Marcellus Shale

News:

Last Updated 11-17-09

Update November 09

News article addresses how PADEP budget cuts will affect natrual gas well drilling and a number of other concerns including Range Resources use of recycled flowback water to help meet its water supply needs. Interesting statistics and other information is presented in the latter half of the article. Read Observer-Reported Article.

Permit Fees Increased

Natural Gas and Oil drilling permit fees in Pennsylvania have been raised, effective October 24, 2009. The new fee structure was published in the Pennsylvania Bulletin and constitutes the first raise in drilling fees since 1984. Modified fees are based on well depth and can range from $250 to
$3, 000. Read PA BUlletin

Marcellus Drilling Permits Continue To Increase

Hydraulic Fracturing In The News

One of the most persistent topics of concern during June/July 2009 was about Hydraulic Fracturing (fracing). In the United States Congress, bills were introduced in both the House and Senate (introduced by Senator Bob Casey) concerning removal of the "Haliburton Loophole" from the Federal Safe Drinking Water Act. Read more:

Article about federal legislation.

Comprehensive article about frac fluids. This is a must read authored by Tiffany Peden, writer for the Daily Review, Towanda, PA.

Pre-Drilling Water Quality

Marcellus gas drilling companies are not CURRENTLY required to test the quality of water in groundwater wells in proximity to proposed drilling sites. However, many are choosing to do so because gas well operators are "presumed liable for the pollution of a water supply located within 1,000 feet of a gas well, unless the operator can prove one of five defenses" . . . read more

Helpful Links

• Penn State Cooperative Extension Website
• PADEP Marcellus Web Page

Fact Sheet From USGS

The United States Geological Survey (USGS) recently published a new comprehensive Fact Sheet about the Marcellus Shale and associated drilling technology and concerns. Read PDF.

Stormwater Permitting To DEP Oil & Gas

News Article About the Transfer

Letter evaluating the decision

The size of Marcellus gas well sites is indicated by the photo above right. Considerable erosion and sedimentation control problems are potentially associated with these sites.

PA Supreme Court Decides Zoning Question

On February 19, the Supreme Court unanimously ruled that drilling companies could not drill gas wells in areas where zoning laws do not permit them. The Court stated that zoning specified by municipal ordinances for R-1 (Residential) zones could not be preempted by PADEP Oil and Gas regulations pertaining to the placement of gas wells. Read Article by Saul Ewing LLP Attorney George Asimos.

For additional information refer to Pennsylvania's Oil & Gas Act (OGA), Section 601.205, which specifies gas well location restrictions.

The Pennsylvania Supreme Court also ruled on the case of the Independent Oil and Gas Association of Pennsylvania vs. Salem Township. In this case the Court clearly decided in favor of the OGA indicating that the Township could not enforce an ordinance which regulates numerous technical aspects of well drilling including well head construction and plugging, water treatment and waste disposal. Read discussion written by K&L Gates.

The Marcellus Shale is a gas-rich formation that underlies more than half of the Commonwealth.  Because of its enormous potential to play an important role in meeting the future energy needs of the nation, and the changes to the landscape that can accompany development of the play, the Marcellus Shale is becoming the rock formation of Pennsylvania called by name in many circles.  For decades, it has been a topic of conversation among many of our PCPG constituents and colleagues for its geological characterization and position in the stratigraphic column, but now ‘the Marcellus’ is just as likely to be heard in conversation among investors, regulators, environmental groups, property owners, and municipal authorities.

If you have been a casual observer of the Marcellus Shale over the last few years from, say an altitude of several thousand feet, you may have observed many drilling rigs move into the Commonwealth and then most of them move out.  To conclude that this signifies a dwindling interest in the Marcellus is probably akin to believing that the price of gas at the pump will never again rise above $2.00 a gallon.  Indeed, as the exploration and development of the Marcellus expands at whatever pace it does over the next several years, the need for the involvement of Pennsylvania’s Professional Geologists and environmental scientists will likewise expand. PCPG wishes to keep our members informed on the developing Marcellus news and issues that could impact our members’ specific practice areas.

PCPG’s Marcellus Shale Committee will provide updates related to the Marcellus Shale in our periodic newsletters.  Meanwhile, we are also launching our Marcellus Shale Library with the inclusion of eight documents provided in PDF format.  Additions to the online library will be made as our Marcellus Shale Committee procures and selects additional material.  We welcome our PCPG members to further access the full documents that we have “placed on the shelf ” of the Marcellus Shale Library, located in the Members section, which will be activated in the near future.  

An overview of these first eight documents we have placed in the PCPG Marcellus Shale Library is provided below:

• The first, and chronologically the oldest, presentation in our Library is the 2005 USGS PowerPoint presentation from Open-File Report 2005-1268 Assessment of Undiscovered Natural Gas Resources in Devonian Black Shales, Appalachian Basin, Eastern U.S.A.  In addition to serving as an introduction to the differences between conventional and unconventional reservoirs (the Marcellus being among the latter), this presentation provides numerous maps and cross-sections that offer a quick visual overview of how extensive this formation is (underlying about 60% of the Commonwealth), and where the Marcellus sits in the geological column among what might be the more familiar rock we encounter in our routine practice areas.  Image above from USGS PowerPoint presentation. Click on Image to Enlarge. Link to USGS website.  

• John Harper’s article The Marcellus Shale- An Old “New” Gas Reservoir in Pennsylvania is reprinted from DCNR’s Spring 2008 Pennsylvania Geology magazine (Vol. 38, No. 1).  Mr. Harper relates that the Marcellus has been a known gas reservoir for more than 75 years, with the earliest commercial quantities being obtained from shallow wells (depths of a few hundred feet) since the 1930’s.  Early production was from easily reachable pockets and the conventional wisdom that developed regarding the Marcellus for the next several decades was that the deeper shale was probably rich in gas but that it would remain an unattractive target until gas prices increased and extraction technology advanced.  Mr. Harper’s article presents a good discussion relating the organic richness and natural radioactivity of the Marcellus, measurable via downhole gamma ray logs, with the presence of gas.

• In September 2008, Dan Arthur, et. al. of ALL Consulting presented a paper at the Ground Water Protection Council in Cincinnati entitled Hydraulic Fracturing Considerations for Natural Gas Wells of the Marcellus Shale.  We are pleased to be permitted to include this paper in its entirety in our Marcellus Shale Library.  The paper presents an excellent discussion of the two technical advances that now makes production from the deeper Marcellus more viable: (1) improvement in hydraulic fracturing of tight formations to promote gas flow to a well, and (2) horizontal drilling that allows a “longer” penetration of a formation that is vertically thickness-challenged.  Shale gas plays like the Marcellus are considered unconventional reservoirs because gas-bearing rock has poor or limited natural permeability relative to the transmission of fluids to the borehole.  Hydraulic fracturing, particularly when used in conjunction with horizontal drilling, is a means to increase the formation permeability through stimulation. This paper includes many references to the Barnett Shale, that formation in Texas with many of same production challenges.  The Barnett has indeed been the proving ground over the last 10-plus years for the technologies that now show promise for advancing development of the Marcellus. Compared to the Barnett, and as related in this paper, it has been estimated that the Marcellus has six to eight times the volume of maximum recoverable gas.

• The USGS Open-File Report 2006-1237, Assessment of Appalachian Basin Oil and Gas Resources: Devonian Shale- Middle and Upper Paleozoic Total Petroleum System, presents the geological history of the entire basin and the petroleum geology of the individual assessment units, including the Marcellus Shale. Obviously, the geology of our favorite Devonian shale has not changed since this 2006 report was issued, but it is interesting to note how the gas-in-place estimates have matured over just the last three years as the Marcellus has experienced an upswing in exploration.  The Marcellus is truly a “dynamic” geological formation in the sense that it is becoming better understood with every well drilled; this is why PCPG will be adding technical literature to our Marcellus Shale Library as the knowledge base expands.

• Terry Engelder and Gary Nash’s Marcellus Shale Play’s Vast Resource Potential Creating Stir in Appalachia is reprinted from the May 2008 American Oil & Gas Reporter.  The formation of gas in the Marcellus is addressed by an in-depth discussion linking plate tectonics, earth stress, and the nature of fracture generation during the burial history of the Marcellus Shale.  Oil and gas production is a chemical reaction of organic matter that ordinarily involves an increase in the pore space of the rock in which it forms.  However, pore space did not increase during the burial of the Marcellus, and the generation of oil and gas resulted in increased pore pressure that was eventually relieved through microcracks formed around flakes of organic matter and expansion of the rock.  As more hydrocarbon was generated, the cracks continued to grow until they opened into the natural hydraulic fractures or joints that now hold the target product.  This report ends with a discussion of the size of the Marcellus resource, with a explanation of how different resource estimates are developed and why these various estimates may be wildly different in the early stages of development.  Any way we look at it, however, a present estimate of 50 trillion cubic feet of  “technically recoverable gas” points to a resource that will require the attention of many of our PCPG members as the Marcellus is developed.  

• Joel Burcat of Saul Ewing LLP's Oil and Gas Drilling and Production: A Summary of Pennsylvania Law is included in our Marcellus Shale Library.  Preceding his presentation of the regulatory framework. Mr. Burcat lists some very interesting historical facts regarding the Commonwealth’s place in the world related to energy, such as: From 1859 to 1901, Pennsylvania was responsible for one-half of the world’s production of oil; oil production declined from a high of over 31 million barrels in 1891 to a low of less than 2 million barrels by 2006; natural gas production increased from 80 million Mcf (thousand cubic feet) in 1946 to 181 million Mcf in 2005.  The state regulatory issues relevant to the Marcellus are many. Mr. Burcat’s paper includes an overview of the Bureau of Oil and Gas Management’s (BOGM) responsibilities, the regulatory programs and regulations in place, permitting requirements, environmental concerns, and a summary of related property and land use cases. 

• PCPG recognizes that the regulatory framework required for all Marcellus-related activities in the Commonwealth is by no means complete.  We include in our library a copy of House Bill No. 2533 (HB 2533), as referred to the Committee on Environmental Resources and Energy in September 2008.  The bill, which did not pass, but is likely to be re-introduced in some similar form this year, was designed to protect property owners with surface (but not necessarily also mineral) rights from the impact of oil and gas activities on their land.  To complement HB 2533, we have also included a copy of George Bibikos’Oil & Gas Alert entitled What Lies Beneath the Surface Owners’ Protection Act?, which is used with permission of K&L Gates.  As Mr. Bibikos indicates, legislation such as HB 2533 would rewrite over a century of Pennsylvania law, requiring that well operators and surface owners execute an agreement guaranteeing compensation for use of and damage to land surfaces before commencing operations.  Presently, surface owners are not entitled to compensation for damage related to well operations.  The oil and gas industry is presently exempt from numerous regulations, and a bill of this nature would provide surface owners with the ability to have some oversight on issues such as surface water drainage, location of access roads and pits, sedimentation and erosion, noise pollution, and surface restoration.

• As inferred above, the ability of a landowner to cash-in on royalties and lease rights is impacted by whether the surface rights or mineral rights, or both, are owned.  An understanding of these issues are included in the Oil & Gas Accountability Project’s (OGAP’s) Oil and Gas at Your Door: A Landowner’s Guide to Oil and Gas Development, which is included in our library along with another OGAP paper Shale Gas: Focus on the Marcellus Shale.   The expansive Landowner’s Guide includes an overview of the oil and gas development process and potential impacts, a layman’s version of the legal and regulatory issues, and what to do “when the landman comes calling.”  The second OGAP paper presents some relatively current (May 2008 publication) information on the Marcellus production to date.