Tuesday, June 5, 2012

Pre-"Gasland" Flaming Faucets in NYS:
Burning Spring Farm, Bristol, Ontario County

This clipping is from the Oswego (NY) Palladium-Times, April 11, 1988 — a pre-"Gasland" curiosity written by Carol Eisenberg of the AP (according to another version published the same day in The Citizen of Auburn, NY):

Going back even further in time, this next one was headlined "Why Go To Yellowstone? We Have Our Fiery Springs."  Looks like it made for some interesting Sunday reading in the Rochester paper, circa 1936.  I had to do some trimming to make it fit here, losing the headline, an over-contrasted photo of the farm, and some details regarding a legendary local Halloween prank which didn't have anything to do with Bristol's water.

To find these clippings, I relied entirely upon a web site called Old Fulton New York Postcards.  This appears to have been named for a prior obsession of the web master — before he landed upon his remarkable, primary mission:  Digitizing, and making keyword-searchable, entire microfilmed archives of old New York State newspapers.

And one more clipping — some pages from the Town of Bristol chapter in the History of Ontario County, NY.  Looks like media coverage of Bristol's "Burning Spring" goes back quite a ways.


Sunday, June 3, 2012

Minard Run in the Northern Finger Lakes:
Utica Shale "Shows Potential"

Minard Run Oil Company Finger Lakes Development Plan

Much more detail on the Chesapeake Energy to Minard Run shallow gas wells transaction in the Northern Finger Lakes — popping within some documents filed May 31, 2012 with the NYS Public Service Commission.

For background, see my March 20 post, which I've left more or less unchanged — and which I believe is still the only original reportage on this deal anywhere.  Not even the hometown Auburn Citizen has yet taken notice.

First, an answer to a previously unanswered question:  Alongside some 400-plus producing wells, Minard Run purchased from CHK 56,130 net developed acres, and 104,779 net undeveloped acres. 

["Developed," also known as "held by production" (HBP), means the whole of the underlying leases are protected from expiration by continued production from under at least part of the acreage.  "Undeveloped" means the lease clocks are still ticking.  And "net" is the way the oil and gas industry accounts for gross acreage in which it technically holds only a partial interest (so, for instance, a half-interest in 100 actual acres is bought and sold as 50 net acres).]

Next, more significantly, Minard Run let NYS officials in on its three- to five-year development plan, by way of giving the PSC a heads-up on possible future pipeline expansion needs: 

• Due to currently low natgas prices, drill the Queenston only "as-needed" to cover supply contracts, at least within the first one to two years;

• Drill maybe 10 to 20 Queenston wells per year, assuming prices recover within the two- to three-year time frame;

[Contrast this with a straight mathematical approximation that the whole raw potential of the just the HBP areas would be 990 remaining well sites (if there's more gas under all those spots) — based on the state's current spacing rules calling for 40 acres of drainage per shallow well.]

• Exploratory drilling over the next 1.5 to two years within the undeveloped acreage — within either Queenston sandstone, or Trenton-Black River limestone, both of which have been previously attempted, the TBR's with limited success; and

• Should NYS get off its ass on shale gas (no, they didn't phrase it that way), Minard Run "feels that the Utica Shale in the region shows potential for exploration of natural gas via horizontal drilling," and "there is a high probability that [it] may engage into exploration of the Utica Shale."

[That's great news for hopeful northern Finger Lakes landowners who may have been lulled by skeptical observers (including me) into reluctantly accepting that shale gas in New York is inevitably going to be a mostly Southern Tier operation.  For drilling opponents, of course, these words from Minard Run will be seen as confirmation of their darkest frackophobic nightmares.]

Lastly, Minard Run reports it's taking over three compressor stations and 195 miles of gas pipeline — although some of that mileage may date from a time period before the PSC was legally assigned to get involved.  (Little-appreciated fact here:  Sandstone natgas production was initiated in the previously unknown, previously unnamed Fayette-Waterloo and West Auburn fields as far back as the Sixties.) 

Those pipelines subject to PSC's 1984-to-2005 oversight include previously approved (and probably mostly built) projects which total about 48 miles of two- to four-inch gathering lines, and another 9.95 miles of eight-inch trunkline.  The spider web lays within four towns in Cayuga County (Scipio, Fleming, Springport, and Aurelius); four towns in Seneca (Varick, Fayette, Seneca Falls, and Tyre); and one town in Wayne (Galen).

Friday, June 1, 2012

PA Active Rig Count: Now Firmly South of 100; OH, Meanwhile, Breaking Records

One of the terrific, completely under-appreciated benefits of capitalism is that it carries within itself the seeds for quickly putting itself wholly or partly out of business, if necessary — temporarily or permanently.

By contrast, a public institution such as my own City of Syracuse was just last week reported to be steadfastly maintaining job titles such as Typist I, II, and III.

As always, change is both good and bad, and there are both winners and losers.  In a supply glut, such as continental North America has on its hands right now with regard to natural gas, consumers win without much notice, celebration, or gratitude. 

But, in the private sector, such a glut inevitably leads to jobs being lost or moved with a single phone call or email.  You don't hear a lot of bitching about it, because business is business, and — in this case — not something that hinges on a lot of interminable, political hullaballoo.  It's just the way it is.

As shown by my chart, the Eastern U.S. counts of actively drilling rigs are quietly, but graphically, telling this story:  Pennsylvania was down to 92 such operations on a monthly average in May 2012 (down, that is, from a record monthly high of 115 rigs, reached in July 2011).  If you prefer the weekly numbers, PA's drilling decline can be painted even more dramatically — down to 85 rigs for the week ending June 1.  (My chart is based on monthly averages, so those even lower numbers will likely show up later.)

Cross the river into Ohio, however, and you see the Buckeye State averaged 17 rigs in May (and, not yet charted, 21 for the week ending June 1).  [Here's a note to OH journalists:  There's a story hiding in plain sight there.  Either number, May or June, is a modern record for your state — going back at least as far as the year 2000, the year when Baker Hughes' online historical data drifts off into the ether.  If you're especially enterprising, I'm sure you could dig back even further:  Baker Hughes has been consistently maintaining these counts since 1944.]

What's it all about?  It's about the Shale Gas Technological Revolution, triggered by hydraulic fracturing, or fracking.  But it's also about the wetter, oilier, and more lucrative resources frackable within the older Utica Shale in OH, compared to the drier, less valuable, pure methane offered up by most of the younger Marcellus Shale in PA.  In other words, it's an old resource extraction story, casting together nature, technology, and economics, with at least a bit part for politics.

I see that West Virginia, meanwhile, is still cruising around without a clear sense of direction, with 23 rigs on average in May, and 23 for the week ending June 1.  Hard to say whether that means anything.  Wonder if anyone will notice when OH surpasses WV, rig-wise, which looks like it could happen this summer.

And New York?  It's gotten so bad in NY, Baker Hughes has officially dropped the Former Empire State — and a number of other high-consuming, low-producing jurisdictions — from its weekly spreadsheet.  I'm pretty sure that means another zero, so far as rigs at work in NY are concerned.  The last time NY had a rig working in-state big enough for Baker Hughes to find it was back in December 2010 — which is a heckuva long time ago if you are an out-of-work Upstater wanting to break into this business, or if you are a hopeful Upstate landowner, sitting atop this otherwise untouchable resource.

Since most rigs are working on a single well during any given week, the ebb and flow of employment impact can be roughly correlated to the rig counts using the figure of approximately 420 jobs per well — based on the assumptions used in a July 2011 study by an arm of Penn State Extension.  While most Easterners can envision only pickup-driving roughnecks from out of state, jobs tied to fossil fuels extraction are actually spread across more than 150 different occupations — each hard at work in their respective fields, before, during, and after drilling.  Everything from truck driver to wildlife scientist.

Moves by industry into northeastern U.S. fields, from 2008 onward, have had the unforeseen political consequence of much more widely publicizing (and making controversial) the previously obscure revolution triggered by hydraulic fracturing — which is now much more commonly (and disparagingly) referenced as "fracking," or "hydrofracking."  Contrary to virtually all shorthand descriptions appearing in northeastern media, hydraulic fracturing is not so much a drilling technique, as it is a "completion" technique — most profitably deployed within deep horizontal wellbores drilled beforehand for that purpose.  It is an American technological feat which combines the 1940s-invented fracking, accomplished vertically, with the 1980s-perfected horizontal drilling.  It was pioneered by independent operators (with some federal R&D help, as President Obama once argumentatively noted) in the Barnett Shale of Texas.

Though widely and misleadingly described by overdramatic northeastern media as working by "blasting," "shattering," or "breaking up" the shale — or by pumping a "chemically laced cocktail" "into the ground" in order to "flush out" the fossil fuels — fracking in actual fact works by simply countering natural rock pressure, temporarily, in discrete, one-at-a-time sections of previously drilled sedimentary bedrock.  That high pressure is applied for the purpose of slipping sand (or ceramic beads) into the shalebed's numerous tiny fractures — some old, and some newly created.  After the hydraulic pressure is intentionally eased up, and some of the spent frack water recovered, the "proppants" are left behind, stuck in the cracks, keeping routes through the shale open for the fossil fuels to escape to the wellbore, usually under normal rock pressure.

[Some further miscomprehensions peculiar to the East Coast:  Fracking has become inextricably linked in the public's mind with natural gas production, but — in actual reality, looking at the full picture in North America or worldwide — the technique is just as important for producing unconventional oil and lighter liquid hydrocarbons as natgas.  (See, for instance, this piece of Reality Correction from the very worthwhile blog of former PA DEP Chief John Hanger.)  Furthermore, though you sure don't hear about this much, fracking is also a key part of the arsenal for several much-less-besmirched enterprises, such as geothermal development, drilling more productive water wells, and still-under-development green dreams to work against global warming by sequestering carbon deep underground.]

My chart above runs the rig data back to October 2004, the month when Range Resources quietly became the first driller in the Appalachian basin to stimulate a horizontal Marcellus well in this way.  Word of Range's surprisingly successful gas-finding results on this and follow-up wells did not get out widely until January 2008, when geologists Terry Engelder of Penn State and Gary Lash of SUNY Fredonia saw through the arcana of industry reports to investors in order to conclude, and publicly release, a significant upward re-estimation of the natural gas content of the Marcellus formation.

Over the time frame of this technological upheaval, the Baker Hughes rig counts are useful in offering a historical comparison of industry's boom or bust response to the varying economic times, geologic fortunes, and regulatory receptions posed by each of these four states.  As you can readily see, drilling in PA was running even or higher nearly every successive month from January 2009 to July 2011, before finally topping out under the downward economic pressure created by the breakthrough's own continent-wide success.  Both OH or WV have stayed open to such developments — being guided by state administrations and political climates favoring the enterprise — but the payoff is only now clearly starting to show in OH.  In NY, by contrast, industry's interest in developing Upstate landowners' previously unknown shale gas resource has been greeted with a chronically delayed regulatory holdup, meshing obstructively with a gathering political firestorm.

In fact, New York on Feb. 15, 2012 — without any media notice whatsoever — reached the Four-Year Mark for its infamous shale gas moratorium.  That is the historical fact if you consider the moratorium's starting point to be Feb. 15, 2008, as I do.  That's the date industry first (unsuccessfully) asked for a drilling permit for a full-scale Marcellus well in the state.  Five months later, on July 23, 2008, New York officials followed their informal bureaucratic hesitation with a more formalized administrative freeze, pending study of the environmental impacts of high-volume completions, and the crafting of tougher operational rules, a process which is still ongoing.

Over all this time, drilling opponents and sympathetic media representatives have largely succeeded in subtly re-framing New York's ban as being a question of whether or not the state will ever allow shale gas development.  Drilling proponents, on the other hand, have insisted upon continuing to view the moratorium as it was originally described — as a temporary measure — preferring to believe that developing the Empire State's indigenous shale gas has always been a matter of when, and how, but not if.  Officialdom has cagily gone back and forth, using either characterization, depending on the person, the timing, or the situation. 

The latest word on the street is that the Cuomo Administration is quietly waiting for the panicky State Legislature to close up shop for the year in June 2012, before finally getting around to gamely defending a substantially limited, "pilot" drilling plan — on grounds of what the science really shows, and what the state's economy really could benefit from.

Baker Hughes has long kept a tally of active drilling rigs for both informational and promotional purposes.  The counts trace their history to 1944, when they were initiated by predecessor Hughes Tool Company (whose founder Howard Hughes, Sr. invented the two-cone rotary drill bit).  The Hughes company realized that its sales force generally knew (or could find out) the location by state or province of every single operating rotary rig in the United States or Canada — even those which weren't (yet) using Hughes tools.

The counts have been consistently maintained ever since, and they have become a barometer for the energy sector, and a future pointer for the economy generally.

Baker Hughes' rig counts are considered more conservative than those broadcast by other outlets, because they only count active, rotary rigs — highly complex operations which are in the midst of placing substantial economic demands on the service, support, and labor sectors.

Rigs are only counted as active if they are being employed anywhere along the line between "spudding in" (or starting a well) and "target depth."  Not counted are rigs that are in the process of being taken down, moved, or rigged up again, or rigs that are being used to support non-drilling chores, such as workovers, completions, or testing.  Most relatively small, cable-tool and truck-mounted setups are also excluded from the census.