Tuesday, January 17, 2012

New York's 2011 Drilling Report: Permits Down, Spuds Down, Completions Down

Media-driven perception:  The NYS DEC Minerals Division is so over-worked and under-staffed, it is in absolutely no position to handle industry's offered shale gas boom, even if the permitting chokehold were ever to be relaxed.

Actual statistics:  Leaving aside the bureaucratic labors imposed by the fracking-related SGEIS (which are undoubtedly substantial), the DEC's drilling-related workload — whether paper permits issued, or actual active drilling sites in need of inspection and monitoring — has dropped between 58 and 66 percent since 2008. 

In fact, in 2008 — New York's busiest year in the modern era of oil and gas — the DEC processed 2.9 times as many drilling permits as it did last year, saw about 2.4 times as many "spuds" (or well starts), and recorded about 2.7 times as many well completions.

Those are the numbers.  Those are the facts.  How do we know? 

We know because — unlike virtually the entire posse of paid mainstream journalists — we've simply run the government data in person and directly, right off the DEC's web site, without waiting around for completely unreliable anti-drilling activists to first pre-process, pre-spin, and pre-bless all possible news stories. 

It's not hard to do.  Running the data for yourself is also a much better plan (and a much more timely plan) than waiting for the DEC Minerals Division to issue its annual reports.  Those reports are usually more than a year out of date by the time they're posted.  In fact, that's the situation right now with regard to the annual report for 2010:  It still has not been released, though the data cover significant economic and environmental activity from more than a year ago (most of which is entirely old news by now).

But never mind 2010.  Here are the 2011 numbers, and here are the 2011 facts:

Online records covering oil, gas, and other wells show the number of newly spudded wells last year dropped 25 percent compared to 2010, and 58 percent compared to 2008.  This is counting all oil and gas wells — but also 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 543 in 2008 (the last year of a very high, three-year run), to 300 in 2009, 301 in 2010, and 226 in 2011.

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
46 percent compared to 2010, and 66 percent compared to 2008.  That's a drop from 738 in 2008 (the highest of three very active years), to 552 in 2009, 470 in 2010, and 254 in 2011.

Examining all wells completed — some of which may have been permitted or spudded in prior years — the decline in activity is similar:  Down 39 percent compared to 2010, and 63 percent compared to 2008.  Again, that's a drop from 539 in 2008, to 283 in 2009, to 327 in 2010, and 199 in 2011.

By pretty much any measure, the numbers from 2011 indicate NY just managed to basically equal the pre-shale gas year of 2004.

[Note that these numbers are based on the online records for all 4,486 wells permitted in New York State since 1-1-2000, as those records electronically existed on 1-16-2012.  Drilling permits applied for, but never granted, were not covered.  In addition to database errors, of which there appear to be a few, it is also likely that there will be a few 2011 records which had not yet been entered into the database as of 1-16-2012.]

So what does it all mean? 

The time period from 2008 to 2011 covers nearly four full calendar years of New York's hotly contested shale gas freeze.  But, technically speaking, the drop in wells permitted, spudded, or completed since 2008 is not directly due to the state's Marcellus 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 February 15, 2008, industry had not yet ever proposed such a project in New York.  And no such permits have been granted since, due to a sequence of administrative moratoriums, which are now supposedly on track to be lifted in 2012.

In Pennsylvania, the first such well was drilled and fracked without publicity as early as October 2004. Since then, the Keystone State's EKG of oil and gas activity has gone virtually off the charts, driven largely by the boom in developing horizontal wells in the Marcellus shale formation.  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.

But not New York.

New York has instead witnessed a drilling decline which appears indirectly related to its own self-inflicted moratorium, acting in conjunction with dramatically increased investment focus on unconventional shale gas, shale gas liquids, or shale oil — to the exclusion of more conventional source rocks.

The glut-depressed value of pure methane — which has now plunged through the $3 level, and threatens to sink past 10-year lows — has also become a key factor in the demise of even such limited drilling as was previously hosted by New York.  Given the inevitable price squeeze, NY's still-drillable, conventional reserves are now viewed by industry as uncompetitive with unconventional prospects — especially those that are heavy in natgas liquids or oil, such as in SWPA, and in eastern OH. 

Even assuming NY tentatively manages to undo its shale gas permitting ban, the resource owners (namely, the landowners) could very well find themselves the victims of bad timing — not ready at the dawn of the shale gas revolution, and now totally underwhelmed by industry disinterest, given the current economics.

Ohhh, if only NYS was ready in 2008! 

I wonder — what was the cumulative economic impact of New York's State of Regulatory Unreadiness?

Monday, January 16, 2012

Norse's 5th Shale Gas Application

[Update April 2, 2012:  The proposed Spacing Unit Map associated with this application has been obtained in PDF form and uploaded here.]

[Update Feb. 28, 2012:  Changed to reflect fixes to DEC database which show the originally listed township (Sanford) and county (Broome) were incorrect, but that the lat/long were, in fact, accurate.]

[Update Jan. 17, 2012:  See comments section for word from a DEC Minerals Division staffer that Norse has been alerted to its inputting error.]

Twitter associate @ikkeregistrert — who closely monitors Norse Energy, quite evidently as a stockholder — noticed this new application this morning:

API Well Number:  31007300000000 [click to Google-map it]
Well Name:  Sage, J. 1H
Company Name:  Norse Energy Corp USA
Well Type:  Not Listed
Well Status:  App to Drill/Plug/Convert
Objective Formation:  Marcellus
County:  Chenango
Town:  Smithville
Status Date:  1/13/2012
Permit Application Date:  1/6/2012
Well Orientation:  Horizontal
Surface Longitude:  -75.716573
Surface Latitude:  42.416048
Bottom Hole Longitude:  -75.726645
Bottom Hole Latitude:  42.425797
True Vertical Depth:  3168
Bottom Hole Total Measured Depth:  7891
Drilled Depth:  7891
Proposed Well Type:  Gas Wildcat
Spacing Acres:  196.14
Only trouble is, the coordinates auto-click into the Town of Smithville, Chenango County, which is quite a ways northwest of the Town of Sanford, Broome County.

So there's either a typo there, or the township and county are incorrect.  Knowing something about Norse's leasehold, it's probably that the township and county are incorrect.

Thursday, January 12, 2012

Essay by Pete Jermann of Olean, NY: Environmentalism a Myopic Paradox – Think Globally, Act Locally, But Not In My Backyard

[Blogger's note:  This remarkable text came to my notice today through a somewhat shorter version which ran in  the Olean (NY) Times Herald — both on-paper and online.  Within hours, it was being pirated onto shale gas discussion groups, such as Natural Gas Forums Dot Com, where landowners gather to share both sentiments and information.  I tracked down the author — a self-employed craftsman and home-schooling father from Olean — and got his permission to preserve his longer original version here.]

Two generations ago the discovery of retrievable gas from the Marcellus Shale would have been greeted with — it's there, we need it, let's get it.  Today, after two generations of the environmental movement, the response is — it's there, you don't need it, it will hurt the earth.  Other than the agreement “it's there,” the calculus has turned 180 degrees.

In the mid-twentieth century the lords of industry reigned as the only team on the playing field.  Today environmentalism has become a full-fledged belief system and has largely won the public relations war.  The environmental movement now plays on the field from a dominant position as the white knights opposed to the now dark lords of industry.  But are the knights really so white and the lords really so dark?  I believe the lords are not so dark and the knights not so white.  However, it is the knights that generally get the free pass, and it is the knights of environmentalism and their seemingly pure quest for the perfect world that I would like to look at.

The current environmental movement fixates on improvements that are immeasurable, intangible and unaffordable.  Where earlier gains in environmental protection tangibly cleaned up dirty rivers, dirty lakes, and dirty air, it now fights against remote possibilities, against threats not actually visible but hiding under every stone and behind every tree in our future landscape.  For these “improvements” it will sacrifice jobs that measurably improve many lives.  It will sacrifice cheap energy that cooks our food, heats our homes, drives us to work and even pumps the water whose purity it holds supreme.  And it will sacrifice public funds on schemes that would never see the light of day if people were asked to invest their own personal resources.

A movement that was both necessary and highly successful has become the reformer who can't stop reforming.  It has become the mother who can't see the goodness in her own children, but only the few faults, no matter how small, that still remain.  A movement that began with rivers afire and moon views dyed brown by smothering smog has become a movement of hubris dictating the perfect climate and the perfect earth.  The rivers no longer burn.  The moon is no longer brown.  Yet the movement marches on like a column of army ants that must feed or die.

What began as a truly progressive movement is neither forward-looking nor backward-looking.  It is simply mired in a mud of its own making that is neither primeval nor futuristic.  Its mantra is a great “NO” proclaimed loudly and often.  Its primary appeal is fear.  Its philosophy is literally sterile — one that sees both the environment and humans as supremely fragile and incapable of adaptation.  Its vision is a myopic paradox – think globally, act locally, but not in my backyard.

Worse than any religion, it demands unquestioned loyalty, simply condemning those dissenting as ignorant or greedy.  In a world where Christian evangelization has been driven from our public square, environmentalist views permeate our government, our media, and our schools.  In a world that increasingly denies man his soul, it grants one to the earth at large.  While it condemns conservatives for wanting a world of medieval simplicity, it longs for a world that predates man himself.

At some point self-righteous zeal becomes an end in itself.  The quest for reform mutates until it has no balance.  It only has “no.”  The motive for a better environment becomes a personal quest engendering good feelings about oneself without requiring any real sacrifice or contribution.

Most ardent “environmentalists” have a job, an income, a comfortable lifestyle, and an annual energy-consuming vacation, all of which conveniently meet their own standard.  It is always someone else who doesn't meet the standard or who pays the price in increased taxes, increased regulation, or by being denied a job that has been deemed harmful in the quest for environmental nirvana.

To look on the treasures beneath our feet as a threat to our comfort rather than a contribution we can make to a more vibrant world economy, one that multiplies wealth rather than redistributes a static wealth, is simply selfish.

When we accept no risk in our own backyards, we have no right to expect it of those whose backyards have provided us with the gas we use to heat our homes, the electricity we use to drive our appliances, and the fuel we use to go to and fro.  In all fairness, if we are not willing to accept this risk, we should turn out our lights, turn off our home entertainment centers, turn off our heat and learn how to scratch a basic existence out of our own backyards.

When entire peoples decide that they should be benefactors of a global economy but not contributors we will not even have wealth to re-distribute.  We will only have poverty, both spiritual and physical.  To not use the resources the earth provides is to be the unworthy servant in the gospel parable who buried his one talent rather than risk losing it.

None of this is to deny our responsibility as caretakers of the world we live in.  However, for the sake of perspective, we should be humbled by the thought that our world began as a geological composite of dead rock and bloomed into an orb teaming with life in every nook and cranny, on the land in the seas and in the air above, all without our help.  To think it needs our micro-managing is hubris of the worst sort.  It is a hubris that will ultimately regulate away both man's freedom and his humanity.

Environmental concerns should always be part of the equation, but they should never be an absolute.  The environment with all its variety of life, geography and climate has always been in a state of change.  It changed constantly before we became its inhabitants, and it will change when we are no longer here.  Environmental responsibility can no more reject risk than it can proclaim “no” to change, because nature itself will always override that “no.”

The Marcellus Shale and many other resources in this country can be mined responsibly, but none of it can be done completely without risk.  There is neither progress nor freedom without risk.  It is foolhardy to think that a life without risk is even possible.  It is foolish to think that risk always favors the do-nothing position.  The risk of doing nothing is the risk of poverty and stagnation.  I think history will show that to be the greater risk.

The perfect world will be found in neither poverty nor prosperity.  But one is better than the other.  Prosperity will always be messy.  There will always be accidents waiting to happen and unforeseen consequences.  However, history shows — particularly the history of the United States — that more people live better lives when they are willing to take those risks and deal with the consequences as they occur.

It is our prosperity that has allowed us to live in a cleaner and healthier world than our ancestors.  It is our continued prosperity that will allow us to continue doing so.  This prosperity will require an attitude that says, “How can we make this happen?”  It will require an emphatic “YES!” rather than a tired, overused “NO.”

Thursday, January 5, 2012

New on the NYS DEC Database: Utica Shale Gas Well Proposed in Madison County, NY

[Update April 2, 2012:  The proposed Spacing Unit Map associated with this application has been obtained in PDF form and uploaded here.]

Since the light at the end of New York State's shale gas tunnel finally got tentatively switched on — sometime during the Summer of 2011 — there have so far been four full-scale drill permit applications, all from the otherwise-water-treading operator, Norse Energy.

On the one hand, this is promising news, because Norse's applications are at least symbolic of pent-up business interest in fulfilling existing deals with the resource owners by getting drilling.  This is happening despite New York's current political and regulatory climate for this business, which the forces of ideology, media, fashion, and popular belief have essentially moved — over several years of strategic persuasive effort — toward an outright, uninformed, seething, and reflexive hostility.

On the other hand, this is depressing news.  We are now nearly four full calendar years since the first such shale gas application upstate was unsuccessfully submitted by industry (Feb. 15, 2008).  While Governor Cuomo gives speech after speech proclaiming New York State is now "open for business," his regulators are still barring this particular door.  Since 2008, the DEC
has pocket-vetoed all of these drilling requests through delay after delay after delay — rather than finally simply letting this part of the private sector do its regulated, taxable, unsubsidized job already.

The four queued shale gas applications — two in the Utica, two in the Marcellus — break down like this:

The first, a Utica project, pitched for Smyrna Township, Chenango County, was dubbed the Norse-Housing 1H.

The second, a proposed Marcellus well, was the Nowalk, R. 3H in the Town of Smithville, Chenango County.

The third, also a Marcellus, straddled the town line between Chenango County's McDonough and Smithville, the Martin, C. 1H.

Now here's a map and the spec's on the fourth:

API Well Number:  31053300000000
Well Name:  Branagan, A 1H
Company Name:  Norse Energy Corp USA
Well Type:  Not Listed
Well Status:  App to Drill/Plug/Convert
Objective Formation:  Utica
County:  Madison
Town:  Lebanon
Permit Application Date:  12/27/2011
Well Orientation:  Horizontal
Surface Longitude:  -75.651178
Surface Latitude:  42.808004
Bottom Hole Longitude:  -75.661483
Bottom Hole Latitude:  42.822831
True Vertical Depth:  4453
Bottom Hole Total Measured Depth:  10347
Drilled Depth:  10347
Proposed Well Type:  Gas Wildcat
Spacing Acres:  573.63