that managing your own impacts is philosophically the right thing to do, but we don't like the responsibility.  And — like a lot of other humans — we don't like change, or challenge, or risk.

[Plus, at least some of us already have the money — so maybe we oughtta let somebody else carry this water, you know?]

But what are the unintended consequences — the cumulative, environmental, economic, and human impacts — of this kind of outrageously priggish, spoiled, sluggish, cautious, childish, pig-like, Marie-Antoinettish, let-'em-burn-firewood behavior?

The consequences, country-wide, are this:  America just got itself entangled in three Middle Eastern wars over the last two decades — and at least one of those wars is still not over!  A whole generation of young Americans has already fought and suffered or died in these wars — or they have now been launched upon a lifetime of suffering afterwards.

And for what?  For this:  America remains desperately needy for foreign oil.  We can't get by without it — or, at least, we think we can't.

If we had energy independence, these guys, our soldiers, could have just been back here at home the whole time — making babies, coaching Little League, baking bread, cutting hair, teaching school, growing corn, selling hardware, putting up windmills, or whatever.  But they're not.  They're on the front lines — putting their lives on the line, to maintain our addiction to foreign oil.

Now, here comes a bumper sticker that pops the goddamn balloon.  If Mother Jones thought it was her business to "comfort the afflicted and afflict the comfortable," well, then, I got her business right here for you — 2011-style.  We New Yorkers are the comfortable!  Just a few words to shake us from our irresponsible slumber:

☮  drill a gas well, bring a soldier home  ☮
☮  build a windmill, bring a soldier home  ☮
☮  grow some corn, bring a soldier home  ☮
☮  burn some firewood, bring a soldier home  ☮

The sentiment may be older — and even to harken to the hopefully by-now-well-known Pickens Plan — but these exact words seem to have crystalized fairly recently, here in the Northeastern U.S., in the midst of a discussion forum hosted by pagaslease, a website originally created by and for Pennsylvania landowners:
Gunner's wife was just thinking out loud.  And Gunner was writing just another snippet in a long-running, landowner-to-landowner conversation — having to do with the landowners' challenge in getting this shale gas resource carefully and profitably developed in Appalachia.

But it struck a chord with a New Yorker — a Chenango County landowner (and shale gas owner) keenly interested in this issue.  She made the bumper stickers.  And she or her helpers are now busy selling them here on eBay.

I hope they sell thousands.  I hope T. Boone Pickens himself takes notice.  I hope they go viral all over America. 

And as for you — I don't care what you're driving — I want to see this bumper sticker all over upstate New York.  I want to see this bumper sticker stuck on the bumpers of any kind of Ford or Chevy, parked anywhere within 300 miles of my hometown — Whitney Point, in Northern Broome.  You got a Volvo, or a Honda, or a Beamer, or a Veedub — gas, or diesel, or NGV, or plug-in, or grease-car, or whatever — I want to see this sticker from behind — in Binghamton, Buffalo, Rochester, Syracuse, or Albany.  Hell, I even want to see this sticker stuck on the chunky rear end of a Toyota Prius — down outside the co-op on West Buffalo Street in downtown Ithaca.

I'm asking you to think for yourself, and to consider shale gas — and all other forms of energy independence — as a challenging-but-doable opportunity for New York, and for the nation. And not as some kind of fearsome, vaguely understood culprit.

☮  drill a gas well, bring a soldier home  ☮
☮  build a windmill, bring a soldier home  ☮
☮  grow some corn, bring a soldier home  ☮
☮  burn some firewood, bring a soldier home  ☮
☮  take some responsibility, bring a soldier home  ☮

Take a stand, New York.  And bring a soldier home.

Sunday, January 9, 2011

Follow the Money as it Exits New York:
Drilling Drops Like a Rock in the Former Empire State

Online records covering oil, gas, and other wells from the New York State Department of Environmental Conservation show newly "spudded" wells have dropped 44 percent, and 42 percent, respectively, since 2008 — a time period covering the first two full calendar years of a temporary freeze on all full-scale shale gas wells.
Counting all oil and gas wells — and including non-fossil-fuel-producing wells such as stratigraphic, brine, storage, and geothermal — the state's database shows the number of wells started dropped from 542 in 2008 (the last year of a very high, three-year run) to 301 in 2009, and to 317 in 2010.

Looking at the numbers of wells permitted — some of which have not been drilled, may never be drilled, or were not drilled in the same calendar year — approved applications from industry dropped 25 percent, and 34 percent, respectively, from 738 in 2008 (the highest of three very active years) to 552 in 2009, and to 485 in 2010.

Examining all wells completed — some of which may have been permitted or spudded in prior years — the decline in activity is similar:  Down 48 percent, and 51 percent, respectively, from 535 in 2008, to 277 in 2009, and to 264 in 2010.

Note that these numbers are based on the online records for all 4,235 wells permitted in New York State since 1-1-2000, as those records electronically existed on 1-9-2011.  Drilling permits applied for, but never granted, were not covered.  It is also possible that there will be some 2010 records which had not yet been entered into the database as of 1-9-2011.

New York's now-famous frack moratorium covers only the issuance of drilling permits for horizontal shale gas wells in which the necessary completion techniques involve high-volume hydraulic fracturing, now commonly dubbed hydrofracking, or fracking. The original, temporary ban on this kind of shale gas development traces its origins to a between-the-lines reading of a July 23, 2008 press release, in which then-Governor David Paterson announced he had directed the DEC to update its 1992-vintage environmental impact statement covering all oil and gas drilling. 

This effort was aimed specifically at the private sector's significant amplification upon existing, five-decade-old hydraulic fracturing technology — with especially higher volumes of water being deployed along long horizontal wellbores, running a mile or so beneath rural residents' homes, and their key well water supplies.  Soon thereafter, it became clear to industry that New York State would not be issuing any shale gas drilling permits in the meantime, while the DEC's professional staff got busy with their study, and also a still-unreleased rewrite of the rules governing gas well drilling and completion.

In December 2010 — while vetoing a more sloppily worded moratorium supported by anti-drilling activists, and handily passed by both houses of the State Legislature — Paterson effectively doubled up New York's white knuckles over fracking by issuing an executive order which specifically extended the DEC's then two-and-a-half-year-old frack study, all the way to three years, or July 2011, at the earliest.

This measure, incoming-Governor Andrew Cuomo lost no time in seconding.  Cuomo has also appointed a new DEC Commissioner, Joseph Martens, who as a leader from the state's well-heeled not-for-profit sector had previously given at least one public speech in which he called for as much slowness as bureaucratically possible, prior to permitting exploitation of New York's largely privately owned shale gas resource.

The drop in wells permitted, spudded, or completed since 2008 is not directly due to the moratorium serving to freeze out a large number of previously existing projects.  That's because none of the New York drilling records (before or since 2008) has ever included a permitted, full-on, full-horizontal, full-fracture shale gas well.  Before 2008, industry had not yet ever proposed such a project in New York.

In Pennsylvania, the first such well was drilled and fracked without publicity as early as October 2004.  A number of additional gas-bearing eastern states — namely Ohio, West Virginia, and Michigan — have since found ways of following PA's lead, without getting bogged down in much political controversy.

New York, on the other hand, has witnessed a drilling decline which appears indirectly related to the moratorium, acting in conjunction with dramatically increased investment focus on unconventional shale gas, to the exclusion of more conventional source rocks.

Industry has chosen to drill fewer such traditional wells in New York (which the state has always permitted, and which it still permits, both before and since 2008), and is instead transferring much of that investment capital to shale gas developments in other states, such as Pennsylvania, where there has been much less regulatory holdup.

In Pennsylvania, the number of wells permitted, spudded, and completed has gone virtually off the charts between 2007 and 2011, driven largely by the boom in developing horizontal wells in the Marcellus shale formation

Saturday, January 8, 2011

Another Utica Shale Test Possible in NY:
Norse Spuds the Aarismaa 1 Near Norwich

Hey, we have another vertical shale gas test possible in New York's own Middle Ordovician Utica Shale.

Pretty much the only driller still active of late in the central part of upstate, Norse Energy, quietly spudded the Aarismaa 1 on Christmas Eve 2010.  The New York State Department of Environmental Conservation wells database describes Norse's new well — on County Road 18, a/k/a Bogers Road, in the Town of Preston, Chenango County
, about five miles due west of Norwich — as all vertical, and with Utica Shale as the objective formation.  Here's a link to Google Maps for the exact Aarismaa 1 location.

This is not necessarily Norse's first or only Utica shale drilling permit in New York.  But it is the first time Norse has decided to get its bit in the ground, officially aiming for this target.  This may or may not represent a break from the frack-moratorium-induced reluctance to vertically test for Utica or Marcellus shale gas, as espoused by new CEO Mark Dice as recently as November, when he publicly reviewed the over-the-counter stock's third-quarter results.  (My long-winded, upstate-filtered version of this then-current State of Norse is still readable here.) 

If I were getting paid to write this blog (and, for those of you who have wondered, I'm not), then maybe I would be making some midday phone calls to Norse, out in Buffalo.  My first question would be whether the Dec. 24 event out in Preston merely represents a spud by the company's second "hole-starting" rig — in order to exercise a permit which was otherwise due to expire Dec. 31.   In other words, does Norse still plan to hold back from a currently permissible vertical test until New York State finally works up the political nerve for issuing its new regulations covering full-on horizontal shale gas exploration?  (Which — not to belabor the obvious — could easily continue to be a long wait.)

If Norse is ready for a test, well then, what sort of completion timetable might be expected?  And also what sort of hydraulic fracturing test is planned, and also has New York State yet permitted any such test frack?  (And also — given that Gastem wound up trucking its latest volume of test frack flowback water from Otsego County 400 miles out of state all the way to Warren, Ohio, for treatment and disposal — what's the plan for any wastewater?)

But, again, I'm not getting paid.  As a consequence, I got bigger fish to fry.  I got some snow to shovel.  I got some firewood to stack.  So you guys are on your own.  Truly, my Chenango County information resources at this point consist entirely of the Internet, the pro-gas CNY Landowners' Coalition (which is my kinda organization, by the way), one or two Norwegians on Twitter, and a very colorful farmer from the Earlville area named Tom.  But, given the right kind of motivation, maybe Melissa deCordova at the (Norwich) Evening Sun, or Jon Campbell at the Binghamton Press could be coaxed into action on this latest move by the folks from Norse.

Just to put this in perspective — outside of some stuff in way western Erie County — DEC records show there are only five previously drilled wells which list Utica Shale as either the "objective formation," or the "producing formation." 

The Olson 1-C (625335), owned by Chesapeake, was completed 4/29/2008 in the Town of Fenton, Broome County.


The Butkowsky 1-B (625331), another $CHK asset, is listed as an active well producing from Utica Shale in the Town of Kirkwood, Broome County.  It was completed 6/17/2008, but I was not able to flesh out any publicly available production data.

Two Gastem USA Inc. wells in Otsego County — the Pullis 1 (Town of Springfield) and the Sheckells 1 (Town of Cherry Valley) — are listed as capable of producing from Utica Shale but currently shut-in.  Both were completed way back in 2007 (although I'm pretty sure Gastem was sending around press releases regarding having been granted a state permit to frack at least the Sheckells this past fall).

A third Gastem well, the Ross 1, was completed 11/11/2009 in the Town of Maryland, Otsego County.

All five of these are vertical wells, and all five presumably would only have qualified for a low-volume frack — although New York State's currently perpetually temporary ban on high-volume hydraulic fracturing did not technically begin until 7/23/2008.

The point is — after you sweep aside all the hype and speculation — very little is actually proven or known about the true potential of Utica Shale for gas production, pretty much anywhere in Appalachia, but especially in New York State.  Compared to the Marcellus Shale, the deeper Utica Shale has consistently been a less desirable target.  Most of what is known about the Utica Shale remains closely held in private hands.  But with every one of these test wells, very important locally relevant information is getting collected by people who know what they're doing — examining the cuttings of this rock, and sampling for natural gas.

Norse's Aarismaa 1 represents that company's first crack at this onion.  For the sake of all the unwitting landowners out there, sitting atop this rock, I hope those wily Norwegians move forward, safely get it done, and that the results are everything you'd ever want in a gas well — and maybe even more.

As for the chart below, again, I'm just trying this out as a possible way of cutting through all the clutter to summarize recent well-permitting or drilling activity in New York.  Just so you know, I'm focusing for now on areas outside of the state's historically most active oil and gas counties (Erie, Chautauqua, Cattaraugus, and Allegheny).
Date
Event
Well type — Formation (orientation)
Well Name
Operator
County (Town)
Map It

1/2/2011
Reached Total Depth
Herkimer (horizontal)
Disciascio 1H
Norse Energy Corp USA
Madison (Lebanon)
31053264780000 

12/29/2010
Spudded
Herkimer (horizontal)
Morse 1H*
Norse Energy Corp USA
Chenango (Smyrna)
31017264800000 

12/24/2010
Spudded
Utica (vertical)
Aarismaa 1
Norse Energy Corp USA
Chenango (Preston)
31017264640000 

12/22/2010
Plugged and Abandoned
Geoexchange
W-3
471 VE LLC
New York (Manhattan)
31061237580001 

12/21/2010
Plugged and Abandoned
Geoexchange
W-2
471 VE LLC
New York (Manhattan)
31061237570001 

12/21/2010
Permit Requested
Herkimer (horizontal)
Anderson J 1H
Norse Energy Corp USA
Chenango (Smyrna)
31017300010000 

12/20/2010
Permit Issued
Herkimer (horizontal)
Davis, TK. 1H
Norse Energy Corp USA
Chenango (Smyrna)
31017264790000 

12/20/2010
Permit Issued
Herkimer (horizontal)
Parry, B. 1H***
Norse Energy Corp USA
Chenango (Smyrna)
31017264810000 

12/20/2010
Permit Issued
Herkimer (horizontal)
Parry, B. 2H
Norse Energy Corp USA
Chenango (Smyrna)
31017264820000 

12/20/2010
Permit Issued
Storage — Onondaga (horizontal)
IW 6A
Wyckoff Gas Storage Co., LLC
Steuben (Jasper)
31101264670101 

12/17/2010
Permit Requested
Stratigraphic — (vertical)
Tilcon West Nyack Quarry 1
Sandia Technologies, LLC
Rockland (Clarkstown)
31087270180000 

12/17/2010
Permit Requested
Stratigraphic — (vertical)
NYSTA Tandem Lot 2
Sandia Technologies, LLC
Rockland (Clarkstown)
31087270170000 

12/17/2010
Permit Requested
Stratigraphic — (vertical)
NYSTA Tandem Lot 1
Sandia Technologies, LLC
Rockland (Clarkstown)
31087270160000 

12/9/2010
Permit Issued
Herkimer (horizontal)
Chiulli 161**
Norse Energy Corp USA
Chenango (Smyrna)
31017264840000 

12/9/2010
Permit Requested
Storage — Syracuse (vertical)
Finger Lakes 1
Finger Lakes LPG Storage, LLC
Schuyler (Reading)
31097264850000 

12/8/2010
Reached Total Depth
Herkimer (horizontal)
Sweezy, J. 2H
Norse Energy Corp USA
Chenango (Smyrna)
31017264760000 

12/5/2010
Reached Total Depth
Storage — Onondaga (horizontal)
IW 6
Wyckoff Gas Storage Co., LLC
Steuben (Jasper)
31101264670000 

12/5/2010
Spudded
Storage — Onondaga (horizontal)
IW 6A
Wyckoff Gas Storage Co., LLC
Steuben (Jasper)
31101264670100 

12/2/2010
Permit Issued
Herkimer (horizontal)
Chiulli 160**
Norse Energy Corp USA
Chenango (Smyrna)
31017264830000 

11/18/2010
Permit Issued
Vernon (vertical)
Spinelli 1-437
Norse Energy Corp USA
Chenango (Smyrna)
31017239080002 

11/18/2010
Permit Issued
Sauquoit (vertical)
Spinelli 1-437
Norse Energy Corp USA
Chenango (Smyrna)
31017239080001 

11/18/2010
Permit Issued
Herkimer (vertical)
Howe1
Norse Energy Corp USA
Chenango (Preston)
31017239980001 

11/15/2010
Permit Issued
Vernon (vertical)
Hare 2
Norse Energy Corp USA
Chenango (Smyrna)
31017238870001 

11/15/2010
Reached Total Depth
Herkimer (horizontal)
Davis 1H
Norse Energy Corp USA
Chenango (Smyrna)
31017264380001 

11/12/2010
Spudded
Herkimer (horizontal)
Smyrna Hillbillies 6H
Norse Energy Corp USA
Chenango (Smyrna)
31017264770000 

11/6/2010
Reached Total Depth
Oriskany (vertical)
Strong 1
Inflection Energy, LLC 
Tioga (Owego)
31107264660000 

11/5/2010
Plugged
Herkimer (vertical)
Branagan M-99-11
Norse Energy Corp USA
Madison (Lebanon)
31053228160000 

11/2/2010
Completed
Brine — Salina (horizontal)
Texas Brine Company 104
Texas Brine Company, LLC
Wyoming (Middlebury)
31121276400000 

11/1/2010
Spudded
Oil — Fulmer Valley (vertical)
Edlind 9
Nathan Petroleum Corp. 
Steuben (West Union)
31101264730000 

11/1/2010
Spudded
Oil — Fulmer Valley (vertical)
Edlind 10
Nathan Petroleum Corp. 
Steuben (West Union)
31101264700000 

* Compulsory integration hearing scheduled 1/12/2011.

** C
ompulsory integration hearing scheduled 2/9/2011.

*** C
ompulsory integration hearing scheduled 3/9/2011.