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).

1 comment:

Anonymous said...

Perhaps as significant as anything else about the already existing natural gas industry in Cayuga and Seneca counties that Minard has now now acquired is that the "heavy industry" that the anti's love to berate exists right alongside some of the most productive farming country to be found in New York State. Tucked into the landscape rather inconspicuously are hundreds of gas wells and their access roads and other infrastructure in a countryside where oceans of milk are shipped out each day as well as a very wide variety of other farm products.