Knapp Acquisitions & Production PA Shale Gas Blog

New documentary takes aim at Gasland, set to tell the real story of shale gas development

2012-02-23T15:36:00.001-08:00

Ladies and gentlemen, allow me to introduce you to Phelim McAleer, the lovely Ann McElhinney, and their new documentary, FRACKNATION.

Phelim McAleer, the filmmaker who captured a very embarrassed Josh Fox on camera after confronting him about his lies in Gasland (which we blogged about here, here, and here ), is now doing a full scale documentary to show the world the real impacts that surround natural gas drilling. And who is funding it? You are! Phelim and Ann are not accepting any corporate donations.

Phelim and Ann have launched the project on Kickstarter.com, which is a site to allow artists to pitch projects to the public for funding. People can pledge money to the project, but the pledge only goes through if the full budget amount requested is reached... for as little as one dollar, you can be featured as an executive producer on the film.

Listen to Phelim and Ann talk about the project, see some of the good work they have done so far, and donate to the cause.

So far, the project is absolutely on fire. It started with a proposed budget of $150,000 and 2 months to meet that goal, and in just over two weeks the project is over 77% funded at $115,000. This is astounding. 1,600 individual donors. On the other hand, you have Gasland 2.0, which has received over a million dollars in money from HBO (which LOVES liberal-garbage documentaries) and the Park foundation, which has itself given millions to anti-gas drilling organizations.

This is a film by the people, for the people. If you have seen the positive impacts of natural gas drilling help your family, friends, acquaintances, and you are sick and tired of the media and the "environmentalists" lying and distorting the real story... this is your opportunity to have your voice heard. I hope you yell loud and clear.

One year after wastewater disharge ban, bromide levels have not dropped

2012-02-21T06:28:00.000-08:00

The AP is reporting that nearly one year after the decades old practice of treating gas drilling wastewater, diluting it, and discharging to rivers was all but banned by the PA DEP (at great cost to the industry, especially smaller and medium sized companies), the high bromide condition it was trying to fix has not improved.

This is not news to anyone in the natural gas industry, and should not have been a surprise to DEP... who were well aware of high bromide conditions in local waterways before anyone had ever heard of Marcellus. As I wrote in May of 2011, if anything the Marcellus industry was a straw that helped break the camel's back... now I'm not even sure if we were that! With 97% of Marcellus waste water curtailed, what is causing the condition? There's little doubt that the condition is actually occurring from acid mine drainage and from the effluent of coal fired power plant "scrubbers".

Also included in the AP report is a paragraph about how the water isn't radioactive either. Big surprise.

http://johnhanger.blogspot.com/2012/02/ap-reports-that-no-radiation-in.html

MDS Energy acquires Phillips Drilling, adds 8 rigs to fleet

2012-02-21T06:10:00.000-08:00

I'm happy to announce that MDS Energy, the local producer that we work closely with, has acquired Indiana County based Phillips Drilling Company from XTO Energy. XTO Energy had just recently acquired Phillips Drilling Company in its purchase of the T.W. Phillips companies.

The rigs, equipment, and employees will be added to the existing infrastructure owned and operated by First Class Energy, the oil and gas field services sister company to MDS, bringing their total rig count to thirteen. First Class Energy also does excavating, road construction, pad construction, pipelining, and site reclamation. With the acquisition of its competitor Phillips Drilling, MDS Associated Companies now has close to 100 employees, all local folks from right here in Western Pennsylvania.

Seven Deadly Spins of PennFuture on HB1950

2012-02-08T07:30:00.000-08:00

Brace yourself. In an absolutely SHOCKING turn of events, Jan Jarrett of PennFuture doesn't like the new Marcellus shale bill. Take a few minutes to retrieve the pieces of your head that no doubt just exploded... I'll wait.

All done? Good. In their continued assault on the gas industry, house and senate republicans, and the governor, Ms. Jarrett is again seizing the opportunity to rile up her philanthropic base with some nasty rhetoric. This time, picking "seven deadly sins" of the new bill. Take a look (and your blood pressure medication). It's an excellent example of just how little this bill leaves environmentalists to complain about. Jarrett's spin is desperate, and flirting dangerously with dishonesty, lets take a look:

The first deadly sin:

· The legislation not only removes the ability of local municipalities to use their traditional zoning powers to manage where and when drilling will occur, the proposed bill also takes away the right for any municipality to legally challenge a permit decision by DEP that the local government believes is not in the best interest of its community.

Incorrect. Communities can still attempt to use zoning, but they must allow reasonable access for drillers if they want to be eligible to receive impact fees. If you let the companies drill, you get the funds. If you ban or severely restrict drilling, you don't. Seems fair, and nobody is stripping any rights.

The second deadly sin:

· The legislation would use impact fee revenue to assess the quality of groundwater across Pennsylvania instead of insisting that the companies that may harm our resources establish those pre-drill conditions. Every other industry in Pennsylvania that could potentially impact groundwater - from landfill operators to mining companies - must establish baseline conditions before engaging in whatever business that risks damaging our precious resources. But this bill would take what limited revenue is being raised by the weak impact fee, turns right around, and gives it back to the drilling companies, instead of using it to address the impacts of drilling, where the revenue is badly needed.

Incorrect. In reality, companies have had to have an accredited 3rd party lab test every water source within 1,000 of the wellbore and report the finding to both DEP and the homeowner. This bill increases the distance to 2,500 ft. A massive increase at a huge cost to drillers. Also, this IMPACT FEE is supposed to be reimbursing the government for costs is faces because of drilling. This would be one of those costs (though I believe it's totally unnecessary, as companies are ALREADY paying for such a study every day).

The third deadly sin:

· The legislation treats gas drillers that violate Pennsylvania’s environmental laws differently from other industries in the state. Environmental laws that regulate every other industry in Pennsylvania prevent DEP from issuing permits to applicants if DEP finds that the applicant is violating the law elsewhere in the state. But under this bill, DEP cannot deny a permit to a driller even if they are violating the law at another site in the state, unless DEP takes a final action on those other violations. That requirement does not apply to any other industry in Pennsylvania, and it severely limits an important tool that DEP has used throughout the years to leverage a company’s desire for a permit to ensuring compliance with the law across the state.

Every time a company gets a minor violation, we should shut down their entire operation state wide? Seriously? Ms. Jarrett must have a bad memory. When Chesapeake had a flange failure, it voluntarily shut down all fracing operations for nearly a month. DEP shut down the operations of several other companies after they had incidents. Ms. Jarrett is searching for a problem where there is none.

The fourth deadly sin:

· The provisions that purport to improve setback requirements for wells from homes and drinking water supplies are a sham. What the dealmakers won’t tell the public is that DEP must grant a variance from these setback provisions if it would deprive a gas well operator of any oil or gas rights, or if the permit applicant says they will implement additional protective measures. Consequently, DEP has regularly granted waivers of the existing setback requirements, and this provision ensures that practice will continue into the future.
They're not a sham, they're the same as they've always been. If you need to drill within the setbacks, you must take additional (much more expensive) precautions, and prove to DEP that they are adequate. Were there no ability to obtain a variance, huge portions of land would be deemed undrillable, and property rights would be stripped. Seems like a reasonable compromise to me.

The fifth deadly sin:

· The setback requirements do not even apply to small, ecologically sensitive intermittent streams or small wetlands.

By small, she means TINY, and by small streams she means streams that don't even exist most of the year. I'm not a biologist, but I imagine that if a stream is dry, then it will have a tough time hosting fish. A stark contrast to PennFuture, which appears to have a red herring hatchery at its headquarters.

The sixth deadly sin:

· The legislation strictly limits DEP’s ability to put conditions on gas drilling operations that may harm a public resource like a park or state forestland. Before any condition can be imposed, the conditions must be promulgated in the same way regulations by the Environmental Quality Board are. Once again, this runs contrary to how every other industry in Pennsylvania is regulated, where DEP regularly imposes conditions in permits necessary to protect the public health and safety, and the environment. But here, when it comes to protecting the public’s most vital resources, DEP must stand with its hands in its figurative pants until the EQB promulgates conditions to be used by DEP. And even then, when DEP determines that extra measures are needed to protect a public resource, the legislation imposes an extra heavy burden on DEP to show a need for the special condition.

If the situation were flipped, PennFuture would be whining that the EQB was NOT involved, and that DEP can't be trusted, that Krancer is a crook, etc. This bill specifically instructs DEP to take parks and other sensitive areas into consideration when granting a permit.

The seventh deadly sin:
· Finally, the legislation fails to establish a public record for tracking where gas drillers are disposing of the waste flowback water from the wells. The proposed law requires operators to keep track of the fate of waste fluids taken off the well site, but those records do not need to be shared with DEP unless the agency requests the records. This means that DEP will have no regular ability to track where and how much waste is being transported from well sites throughout the Commonwealth, and will have little ability to ensure that wastes are being properly managed.

Only if DEP requests the records? What is stopping them from requesting them then? Another (correct) way to headline this is "DEP was granted the right to track water cradle to grave."

The assertions that this bill is a gift to drillers is an absolute joke. It greatly increases the tax and regulatory burden of the gas industry, which will greatly bump up the operating cost. This at a time when gas drillers are already fleeing the Marcellus like a sinking ship for the more profitable Utica shale next door in Ohio. PennFuture trumpets the lack of additional leasing in the state forest as a victory. Nobody would have wanted to lease it anyways!

This bill is not a gift to drillers, it's a swift kick in the ass to them as they move to Ohio. This will cost Pennsylvania jobs. It will cost it investment dollars. It will kill royalty payments. A reasonable increase in the permit fee to go to local governments could have fixed all of this. Instead, we have a bloated bill which sticks Marcellus drillers with all sorts of costs that is has no business being stuck with. It's sad that we proclaim to be open for business, and then welcome the Marcellus industry with a special "just for you" tax when the only commodity they produce is at a historic low price.

Is Josh Fox (Gasland Director) running an illegal 501(c)(3) charity?

2012-02-02T08:36:00.000-08:00

Link to Donation Site from Gasland Website

So it was recently brought to my attention that Josh Fox, repudiated director of the fear-profiteering faux documentary "Gasland" is calling his production company, International WOW a TAX EXEMPT 501 (c)(3) charitable organization and soliciting donations to "educate the public about the perils of gas well drilling". But a quick check of the International WOW website shows a promotion for Gasland The Movie (and a link to buy the DVD), and a list of theater projects the director had worked on.

Being about as far from a CPA as you can get, I took a gander at the IRS website to brush up on my tax exempt charitable organization knowledge... this is what I found:

To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.

further clarification on legislation influencing:

In general, no organization may qualify for section 501(c)(3) status if a substantial part of its activities is attempting to influence legislation (commonly known as lobbying). A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status.

Legislation includes action by Congress, any state legislature, any local council, or similar governing body, with respect to acts, bills, resolutions, or similar items (such as legislative confirmation of appointive office), or by the public in referendum, ballot initiative, constitutional amendment, or similar procedure.

An organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting, or opposing legislation, or if the organization advocates the adoption or rejection of legislation.

The above, which describes what you are NOT allowed to do, is almost a word for word description of what Mr. Fox does. Here's a video of Mr. Fox "not influencing" legislation (start at 4:55):

In addition to all this, International WOW received $75,000 from the Park Foundation, a group which has spent millions sponsors dozens of anti-gas drilling organizations, and has been charging $7,500 to spew his lies at speaking events.

As I said, I'm no accountant, but this looks an awful lot like there are some questionable accounting practices going on with Mr. Fox.

CBS News Purposefully/Viciously Distorts Report of Gas Drilling

2012-01-30T09:11:00.000-08:00

Last night, CBS News aired a deliberately falsified report on the Dimock, PA that ignored the facts and intentionally misrepresented with careful editing an interview with Former DEP Secretary and environmentalist John Hanger (see his extremely pissed off response here). The report could not have been more wrong on literally ever single issue it touched on. Normally I would have assumed this was just lazy journalism from an ignorant mainstream national media, but it's not. This was deliberate. This was intentional. This was malicious. Here are a few of the purposeful distortions.

1. The clip of the methane in the water is out in Colorado, in Weld County, at the house of Mike Markham... and was proven to have nothing to do with gas well drilling as evidenced here:
http://cogcc.state.co.us/library/GASLAND%20DOC.pdf

2. The only contaminants that were of concern to the EPA were manganese and arsenic, which are both naturally occurring minerals and their presence (along with naturally occurring methane) is well documented in the aquifer in question. In addition, neither manganese nor arsenic were used on the wells in the vicinity of Dimock. A recent study shows that over 40% of water wells in PA do not meet Safe Drinking Water Act standards, and Pennsylvania is one of the only states in the country NOT to have water well construction standards.

3. There is an active junkyard on Carter Road, which is the likely source of the glycols found (from leaking anti-freeze), and they were of such small concentrations that they were of no health concern.

3. The PA DEP has not reversed its decision. They found that the wells were improperly cemented which allowed gas to migrate BEHIND the steel wellbore and up into the aquifer above. This has nothing to do with hydraulic fracturing, and DEP as well as a Duke University study of water in the area found no evidence of any frac fluids in the aquifer. Your characterization of this in your report is incendiary and extremely misleading.

4. Your graphic showing water leaking out of the wellbore into the drinking water formation is absolutely incorrect. There is not a single instance of this ever having happened. The few contamination that have occurred were from surface spills, and new best management practices had all but eliminated the possibility of contamination from spills.

5. Mr. Sautner neglected to mention to you is that he has $265,720 of no strings attached settlement money sitting in an escrow account from the Gas Company that he could go pick up tomorrow. In fact, all of the residents affected by the methane migration have a settlement check waiting for twice the assessed value of their homes. They would rather play the victim as it allows them to hob nob with celebrities and draw the attention of the national media. They also don't want to screw up their chance at their multi-million dollar lawsuit against the gas company.

6. Many of the neighbors of those who are suing have been using their water for well over a year now, with no problems. They worked with the gas company, received free water treatment systems, and now their water quality is significantly better than it was before.

CBS News should be ashamed, and whoever approved this piece of garbage should be fired immediately!

White House Gives Gas Drilling a Ringing Endorsement

2012-01-26T06:13:00.000-08:00

For any of you who might have missed the President's State of the Union address, I'm happy to report that much was said (finally!) about natural gas. President Obama made left no doubts that hydraulic fracturing is safe, and can jump start this stagnant American economy, by creating as many as 600,000 jobs in the next ten years. Mr. Obama remarked that we have a 100 year supply of gas, and that it can and is being safely extracted every day. This cheap, clean source of energy can revitalize American manufacturing and make our products competitive with foreign products. They have cheap labor, we have cheap energy.

But the most intriguing statement of the night, which appeared to be a victory for the environmentalists, was actually very telling if you read into it. Obama said "drillers will be required to disclose chemical used when drilling on public lands".

If Mr. Obama only plans to require drillers to disclose chemicals on public lands, that means he would be requiring it as a Lessor, the same way any landowner can, as part of the lease. He would NOT be doing it through legislation. Which (at least by appearance) would infer that Obama does NOT plan to bring drilling under the regulation of the federal government. They are just words, but it is comforting to hear them.

This is a huge blow to fractivists and obstructionists and a huge victory for the United States of America. Now let's roll our sleeves up and get to work rebuilding this country.

Natural gas prices down, but not out

2012-01-23T07:44:00.000-08:00

While natural gas prices have fallen considerably due to record production, record storage levels, and a winter where folks in PA could have been out sunbathing half of December, companies have been acting swiftly to counteract this high supply condition that is tanking nat gas futures. Talisman has committed to moving more rigs to oil plays, EQT is moving their rigs to more liquid rich areas, and Chesapeake (the country's most active driller) today announced that they intend to cut their production by 8% for 2012. There will be more cuts, there will be more rigs moving to oil.

Short term, let's hope for old man winter to show up sometime soon. In the long term, let's get our cars and trucks and power generation facilities burning this clean, cheap American fuel. The low price of gas, while tough for producers, is saving Americans close to $2 BILLION DOLLARS PER WEEK. If we used more of it (like the rest of the world), the saving could be even more.

Now hiring several positions

2012-01-16T11:10:00.000-08:00

We are now accepting applications for land agents, courthouse abstractors, and a GIS technician.

Please send resumes to info@knappAP.com

Thanks in advance, and good luck!

Mike

Kudos to Homer City Power Plant - Installing new emissions controls

2012-01-11T22:47:00.000-08:00

Proposed New Pollution Controls at HCPP

A big congratulations should go out to the operators of the Homer City Power Plant in Indiana County. They just released plans to make a $700 million dollar investment to install new scrubbers at the plant to vastly reduce the large amount of noxious gases the old girl was belching out on a daily basis. This will also allow the good folks at Rosebud Mining, who are all local folks that provide 45% of the coal burned there, to keep on trucking.. both figuratively and literally. Rosebud has one of the best reputations around for taking exceptionally good care of it's employees. This is great news locally, and for all those downwind, who can now breathe a little easier.

More info can be found here:
http://www.indianagazette.com/a_news/article_5e1be01b-f7a9-557a-93a5-414093ec85a5.html

Response to Former DCNR Head/PennFuture Blogger RE: LOCAL ZONING

2012-01-11T22:09:00.000-08:00

Former DCNR Head and PennFuture blogger John Quigley published the following today:

When it comes to the debate over allowing or denying local governments the ability to have a say in managing the activity of Pennsylvania’s booming natural gas industry, the industry and its supporters are trying to lure us into a fact-free zone.

With Pennsylvania’s economy still reeling from the recession, and with state tax revenues still anemic, industry talking points, not surprisingly, focus on the economy and jobs. A central argument is that state-level, uniform regulations of the gas industry – as opposed to any degree of local control whatsoever - are critical to ensure the industry’s growth and the economic benefits that promises.

The benefits – direct jobs, jobs in supply chain and support industries, and lower energy costs for consumers and businesses – are true enough, though inflated job creation and tax estimates have clouded things considerably. But the suggestion that any local control of an industry that literally changes the landscape and impacts communities in multiple ways is a job-killer stretches the truth.

Clarity, consistency, and predictability are said to be key to the gas industry’s growth in Pennsylvania. Yet the industry is often characterized as “highly sophisticated” and inherently deals with considerable uncertainty on the ground - highly variable and complex local terrain, geology, and conditions - to say nothing of volatile market prices. And while multiplying local ordinances probably do reduce efficiency, the reach of horizontal drilling and pipeline technologies can probably tolerate some inefficiency.

Underlying all the spin is the larger myth that we must choose between environmental protection and economic growth - particularly in the energy sector. That industry will hold back on investing in their operations and workforce – even here in the Saudi Arabia of natural gas – because of burdensome regulations, be they state or local. Ignored is the general evidence that regulations don’t kill jobs; some regulations even create them and with respect to the gas industry in particular, can even save money.

Also ignored is the fact that conditions on the ground in communities matter very much with a place-based industry like gas drilling. Many of the biggest impacts are local. Blanket state rules may not cover every local circumstance. Locals should have a say.

The danger in all of this – besides drill rigs, containment ponds, pipelines, or compressor stations perilously close to homes…or schools…or nursing homes…or hospitalsv – is that we end up competing with other states in a race to the bottom, while communities are sacrificed.

The fact is, we do have uniform regulation of the industry right now in Pennsylvania through the Department of Environmental Protection. Municipalities have been preempted from regulating the gas industry since passage of the Oil and Gas Act. What is really at issue here is whether a local government’s power to plan land uses and protect its citizens should be shifted from municipalities to Harrisburg. Industries across Pennsylvania have successfully managed to grow while respecting the right of Pennsylvanians to decide how the land in their communities should be managed through their locally-elected officials. How is the gas industry different?

The fact is, it’s not.

If the gas industry and its supporters are truly in favor of shifting local planning to the state level, then let’s do it meaningfully and uniformly for all of Pennsylvania’s businesses. Establish a system similar to Oregon where uniform statewide goals are set, and counties must adopt comprehensive plans that meet those goals, and municipalities, in turn, must adopt ordinances to meet the county plans. Without that, what the proponents of uniform statewide policies are really after is to eliminate land use planning for the gas industry.

That’s one fact that every citizen of Pennsylvania needs to know.

MDS Energy Conventional Natural Gas Well - Armstrong County, PA

As you can see, the above rant is mostly comprised of the same old anti-industry love-hate fluff that PennFuture just can't seem to get over, like a spurned prom date that got stood up the night of the big dance. Certainly nothing new there. Attacking the big bad gas industry is good for donations... we get it. But given what's on the line, and the questionable validity of Mr. Quigley's insinuations, let's take a closer look....

Shale Well Flare - Less Than 100' from home of MDS Energy Vice President

Fracing an MDS Energy Shale Well in a Cul-de-sac, Armstrong County

The fact is, that the gas industry is MONUMENTALLY different than most other land uses. First of all, the disturbance is temporary. The flurry of activity comes for a few months, then it goes. For the next several decades, not much more than a few pipes in the ground and some tanks will be silently sitting, usually out of view and of no disturbance to anyone. Second of all, placement of a gas well is not arbitrary. You can put an adult bookstore, a liquor store, or a cement plant just about anywhere, so the concept of zoning allows communities to make sure it doesn't go next to a school. And they can keep the cement plant out of a subdivision. But you can't put a gas well anywhere. There are a plethora of variables in that equation, many beyond the control of the gas companies. There are already setbacks and restrictions. If you want to argue that they are inadequate, that's fine... but it's an argument that needs to be taken up in Harrisburg, not at the monthly township meeting at your local firehall.

Also, you have to let that adult bookstore be put somewhere. You can't ban it. And that is exactly what many communities are trying to do with gas drilling. It is these blatant abuses of the MPC (which itself plainly states is not intended to inhibit mineral extraction) that have prompted push back. You would find no argument from me when it comes to the siting of compressor stations and processing facilities or other permanent, obtrusive facilities...these are few and far between, and there is some leeway in where they can be located... but the extremes to which communities are using the MPC in an attempt to regulate (or ban) gas drilling should be stopped. The state should step in and close those loopholes, and return oil and gas oversight to where it belongs... under the watchful eye of the DEP.

Wet Gas vs. Dry Gas - Do you know what these are? If not, you need to!

2012-01-07T06:37:00.000-08:00


Wet/Dry Gas Line in Western Pennsylvania

Wet gas, dry gas, hot gas, cold gas, one fish two fish red fish blue fish. Condensates. NGL's. Pentanes, Butanes, and Propanes, OH MY!

If you're watching Marcellus, you may have heard these terms. If you don't fully understand them, you need to because they are of vital importance.

First of all, we have to define "natural gas" Natural gas is a gas comprised of multiple hydrocarbons, the most prevalent being methane. The higher the methane concentration, the "drier" or "colder" the gas is. Other constituents of natural gas are evaporated liquids like ethane and butane, pentane, etc. We refer to these collectively as natural gas liquids (NGLs), or "condensates". The higher the percentage of NGL's, the "hotter" or "wetter" the gas is. NGL's must be stripped out of the gas before it can be put in a pipeline and used. Ethane, which is prevalent in Western PA wet gas, is the feedstock for Ethylene, which is what we use to make plastics.

Now, let's discuss at WHY some areas have NGL's and others do not.

Time to look at more definitions: There are two different types of methane. Biogenic and Thermogenic. Biogenic methane is basically swamp gas. A byproduct of decomposition of organic matter usually seen at or very near ground level. Thermogenic methane, as the name implies, is generated by heat. Millions of years ago, Western Pennsylvania was an ocean. Organic matter settled to the bottom and over the millenia the ocean dried up and was covered with thousands of feet of sediment. The pressure of all this sediment over top of it creates heat. It is this heat that "cooks" the hydrocarbons out of the organic material. Just how much it has been cooked is referred to as Thermal Maturity.

UTICA Shale Thermal Maturity Map

As a formation becomes more and more thermally mature, it will yield different hydrocarbons. First, you will have oil. As time goes on and formation cooks longer, the oil will turn to natural gas with a large amount of NGLs. Wait a few more million years and you will find that the liquids will almost all cook off and you are left with dry gas. Eventually, all of the hydrocarbons cook off, and you are left with a formation that is "overcooked" or "overmature". There are places where the Marcellus is 200 feet thick, and has a high organic content, but contains NO gas or oil because it has all cooked away. The above map shows that the subsurface formations in this region (this map shows the Utica, not the Marcellus) are more thermally mature as you move to the southeast. This is why they are hitting oil in Ohio, wet gas in extreme Western PA, and dry gas in the rest of the state.

Now, the $64,000 question. WHY SHOULD I CARE IF I HAVE WET GAS OR DRY GAS?

Whether you are in a wet gas or dry gas area is going to have a huge impact on the value of your lease. Right now, the NGL's are worth considerably more than dry gas. In some areas, the value of the gas is more than doubled because of the NGL's. Right now, the commodity price for natural gas is very low due to an oversupply situation. Companies in dry gas areas are LOSING money because of this, while companies in areas with large amounts of NGLs are doing much better. Dry gas areas are dead as a doornail right now for leasing, but wet gas areas are seeing nice offers. With the impressive (read: jaw-dropping) results companies have been having in the Utica in Ohio with oil production (which is far more profitable than wet or dry gas) dry gas areas have been reduced to a distant third tier. Dry gas areas will not be in high demand for a long time, possibly decades. That is not to say that they will not be drilled. There is a boatload of gas there, but companies will not be competing and landowners shouldn't expect to see the huge up front bonuses (that they did a few years ago) again any time soon. With the low price of gas, it's simply not economical to pay out thousands of dollars per acre just to be able to pull a rig on the property to spend millions to drill a well that will barely make a profit at these prices. Wet gas area landowners have a bit more leverage (NOTE: Not all wet gas areas are created equal). But with oil looking more and more like it's going to stay at a high price, expect the attention and the big money to be flowing into Ohio, and away from dry gas areas in PA.

You might be a fractivist if...

2012-01-05T19:47:00.000-08:00

Vile Industry Propaganda

**BREAKING NEWS, MUST READ. YOU WON'T BELIEVE THIS!!!**

While looking for a good anti-gas drilling blog to inform myself with today, I read on the internet that in some places, even here in the United States, there are parents that 5 days a week force their kids to board a diesel powered, benzene spewing wheeled metal frame wrapped in a thin steel skin to sit, unharnessed and unprotected, as this vehicle, piloted by a stranger, speeds down oil soaked gravel paths mere feet away from oncoming semi trucks, gasoline tankers, coal trucks, and other gargantuan chunks of steel, sometimes carrying radioactive or explosive materials, the responsibility of which is granted to anyone who can pass a simple state administered exam. The poor innocent children will be subjected to closing speeds exceeding 130 miles per hour in some cases, and directly below them are scores of gallons of explosive diesel fuel contained by an tank which routinely punctures in the event of a crash. Every year, over FIFTY THOUSAND PEOPLE ARE KILLED ON THESE ROADS! Hundreds of thousands more seriously injured. Yet these parents FORCE their children to get on these bright yellow death sleds every day, not just once, but TWICE!

This is an outrage. These parents should be locked up for endangering their children like this. They say that they "think" it is relatively safe. THEY ARE MISINFORMED. They don't know the truth. They are greedy, only caring about themselves, wanting to have a career instead of home-schooling their kids. And the industry is full of evil lying shills that will tell you "hey, everything is ok, every year billions of children are taken on hundreds of trips by school buses and it's very very rare for anyone to be harmed.". But can they GUARANTEE you that these children will make it to school without exploding? NO!?!?! If you can't guarantee it, we need a moratorium. We need to do some more studies on how we can get children to school with 100% guaranteed safety. Evil companies that murder our children take nice sounding names like Blue Bird, or have puppy dogs like Mack and "Greyhound" to make them seem safe... and have you SEEN THE PROPAGANDA THEY PUT OUT? It's nothing like Frack-o-saurus coloring book, but still....check it out: A school bus with MAGIC POWERS? These school bus manufacturers are the lowest scum on the planet!!!!!

These things are ALL over the roads. Messing up the rural landscape. Tearing up the roads. We need to inform our communities about this. We need to DEMAND that our legislators put an end to this immediately. We need to occupy school board meetings. We cannot rest. School starts at 7:30 tomorrow morning.

Fractivism - A case study in delusional self importance

2011-12-28T07:47:00.000-08:00

Irony: Her dress, her makeup, nail polish, fake plastic adornments, the sign paint...all brought to you by fracing.

All across the northeast, a very small but vocal band of well-to-do city and subdivision dwellers have risen up against natural gas companies for doing what they have been doing here for 150 years: Providing them with cheap, clean natural gas to heat their homes and generate their electricity. One must ask why?

There are a plethora of reasons, including genuine concerns for the environment. But far too many are using this "cause" as a reason to get together and drink a few beers, boost their egos, feign outrage over the latest anti-drilling propaganda circulating on the internet, and pat themselves on the back for being "involved", while being completely uninformed and basing their entire view of the industry on self -affirming anti-gas propaganda.

One need not look far to see just how phony many of these "environmental" groups are. Case in point: Coalition for a Healthy County in Indiana County, PA. We'll use them as an example, since they seem quite keen on doing the same with us. While I know that some in this group are genuinely concerned (and we've worked very closely with some of them to address those concerns), one must question the motives and authenticity of its leadership. CHC relentlessly bashes the natural gas industry (which is barely operating in Indiana County), while almost completely ignoring the fact that two of the largest pollution sources in the Western Hemisphere reside within the county they are purporting to protect.

Sweeping, monumental, HISTORIC regulatory changes coming out of DC that could clean up those plants causing the pollution garnered barely more than a peep from the CHC. According to their blog, they all "signed a postcard". But the CHC has rallies, phone banks, booths at the fair, they attempt to load zoning board hearings and public meetings with fractivists, they petition local government officials, they have meetings at the local university to indoctrinate students with anti-gas propaganda. All to try to stop gas drilling in a county which already has far in excess of 12,000 wells in the ground, and absolutely zero environmental impacts to show for it. No concern from industrial runoff, AMD, residential runoff, or agricultural runoff. Not so much as a peep from the CHC on these VERY REAL ISSUES right in their own backyard. This is in stark contrast to many REAL environmental groups in Indiana, that are out monitoring stream quality, have built stream filtration systems, and engage the public through outreach programs that take them out and show them the damage to their environment with their own eyes and what they are doing to fix it. These are NOT the folks that I am talking about.

One has to ask, why is it that the Coalition for a Healthy County's leadership steers it towards a problem that does not exist? Why does it rabidly attack a local gas company trying to drill a small little vertical Marcellus shale well on farmland a half mile away from a state park, when that park is a dozen miles downwind from two of the nation's worst polluting power plants that pump millions of tons of toxins into the air annually?

Let's take a look at these facilities and how they rank nationally on some of the most harmful pollutants that humankind faces, pollution that causes REAL death and illness:

Homer City Power Plant - Homer City, PA (rankings based on "worst in the country")

Arsenic - 3rd worst . 2,400 lbs/yr
Chromium: 16th worst : 1,301 lbs/yr
Lead: 19th worst: 905 lbs/yr
Mercury: 21st worst: 547 lbs/yr
Nickel: 26th worst, 1,402 lbs/yr
Selenium: 7th worst, 9,001 lbs/yr
Hydrochloric Acid: 4th worst 4,100,005 lbs/yr

Keystone Power Plant - Shelocta, PA

Arsenic: #5 worst : 2,116 lbs/yr
Chromium: #15 worst: 1,301 lbs/yr
Lead: #45th worst: 543 lbs/yr
Nickel: #25th worst: 1403lbs/yr
Hydrochloric Acid: 7th worst 3,500,005 lbs/yr

So these two facilities are pumping out MILLIONS OF POUNDS of toxic pollutants per year. This is not even counting NOx, SOx, and particulate matter (soot). These things cause ground level ozone, acid rain, heart disease, lung cancer, neurological disorders, birth defects (1 in 6 women in PA has enough Mercury in here system to be of concern), thousands and thousands of cases of childhood asthma. Yet the CHC all but ignores them, to concentrate on fracking, which has been linked only to minor, temporary, and uneventful water issues from the occasional surface spill which EVERY industry is susceptible to.

I believe the answer to the question is that that it's all about ego. Some folks like to get their name in the paper. They like the notoriety that comes from their peers. They like to stand up and make impassioned speeches in front of a crowd (sometimes over and over again). They will do anything and say anything to help their "cause", including intentionally misleading their followers. They ignore real concerns for sexier, more "newsworthy" fake concerns because it will bring them more attention. They engage in ridiculous conspiracy theories, they vilify the Pennsylvania workers that work in the industry, yet reap the benefits of their hard work without so much as a flutter of their moral compass. Jumping on the flavor of the week bandwagon instead of addressing the really important issues very seriously erodes ANY credibility that the organization has.

To all those who are actually concerned with the environment, we are with you, and we will work hand in hand with you to make sure that natural gas drilling continues to move forward in a safe, respectful, environmentally conscious manner. Watch us, critique us, keep us honest. You will help play an integral role to make sure gas drilling is conducted as safely as possible.

To those obnoxious fools who are standing in the way of American prosperity and a cleaner environment through natural gas usage because you overheard a barista saying it's "bad", or because you don't like "big oil" companies, because you saw"Gasland", or because YOU don't stand to get a royalty check but your neighbor does... To the people whose only experience with drilling is what you read on Google or your favorite anti-fracking blog, to those who can only provide a collection of biased news clippings to try to prove your point: To those who vilify the natural gas industry as a fundraising campaign *cough PENN FUTURE cough*

GO FLY A FREAKING KITE!

The adults are busy making sure society continues to operate. Go find a quiet corner to sit in so you can mumble to yourself about buzzwords like "cumulative impacts" and "sustainability".

Looking back on 5 years of Marcellus shale

2011-12-26T08:07:00.000-08:00

Five years ago, if you'd said "Marcellus" to me, there would be one thing and one thing only that came to my mind: Marcellus Wallace, the no joking around crime syndicate boss played by Ving Rhames, from one of the greatest movies of my generation, Pulp Fiction. Today, not so much.

It is absolutely unbelievable how quickly things have changed. Not just in my industry, but in my region. When I talked to folks 5 years ago, it was the same sad story since the steel industry left in the 1970's... a lot of doom and gloom. But now, there is a very palpable vigor that has been restored to the area. A buzz that you can see AND feel...like a racing engine with a bad battery, the area just needed a jump start. Pipelines are going in, roads are being built, wells are being drilled. Long abandoned railroads, quarries, and mines are coming back online. Steel, chemical, and manufacturing plants are being opened. Jobs, tax revenues, and royalty incomes are being created. It was like Pennsylvania's proud blue collar workforce had a 40 year bout with the flu, and Marcellus was a big old shot of penicillin.

Normally, there would be a price to pay for such an economic blessing.   With Marcellus drilling, the only byproducts are cheaper, energy to heat our homes, fuel our cars, and generate our electricity. Much cleaner air and water. Much reduced dependence on imported oil, which greatly increases our national security.

The last 5 years feel like a blur. In the fleeting days of 2011, its now hard for me to even imagine there was a time when "Marcellus" meant a movie mobster, and a booming Western PA economy seemed like a Hollywood fairy tale. The region I love so much that I was forced to leave after college because of its barren job market now looks like the Garden of Eden. Western Pennsylvania is coming full circle.   We are the birthplace of the energy industry, and for many years its throne sat in Pittsburgh. We let Houston borrow it for a while, but we're ready to take it back now.

Next Christmas, and for many more to come, we will need to inspect that organic rich black rock some of us find in our stockings. If you've been a good boy or girl, it might be shale instead of coal.

Myself and my staff wish you all a safe and joyous holiday season. Here's to even bigger and better things in 2012.

Best wishes,

-Mike

Knapp and MDS featured in Pittsburgh Tribune Review Article Today:

2011-12-19T08:17:00.000-08:00

Article touches base on us vertical drillers and how the proposed impact fees stand to impact us. Check it out:

http://www.pittsburghlive.com/x/pittsburghtrib/news/specialreports/marcellusshale/s_772701.html

Today's Wall Street Journal Article Chronicles Leasing Decline

2011-12-19T07:51:00.000-08:00

As I noted on this blog back in April for what I had been seeing out in the field, the big lease rush of 08-10 is pretty much over. Low gas prices and the Utica shale in Ohio (and it's huge estimated OIL reserves), have moved the spotlight off of Pennsylvania. In many counties, leasing has all but stopped.

Today' Wall Street Journal chronicles this, worth the read:

http://online.wsj.com/article/AP3a68bffb31b049adbeea593b43e165aa.html?mod=wsj_share_tweet

300+ update letters out in the mail today

2011-12-15T14:59:00.000-08:00

To all those who have been waiting more than patiently, I'm happy to say that over 300 update letters went out today. My staff has been working diligently to get this completed. We have a few more that will go out tomorrow, but the vast majority of you should have your letters by the weekend.

Context for StateImpact PA Article on DEP's Decision in Dimock

2011-12-08T16:00:00.000-08:00

StateImpact PA reporter Scott Detrow, a straight shooter as far as I am concerned, filed this story today entitled "DEP’s Dimock Decision Based On 2010 Agreement, Not Water Quality" which could easily be misinterpreted to mean that the DEP has not signed off on the quality of the water in Dimock, so I'd like to offer a bit of additional perspective:

The DEP acknowledged a long time ago that methane was the only contaminant that was of concern. Methane is easily removed by installing a filtration system designed for that purpose. Herego, if Cabot offered and installed methane removal systems, and redesigned their well standards to make sure that it doesn't happen again, all would be well and they could go about their business. As mentioned in the article, the systems remove 96-98% of the methane.

DEP didn't require Cabot to remove the methane from the aquifer, as this can be tricky or impossible. They required Cabot to do everything in their power to TRY to fix it. Thankfully, it did indeed work and methane levels are back to background levels. What's puzzling is why DEP required Cabot to deliver water as long as they did.

I don't have the info in front of me, but I bet that during the time between the original COA and the revised COA, methane levels were already dropping significantly, which was evidence that the conditions originally imposed were working or had already worked. As such, there was no need to specifically address "water quality" in the revised COA.

If the water was believed by DEP to be degraded to an unsafe level by Cabot, there is no way, shape, or form in which they would have granted Cabot the ability to discontinue water deliveries. This is further evidenced by the EPA's comments on the matter.

Bottom line: The water is safe to drink in Dimock.

Delay in update letters

2011-12-07T07:19:00.000-08:00

Just to let everyone know, we are a little bit behind schedule in sending out letters as we are anticipating being able to include additional acreage. Please hold tight, we expect to have word by the end of the week and will be sending everything out on Monday.

Thanks

Mike

Lease Sale Update

2011-11-30T15:33:00.000-08:00

Many thanks to all those who have been waiting patiently for word on how the lease sale is going. I am happy to report that we are currently preparing an update letter for all those landowners who signed their land into the sale. As there were over 400 people who signed in, it is going to take us a little bit of time to get them done, but we will have them out in the mail no later than early next week, which should ensure everyone will have the update by next weekend.

If you need to know the status of your property ASAP, you are more than welcome to call us (like always) and we will be happy to fill you in.

Happy Holidays!

Mike

Spoke with NY Times reporter Ian Urbina today

2011-11-21T14:58:00.000-08:00

Those who follow the news regarding shale development may well know the name Ian Urbina. Mr. Urbina is the now infamous New York Times reporter who has written many articles on gas drilling, many of which have been very critical of natural gas drilling...sometimes on what many have called shaky grounds.

Mr. Urbina called today wanting comment on some of the shady practices that some landmen were employing to get gas leases signed. I answered honestly: that there have been some unscrupulous folks out there that were trying to make a quick buck on the boom but that most of them have crawled back under whatever rock they came from. The vast majority of the folks that are out there leasing land are good people. I identified some of the situations where landowners erroneously become angry or feel cheated by land companies:

Example:

Farmer A signs for $200 per acre, Farmer B, his neighbor, signs for $500 per acre 6 months later. Farmer A feels cheated, but several successful wells were drilled in the area or another company came into the area and drove the price up, which forced the landman to increase his offer.

It only takes a few bad apples to ruin the perception of the industry though. I detailed some of the landowner protections that we put in our leases.

At the end of the interview, I mentioned to him that I was well aware of his series and questioned him on some of his articles. He stood defiant in support of them, calling his piece which framed the shale gas boom as a "Ponzi scheme" as one of his proudest in the series, saying "we simply put a megaphone to what the industry was internally saying but refused to say on record". I think that he and I would disagree as to whether or not his sources are an accurate representation of the "industry" as a whole, but I wanted to be respectful.

Both having the sense that we would have to agree to disagree, I told him that his pieces have certainly stirred up conversation and public debate on the subject, and that is a good thing for everyone, and I wished him luck with his series.

I hope Mr. Urbina accurately portrays our conversation, and doesn't just pick out the pieces where I offered candid criticism of my own industry. I'm interested to see how it turns out.

Local drillers at very real risk of being taxed out of existence

2011-11-18T06:45:00.000-08:00

Comparison between drilling types

As legislation addressing Marcellus shale development has passed this week in the House and Senate, and having had a chance to review and digest the new laws, we have a grave concern. In an attempt to hold accountable the mostly out of state corporations that drill the large, horizontal wells most often associated with Marcellus production, the legislature has unwittingly proposed a fee structure that would steamroll local companies drilling much smaller vertical Marcellus shale wells.

These wells are mostly drilled on smaller properties, and are the only way that thousands of smaller properties in Pennsylvania will ever be able to capture their Marcellus gas (due to a lack of forced pooling regulations, geologic abnormalities, state mandated setbacks, overly faulted zones, etc.). If we force vertical drilling out of existence, we will also force out hundreds of millions of investment dollars and billions of dollars in royalty and tax revenues. These landowners will be forced to sit on the sidelines, not being able to realize their chance at a better life, as their gas sits idle beneath their feet.

These wells are not much different than the conventional wells that have been drilled here for 100+ years. They are deeper, and they use slightly more water. Same rig. Slightly larger pad. They take 5-7 days to drill instead of 3-4. Same chemicals. Same pressures. On site, the only way I could tell whether or not the rig is drilling a Marcellus well or a shallow well is to look at the drillers log to see how deep they are.

There is no measurable increase in impact to the taxpayer, the environment, or the communities that we operate in. Our workers are all local. No increasing the need for social services. No increases in crime. No reductions in affordable rental housing. The dollars we invest stay local. Local investors. Local landowners. Local subcontractors. Local suppliers. Local employees. All spending their proceeds in local communities.

The fee structure, as proposed by the Senate, would stop vertical drilling DEAD IN ITS TRACKS. It would levy a per well fee of between $110K and $130K. That equates to a 10-15% tax for local vertical drillers, the highest in the nation. The horizontal drillers are being taxed at a 2-3% rate. Vertical wells produce 90% less gas than the average horizontal well.

Notice the cranes on a horizontal site are larger than a vertical drilling rig

With the long term low price of natural gas we are facing, coupled with the expensive new environmental regulations already enacted (and new ones that are proposed in these bills), slapping a 15% tax on vertical drillers WILL be the nail in the coffin for vertical drilling. It will cost hundreds, if not thousands of jobs, mostly here in Western Pennsylvania. It will reduce large amounts of money from being invested in local communities. The state will actually LOSE a large amount of revenue, as 15% of zero is zero.

Over in the house, the bills is much more reasonable. Thanks to the leadership of Representatives like Speaker Sam Smith, Jeff Pyle and Dave Reed, the per well fee for vertical Marcellus wells would be a more manageable $40,000 per well. While this would still a huge burden and would slow investment and development, it would not kill the industry. It also allows for counties to set lower fee rates if they like, so counties with large amounts of vertical well development could easily choose to lighten the burden on those local drillers that live, work, and employ within them.

As the House, Senate, and Governor's office move to reconcile these bills, we implore them to make the prudent and fair decision to recognize the 90% smaller size and scope of vertical drilling, with a fee that is 90% reduced from that which is applied to horizontal wells.

For more information on the impact fee and horizontal/vertical drilling, please download our informational PDF file: Differences Between Horizontal and Vertical Wells

Clarification on support of HB1950

2011-11-10T18:02:00.000-08:00

While we do support the adoption of language that would remove local zoning ordinances from being able to regulate gas well drilling, we wanted to clarify that it is NOT because of folks like those in Indiana County. It is the extremists who want to ban drilling in entire municipalities with wanton disregard for private property rights that cause us to support that provision of the bill.

We would be very much in support of the STATE, if it decides to take away such zoning powers, to adopt a policy surrounding ALL state parks that mirrors Indiana County's. We would also support increased oversight, regulations, and more thorough permit review when oil and gas operations are being proposed in environmentally sensitive or recreationally valuable areas, or in areas with a high level of development. If companies cannot reasonably show that their operations will not be an undue burden on surrounding properties and communities, then they should have to adjust their plans until they can.... or they should not be allowed to drill.

Indiana County applies common sense, and everybody wins... RE: Conservation Zone Ordinance

2011-11-10T17:44:00.000-08:00

I'm happy to report a favorable outcome to all of those who have been following the debate surrounding Indiana County's parks in regards to natural gas drilling. Last night, the Indiana County Planning Commission finalized their set of amendments to the zoning ordinance. There was no drilling ban in their proposal. Their proposed updates to the ordinance are exactly what the doctor ordered: Common sense restrictions to minimize glare, dust, noise, aesthetic impact, and road use to protect the sanctity of the park. Many of the changes will be restrictions that the Zoning Hearing Board placed on the special exception use permit that was granted to us back in September to drill near Yellow Creek State Park.

It was the Indiana County Commissioners who directed the Planning Commission to look into doing such an update, and ultimately the decision lies in their hands on whether to accept these changes, reject them, or pass them with some measure of revision. We urge the commissioners to adopt these changes as presented.

We view this as a victory for all parties involved. The landowners will not have burdensome restrictions placed on their ability to harvest their natural gas. Those who are concerned about the impact gas drilling could have on the park won significant extra protections that almost certainly would not have been added if not for their actions.

This has been a very contentious issue, and the county officials from the commissioners, planners, economic development staffers, zoning hearing board members, etc. all took it very seriously, spending HUGE amounts of their own private time to become educated on gas drilling to make sure they made the best decisions for the county. I wonder if Indiana residents fully appreciate the devoted and caring group of folks that are looking out for them? If they don't, they should.

Also, we can all be proud and hold our heads high for maintaining a civil and respectful discourse throughout this process. The same cannot be said for most other places in the state that are dealing with these types of issues.

Lots of action in Harrisburg on shale gas

2011-11-07T05:41:00.000-08:00

Thankfully, Harrisburg has heard the people loud and clear. Marcellus shale development is favored by Pennsylvania residents 2 to 1. Here in Western Pennsylvania, only 1 in 4 believes that drilling should not be allowed. While it has been a pleasure working with Indiana county to add some extra protections around their state parks, many municipalities have not been using reason and have shown great disregard for property rights as they have approached Marcellus shale drilling issues. In light of this, we strongly support the governor and the house of representatives in their desire to see gas drilling regulated by those who have the experience, resources to do so, all of which reside at the state level.

Environmental groups opposed to drilling have shown time and time again that they are willing to ignore the facts and operate in a hysteria filled bubble with no respect for the rights of their neighbors. They spread anti-drilling propaganda and are using fear tactics to scare municipalities into trying to regulate an industry they barely understand. Kudos to the House Republicans and the Governor for being willing to stop this nonsense and put oil and gas regulation back where it is supposed to be, with the state.

Despite Soggiest September in Pennsylvania History, No Violations at Yellow Creek Site

2011-10-14T17:31:00.000-07:00

On September 12th, Coalition for a Healthy County mockingly posted the following on their blog (under the title "Frack is Whack!"): "The zoning hearing board approved MDS’s application to drill. You already know this........ In his quote, Mike Knapp says the [majority of MDS Energy's] violations were only waste washed around from a heavy rain. Here’s to hoping that there’s never rain at Yellow Creek."

And with that, the skies opened up...

CLICK TO ENLARGE

Like the title says, September 2011 will go down as the wettest September in Pennsylvania since records started being kept 117 years ago. 6.5" of rain has fallen in Indiana County since MDS Energy received permission to move forward with the James Ray Marcellus shale well on September 9th. But as often seems to be the case, DEP officials came to do an unannounced site inspection on October 5th... after 8 straight days of rain totaling nearly 3 inches of precipitation. This is a higher rate than the daily average for the state in September, which we noted is the wettest September...ever. Lucky us, right?

Well, I'm happy to report that there were ZERO violations noted by the very thorough DEP inspector that came out to check up on us. Eight days of rain before an inspection does not usually bode well for a gas drilling inspection. But we are certainly happy to showcase that if the right precautions are taken, come hell or high water, gas drilling can be done with a VERY minimal footprint.

Coalition for a Healthy County at odds with PennFuture? They should be...

2011-10-13T10:25:00.000-07:00

A few points, for your careful consideration:

PennFuture, Pennsylvania's largest and most influential environmental organization, recently came out with a plan to protect Pennsylvania's state parks from gas well drilling encroachment, as was previously chronicled on this blog. The plan calls for a voluntary pledge from gas companies not to develop properties they control in state parks, and additional regulations from DEP. Here is their proposed system for regulating drilling around state parks as garnered from what is available on their website, their press release, and correspondence between PennFuture and Indiana County:

No drilling within 300' of park boundaries.
Conditioning permits for wells upon a demonstration that the environmental, recreational and other impacts on the park will be minimized
Public hearing

Now, let's take a look at the existing Indiana County zoning ordinance that currently exists around Indiana County's parks:

No drilling within 500' of park boundaries.
Conditioning permits for wells upon a demonstration that the environmental, recreational and other impacts on the park will be minimized
Public hearing

As you can see they are nearly identical, except for the fact that Indiana County has a 40% larger setback area.

Worth noting: We have 100% supported the Indiana County system and have been working with county officials to try to implement proper updates to the regulations to reflect the larger scope of Marcellus shale drilling.

Also worth noting: Coalition for a Healthy County's sole stated reason for existing is the vehement opposition to the Indiana County system. Their contention is that gas drilling MUST be banned for several MILES in each direction to protect the parks.

Quotes from CHC's blog:

"the ordinance does not offer adequate protection to address the relatively new procedure of hydraulic fracturing of the Marcellus Shale."

"To really protect the county’s natural areas, the county needs to prohibit fracking and other harmful activities in the conservation zones."

"While the Zoning Hearing Board decided to stick it’s head in the sand before making their decision on this one, the county still has a chance to take the potential threats of deep shale fracking seriously. Lets remind them."

Coalition for a Healthy County has not been shy about their stance, being very critical of us for applying to operate within the confines of the Indiana system. CHC members have gone so far as to state in the media that it is a "slap in the face to Indiana County residents". We've routinely been accused of putting profits ahead of people, of having no care for the environment, and some CHC members are even suggesting to people that we vandalized our own well site, all due to our support of this system. If this is their stance on the Indiana system, then one would assume they would consider PennFuture's proposal one that slaps residents in the face, puts profits ahead of people, and has no care for the environment, correct?

In my humble opinion, this puts a glaring spotlight on just how much of an extremist position CHC is pushing. Their own ringing endorsement of PennFuture in an Indiana newspaper says it all: “PennFuture, founded by former DEP head John Hangar, has a history of fact-based policy solutions which find the right balance between environmental and health protections and economic development,” says Gerald Smith, leader of the Coalition for a Healthy County

They have indeed found the right balance on protecting state parks. However, since they already pledged their support to CHC and their amendment to ban drilling, they are honoring that, which I respect, despite the massive contradiction. But imitation is the sincerest form of flattery, so one cannot rationally assume that PennFuture is anything but supportive of the Indiana county system, at least on a conceptual level. They could have proposed anything they wanted to, they CHOSE to mimic the Indiana County system. If it works on every other park in the state, it would work at Yellow Creek.

Hopefully this will show CHC and members of the public that are so vehemently opposed to the current Indiana County system that it's not a radically pro-industry policy as they like to make it out to be, that will leave the state parks devastated.

Robin Hood Economics Come to Harrisburg

2011-10-10T07:53:00.000-07:00

While many folks are happy and content with the more than reasonable proposal for natural gas companies to pay for their direct impacts, Democrats, Republicans in districts that do not overly the Marcellus, and some environmental organizations are pushing for more. Much more. Even though Pennsylvania already has one of the most hostile corporate tax structures, they want to put a 5% tax on all gas extracted, which would equate to about half a billion dollars per year. They want much of this money to go into the general fund, to subsidize...well....whatever.

Should the natural gas industry be put on the hook to fix environmental damages they did not create? Should they have to pay for projects in districts hundreds of miles from the closest gas well? Should they have to subsidize decades of irresponsible spending and the squandering of taxpayer money by Harrisburg?

But what is even more puzzling is the rhetoric of those who want more. Many are demonizing both Corbett and the industry (which has created thousands of jobs and paid over a Billion dollars in taxes over the last couple of years). Calling the fee a "sweetheart deal". Insinuating that there is collusion. Declaring that Pennsylvanians are being "ripped off" because folks in Philadelphia might not benefit enough from drilling that in no way effects them in any negative way whatsoever. It will clean their air, lower their energy bills, and put a BUNCH of extra money in the General Fund, and provide a host of job opportunities...but apparently that's not enough.

It's very telling that those who are crying "foul" the largest are those who are not getting a piece of the pie. Those in affected counties generally support the idea of a reasonable impact fee. Sour grapes and greed are not good policy. General projects should be funded through the General Fund. Gas companies should pay for their impacts, and should NOT be singled out with a ridiculous severance tax. The industry is creating jobs, filling up the general fund, cleaning up the environment, lowering energy bills, and helping America gain energy independence. They should be welcomed to the state with reasonable fiscal policy, not a greed based free for all money grab in Harrisburg.

KAP President Mike Knapp featured on Pittsburgh Post Gazette's "In the Pipeline"

2011-10-07T12:46:00.000-07:00

Check out the video here: Pittsburgh Post-Gazette's "In the Pipeline"

I had the distinct pleasure of sitting down yesterday with the hosts of "In the Pipeline" Erich Schwartzel and Beth Ponsot. In the Pipeline is a part of the Pittsburgh Post Gazette's award winning Marcellus shale coverage project called "Pipeline". They have done an excellent job reporting on all things Marcellus and I highly suggest you make them a daily stop when you're surfing the web. They compile top shale stories around the region and post them every morning, they provide all sorts of well drilling data and information through their alliance with FracTracker.org and go in depth on stories that may have slipped through the cracks with Allegheny Front, a Western PA radio show that chronicles hot-button environmental issues. In today's media, it is rare to find a truly balanced and unbiased source of news, especially on emotionally and politically charged issues like Marcellus shale development, but Pipeline nails it. Thanks to Erich and Beth, keep up the great work.

Pipeline can be found on the PG website under the "Local" tab, or through this link: http://shale.sites.post-gazette.com/

They also have an excellent forum for spirited discussion on their Facebook page, which I recommend checking out as well: http://www.facebook.com/pipelinePG or keep up on your shale news via twitter by following them on @pipelinePG.

Smooth Sailing at Yellow Creek State Park

2011-10-05T11:41:00.000-07:00

Drilling at 6,500'

On Friday evening the rig arrived at the MDS Energy James Ray Marcellus shale well site off of Ray Road in Cherry Hill Township, Indiana County. As of this morning, the rig has reached 6,500', with about 1,200' left to drill. Everything has gone according to plan, no issues whatsoever. If all continues as planned, we should be able to move off location this weekend.

Intersection of Ray Road & Access Road

Despite all the rain, the site is in good shape, the road is perfect and there is not a speck of mud on Ray Road. I did a VERY unscientific sound study and stopped at several predetermined points at 1,000', 1,500', and 2,000'. Just off to the edge of the pad, about 60' from the rig, the noise is not so overbearing that you have to yell to hold a conversation. One must just talk a bit louder than normal.

Looking down access road

Drilling noise was noticeable at 1,000'. Not overbearing, certainly not loud enough to impact a conversation. Could barely be heard in the truck, engine off and windows up. Some of the higher pitched engine noises could still be heard.

At 1,500 feet, you could still hear the rig, but only a very distant, low pitched hum. Could not hear anything inside the truck. Similar at 2,000', but fainter. This is with no sound abatement measures and the benefit of foliage on the trees to reduce sound travel, and during the day when the ambient sound levels are higher. If the rig is even audible at the lake, it is certainly not intrusive.

Statement on Governor Corbett's Proposed Impact Fee

2011-10-03T12:53:00.000-07:00

FOR IMMEDIATE RELEASE 10/3/11

We congratulate Governor Corbett for taking his time and coming to the correct conclusion that the best way to reimburse those communities impacted by drilling is to compensate them directly. We further congratulate the Governor for resisting the pressure from some environmental organizations to turn this fee into a slush fund for statewide environmental initiatives. Such general projects, while very important and worthwhile, should draw appropriations from the general fund, which the gas industry is already heavily subsidizing. The calls from some high profile environmentalists that the gas industry is receiving some sort of break or hand out with this legislation are preposterous. We pay the same taxes as every other industry, yet we are constantly accused of paying nothing. We are the number one job creator, we reduce energy costs, and are helping to clean up Pennsylvania's atrocious air quality. Such venomous rhetoric from the environmental camps is really getting tiresome.

While Governor Corbett’s fee is an equitable fee for “horizontal” Marcellus Shale wells, if applied to the much smaller, much less costly, and much lower producing VERTICAL Marcellus shale wells drilled by smaller, local companies, it would be devastating.

After Marcellus came to town, many of the shallow well drillers that had been operating for decades here in PA transitioned to drilling more profitable and more labor intensive vertical Marcellus wells. These vertical wells are about 90% smaller in nearly every measurable aspect. 90% less water, 90% less truck traffic, 90% less time to drill and complete, 90% less surface disturbance, etc. They are MUCH more similar to traditional shallow well drilling as compared to the highly technical, very expensive, and much better producing horizontal Marcellus drilling. In fact, during the drilling stage, they are indiscernible from traditional shallow wells. Same rig, same location size, same everything. Just a bit deeper.

The fee, as proposed, would burden these drillers with an overwhelmingly disproportionate fee that would represent nearly a 20% increase in well cost. At a time when the price of gas has fallen and portends to stay low for years into the future, and water disposal and environmental regulation issues continue to drive up drilling costs, such a fee could put an end to all vertical Marcellus shale drilling... which would put those the local companies that have been operating in Pennsylvania for generations out of business, costing thousands of jobs.

If the fee is modified to include a proportionately smaller fee to reflect our much smaller impact, then we would be behind it 100%. But until then, we cannot support legislation that would effectively be our death sentence.

PA's Largest Enviro Org Come Out With State Park Drilling Policy Suggestions:

2011-09-29T14:42:00.000-07:00


Blog Author and Younger Brother - Blue Spruce Park, Indiana County (circa 1988)

Today PennFuture, PA’s largest environmental group, came out with a new campaign to ask gas companies to voluntarily agree not to drill in state parks. The campaign, “Don’t Drill Through the Heart of Pennsylvania” will also include lobbying the DEP and legislators to install a setback from state park boundaries just like Indiana County does with its “Buffer Zone”. PennFuture believes a three hundred foot setback is more than sufficient to maintain the tranquility of the parks. Indiana County is already nearly double that with its five hundred foot setback. PennFuture also believes that there should be special extra regulations for drilling in areas surrounding parks, local review, and public hearings. Sounds kinda familiar, right?

An article in the Pittsburgh Post Gazette summarizes their efforts: http://www.post-gazette.com/pg/11272/1178431-503.stm

MDS Energy and Knapp Acquisitions and Production have already made this pledge, many months ago... including the specific pledge to DCNR officials not to drill any wells on the 155 acres of natural gas rights it controls underneath Yellow Creek State Park, and to block any other companies from being able to do so in the future. As the state owns all of the gas rights under the park, save for one small parcel, I’m happy to say that with our commitment and the county’s 500’ setback, Yellow Creek is one of the only state parks that doesn’t have to worry about gas drilling encroachment.

Kudos to PennFuture for taking up this issue in a pragmatic fashion that protects the parks and allows adjacent landowners the ability to develop their gas rights, and kudos to Indiana County’s commissioners, planning commission, and zoning hearing board for being so far ahead of the curve on this issue that powerful environmental organizations are borrowing Indiana County’s model to apply to ALL state parks here in Pennsylvania.

Violent vandalism/eco-terrorism at our controversial gas well site near Yellow Creek

2011-09-22T08:56:00.000-07:00

Landowner Jim Ray in front of the vandalized pit liner

Yesterday morning our operators arrived at the James Ray well site and found that someone had shot the plastic liner that sequesters the water and drill cuttings with a shotgun at least a half dozen times. Thankfully, the pit only contained rainwater and a small amount of drill cuttings and no environmental damage occurred as a result.

Link to Indiana Gazette article covering the vandalism: http://www.indianagazette.com/a_police_courts/article_3ff8f1df-caeb-5abb-b857-f55dd15e4772.html

This comes not less than two weeks after the approval by the Indiana County Zoning Hearing Board granting a special exception use permit to MDS Energy to drill this well within the Yellow Creek State Park Conservation Zone. This was a highly contested permit with lots of media coverage, dozens of local residents and several high profile environmental groups lobbying hard to block its issuance.

As you can imagine we are extremely disappointed that someone would do such a thing, especially in the manner in which they did it. It would have been just as easy for someone to trespass onto the site and cut the liner up with a box cutter, but this individual used a much more violent, threatening way to make their point. This is what we find most troubling. The landowners are understandably upset and fear for their safety. This was more than vandalism. We view this as an intimidation tactic... a thinly veiled threat of violence.

The rhetoric coming out of the extreme anti-natural gas drilling camp has been becoming increasingly violent. See this blog by Energy In Depth: http://eidmarcellus.org/2011/08/13/domestic-terrorism-advocated-by-anti-gas-radical/

Shotgun Damage

Is this the first case of eco-terrorism against Marcellus shale drilling? It may well be. It sickens me that our company, which has BENT OVER BACKWARDS to work with the environmentalists opposed to our plans to increase the protections on this site, has the dubious distinction of being the first company to have to deal with something like this. Thanks to the actions of this despicable, cowardly person we now have a family who has to fear for their lives. We have good, hard working employees with young families having to watch over their shoulder with families at home that all must now worry if this lunatic is prepared to take his violent intimidation tactics to next level. What a sad state of affairs.

Mike Knapp
President
Knapp Acquisitions & Production
Kittanning, PA
724-548-2501 x304

Cumulative effects of gas well drilling

2011-09-17T09:35:00.000-07:00

Wet Gas vs. Dry Gas Areas - Marcellus Shale Formation

As we near the Indiana County Planning Commission's deadline for a recommendation on whether or not to amend the stipulations on natural gas well drilling in the county's conservation zones (read more here: Indiana County Conservation Zones), those who are opposed to drilling have again shifted their tactics. Their latest bone of contention: Cumulative effects. They argue that while one well may not have an impact by itself, if multiple wells are drilled they together could somehow together impact the park.

When asked what cumulative effects they are speaking of, not much of an answer was given, outside of a vague reference to air quality and the suggestion that frac water could leech up through 8,000 feet of solid rock... something which had not happened one single time in the last 60 years, in over 1.3 million applications of hydraulic fracturing.

We have proved beyond any sort of reasonable doubt that we will not be a threat to water quality. Indiana County's "dry gas" does not contain natural gas liquids (a/k/a condensates), so there are not issues with VOC's evaporating and affecting air quality. Compressor stations in dry gas areas run on the clean burning natural gas in the pipelines they are pressurizing, they are few and far between, and county officials have already stated several times, on the record, that they would not allow compressor stations inside the conservation zone anyways.

The only pollution issues that could happen are during the drilling of the well, when the diesel powered apparatus are working. But as soon as the well is done, that all goes away... so there is no cumulative effect associated with it.

I'm utterly at a loss as to what these supposed cumulative impacts could consist of. Once the well is drilled, the gas goes into a pipe, into a PUC line, and then into your home.

The last expert the Coalition for a Healthy County (CHC) presented to the Planning Commission, a member of GASP (Group Against Smog and Pollution), gave a presentation on the harmful effects of condensates and diesel powered compressors on air quality. Both VERY valid concerns in some areas, but not in the least bit pertinent to Indiana County.

INDIANA COUNTY HAS NO CONDENSATES AND NO DIESEL POWERED COMPRESSORS!

Had members of the industry not been in attendance to point that out, I fear the commission may have been incorrectly influenced by that testimony. This is a massive oversight that both GASP and CHC should be held accountable for. CHC has used some very harsh words in the media regarding our commitment to details, with very thinly veiled accusations of being either inept or indifferent. CHC wants to hold the industry to a VERY high standard when it comes to the integrity of the information we present. It should hold itself to that same standard.

In light of this, I call on the Coalition for a Healthy County to lay out their concerns relating to cumulative impacts here on this blog so as to make sure that the county is receiving accurate, pertinent information on which to base its decision.

MDS Energy Approved to Drill Near Yellow Creek State Park

2011-09-09T16:01:00.000-07:00

For those who follow this blog, you are undoubtedly aware of the ongoing saga surrounding our proposed plans to drill a vertical Marcellus shale well in a farmed field just outside of Yellow Creek State Park. I am very excited to report that today the Indiana County Zoning Hearing Board looked favorably upon our amended application, and granted us permission to drill our well.   This is great news for the landowners in the Yellow Creek Conservation Zone and the other Conservation Zones that are comprised of 18 square miles of private property in Indiana County.

However, this victory could very well be short lived.   Those who are opposed to drilling inside the conservation zone are smart, motivated, well organized, and are applying significant political pressure to see to it that the ordinance is rewritten to ban all gas well drilling inside these zones.

This is a small victory, but the war is far from over.   Whether you have a dog in this fight or not, if you live in Indiana County, own property in the county, or know someone who does... I implore you to take action and contact the Indiana County Commissioners and the Indiana County Office of Planning and Development and let them know that you are in strong opposition to any such ban.   I can assure you that your neighbors who live in these zones, many of whom have their entire future riding the outcome of their decision (and I'm not exaggerating when I say that), will be most appreciative of your actions.

Have a great weekend everyone!

Mike

Great Read from NY Organic Farmer Natural Gas Drilling

2011-09-06T18:14:00.000-07:00

Originally published at www.eidmarcellus.org

Kate Watson

Schoharie County Landowner

When the phone rang a few weeks ago and a reporter was on the other end, asking to interview me about natural gas production and our lease, I was somewhat prepared. Three years ago we signed a lease, along with other excited farmers in our community. Prior to signing the lease, we talked to neighbors and experts. My husband went to a local meeting where attorneys and officials from the NY State Department of Environmental Conservation made presentations and answered questions to educate landowners about the legal and environmental impacts of leases and natural gas production. It was an exciting time in Schoharie County. As with most opportunities of good fortune, it seemed too good to be true and when a couple of years passed without activity, the whole scenario was relegated to the background of my consciousness.
Then signs began cropping up on people’s lawns. They were ominously black and red with a foreboding warning. On occasion I spotted signs from the “other side” as well. I instinctively liked them better. They were green, and stated brightly that those landowners were “friends” of natural gas.

The signs were not enough to rattle my brain into doing further research. That came one day while I was sitting in the office of our farm based organic feed business. One of our customers showed up. Unbeknownst to me at the time, I find he is a lobbyist for anti-development groups. I’m not sure how the subject of gas drilling came up, but when it did, our customer became terribly excited. He began to speak loudly and gesticulate wildly about the certain doom on the horizon if the moratorium was lifted. I just smiled sweetly, recalling the nice green signs I had seen and responded that I was a “friend of natural gas”. That prompted our customer, we’ll call him Bill, to become concerned about my apparent ignorance, and with that he rattled off some dire details, which I’m sure he thought would quickly dash my naiveté and jolt me into the reality of the “nightmare” I had unleashed by signing a gas lease. I politely excused myself as soon as I could. I by no means had become an expert but after my conversation with Bill, I did find that I could still be a friend of natural gas.

The second event that prepared me for the reporter’s call took place soon after my encounter with Bill. I found myself reunited with a woman that I worked with when I moved to Schoharie County, twenty years ago. At the time I was working as a soil technician for the USDA’s Soil Conservation Service (SCS). She worked in the office next door, at the USDA’s Agricultural Stabilization and Conservation Service. She is also the wife of a local dairy farmer, her name is Debbie. During our conversation, a tentative question soon came: “Do you have a gas lease?” I hesitated before answering in the affirmative. Relief instantly appeared on Debbie’s face. Word was passed and before long, there was a group of enthusiastic landowners discussing the issue. I shared what I had learned in my research. Debbie got so excited about my enthusiastic support of gas drilling that she exclaimed to the others, “We have a leader!” Of course its understandable Debbie was excited. A few weeks before, she had gone to a meeting expecting to hear a balanced discussion. Soon after arriving she discovered it was more of an anti-development rally. “They were really angry”, Debbie told me, with a fair degree of surprise in her voice.

So, when the reporter called, I was ready. I had heard the anti ravings of Bill and others. I researched the facts. I talked to local farmers and landowners. I thought long and hard about the whole situation.
The reporter was tentative and when he realized we were operating a certified organic farm he was shocked. He said he thought the pro and con groups were divided along defined political lines, like Republicans and Democrats.

In our discussion I noted the benefit of developing a clean energy source that would make us less dependent on foreign oil. I suggested it would bring jobs to the area at a time of high unemployment (which in good times was relatively economically depressed). I inquired what the reporter knew about hydraulic fracturing. He admitted he knew little. I gave him as many facts as I could. I emphasized the high taxes farmers pay, how hard they work, only to find themselves deep in debt, sometimes forced into mortgaging generational family farms. I noted how wonderful it would be if farmers could benefit from a commodity beneath their land; one that could be extracted while fields could still be worked, all while helping the local economy and preserving an agrarian based community. I don’t think the reporter was persuaded. In the end, he used some quotes, but overall, the piece was plagued with emotional controversy and devoid of pertinent facts.
I have not always been a farmer, but my husband has. When urban pressure forced him to sell what land he had left in New Hampshire, I convinced him to come to upstate NY. He was ecstatic to see the thriving agricultural community in Schoharie when we came here over twenty years ago. Since that time we have attempted several farm based businesses. For many years we had a large flock of sheep, but ended up liquidating when the cost of shearing them surpassed the price of wool. We had a herd of dairy cows as well. I never really embraced the lifestyle so we moved on from that endeavor too.

Farming life is difficult. To survive, you must keep the land productive and pay high taxes on large tracts of land. With this in mind we continued looking for a niche. The niche we found was organic farming. Organic farming is insulated from the pressure of large factory farms that are taking over food production. By virtue of organic practices, it tends to be a small operation, suited perfectly to the scale of a family farm. We grow organic hay on our certified land, and buy organic grain, which we mill into mixes and deliver to organic farms that are producing milk, eggs and meat.
There is nothing in natural gas production that conflicts with our organic certification or practices. In fact, I am hard pressed to see how utilizing the fertility of the space beneath our fields conflicts with being good stewards of the land above. I like to be consistent and rational, and no matter which way I look at this, it remains a win-win, positive event. Clean energy from below, crops above.

At SCS I became intimately familiar with farming. It was here that I learned about conservation and preservation. Conservationists advocate the wise use of resources in accordance with good stewardship, to enhance future sustainability. Preservationists seek to maintain the status quo by resisting development in order to preserve the resource. As far as I can tell, conservation is based upon common sense and pragmatism; preservation seems to rise out of a quirky, romantic idealism. Farmers are very practical people and as such, tend to be conservationists. We should be grateful for that. Idealists would never be able to persevere in the grueling reality of daily farm life and no one conserves and cares for their land like a farmer.
My husband and I love our land as only farmers can. I’m not sure folks that never farmed can understand this love. Today, in our organic feed business, we serve a multitude of organic farmers struggling to maintain the agrarian way of life in an increasingly hostile economic and social environment. Farmers are not going to compromise the good of their land for a fast profit. They take their responsibility as stewards of the land seriously. It seems clear that the possible boon that natural gas production might bring to our rural communities is a godsend and that farmers are the best decision makers to be overseeing this process.
Since farmers are the large landowners in most rural counties, it is farmers that have been caught in the middle of this controversy. Sadly, it has pitted small land owners against farmers in some places. After the interview, the reporter asked “You probably wouldn’t want us to put your picture in the paper.“ I had to laugh. I asked him if people were really scared to be seen as natural gas advocates. From my perspective, this hostility is born, not in facts or truth, but in an emotional campaign fueled by prejudice and fear.

There is a joke about a lawyer, a doctor and a farmer discussing what they would do if they won the Mega Millions lottery. The lawyer declares he would build a mansion in the Bahamas. The doctor decides he would buy himself a private jet to travel around the world. After a little thought the farmer announces, “I guess I would just keep farming until it was all gone.” Truth be told, I believe if the farmers in this county hit the “lotto” with a lucrative gas well, they’d pay their bills, buy new equipment, and just keep on farming.

Open Letter To Jan Jarret, President of PennFuture

2011-09-02T08:23:00.000-07:00

Yellow Creek State Park Conservation Zone - 6,000+ Acres of Private Property

September 2^nd, 2011

Jan Jarrett

President

Citizens for Pennsylvania’s Future (PennFuture)

Dear Ms. Jarrett,

I appreciate PennFuture's stance in opposition to drilling in state parks. We share that stance, and we have put our money where our mouth is. In our proposal to DCNR to relocate an aging pipeline that runs underneath Yellow Creek Lake within Yellow Creek State Park in Indiana County, we also committed to NOT drill on 155 acres of privately owned gas rights under the park that we have leased. As the state owns all other gas rights (with the exception of one small piece which is not well suited for development), our commitment not to drill should leave Yellow Creek State Park as one of the few state parks impervious to encroachment by gas drilling. This was not a request from DCNR. This was not brought our as a bargaining chip. This was our idea and part of our original proposal.

Our lease on the aforementioned 155 acres will expire in the next several years, at which point in time another company could lease the property and drill multiple wells inside the park. In order for us to keep our lease in force on a long term basis and keep another company from drilling, we have to drill on an adjacent property outside of the park, and unitize (pool) the properties together. In any other county this would not be an issue, but Indiana County is unique.

Surrounding state and county parks in Indiana County are zones with special zoning ordinances that were put into place back in the 1970’s. There is a five hundred feet “Buffer Zone” which does not allow gas drilling. There is a much larger zone called a “Conservation Zone” which is intended to restrict residential development and curtail extremely overbearing land uses, such as heavy industrial, strip clubs, junkyards, landfills, hazardous waste dumps, etc. The Conservation Zones extends in most places to over a mile from the parks. In the case of Yellow Creek, the zone extends upwards of two miles from the park. Oil and gas wells have always been permitted within the Conservation Zone after certain additional restrictions are met. So as the laws stand now, we would be permitted to conduct our drilling OUTSIDE of the park to save the land INSIDE the park.

But that is now up in the air due to several environmental organizations, including PennFuture, aggressively lobbying the Indiana County Commissioners and the Indiana County Planning Commission to extend the gas drilling ban from the Buffer Zone to the Conservation Zone. In response to this lobbying, the Commissioners have directed the Planning Commission to review the ordinance to either update it to reflect the larger scale of shale drilling, or ban it altogether.

While we appreciate and certainly sympathize with PennFuture’s desire to protect the park (I was born and raised in Indiana, and spent much of my youth enjoying the park with my family), there is no question that gas drilling can be completed inside the Conservation Zone with little to no impact on the park. That raises several questions:

Why is PennFuture supportive of a ban as opposed to the more pragmatic solution of additional common sense restrictions that would maintain the sanctity of the park while respecting the private property owners within the zone and encouraging the development of clean fuel?

Why is PennFuture ONLY trying to ban gas drilling on private property around parks in Indiana County?

Do you plan to lobby to ban drilling not only in parks, but also on the hundreds of thousands of acres of private property surrounding other parks in the Commonwealth?

Does PennFuture feel that the 2 miles from the lake in the Yellow Creek Conservation Zone is far enough? If not, how much farther does PennFuture think that zone should extend?

There are only four parks in Indiana County, but almost 12,000 acres (18 square miles) of property rights, owned by hundreds and hundreds of taxpaying residents, would be unnecessarily taken without compensation by your proposal. It would be the second largest ban on drilling in the state, behind only the City of Pittsburgh (which will be struck down if ever challenged) at about 50 square miles. I have met these landowners and developed relationships with many of them. They are gleefully optimistic at the possibility of gas royalties helping them to realize what they though to only be pipe dreams: The ability to retire at a reasonable age, to put their kids through college, to pay for expensive medical care without burdening their children, and to (for many) experience financial security for the first time in their lives.

This is not a safety issue like in Pittsburgh or Peters Township which are urban or suburban areas. This is mostly sparsely inhabited farm land. This is not a habitat fragmentation issue. It is not a watershed protection issue. It is not an environmental or health issue. This is a noise and aesthetic issue, and both of those issues can easily be addressed with additional common sense regulations.

Several other municipalities in the Commonwealth have recently enacted regulations regarding noise and light pollution. Please also refer to the below drilling noise impact and abatement study which clearly shows that drilling noise would not be an overbearing impact on the park even without abatement measures being implemented, and would be nonexistent with them in place. http://knappAP.com/content/noisestudy.pdf

We strongly urge you to reconsider your decision to advocate the expansion of the drilling ban zone around Indiana County parks. We ask you to instead join and work with us to propose additional, common sense regulations for the Conservation Zone that protect the park, respect the landowners, and further provide Pennsylvanians with a clean, domestic alternative to foreign oil and other dirtier fuels.

Michael S. Knapp

President

Knapp Acquisitions & Production

Kittanning, PA

http://www.knappAP.com

http://knappAP.blogspot.com

Knapp Acquisitions & Production President Featured in NPR Story on Land Leasing

2011-08-29T15:42:00.000-07:00

Earlier this summer I had the pleasure of talking with an NPR reporter to show some of our gas drilling operations and comment on land leasing practices in the wake of some unscrupulous landmen attempting to take advantage of residents in areas where no gas drilling had previously occurred. The reporter was Emma Jacobs from Innovation Trail (an NPR associated collaboration of reporters covering innovation and often gas drilling issues in Binghamton, NY). I was very pleased to see that quite a few other NPR affiliates picked up the story and ran with it, including many stations in New York City, Upstate New York, Harrisburg, and Philadelphia. It would have been very easy for the reporter to only cover one side of the story. Kudos to her for going out of her way to get insight from both sides.

The story can be read/heard here: http://innovationtrail.org/post/front-lines-fracking-get-personal

ICNGTF Welcomes Fmr. PA DEP Secretary John Hanger

2011-08-26T07:46:00.000-07:00

DEP Secretary John Hanger

Those of us on the Indiana County Natural Gas Task Force were treated to a wonderful presentation yesterday by former PA Department of Environmental Protection Secretary John Hanger. Mr. Hanger, who oversaw the more than doubling of oil and gas inspectors and enacted stringent new environmental safety regulations, did an excellent job of putting the positives and negatives of gas well drilling into the proper perspective. Mr. Hanger stressed that while no industrial activity can be completely error-proof, if we continue to strive for perfection then the myriad of positives (especially the air quality improvement that can be gained from displacing dirtier fuels) most certainly outweigh the negatives.
Many thanks to John for making the long trip out from his home in Hershey. I highly encourage EVERYONE who reads this blog to check out his now infamous "Facts of the Day" blog, which has tons of great info on not just natural gas, but alternative energy, politics, etc. You can find it at http://johnhanger.blogspot.com

CNX/Consol Joint Venture with Noble Energy Encouraging

2011-08-25T08:37:00.000-07:00

CONSOL Energy Inc. has entered into an agreement with Noble Energy, Inc. for the joint development of CONSOL's 663,350 Marcellus Shale acres in Pennsylvania and West Virginia for aggregate payments to CONSOL of approximately $3.4 Billion. That comes out to about $10,000 per net acre. Not too shabby.

This continues a well documented trend of multinational oil companies spending HUGE cash to gain natural gas assets. The private sector sees natural gas coming like a deer in the headlights of a commercial jetliner. It's absolutely mind numbing why Washington, in a time of employment, deficit, and massive foreign wars due to foreign energy dependence, is almost completely ignoring the billions of dollars in investment and hundreds of thousands of jobs this domestic natural gas boom is creating. It's magnitudes cleaner than the fuels we use now, its much cheaper than the fuels we use now, its a huge stimulus to the local economy in, it keeps money OUT of the hands of unstable mid-east dictatorships... the list goes on and on. Why is Washington sleeping at the wheel on this issue?

All that being said, CNX (Consol's gas division) is a great company. They are the standard when it comes to safety, setting the bar and setting it high. I can't tell you how many times I've heard from folks working in the service side of the industry say "if you can work for CNX, you can work for anyone" (when it comes to safety programs). I have the pleasure of working with CNX's Vice President of Operations Craig Neal on the Indiana County Natural Gas Task Force. They are absolutely an asset to the region and we are blessed to have them.

Group behind proposed gas drilling ban retorts

2011-08-16T20:44:00.000-07:00

The following was posted by Gerald Smith, leader of the Coalition for a Healthy County, which is the driving force behind the proposed gas drilling ban in Indiana County which we have been chronicling on this blog, in response to one of our recent posts calling Indiana County residents to oppose their radical agenda:

Note, the Coalition for a Healthy County has a very moderate stance on natural gas drilling in Indiana County. It is a recommendation of comprehensive best practices for all gas drilling county wide, and a ban on drilling in areas already designated for protection, such as the the conservation zones mentioned above (about 3% of the county's total acreage).

Property owners inside the conservation zone will be able to access their natural gas using the most common technology available for gas drilling, horizontal hydraulic fracturing.

Coalition for a Healthy County's stance is ANYTHING but moderate. If drilling is safe everywhere else in the county, then why not in the conservation zones? What is the basis for your insistence of a ban here, but not elsewhere?

You say it's to protect the water... Yellow Creek provides drinking water to Homer City, home to 5,000 residents. But a spill 10 miles upstream from the lake will be just as damaging as a spill directly into the lake. Why not ban drilling in the entire Yellow Creek watershed? What about the Two Lick watershed that supplies water to Indiana Borough and its tens of thousands of residents? What about the Allegheny and Monongahela river watersheds? What about the fact that the few spills that have happened have been studied exhaustively and have shown little to no environmental effect? US Route 422 goes directly over Yellow Creek just before it enters the lake. What if a tanker truck were to overturn on the bridge and spill thousands of gallons of raw diesel, or benzene, or some other horrific chemical? Shall we tunnel under every stream to avoid such a potential spill?

You say it's about air quality. Do those who live outside of the conservation zones have gills? I believe they breathe air too. If the emissions from gas drilling (which are laughably minimal) are suitable OUTSIDE of the conservation zones, why not in them? The oil that is burned on site during our 7-10 days of drilling and 12 hours of fracking is the same oil that belches out of the tailpipes of the lines of school buses that sit idling outside of every school in America. The same emissions that we breathe when following a semi-truck hauling around organic turnips. The same oil that burns in the cars traveling around on the park’s miles of oil soaked gravel pathways we call roads. The same emissions that come from your tailpipe when you drive to meetings to voice your opposition to natural gas drilling.

Some of your members who happen to live next to our proposed well say it’s about the truck traffic. There would be no truck traffic in the park. Just a small amount of temporary increased truck traffic on roads those members happen to live on. I find it VERY hard to believe that those members would be any less “offended” by this truck traffic if they happened to live outside of a conservation zone. And the point is moot, because it DOES NOT AFFECT THE PARK. The ordinance is to protect the park, NOT those who happen to live in the conservation zones. The overwhelming majority of the residents inside the conservation zones have already spoken on this issue, by signing gas leases to allow drilling on their properties. The residents and drilling companies alike pay state, local, and fuel taxes that go to build and maintain these roads the same as everyone else. Who is the Coalition for a Healthy County to suggest that they have no right to use them?

You say that the properties can be accessed via horizontal drilling. You are 100% WRONG. There are a myriad of reasons why, including subsurface geology, surface topography impediments, other companies owning leases, holdout landowners, state mandated setbacks, lateral length limitations, the Marcellus shale’s specific structural qualities that allow drilling only in a Northwest to Southeast direction, etc. This is the most disingenuous of your talking points, and I wish you would abandon it.

The only feasible way that gas drilling could have an impact on the park is visually, and from noise. This is an argument that actually has a shred of merit. However, these are issues that can easily be addressed, but for some reason I have not heard one peep about them in all of the public meetings where you have tried to present your case. Why? Because they are inherently weak, and easily solvable. The temporary sight of the top of a gas rig barely eclipsing the treeline surrounding the park is a sad, sorry reason to steal property rights. And noise is not much of an issue to begin with, and is easily mitigated with sound abatement measures.

I fear what much of what your opposition boils down to is an ideology. A “green” ideology that is anti-corporation, anti-fossil fuel, and anti-“big oil”. This battle over the conservation zones is one that is close to home, and one that seems like it could be winnable. One which has a significant amount of collateral damage for those who are actually involved…damage you try to downplay with comments like “it’s only 3% of the county”. That 3% breaks down to 18 square miles, close to 12,000 acres. Hundreds and hundreds of REAL families. I don’t see you going door to door, telling these people on their doorsteps that you are there to take their shot at a better life away, or even trying to convince them they should WILLINGLY reject natural gas drilling on their properties inside the zone. Instead, you lobby county officials to do it on your behalf.

So no, I do not believe your stance to be moderate, sensible, justified, rational, or having the slightest sense of continuity. I find it to be oppressive, radical, offensive, insulting to the intelligence of conservation zone landowners, and an affront to the most basic property rights our country was founded on. In West Virginia, they push entire mountaintops into streams, literally removing them from existence, but you spend your time demonizing the industry that is actively providing an alternative to that? An alternative that DRAMATICALLY cleans our air, stimulates our economy, increases our national security, and grows our tax base which can fund programs like acid mine drainage remediation, farmland preservation, and improve the facilities of places like state parks.

Moderate? Not even close.

Please sign petition to help Indiana County Private Property Owners

2011-08-15T13:38:00.000-07:00

If you are following the ongoing situation in Indiana County regarding natural gas drilling on private property in the vicinity of state and county parks and wish to show your support for these landowners, please take a moment of your time to sign the following petition. With your help, hopefully we can push back these anti-gas drilling radicals.

Change.org|Start an Online Petition »

The time to speak up and become involved is here

2011-08-15T07:09:00.000-07:00

In conversations I have had recently with various public officials, there is one thing that is becoming clear to me. A very small, very vocal minority can do lots of damage...if they are the only voice in the room.

As we have been working on this conservation zone issue in Indiana County, where a small group of anti-gas drilling extremists has been working feverishly to ban drilling, its becoming increasingly clear that in the absence of a dissenting opinion, that voice is given far too much credence...

It is time for the silent majority to stop being so silent. It is time for those who actually live in these conservations zones to stand up and have their voices heard. It is time for Indiana County residents, as well as residents across our great commonwealth to take these radicals head on. They are VERY actively indoctrinating your neighbors with lies, spin and exaggerations. They show no remorse in lobbying to steal away the chance of prosperity and a better life for the families of hundreds of Indiana County residents. The hard working people who have toiled and broke their backs for generations to provide the comforts of cheap, convenient food these radicals buy at the grocery store every day. People that put their life on the line for us as police officers and fire fighters. Teachers, small business owners, and veterans. I have seen their faces. I have shook their hands.   They are not an idea, not a talking point.   They are real, honest, hardworking people who work hard and sacrifice every day for their families, for their community, and for their country.

These radicals very strongly object to increased common sense regulations in these zones that would protect the parks (which is what the industry is advocating) and allow these folks to not have their gas rights stolen away from them.   The only thing they will accept is an outright ban. It's nauseating how easily they are throwing their fellow man under the bus.   And with no other voices in the room to counter their insanity, our elected officials are put in a position where they MUST listen to them. We must make it easier for them to dismiss these radicals as the fringe element that they are!

If you saw a burglar robbing your neighbors house, would you do nothing? If you saw a carjacker trying to take an elderly woman's car, would you do nothing? What these extremists are trying to steal is of much greater value...the chance at a better life for their children, their grandchildren, and their great grand children. The chance at retirement at a reasonable age. The chance to send their kids to a decent school. The chance at the AMERICAN DREAM! Let's stand up together and stop this thievery. All we have to do to stop them is show up and speak our minds.   And the time to do that is now.

Anti-gas drillers advocating domestic terrorism

2011-08-15T06:35:00.000-07:00

If you haven't yet reached the point where you are pissed off about the anti-gas drilling distortions, mistruths, spun facts, omissions, inflations, hyperbole, and outright lies, then this may well get you there.

Threats of domestic terrorism.

There was an article posted online by the Middletown Times Herald-Record, in which the following was posted by a Monticello, NY businessman:

http://www.recordonline.com/apps/pbcs.dll/article?AID=%2F20110812%2FNEWS%2F108120342&emailAFriend=1

In a blog from Energy In Depth calling attention to the above posting, an anonymous posted by the name of "nodrillinghere" posted the following promise:

“You’ll know who I am when you’re meant to know who I am .. and don’t worry, you WILL know who I am when it’s your time.”

One could write this off as the venting of frustration, but I do not. Especially considering the recent events coming out of Oklahoma, where a man was arrested last week for placing a bomb on a large pipeline. That's right. A 40 year old American man created and placed a bomb on a natural gas pipeline. It has been confirmed that he is not a member of a terrorist group, and is not a disgruntled former employee.

http://articles.cnn.com/2011-08-12/justice/oklahoma.pipe.bomb_1_gas-pipeline-bomb-squad-device?_s=PM:CRIME

This is what happens when radical anti-gas advocates falsely pump up their rhetoric to the extreme. The visions that they plant in the heads of the populous that natural gas drilling is "destroying the environment" turning Pennsylvania into a "toxic wasteland" and "killing our children with their chemicals" are dangerous. When you indoctrinate extreme rhetoric into people's minds, you will breed extreme actions.

It needs to stop. And it needs to stop now. I have personally had my name, my company's name, and the name of the drilling company we represent battered in the press, on the internet, and at public meetings by anti-gas drilling extremists. Our handful of DEP violations where small amounts of muddy water escaped our well pad or access roads after heavy rainstorms are spun into hideous false statements and inaccurate accusations of wanton environmental contamination.

These anti-gas drilling extremists cannot base their arguments on the truth. Because if they did, they would have little leg to stand on. I wonder if they are fully aware of the collateral damage they are causing, outside of delaying our transition to clean burning, domestic natural gas. And I wonder if they did know, if it would make any difference to them.

Other massive ways domestic shale gas production is helping the economy

2011-08-05T06:31:00.000-07:00

The following is a letter published on the editorial page of the Wall Street Journal. It quantifies just ONE of the industries domestic shale gas production is positively influencing.

A point not made in your editorial "A Tale of Two Shale States" (July 26), or in the letters of July 29, is that natural gas is especially critical to the revitalization of chemical manufacturers, an industry that employs 784,000 Americans and supports five million additional jobs across the economy. Natural gas and its associated liquids are the primary raw materials, or feedstocks, that enable the chemical industry to create 96% of all the domestically manufactured goods Americans purchase and use daily.
A recent American Chemistry Council study found that increased production of shale gas would produce nearly 400,000 new jobs in the chemical sector and among suppliers, increase U.S. economic output by more than $132 billion and provide $4.4 billion a year in local, state and federal taxes. The chemical industry now has a huge advantage over its global competition. In 2010, industry exports increased 17%, shifting the industry's balance of trade from a $100 million deficit to a $3.7 billion surplus. Plastics exports alone were up 10% last year. Industry leaders such as Dow Chemical and Eastman Chemical have restarted plants idled by the recession. Other companies are expected to announce expansion plans in the U.S.
America will continue to rely on and benefit from natural gas development. As a result, aggressive policies aimed at constraining supply as demand increases could undermine the growth and development of American manufacturers.

Cal Dooley
President and CEO
American Chemistry Council
Washington

Lieutenant Governor Jim Cawley Fires Back

2011-08-05T06:22:00.000-07:00

The following is an Op-Ed piece written by Pennsylvania's Lieutenant Governor Jim Cawley that appears in today's Harrisburg Patriot-News. I thought it to be especially poignant given yesterday's stock market crash. At a time when the American (and global) economy looks very dark, domestic natural gas development is shining bright.

Lt. Governor Cawley

One of the persistent myths about Pennsylvania’s Marcellus gas industry is that it pays no taxes and that we are all losing out on the wealth it generates.

In op-eds and comments throughout the state, the idea is being pushed that only a tax specifically targeted at this growing industry, an industry that has paid close to $1.2 billion in taxes already, will solve our financial and even environmental worries.

That just isn’t so.

Let’s consider a few of the arguments as they were presented recently.

I have read that the Marcellus Shale Commission’s recommendation of an impact fee, targeted to the communities directly affected by Marcellus drilling, is “unfair to everybody else in Pennsylvania.” Why should people unaffected by drilling collect on an impact somewhere else? Should part of Philadelphia’s wage tax go to Pittsburgh? When a house burns down in Scranton should someone in York share the insurance settlement?

When are we going to see through the silliness and recognize that the Marcellus industry is benefiting everybody the way other industries do: by lifting the overall economy.

One deceptively easy argument tax advocates have made is that the gas is there, and it’s not as if the companies can move to North Carolina and drill it. They have to drill here eventually. That’s true. And it’s also true that, at slightly more than $4 per million BTUs, natural gas is selling at record lows, in part, because it is now so plentiful.

The reason drillers are drilling now is that we have kept out of the way by not specifically targeting a single industry — theirs — with a tax no other industry in the state has to pay.

By drilling now, they have produced billions of dollars in payroll. They have created tens of thousands of new jobs and have helped to keep the state’s unemployment rate a full percentage point below the national average. Our goal isn’t simply to get them to drill now, but to make Pennsylvania the hub of the industry.

They can drill eventually, but Pennsylvanians need the jobs now.

And, contrary to the implications critics make, the Marcellus industry has generated more than $1 billion in corporate, sales and personal income tax revenues to Pennsylvania in the last five years, with most of it coming in the last 18 months.

That’s economic growth and it is what generates wealth in a way that a tax targeted at a specific industry will not. The rhetoric of the extraction tax advocates is reminiscent of the fraught predictions of a decade ago about how casino gambling would eliminate property taxes, fund our schools, pave our roads and maybe improve the weather.

Jim Cawley

Promoters spent that money a dozen ways before the first casino was opened. They’re doing the same thing now with their mythical extraction tax.

Tax enthusiasts also make the claim that Marcellus poses an imminent environmental danger to the rest of the state that, for some reason, can only be solved by a tax. What will protect the state’s environment is aggressive and impartial enforcement of environmental regulations.

This year, the Department of Environmental Protection levied more than $1 million in fines against a single drilling company for environmental violations. Taxes don’t stop pollution. Environmental enforcement does.

And, too often, we’ve seen what happens with tax money.

Think of the Capitol as a long, Velcro tube. Blow $200 million into one end and wait on the other. In all likelihood, half of it would arrive on the other end. The rest would be caught like lint on the pet programs and political perks of special interests whose agendas have little to do with the idea of commonwealth.

It is common politics. The Marcellus Commission’s job was to rise above that and find a way to turn our momentary good fortune into lasting economic wealth.

People need jobs, not taxes.

Pittsburgh Councilman Doug Shields beating a dead horse again

2011-08-02T06:40:00.000-07:00

Doug Shields

Never one to miss an opportunity to incite unfounded hysteria for political gain, Pittsburgh councilman Doug Shields is at it again. Having already passed an unconstitutional ban on gas drilling within Pittsburgh city limits, Mr. Shields has now successfully added to the ballot a referendum, which would ask voters whether they support an amendment the city's home-rule charter to adopt a "community bill of rights" which would ban gas drilling. There are no companies that plan to drill inside city limits. Mr. Shields is well aware of the fact that such a ban is indefensible in court and in direct violation of the Pennsylvania constitution and the Oil & Gas Act. This is merely a publicity stunt...political posturing of the worst kind. Fluffing up his resume to move into the private sector when his term expires at the end of this year. Both Pittsburgh and all Pennsylvania residents should be outraged. Mr. Shields is adding legitimacy to a baseless, extremist position that hurts his constituency. He is pouring fuel on a fire that needs it not. Mr. Shields is happy to accept the new jobs and tax revenues the industry brings, while trashing those who make it possible. Is Mr. Shields not aware of the ACTUAL problems the City of Pittsburgh is facing? There seems to be a myriad of them. I strongly encourage him to work to address those, rather than wasting taxpayer dollars by inventing phantom issues and haphazardly exploiting one of the few industries bringing jobs, prosperity, and tax revenues to the region.

Jim Ferlo

Another one to watch is State Senator Jim Ferlo, who represents a district in SW Pennsylvania. Another scumbag who is building a soapbox for himself by trashing, many times personally, the good, honest Pennsylvanians working in the Marcellus industry. Never have I seen an elected official so swiftly and without remorse throw his own constituents under the bus. They should both be ashamed of themselves. Pittsburgh and the region should be embarrassed by their representation. Mr. Shield's reign of idiocy and arrogance will be coming to an end soon, but it will take the voters to send Mr. Ferlo and his anti-Pennsylvania, anti-progress policy down the road. Both of their departures cannot come soon enough.

Knapp Acquisitions & Production Lessor's Letter to the Editor

2011-07-29T06:23:00.001-07:00

One of our Lessors, James Ray, had the following was published in yesterday's Indiana Gazette:

Kudos to the sponsors of the Pennsylvania Gas Expo last week and to the exhibitors for an interesting, informative and timely topic. The theme of the entire event seemed to be "Marcellus shale gas production in Indiana County as well as western PA is here now and is here to stay for a long time." It brings important economic benefits not only to landowners of gas deposits but to the region and state.
Anyone who took the time to attend learned that the fears and concerns some have were put into perspective. Fears about "fracking" are often overblown as there have been no cases of contamination as the result of fracking.

Thanks also to the county commissioners for supporting this event and for recognizing the importance of this economic opportunity.
If you missed the expo, an array of topics were covered -- from gas finance and tax issues to job opportunities. The issue of safety was thoroughly addressed. As someone commented, "The gas companies are in the business to make money, not to have accidents."
There were financial planners from local banks who discussed what to do with the newfound money. The concluding panel discussion covered an overview of Marcellus shale, land leasing, the environment and the future. This was a day well spent.

MDS and Knapp Present Amended Permit Application with County to Drill Near State Park

2011-07-27T07:42:00.000-07:00

Last night myself and the Vice President/Chief of Engineering from MDS Energy publicly presented our amended permit application to the county zoning hearing board.

We were able to get the General Manager and top chemist from Kroff Well Services to attend the meeting. These are literally the two guys that INVENTED, hold the patents, and produce the frac fluid constituents that are going to be employed on this well. They did an AMAZING job describing the constituents and how we reformulated our frac fluid blend to make it "greener" and noted how they have been selling many of these exact same chemicals to other industries who are permitted to discharge their effluent into the environment with no restriction, and have been doing so for decades. We need to clone these guys and put them on every street corner.

Important points: There are NO BTEX compounds in our frac fluid. There are NO endocrine disruptors in our frac fluid. The frac fluid, when tested, is well under 1% of the LC50 standard. The gentlemen went so far as to say (under oath) that most of the constituents are safe enough to bathe in, and that they would allow their children to drink it. The only constituent that could be harmful is the biocide, which they mentioned only has a working time of about 15 hours, then it degrades into bromides and chlorides which are not at all harmful and are used as disinfectants in public water supplies.

We presented our sworn testimony, then took a host of questions from the board. After that, the board allowed the public to directly question us. There were many, all from environmentalists opposed to the project. Then everyone got to get up and make a speech. Several of the landowners in the conservation zone spoke about how they'd rather not have their gas rights stolen from them, and there was a great speech given by a local gentleman who is a retired coal company operator who spoke very eloquently about his experience with DEP and how they can and will nail you on anything, and the fact that we have as few violations as we do is actually evidence of our responsible operation, rather than the opposite.

The board has 45 days to render a decision, and they mentioned that they would work through this as quickly as they can, giving the impression that they MAY have an answer for us quicker than that.

This is by far the most controversial location we could apply for, so if we can get this one through it should be smooth sailing from there on, as long as the county does not place overbearing restrictions on the industry or institute a gas drilling BAN inside the zone, which is what is being lobbied for by local environmental groups, who have also involved PennFuture, a very powerful state wide environmental group. The Planning commission will be meeting again tonight to discuss how they want to rewrite these laws and they will be taking input from the Indiana County Natural Gas Task Force, which also happens to meet this afternoon. I will be in attendance at both. Stay tuned for a synopsis of those meetings.

Governor's Marcellus Shale Advisory Committee Report Statement

2011-07-23T07:39:00.000-07:00

Yesterday, Lt. Governor Jim Cawley issued the much anticipated final report of the Governor's Marcellus Shale Advisory Committee, a collaboration between various state agencies, industry representatives, environmental groups, and other interested parties. We commend the work of this committee and its findings. The Governor and the legislature now have close to 100 recommendations to improve environmental regulations and accelerate the development of natural gas and the ancillary industries that can benefit from the abundance of shale gas here in Pennsylvania. After reviewing the document, we endorse it wholeheartedly. Many of the recommendations leave much room open for interpretation or leaves specifics of how they might be enacted up to the legislature. As the Lieutenant Governor said in his remarks at the final hearing to vote on the recommendations this not the beginning of the end, this is the end of the beginning.

Vertical vs. Horizontal drilling. A Tale of Two Drill Rigs

2011-07-18T12:47:00.000-07:00

Overhead Side by Side View of Vertical & Horizontal Well Pads

Did you know that there are two very different styles of drilling into the Marcellus shale here in Pennsylvania? There are horizontal wells and vertical wells. The style of drilling that garners almost all the media attention is the large scale horizontal wells, but there are many local companies who have switched from drilling shallow gas wells to vertical Marcellus wells. Vertical Marcellus wells tap the same gas rich formation, but they are much smaller, use much less water, and require a fraction of the time and truck traffic to successfully complete. Vertical well drilling lends itself to certain sensitive areas, such as Indiana County's Conservation Zones surrounding state and county parks.

Click the following link to see how vertical and horizontal gas well drilling stack up. Marcellus Shale Drilling - Vertical vs. Horizontal

Fort Worth Gas Drilling Air Quality Study

2011-07-18T10:10:00.000-07:00

Fort Worth, Texas - Sitting atop the prolific Barnett Shale, the birthplace of shale gas extraction, Fort Worth has been the center of studies regarding natural gas drilling and environmental impact. There are close to 400 wells and multiple compressor stations inside city limits in densely populated areas. Last week, the results of a million dollar comprehensive study specifically aimed at the impact of shale gas drilling were released. Their findings? Natural gas drilling is "NO SIGNIFICANT THREAT" to the safety of residents. It's important to note that this study was commissioned and paid for by the city of Fort Worth.

For more details, check out this link to the report: http://fortworthgov.org/gaswells/default.aspx?id=87074

Less than a week until the PA Gas Expo in Indiana, PA presented by MDS Energy

2011-07-15T05:12:00.000-07:00

Brand New Kovalchick Conference Center - Host to the PA Gas Expo

I hope lots of you have made plans to attend the PA Gas Expo this year, which will be held this coming Thursday. It was an amazing success last year at the Indiana County Fairground, and it will be much bigger and better this year across the street at the BEAUTIFUL new 80 million dollar Kovalchick Conference and Athletic Center. There will be over 150 exhibitors, many panels with industry representatives addressing issues and answering your questions. I will be speaking on a panel with representatives from EQT Production and Energy Corporation of America addressing land leasing issues, environmental impact, etc. Whether you are a shale geek or a new comer just wanting to figure out what this Marcellus craze is all about, there will be plenty for you at the Expo. Hope to see you there!

More info can be found here: http://pagasexpo.com

BHP Billiton, Chesapeake Energy both make billion dollar commitments

2011-07-15T05:00:00.000-07:00

In another huge deal involving a foreign company investing into US shale gas, BHP Billiton, the world's largest mining company, is shelling out over $12 billion to acquire Petrohawk, whose holdings are mostly in shale gas in Texas and the Gulf Coast. This is another CLEAR signal that natural gas is going to be the fuel of the future here in the Unites States. Despite prolonged low commodity prices and a fairly large disparity between supply and demand, companies are putting their money where their mouth is, betting that the country will soon be adopting natural gas as a transportation fuel, as a feedstock for plastics and other petroleum based products, and its market share will continue to increase in the power generation sector.

CNG Refueling Station - Coming soon to a Neighborhood Near You

The United States currently exports over a million dollars a minute to acquire foreign oil. That equates to over 400 BILLION dollars per year of American wealth that leaves our economy. The fallout from this horrifically unsustainable policy permeates throughout our society in every way imaginable. Stepping up BIG TIME to help spur our movement away from foreign oil onto much cleaner, much cheaper AMERICAN natural gas is Chesapeake Energy, who announced that they will be investing 1 billion dollars over the next 10 years infrastructure to support natural gas fueled transportation, including the building of 150 refueling stations in strategic places to allow big rig trucks easy access to them on heavily used shipping routes. If Congress will pass the NAT GAS act, we will be WELL on our way to being freed from the unbearable shackles of our dependence on OPEC.

Indiana County Planning Commission Meeting Last Night

2011-07-14T05:34:00.000-07:00

Last night's meeting of the Indiana County Planning Commission began what will be a several month process to investigate and recommend updates to the county's conservation zones, which are zoning ordinances that place some extra restrictions on gas well drilling on private property surrounding county and state parks. On hand was the Coalition for a Healthy County (CHC) who presented the Commission with proposed language that would ban gas well drilling in these areas. The Commission also heard from several members of the public and from a representative of PennFuture, a state wide environmental policy organization who helped to prepare the draft language for the CHC. The meeting was very cordial and the Commission seemed pleased with the public interest. The board spoke mostly on procedural items on how they are going to accomplish their task of investigation and formulating their recommendations. They plan to meet 5-6 times between now and their October 12th deadline. Byron Stauffer, Director of the Office of Planning and Development promised transparency and public involvement throughout the process.

We agree with the decision to update the regulations, as Marcellus drilling is a different animal than traditional drilling and there are some common sense stipulations that should be put into place to protect the sanctity of the parks. As always, we will work diligently to make sure that the RIGHT regulations make it to light and the others do not.

Public Meeting Wednesday about Gas Drilling in Indiana County Conservation Zone

2011-07-09T10:36:00.000-07:00

This Wednesday, the Indiana County Planning Commission is having a public meeting to take input regarding the updating of the regulations for gas drilling in the Conservation zones surrounding state and county parks in Indiana County. The Coalition for a Healthy County, an environmental group whose sole stated objective is to ban gas drilling in these conservation zones, effectively stealing the gas rights of hundreds of taxpaying Indiana County residents. The meeting will be this Wednesday at 7:00 at the courthouse annex adjacent to the Indiana Gazette. Those who oppose such a ban are asked to be in attendance to have their voice heard.

Sale Update

2011-07-05T04:29:00.000-07:00

Thanks to all those who returned their Amendments. We have received back the overwhelming majority of the documents, with a few stragglers left behind. We are currently processing those documents and should have a final tally by the end of the week. I know that a lot of people are on vacation this time of the year or otherwise pressed for time. If you have not got around to sending back your documents, this is no big deal. If you have not yet returned your documents, you can still do so but please date the document PRIOR to June 30th.

There are a few folks who we are working through some issues on who may not have received their documents yet. If you have NOT received your paperwork, please contact us soon so that we can make sure we get you taken care of.

Thanks

NY Times reports NY Gov. Cuomo to lift fracking ban (in part)

2011-07-01T06:43:00.000-07:00

For 4 years now, New York state has been waiting on a study to be completed on if and how fracking can be instituted safely and to the benefit of its residents. That study is due to be released today, and yesterday afternoon it leaked that Cuomo is indeed planning to lift the fracking ban. Congratulations to our friends north of the border who will now be able to reap the same wonderful economic and environmental benefits from increased natural gas production. Unfortunately, many areas of NY will still be off limits. My heart goes out to those landowners who have been left behind by their state. I certainly hope that those areas will eventually be open to drilling after a few years of safe drilling experiences and after the public hysteria dies down. If New York state says that drilling is safe, which it has, then there should be a minimal amount of restrictions. I fear that this may turn out to be a huge mess, but at this point I believe that NY landowners are willing to accept something, rather than the nothing they've been alloted these last 4 long years.

Spill Impact

2011-06-28T08:15:00.000-07:00

For those who may have missed this when we posted it back in May, a breakdown of what a potential spill would look like at our proposed well site in the vicinity of Yellow Creek Lake in Indiana County, PA:

Worst Case Scenario at Yellow Creek Lake Examined

A man much wiser than me once observed that people tend to fear that which they do not understand. Let's take a look at a worst case scenario that could arise from a drilling accident at our planned James Ray gas well.

For our example, let's assume an incident like what Chesapeake faced recently in Bradford since it's a recent and widely publicized case.

A flange on the wellhead breaks during fracking, and frackwater begins to douse the well site. Lets assume (and this is a big assumption) that our spill control plan is somehow overwhelmed, allowing 10,000 gallons of frackwater to escape the wellpad and run out onto the soil. For simplicity's sake, let's assume that all of the 10,000 gallons successfully travel the approximate 2,000+ feet distance between the pad and the shore, entering Yellow Creek Lake.

First, let's take a look at what all is in that 10,000 gallons of frack fluid:

Fracking fluid is 99.5% water and playground sand. The remaining half of a percent breaks down as follows: (typical chemical mix in fracking fluid, sourced from http://www.energyindepth.com)

Hydrochloric Acid: 0.123% (12.3 gallons) The largest chemical constituent. Very scary name, but very benign when diluted. Hydrochloric acid is the preferred additive to lower the pH in public swimming pools. Millions of gallons of Hydrochloric acid is poured, undiluted, into public swimming pools every year.

Petroleum Distillate: 0.088% (8.8 gallons) Petroleum distillates are found in every day products such as candy, laxatives, and make-up remover.

Isopropanol: 0.085% (8.5 Gallons) Another scary sounding name. But you might know it better by its other name... Rubbing Alcohol.

Potassium Chloride: 0.06% (6 gallons) Used as a low sodium table salt substitute, and used as an alternative to salt in water softener systems.

Guar Gum: 0.056% (5.6 Gallons) Most common use is in the food industry as a thickening agent. You'll find it in ice cream, salad dressings, toothpaste, and many other food items.

Ethylene Glycol: 0.043% (4.3 gallons) This is one of the not so nice chemicals in fracking. It is defined as moderately toxic. It's the primary constituent of automotive antifreeze.

Sodium Carbonate: 0.011% (1.1 gallon) Another staple in the swimming pool industry. It is often referred to as soda ash, and is the most common way to raise the pH in a swimming pool.

Sodium Chloride: 0.01% (1 gallon): Table salt.

Borate Salts: 0.007% (less than 3 quarts) Used as a food additive/preservative and as a pH buffer in swimming pools.

Citric Acid: 0.004% (less than 2 quarts) Lemon juice; food additive

N,n-dimethyl formamide 0.002% (about 32 fluid ounces) used as an industrial solvent, long term exposure to this chemical has been linked to cancer in some studies and is thought to cause birth defects, but is not listed as a known carcinogen by the EPA.

Glutaraldehyde 0.001% (about 16 fluid ounces) this chemical is used for surgical disinfection and as a biocide to kill algae while not harming surrounding aquatic life.

Now, to further put this into a perspective that is easy to wrap your head around, let's reduce these numbers to the equivalent of contamination were they to enter a standard 25,000 gallon swimming pool.

Yellow Creek lake is 720 acres. Assuming an average depth of 10 feet, that would put the volume at 2.35 Billion gallons. As such, the equivalent amounts in a swimming pool would be as follows:

Hydrochloric Acid:       1.09 drops
Petroleum Distillate:      2/3 drop
Isopropanol:                   2/3rd drop
Potassium Chloride:      1/2 drop
Guar Gum:                   1/2 drop
Ethylene Glycol:          1/3rd drop
Sodium Carbonate:    1/10th drop
Sodium Chloride:           1/10th drop
Borate Salts:                 1/16th drop
Citric Acid:                   1/25th drop
Dimethyl formamide     1/50th drop
Glutaraldehyde:             1/100th drop

This does not account for the fact that there is a large flow of water into the lake that would further dilute the contamination.   This does not account for the fact that most if not all of that 10,000 gallons would be soaked up in the topsoil, and most likely would not even reach Yellow Creek Lake at all. As you can see, the numbers we are talking about here would not present a "catastrophic" situation as has been haphazardly stated by the Central Indiana County Water Authority. There is serious doubt as to whether there would even be any impact at all. Would you drain your swimming pool and replace the water with fresh water if you knew 1/3 of a drop of anti-freeze were to fall into it? You would have to drink 100 swimming pools worth of water to ingest one drop of the most dangerous constituent in the fracturing mix.

In the history of Marcellus shale drilling, no such incidents have occurred with vertical Marcellus shale drilling (the kind that is being proposed near Yellow Creek), which uses much lower pressures and much smaller volumes of water.

A few good links to a few good articles:

2011-06-27T16:20:00.000-07:00

Wall Street Journal article from Sunday:

http://online.wsj.com/article/SB10001424052702303936704576398462932810874.html

AP article about Marcellus shale production blowing away initial expectations:

http://www.indianagazette.com/b_news/article_2c8864f2-531f-58e3-9a8a-8c542ba7d984.html

Another Great Task Force Meeting

2011-06-24T03:07:00.000-07:00

CNX's Operations in Westmoreland County

At today's Indiana County Natural Gas Task Force meeting, we got to hear from Craig Neal, Vice President of gas operations at CNX, CONSOL Energy's natural gas division. In his presentation, Mr. Neal showcased a project they have been developing in Westmoreland County. 500 feet from Beaver Run Reservoir, the drinking source for 150,000 people, CNX has safely and successfully completed multiple horizontal legs, and maintained a 10 million gallon impoundment without incident. Mr Neal did an excellent job showcasing CNX's (and the industry in general) committment to safety, and showes the behind the scenes best practices being employed that get little to no press. Such practices are very common in the industry, and they go far above and beyond the current state requirements.

Many thanks to Mr. Neal for his wonderful presentation, I very much look forward to working with him as well of the rest of the task force members in the coming months.

Thank you to the Indiana Gazette

2011-06-20T09:38:00.000-07:00

Thanks to the editors of the Indiana Gazette for publishing my op/ed piece regarding the potential impact of a well control issue at our proposed operations in the vicinity of Yellow Creek Lake. You can find the piece in Sunday's version of the Gazette or on their website at the following link:

http://www.indianagazette.com/a_opinions/article_793f60cc-f005-58dc-b654-b2e70aaae24a.html

Group Organizes in Indiana County Against Marcellus Drilling

2011-06-15T13:43:00.000-07:00

In yesterday's Gazette, there was an article announcing the formation of a new group, calling themselves the Coalition for a Healthy County. Their stated objective is an outright ban on gas well drilling in areas designated as "conservation zones" surrounding park lands in Indiana County. The conservation zones are county zoning ordinance areas which restrict certain activities within a certain distance from the park, such as quarries, landfills, junkyards, motels, bars, etc. The ordinances are very valuable in protecting the peace and serenity of the park.

The vast majority of the land in the zones is private owned. Much of it is developed for residential living and farmland. The zones, adopted in 1973 and amended in 1983 and 1994, specifically allow for oil and gas drilling as long as a 500 foot setback from park property was observed and special precautions were taken.

While we respect and appreciate the group's concern for the sanctity of Indiana County's parks (a concern we share as both outdoorsmen and former Indiana county residents who grew up at Yellow Creek and Blue Spruce), we strongly disagree with the group's viewpoint that gas well drilling is excessively detrimental to the park, especially so much so that the property rights of Indiana County taxpayers (15,500 acres, or 24 square miles worth) be subverted by an outright ban on the practice. In some areas, the conservation zones extend over 2 miles from the park itself as the zones are based on drainage basins.

We believe that in many situations drilling within the conservation zone may require additional steps to ensure that the park is not encroached upon during the short amount of time drilling operations are being conducted to drill a well. We fully support making sure the correct measures are put into place and vigorously enforced. However, people who own land within the zone have rights too and they should be respected. People bought land inside the conservation zone with the understanding that their gas rights were worth something. To hear there are folks that advocate stripping their fellow Indiana County residents of their very valuable gas rights before even investigating or discussing what steps could be taken to strike a balance between the two is disappointing.

We hope that the Coalition will rethink its mission statement. They have stated that they believe Marcellus drilling to be a safe enough activity to be conducted in other areas of the county. We wholeheartedly agree. With some special considerations, it can be done safely and with minimal disturbance in conservation zones as well. I look forward to working with the leadership of their organization via the Indiana County Natural Gas Task Force on which we both serve, and also extend an invitation to the Coalition to work together on this specific issue separately. If we work together, we CAN have the best of both worlds.

Fox News Picks Up on Josh Fox's Desperate Attempt to Censor Critics

2011-06-14T15:19:00.000-07:00

Fox News interviewed Filmmaker Phelim Mcalee, the wonderful journalist who confronted Josh Fox about his lies and was subsequently censored by Josh Fox's lawyers. I highly suggest checking it out. Even though the flaming faucet is just one of the many mistruths and blatant lies in Mr. Fox's movie, it's obviously the most visible and by far the most powerful image in the film. This interview puts that image into the proper perspective. Click the link below:

http://video.foxbusiness.com/v/990401126001/gasland-director-accused-of-censorship

New Poll Shows PA Residents OVERWHELMINGLY Support Marcellus Drilling 2 to 1

2011-06-14T12:56:00.000-07:00

If you pick up a newspaper, follow the evening news, or peruse the internet with regularity, you might believe that the majority of Pennsylvanians are opposed to Marcellus shale development. You'd be wrong.

A new Quinnipiac poll shows that Pennsylvanians overwhelmingly believe the economic benefits of natural gas drilling in the Marcellus Shale outweigh the possible environmental impacts. This trend is strong across Democrats and Republicans, men and women, in every region in the state. It is not at all surprising to those of us who are out and about talking to landowners every day, especially in areas that have experienced first hand with natural gas production. Hopefully this poll will resonate both in Harrisburg and in Washington.

Here are some of the numbers broken down:

Total:
Drilling: 63%
Against: 30%

Republicans:
Drilling: 77%
Against: 18%

Democrats:
Drilling: 52%
Against: 38%

Independents:
Drilling: 62%
Against: 35%

Men:
Drilling: 68%
Against: 27%

Women:

Drilling: 58%
Against: 34%

Pennsylvanians realize that the risks associated with Marcellus drilling are minimal and realize the massive benefits to both the economy and the environment. Finally, we have the official numbers to show that.

-Mike

Phillips sells to Exxon-Mobile/XTO for $1.69 Billion

2011-06-09T08:16:00.000-07:00

NEW YORK/HOUSTON (Reuters) - Exxon Mobil Corp (XOM.N: Quote, Profile, Research, Stock Buzz) said it bought privately held natural gas company Phillips Resources and related company TWP Inc for $1.69 billion last week, picking up about 317,000 acres for exploration in the Marcellus shale basin.
The action highlights the importance Exxon is placing on natural gas assets after spending about $30 billion last year to buy natural gas company XTO Energy, adding one of the leading developers of shale gas and a resource base of 45 trillion cubic feet of gas equivalent.
Exxon has shelled out billions to build up its exposure to so-called "unconventional resources", formations like oil and gas shales that require more advanced technology for extraction.
"We believe that the mergers will create significant value by leveraging regional synergies in upstream operations and acreage holdings between XTO Energy Inc and the Phillips Companies," said Alan Jeffers, an Exxon spokesman.
Exxon, already the largest producer of natural gas in the United States, said the two companies had proved reserves of 228 billion cubic feet equivalent of natural gas. The Phillips companies produce about 50 million net cubic feet per day of natural gas.
At a shareholders meeting last month, Exxon's Chief Executive Rex Tillerson said his company was "positioned to double our US unconventional production over the next decade with an inventory of approximately 50,000 drillable well locations."
Exxon has said it is taking a long-term view of natural gas markets, betting that power generation in developing countries like China and India will cause demand for the cleaner-burning fuel to surge in coming years.
Natural gas prices have been burdened by heavy supplies and have not closed above $5 per million British thermal units in New York trading in nearly a year, while crude oil has soared above $100 per barrel.
Last year, Exxon paid around $700 million to buy Ellora Energy, picking up that company's position in the Haynesville shale in Louisiana and Texas.
Exxon's XTO unit will manage the assets. The company said its goal was to retain the companies' employees.
(Additional reporting by Matt Daily; Editing by Robert MacMillan and Tim Dobbyn)

Gasland Director Josh Fox Censors Video Posted Days Ago on This Blog

2011-06-07T13:14:00.000-07:00

A couple of days ago I wrote about how the despicable spinster Josh Fox, when put on the spot by a reporter wary of his grandiose claims, accidentally admitted (on camera) to omitting facts and misrepresenting the situation regarding methane is water wells. I posted a video of Mr. Fox tripping over himself, trying to come up with a lie. Interestingly enough, soon after the video was posted to Youtube Josh Fox's attorneys sprung into action, censoring the video by falsely claiming copyright infringement because the part of his documentary where he was lying was shown. However, this use of his documentary falls under the "fair use" statute, which obviously allows the use of a clip in such a nes story. After Youtube took it down, it was posted to Vimeo, a rival site where WITHIN HOURS Fox's attorneys had it removed. Mr. Fox wants to take away your gas rights, plain and simple. Read more on Andrew Brietbart's BIG GOVERNMENT, who is covering this massive hypocrisy.

http://bit.ly/kpAvzl

-Mike

Lease sale documents going out today and tomorrow

2011-06-06T10:03:00.000-07:00

To all those involved in the leasehold sale, please be advised that we recently completed the amendment documents and they will be going out in the mail today and tomorrow. If you have any questions please feel free to call. With well over 400 documents going out, we are expecting a very high call volume so we if we can't talk to you immediately when you call in we will be making every effort to get back to you ASAP.

If you have a question and would be willing to shoot it off in an e-mail rather than a phone call it would be very much appreciated. E-mails can go to info@knappAP.com

The document will accomplish two things:

Remove the June 30th deadline to have a signed buyer in place. Due to the extremely long time it took us to get through the due diligence stage, we were delayed in offering the package to inspection by potential bidders by about 4 months. The package has been out being reviewed for about 6 weeks now and we are expecting bids to be forthcoming soon. You will note that the much more important deadline of December 31st has not changed. That is the deadline to have the deal closed and your check to you.

Modify the depth restriction: In most of the sale leases we signed, the Marcellus shale was the only formation included. We have been advised that there could be a significant increase in value by including the Utica shale rights. As such, we have added language that would include both the Marcellus and the Utica. In some areas, it could be your only shot at getting anything out of the Utica as many places may be too deep to drill or the formation may be "overcooked" and not worth drilling. In other areas, the Marcellus is too shallow and underpressured (mostly towards the extreme western part of the state) to be drilled, but in those areas the Utica looks very promising. It is totally up to you as to whether or not you want to include your Utica rights. If you want to keep it to just the Marcellus, feel free to cross out that paragraph with pen and put you initials.

Thank you for patience. The light at the end of the tunnel is growing ever brighter.

-Mike

Another Misinformed Letter to the Editor of the Indiana Gazette

2011-06-02T16:55:00.000-07:00

In today's paper, Lee Schweitzer, a local landowner who owns property directly adjacent to the property we are drilling near Yellow Creek State Park but is not benefiting financially, had this to say:

Now is the time to work together to uphold Article 27 of the Pennsylvania Constitution, which states: "The people have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment.
Pennsylvania's public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people."

The Indiana County commissioners, landowners and all county residents have the unique opportunity to care for and preserve our precious state and county parks, including the surrounding conservation zones -- to pass them on unscathed to our children and children's children who need, deserve and are entitled to them. Note that less than 3 percent of Indiana County land is in parks and conservation zones.
At the very least, we should be willing to set aside our conservation zones as we work to create healthy decisions about choosing appropriate locations for Marcellus shale gas drilling.

All types of mining create pollution. Gas from Marcellus shale mining leaves a bigger carbon footprint than conventional gas mining. Cornell professor Robert Howarth reports that emissions from shale gas development are much higher than from conventional drilling and likely to aggravate global warming.
Turns out that drilling shale gas wells puts anywhere from 30 percent to twice as much carbon into the atmosphere as conventional gas wells. The research was published in April in the peer-reviewed journal "Climatic Change Letters."
Let's come together to protect our conservation zones. Let's uphold our state constitution and reaffirm that our state and county parks are indeed the "common property of all the people."

Mr. Schweitzer is correct that the people have a right to clean air and pure water. Unfortunately, he's erroneously turned a friend into a foe. Shale gas production is going to be one of the largest environmental improvements this nation has ever seen. The Cornell study he quotes above is total hogwash and has NO bearing on his argument. John Hanger, the democrat environmentalist former head of the PA Department of Environmental Protection called the study "fabulously publicized and fabulously false". The carbon emissions the Cornell study grossly overstates is METHANE. The same exact methane produced in great quantity by cows, and to a lesser extent by humans as a byproduct of digestion. It's not good for global warming, it's embarrassing at the dinner table or in front of the in-laws, but it's not at all toxic and not harmful to humans. A similar study conducted by the US Department of Energy found the carbon footprint of shale gas to be much much less than the Cornell study.

However, this is all a moot point as it pertains to the question at hand, which is whether or not Conservation Zones are suitable for drilling. Conservation Zones are NOT STATE PARKS. Mr. Schweitzer is vastly misrepresenting the intent of the zoning laws. They aren't homeowners association restrictions. They are not meant to dissuade development. There is no "sanctity" to be maintained. You can build houses, log, clear the land and farm, mine for coal, drill gas wells, etc. You can do just about anything that you would be able to do anywhere else in the county on your private property. The idea behind it is so that someone doesn't build a dirt bike track, a sawmill, an air-horn testing lab, or some other activity that actually would ruin the sanctity of the park. A gas well sitting silently up against the treeline, a 1/6th of a mile from the park boundary in no way, shape, or form is intrusive to the sanctity of the park, and as such is not in conflict with the purpose of the conservation zone.

Completed Marcellus Shale Natural Gas Well

Wellhead emissions are low to non existent, so any operations inside the Conservation Zone would not have an impact on the air quality in and around the park. DEP has conducted multiple tests of air quality in areas surrounding large concentrations of drilling, and have found no issues. We've already agreed to move the compressor station outside of the conservation zone. Barring a catastrophic incident, there will be no water pollution encountered. Besides a faint whistle you can hear right next to the well, there will be no noise over the 50 year lifespan of the well but for the few days of drilling. After that, there will be ZERO impact on the park. Nothing. Nada. Zilch. Zero. Can't see it, can't hear it, can't smell it. It will be a few pieces of pipe, innocuously sticking up a few feet out of the ground. Can you imagine something that produces LESS of an impact?

The Conservation Zone is in place to protect the park, not to inhibit any other rights of the landowners in the zone. The extra restrictions the laws provide for work. The zoning board hearing process worked. The board reviewed the proposal, parties voiced their concerns. The board denied the permit and enacted additional necessary conditions pursuant to the unique situation presented to them. The system worked! The people who purchased those properties did so under the guise that their oil and gas rights were worth something, as the county specifically ruled on the issue and declared that gas well drilling is a special permitted exception inside the zone. There would have to be an exceptionally compelling reason to strip property owners of their very valuable natural gas rights. This, in my humble estimation, ain't it.

-Mike

Gasland Director Josh Fox Admits to Omitting Facts

2011-06-01T10:44:00.000-07:00

In a less than stunning turn of events, Josh Fox, director of the slanderous pile of garbage "Gasland", admitted to holding back extremely pertinent facts from his "documentary", which greatly distorted and skewed the situation presented to its viewers.

In question is the most powerful and discussed image in the movie, the gentleman in Colorado lighting his tap water on fire. Josh Fox would have you believe that natural gas drilling in the area caused the methane in the water, however there were reports dating back as far as the 1970's that there was a "troublesome amount of methane in the water" in that area. In the documentary, it even shows what happens when one of the families tries to drill a water well: it contained so much methane that it blew out uncontrollably and had to be plugged. The Colorado agency in charge of regulating the gas industry tested the methane, and determined it to be "biogenic" methane, which means that it was naturally occurring and had nothing to do with gas drilling. When faced with this information in a public forum, Mr. Fox tries to disclaim the study by saying: "so what, we've been able to light water on fire in NY since the 1930's", thus admitting that the notion portrayed in his movie (that gas drilling is the main if not only reason people can light their water on fire) is absolutely false. This is journalistic bottom feeding at its worst. Mr. Fox, fully aware that natural gas drilling is overwhelmingly safe and, to be quite honest, BORING, would not make for a very interesting documentary. But you sensationalize a few facts here, invent a few there, lie lie lie..... add some scary music and a monotone voiceover and you've got yourself quite the indoctrination machine, and quite the self-promotional machine. Listen and watch for yourself when Fox is questioned by someone who hasn't drank the Kool-Aid.

New study shows Marcellus shale creates 48,000 jobs last year, 3 of 4 go to Pennsylvanians

2011-05-31T09:42:00.000-07:00

Nearly 48,000 people have been hired in the last year by industries related to drilling in the Marcellus Shale, and 71 percent of those people were Pennsylvania residents. Nine thousand of them were hired in the first three months of 2011.

The average salary was higher than the statewide average.

And the rate of hiring is accelerating.

Read more here: http://www.pennlive.com/midstate/index.ssf/2011/05/marcellus_shale_drilling_creat.html

Inaugural Indiana County Natural Gas Task Force Meeting Very Encouraging

2011-05-27T08:21:00.000-07:00

Yesterday afternoon the task force met for the first time and received encouraging words from Lt. Governor Jim Cawley, Senator Don White, Representative Dave Reed, Indiana County Commissioners Rod Ruddock, David Frick, and Patty Evanko. Mr. Cawley was very outspoken about the need to disseminate conjecture from fact and stated that the task force must look past the media headlines. It was a pleasure to hear him speak so eloquently about the potential benefits of natural gas drilling, while cautioning that the process must be conducted safely to ensure environmental quality. It's so very refreshing to see that the highest level officers in the Corbett administration are well versed on the actual in's and out's of our operations.

Looking forward to being a part of the Indiana County Natural Gas Task Force

2011-05-26T08:47:00.000-07:00

Earlier this year, the Indiana County Commissioners instructed that an advisory panel be put into place to help advise the Commissioners and help to shape policy regarding the development of the Marcellus shale in Indiana County. I am proud to count myself as a member of this task force and look forward to working with the many other constituencies represented on the diverse panel to make sure that the Marcellus is developed in a safe, responsible, and efficient manner to benefit all Indiana County residents. The first meeting will be this afternoon at the Kovalchick Center in Indiana, with Lieutenant Governor Jim Cawley to be in attendance to help the panel get off of the right foot. Lt. Gov. Cawley is the chair of a similar state level advisory commission. I'll be live-tweeting if possible and will post a full recap of the meeting on this blog.

-Mike Knapp

Federal & State Environmental Heads Defend Natural Gas Drilling

2011-05-25T14:14:00.000-07:00

Unites States EPA Head Lisa Jackson

EPA Chief Favors Clean Burning Domestic Natural Gas

WASHINGTON — The head of the Environmental Protection Agency told a House committee Tuesday that she favored natural gas production and said she didn't know of any “proven case” in which hydraulic fracturing had affected drinking water.

Lisa Jackson, the EPA administrator, also told Rep. James Lankford that natural gas companies should be well aware of the study being done by the agency on hydraulic fracturing because their input has been solicited.
Jackson testified before the House Oversight and Government Reform Committee, which released separate reports on energy this week.

The Republican majority report accused the Obama administration of trying to raise energy prices by stifling domestic oil and gas production and pursuing climate change policies, while Democrats said excessive speculation in the oil futures market was behind recent spikes in oil prices.
The reports, and the committee hearing, extended the partisan debate that has been ongoing in Washington since gasoline prices started rising weeks ago.

Jackson sought to counter Republican charges that the EPA wanted to slow natural gas production by seeking to regulate hydraulic fracturing, or fracking. The process, in use for decades, involves injecting chemicals, water and sand into a well to fracture rock and release gas.
Jackson said natural gas creates less air pollution than other fossil fuels “so increasing America's natural gas production is a good thing.”

Under questioning from a Pennsylvania Republican, Jackson said she was “not aware of any proven case where the fracking process itself” had affected water.

Former PA DEP Secretary John Hanger

Former Pennsylvania Department of Environmental Protection Secretary Speaks Out:

HARRISBURG - In comments posted today on his blog, Former Secretary of the state's top environmental agency and prominent environmentalist John Hanger highlights recent studies that prove natural gas extraction to be overwhelmingly safe, not the huge threat to water quality that some environmental radicals claim, and a huge benefit to the environment because of it's clean burning qualities:

"eleven drinking water companies and providers have tested their drinking water for radionuclides and other contaminants and all eleven found no radionuclide pollution or other contamination from drilling or any other pollution source, according to statements made by DEP to the press."

"Pennsylvania American Water Company did an exhaustive battery of testing at 5 of its drinking water plants in the Pittsburgh region and the results were that the water is safe and meets all health standards. "

" If the water were not safe, the failure to test adequately or the failure to disclose such information immediately to the public could put in jail those responsible for not disclosing."

"Apart from drinking water companies, DEP itself in November 2010 did in stream testing for radionuclides in 7 counties and the results were negative or safe."

"No private water well or aquifer has been contaminated with frack fluids that have returned from depth to pollute ground water. The Duke University testing of 60 water wells where methane in some cases was present confirmed that no chemicals or frack fluids were in the private water wells. The Duke testing reached the same results as testing by the Department of Environmental Protection had reached."

You can follow Mr. Hanger's blog (and I highly suggest that you do) at http://johnhanger.blogspot.com

As always, thanks for reading!

-Mike Knapp
President
Knapp Acquisitions & Production

Lease Portfolio Sale Update

2011-05-24T07:42:00.000-07:00

To all those who signed leases with us to have their properties included in the multi-company leasehold sale we are a part of: Due to the much longer time to prepare the package for bidding, we are asking our Lessors to absolve us of the June 30th restriction to have a signed buyer in place. This will have no impact on when you will ultimately receive your payment, as the December 31st deadline for a deal to be closed and you to receive your check will remain in place. We have been receiving VERY positive feedback from those companies reviewing the package (as we suspected), and there is a good chance that we will have an agreement in place by June 30th, but logistically we cannot wait until the last minute to get extensions if we will need them. As such, we will be sending out an "amendment to addendum" along with an official update to all Lessors later this week or early next week. The amendment adds additional clarification to third party fee allocation, and changes the depth restriction to include the Utica shale. Last year Utica development looked a long way off, but we now believe it will add substantial value to prospective buyers increasing the per acre payout. We are expecting a large volume of calls when these 400+ documents go out, so if you have questions we please ask you to send an e-mail to info@knappAP.com if possible, if not feel free to call but if we don't get back to you immediately we haven't forgot about you we're just backed up.

Thanks so much for your patience. The light at the end of is in sight. Hang in there!

-Mike

PA DEP Releases Marcellus Shale Impact on Air Quality

2011-05-20T06:04:00.000-07:00

DEP Report: Marcellus Operations in Northcentral Region Show No Impact on Short-Term Air Quality

No Emission Levels Found that Constitute Public Health Concern

An air quality study near Marcellus Shale natural gas operations in Bradford, Lycoming, Sullivan and Tioga counties found no emission levels that would pose a public health concern, according to a report released today by the Department of Environmental Protection.

“The results show there are no emission levels that would be of concern to the health of residents living and working near these operations,” DEP Secretary Mike Krancer said. “They are consistent with the results of our air monitoring in southwest and northeast Pennsylvania, the other two areas of the state with the most Marcellus drilling.”

The report notes that the sampling effort, conducted between August and December 2010, was not meant to address potential cumulative impacts.

DEP’s assessment focused on concentrations of volatile organic compounds, including benzene, toluene and xylene, which are typically found in petroleum products. The department also sampled for other pollutants, such as carbon monoxide and nitrogen dioxide, near natural gas extraction and processing sites.

DEP first conducted background sampling in early August 2010 at the Sones Pond parking lot in Loyalsock State Forest, Sullivan County.

The air quality sampling was conducted the weeks of Aug. 30, Nov. 15 and Dec. 6. An evening sampling event was held Nov. 17. DEP used its mobile laboratories and the equipment was set up downwind of the target sources during early morning and late evening hours.

“This study provides us with additional valuable information as part of our ongoing effort to determine the impact of these operations on air quality, public health and the environment,” Krancer said.

The air monitoring surveys were located next to Talisman Energy’s Thomas Compressor Station in Troy Township, Bradford County; East Energy’s Shaw Compressor Station in Mainesburg Township, Tioga County; East Energy’s Chicken Hawk well south of Mainesburg; and Anadarko Petroleum’s Hagemeyer well in Gamble Township, Lycoming County.

Those surveys detected the main constituents of natural gas—including methane, ethane, propane and butane—as well as low levels of other compounds, such as MtBE, carbon monoxide and methyl mercaptan, the odor-producing compound.

DEP’s sampling did not find concentrations of any compound that is likely to trigger air-related health issues associated with Marcellus Shale drilling activities in the northcentral region.

Results from DEP’s previous air monitoring studies near Marcellus facilities in southwest and northeast Pennsylvania were announced in November 2010 and January 2011, respectively.

To view the report, log onto www.depweb.state.pa.us and click “Regional Resources,” then Northcentral Region and choose the “Community Information” link on the right side of the page.

For more information, visit www.depweb.state.pa.us or call 570-327-3659.

Big Trash Goes Green

2011-05-19T09:27:00.000-07:00

Waste Management Converting Entire Fleet To Run On Natural Gas

Waste Management is the latest large corporation to realize the huge benefits to using natural gas as a transportation fuel instead of diesel.

The company already has 1,000 of its fleet of 32,000 trash-hauling trucks on natural gas. But now it’s embarking on an unprecedented 10-year, $5-billion plan to convert its remaining vehicles. This year, 80 percent of Waste Management’s truck purchases are natural gas-fueled vehicles.

The company estimates that it’ll save $350 million on fuel annually. Lower maintenance costs will result in additional savings. It will also save huge amounts of dirty diesel exhaust from entering the atmosphere, and will help to reduce our dependence on foreign oil.

BIG NEWS: Long-Awaited Study Shows Western PA Waterways Not Contaminated by Gas Well Drilling Wastewater

2011-05-17T14:55:00.000-07:00

Following a full battery of tests at Pennsylvania American Water’s raw water intakes along the Allegheny, Clarion and Monongahela Rivers and Two Lick Creek, in Indiana, PA, the company found no elevated or harmful levels of radiological contaminants, volatile organic compounds (VOCs) or inorganic compounds (IOCs). The results confirmed that the quality of the water supplied by Pennsylvania American Water's treatment plants has not been impacted by radioactive materials, VOCs or IOCs from Marcellus Shale drilling wastewater.

Analysis of the water at all sites tested determined that no detectable levels of the following radiological contaminants were found: Gross Alpha Radiation, Gross Beta Radiation, Radium-226, Radium-228, Strontium-90 and Tritium.

The results also revealed no detectable levels of the following VOCs: Benzene; Carbon Tetrachloride; Chlorobenzene (mono); cis-1,2-Dichloroethylene; 1,2-Dichloroethane; 1,2-Dichlorobenzene (Ortho); 1,4-Dichlorobenzene(Para); 1,2-Dichloroethane; 1,1-Dichloroethylene; 1,2-Dichloropropane; Ethylbenzene; Dichloromethane; Styrene; Tetrachloroethylene; Toluene; trans-1,2-Dichloroethylene; 1,2,4-Trichlorobenzene; 1,1,1-Trichloroethane; 1,1,2-Trichloroethane; Trichloroethylene (TCE); Vinyl Chloride and Xylenes (total).

The test results showed levels well within compliance standards for 32 IOCs, including chromium, mercury, arsenic, barium, copper, lead, cyanide and boron, uranium and cadmium. In addition Pennsylvania American Water, at the request of the Pennsylvania Department of Environmental Protection (DEP), sampled our finished drinking water at three sites (Pittsburgh Aldrich, Pittsburgh Hays Mine and Clarion) in late March 2011, for total alkalinity, bromide, chloride, pH, total dissolved solids, uranium, gross alpha radiation, radium 226, and radium 228. All of the data received show that all results are within all acceptable water quality standards set by the US Environmental Protection Agency and the PA DEP.

The company performed the additional testing over and above its routine sampling and monitoring for more than 90 contaminants to ensure compliance with all water quality standards.

Worst Case Scenario at Yellow Creek Lake Examined

2011-05-14T19:21:00.000-07:00

Central Indiana County Water Authority Calling for a Moratorium on Gas Drilling?

2011-05-14T12:22:00.000-07:00

When I read the Indiana Gazette on Thursday, I was shocked to see that the Central Indiana County Water Authority was lobbying the Indiana County Commissioners to place a moratorium on Marcellus Shale drilling in the county. One can only assume this is an attempt to block our plans to drill on our leaseholds in and around the Yellow Creek Conservation Zone. While I can certainly understand and respect that the Authority has an obligation to protect the health and well being of its customers, I am curious as to what they are basing such a radical request on. We are in the process of compiling a list of all of the "frack water" constituents that we would be using, but we have not yet presented that to the Zoning Board or the Water Authority. Nor have we presented them our upgraded contingency plans to ensure no such contamination occurs.

I have personally been in contact with the Authority, who assured me several weeks ago that they were in no way against Marcellus shale drilling, going so far as to mention that the Authority has been selling water to gas companies for use in fracking activities in the county. Has the authority ended this practice in light of their new public stance?

Furthermore, I believe the Authority is lobbying the wrong people. I would have to agree with Commissioner Rod Ruddock who said "counties like Indiana are not equipped to do that sort of work." The DEP is the state regulatory body that is charged with overseeing natural gas drilling. They are 100% in tune with the process and the dangers involved. They are staffed with experts on gas drilling and the possible environmental impacts that come with it. DEP is in no way opposed to our plans. Having fully investigated the situation, they deemed our proposed operations as safe, and subsequently granted MDS Energy the permit to drill.

I am very disappointed in the Authority for rushing to judgment and issuing incendiary public statements with incomplete information at best. Irregardless of this, we look forward to working as closely as possible with the Authority to assuage their fears about our operations and provide them with all of the information they need, thus continuing our long running policy of transparency and public engagement.

More people coming out of the woodwork to dispute Cornell air quality study

2011-05-12T11:08:00.000-07:00

A Scottish energy research firm Wood Mackenzie (http://www.woodmacresearch.com/) is just the most recent expert to confirm the massive, massive flaws in the Cornell University "study" of natural gas drilling and its effect on global warming.

According to Wood Mackenzie's review of the study, Cornell grossly overshot several key assumptions in their study. Their estimations for the amount of gas released during the flowback stage of the well drilling process (during the fracking process) were 60-65% TOO HIGH, and 90% too high during completion (the post-fracking flaring stage). They assumed that NO wells were flared, but all were vented. This is far from the case. Most wells are flared as venting the gas into the atmosphere can be dangerous. Raw gas in the atmosphere is very bad for global warming, but when it's burned it creates minimal emissions when compared with most other fuels. Cornell (which, ironically enough just made a huge deal about changing their on-site power plant to run on clean natural gas) should take a serious look at the gentlemen behind this study and their motivations. There is no place in this very fragile public debate for politically motivated "studies" that are no more than anti-gas drilling propaganda from avowed anti-gas drilling activists. Cornell should be very embarrassed for having their name attached to this garbage.

Flew out to Harrisburg this morning to meet with DCNR

2011-05-11T13:07:00.000-07:00

Spring, doing its thing this morning in the beautiful Appalachians

Myself and the President of MDS Energy Michael Snyder flew out to Harrisburg this morning to meet with a consortium of DCNR officials regarding our drilling operations in the vicinity of Yellow Creek State Park. What a beautiful day for a helicopter ride! Thanks to Smitty for getting us there in one piece. The folks at DCNR could not have been nicer. We are very much looking forward to working with them to not only minimize our environmental impact to the park, but to possibly IMPROVE the park with our operations. More to come on that as things progress. Also got to bump into Ray Walker, Vice President of Range Resources. As always, it was a pleasure. Great to see the Commonwealth and industry working hard, hand in hand, to make sure this resource is developed safely for the benefit of all Pennsylvania residents.

Duke Univ. Study Says Gas Wells Cause Methane Migration: Let's take a look...

2011-05-10T13:50:00.000-07:00

Insufficent cement behind the well bore allows gas migration

Today a study released by Duke University is being widely circulated claiming that natural gas drilling can cause methane to travel into private water wells. In other news: the sky is blue, water is wet, and people would rather pay less in taxes. Any activity that pierces both an aquifer and a gas bearing formation CAN cause methane to migrate.   Water wells, gas wells, geothermal bores, coal and limestone mine vent shafts, etc. can all cause methane migration.   This phenomenon is as old as water well drilling itself. If the wellbore is not properly cased and cemented, methane can travel upwards BEHIND the pipe, and into groundwater.    If the cement pumped down the wellbore to come up behind the casing pipe does not go high enough, it can leave formations exposed to the wellbore. Click the picture for a larger view to see both how methane migration works, and why I will never be employed as an artist.

There are many places where the Duke study has gaping holes in its credibility and objectivity. Allow me to point out a few:

The place they went to test for methane is Dimock, PA. This is curious, as Dimock is the location of several very well documented methane migration cases regarding gas drilling, where the DEP has investigated, found fault, and taken action against a gas company for improperly constructing wells, allowing a large amount of methane migration.   This is the equivalent of testing the area around the Fukushima nuclear reactor in Japan to see if nuclear reactors in general leak radiation. Of all the places in the Marcellus they could have tested, they picked the methane migration "ground zero". And this is the ONLY place in the Marcellus they decided to check. Curious.

Next up, sample size. 66 wells? There is no way that any sort of definitive conclusion can be gained from looking at such a small number of wells. There were no baseline tests done to see what the wells looked like BEFORE drilling. Out of the 66 wells sampled, the Duke researches found high concentrations of methane (albeit less frequently) in areas where the was NO gas drilling whatsoever. When the DEP was investigating the company that drilled the bad wells in Dimock, that company was able to obtain a number of sworn affadavits from residents and water well drillers who operated in the area. They said that methane in water wells was very prevalent in and around Dimock. Much of this gas they are attributing to gas drilling operations is actually attributable to naturally occurring conditions.

However, while it seems that the Duke researchers were hoping to come to a much more dramatic conclusion, they may have accidentally helped prove the gas industry safe on the most serious accusation being hurled in its direction, which is the contamination of water aquifers with fracking fluids. There was ZERO evidence of groundwater contamination by fracking fluids. According to the AP story the Indiana Gazette ran on the front page today, this result was "unexpected". Maybe to them, but certainly not to anyone in the gas industry. There is not a single documented case of this ever having happened. Why would these researchers assume that there would be such contamination? This is more telling evidence as to prejudice existing among those who conducted this study.

Last but not least, it is most certainly worth noting that methane is not toxic when consumed by humans. It is not regulated or restricted. Your body actually MAKES (and sometimes expels at the most embarrassing times) methane. A recent Penn State study found over 77% of water wells in West Virginia contain methane. As long as it is not in a high enough concentration for it to become flammable (which happens, but is rare), governmental bodies do not even advise anyone to take any action. If the concentration is high, they recommend an aerator and an inspection to make sure the well is properly vented so as not to create conditions for a possible explosion. Far from any sort of doomsday public health risk some are trying to spin.

It comes down to this. If the wells are constructed right, there will be no methane migration or frackwater contamination. The new PA DEP regulations instituted earlier this year specifically address this, and now PA has the strictest regulations in the country for well construction. This study is finding outdated symptoms from a disease that has since been cured.

Small acreage? Bigger companies not always better

2011-05-09T10:56:00.000-07:00

If you are have a smaller parcel of gas rights, let's say 75 acres or below, there may be a very large benefit to finding a smaller, local producer drilling vertical Marcellus shale wells rather than signing with a large company where you will be included (possibly) into a larger drilling unit. There are a few companies (ourselves included) who can offer a much better deal. If you are unitized into a big horizontal unit (which can easily exceed 1,200 acres), you only get a portion of the royalty from the well drilled and your portion is calculated based on the amount of land you have. If you have 20 acres and are in a 1,000 acre unit, this means you'll only get 2% of the 12.5% royalty (or whatever the negotiated royalty percentage is).

So if that well is paying out a $40,000 per month royalty, you would only receive $800 per month. Compare that to the vertical wells we drill, which can deliver over $5,000 per month as the royalty and enough free gas to heat your home. We can also offer much shorter terms than the 10 year terms most companies are offering right now, so you won't have to wait the better part of a decade to benefit from your royalty income.

Statement Regarding Our Yellow Creek Conservation Zone Drilling Operations

2011-05-06T08:22:00.000-07:00

On monday evening, the Indiana County Zoning Board rendered its decision regarding MDS Energy's proposed gas well inside the Yellow Creek Conservation Zone in Brush Valley and Cherryhill Townships. While the board denied the application, it stated unequivocally that Marcellus Shale drilling is a permitted activity within the zone if special precautions were taken to protect the environment and the sanctity of the park. The board encouraged MDS to address their concerns and resubmit the proposal for their review.

The full text of the Zoning Board's decision can be viewed HERE.

MDS Energy President Michael Snyder released the following statement regarding the board's decision:

I would like to take the opportunity to thank the Indiana County Zoning Board for their detailed review of our proposed plans to drill a gas well on the James Ray property in the Yellow Creek Conservation Zone. We respect and appreciate the guidance the board has given us, and we intend to meet or exceed the additional expectations requested. We wholeheartedly acknowledge that special attention should be paid to sensitive areas such as the Conservation Zone, and that in some situations additional precautions must be employed. MDS Energy is committed to the safe and responsible development of natural gas in Indiana County. We see this decision not as an impediment, but as a valuable opportunity to show publically that we are more than willing to work with local governments and residents to minimize our impacts on both the environment and the properties of those who find themselves in close proximity to our operations. We hope that over time we can prove to Indiana County residents that we are worthy of being entrusted with their most valuable resources: Land, air and water. I myself am an avid outdoorsman, as are most of the employees in the MDS Energy family, many of whom call Indiana County home. The Marcellus shale is a godsend in so many ways, but we cannot sacrifice the integrity of our environment in the name of progress. With the incorporation of constantly improving safety technology and proficient regulatory oversight, we strongly believe that the industry as a whole can safely develop this clean burning domestic fuel to the benefit of all residents of the Commonwealth, helping to return Western Pennsylvania to the bustling hub of economic activity it once was.

Michael D. Snyder

President

MDS Energy Ltd.

Kittanning, PA

For all those worried that we might have missed the boat...

2011-05-04T16:21:00.000-07:00

Sure doesn't look like it. As I suspected, the majors are still hungry for large, long term acreage positions in the Marcellus. Chevron announced today that they are acquiring 228,000 net leasehold acres in a deal with Chief O&G, which will be its second billion dollar deal in the Marcellus in the last six months. The acreage is reported to be in Southwestern Pennsylvania, possibly very close to home. Chevron was a little bit late to the game, but they've been making up for it. By my count, they should be at about 750,000 acres now. That's a pretty good chunk, but probably no more than half of what they would like to have in their coffers. No details have been released about where the acreage is or what the per acre numbers are, but it will be VERY interesting to see what they are when they come out. Stay tuned.

Lest we forget on this historic day...

2011-05-02T09:02:00.000-07:00

God Bless America and those brave souls who walked (on our behalf) into the lion's den and walked out safely with their trophy in hand. They are true heroes, and should be celebrated as such. This is truly a great day in American history.

However, I think this is also an appropriate time to reflect on what got us into this mess in the first place: America's dependence on foreign oil. Osama Bin Laden, Al Quaeda, and like-minded individuals in the middle east do NOT hate us for our freedom. They hate us because our decades long policy of intervention in the middle east. They hate us because the bombs that their US-supported dictators drop on them are emblazoned with the American flag. The specific reason that Osama Bin Laden struck against America? Our military bases in Saudi Arabia. His words, not mine. Military bases that would not be there if it were not for America's crippling addiction to mid-east oil.

American can break this addiction by developing its own natural gas resources. The air, the water, the economy, and our society as we know it will all be cleaner and safer because of it.

Underground storage tanks much larger threat to water aquifers

2011-04-30T12:58:00.000-07:00

25% of "urban" water wells in PA test positive for MTBE

As the media, politicians, and the public focus on the safety of Marcellus shale drilling, particularly on the industry's ability to operate without impacting water quality, a much scarier threat continues to loom under our feet and in our faucets. Leaking underground fuel tanks. It's not as sexy of a headline as the occasional Marcellus mishap, but it's damages are far more reaching.

Check out this report from the Pennsylvania DEP entitled "MTBE: Concentrations in Groundwater in Pennsylvania." http://1.usa.gov/mlF55G

Just a little background on MTBE: Methyl tert-butyl ether, is a volatile, flammable and colorless liquid that is immiscible with water. MTBE is a gasoline additive, used as an oxygenate and to raise the octane number, although its use has declined in the United States in response to environmental and health concerns. It has been found to easily pollute large quantities of groundwater when gasoline with MTBE is spilled or leaked at gas stations. (thanks, Wikipedia).

It's not exactly light reading, so I'll condense the most important points.

The PA DEP lists the number of KNOWN underground gasoline tank leaks in Pennsylvania at 15,000. That's not a typo. FIFTEEN THOUSAND STORAGE TANK LEAKS. Each one of them a HUGE threat to water aquifers. Nationally, the number (as of the release of this report) was over 400,000. One has to wonder how many more went unreported.
MTBE is very soluble in water and is resistant to biodegredation, so it will stay in the water a very long time. Its extreme solubility means that MTBE plumes can contaminate the aquifer MILES from the point of the leak.
Of the 15,000 storage tank leaks DEP has on record, only 7,000 contain detailed enough information for them to locate the leaking tanks.
Almost 25% of urban area water wells tested positive for MTBE. That's 1 in 4 wells folks.

EPA has documented over 400,000 cases of leaking fuel tanks

MTBE is just ONE of the harmful constituents found in gasoline. You will also find the BTEX chemicals (benzene, toluene, ethyl benzene, and xylene). All four are known human carcinogens. Also, since diesel fuel does not have MTBE added, leaking diesel fuel tanks are excluded from this study.

Ironically, the adoption of natural gas as a transportation fuel would eliminate the need for MTBE. MTBE is used to lower ground level ozone emissions. Compressed Natural Gas (CNG) produces 90% fewer ozone emissions when compared to the cleanest gasoline in the nation (California RFG).

Corbett bedfellow to PA Natural Gas Industry? If so, he hogs the blanket and snores.

2011-04-27T11:50:00.000-07:00

Even since before the election last year, now Pennsylvania Governor Tom Corbett has been accused of being a bit too cozy with the natural gas industry. Accusations range from preferential treatment to criminal collusion. Those aligned with the anti-drilling movement have slammed the Governor over the actions of the DEP, including the temporary policy shift of having DEP higher up's double checking NOV's (notice of violation). But if you've been paying attention over the last few weeks, Corbett's actions have been anything but in the best interest of the bottom line of natural gas companies.

Corbett announced that he would be willing to talk about a tax on shale gas extraction. To save political face, it is euphemistically being described as a "impact fee", but this is the plan the GOP as well as the industry have supported all along. This will be a tax that will benefit the communities where the drilling is actually occurring, unlike the Democratically supported severance tax proposals which would have deposited 85% of the revenues in the General Fund. Senate President Joe Scarnati (R - Jefferson County) is expected to release a proposal for an impact fee this week.

On the heels of this announcement came one of the largest policy shifts in DEP history. Michael Krancer, Secretary of the DEP, announced that the DEP wants all gas drilling wastewater to stop going to municipal treatment plants, where it would be partially treated, diluted, and then released into local rivers. This practice had raised several issues, and when the data from further testing became available, the DEP acted swiftly to ban the practice, even though Marcellus drilling was just a minor factor in the elevated bromide levels that were the cause for concern (most of it is caused by.... you guessed it... COAL). Bromides are not harmful, but when water is drawn from the river for drinking water and chlorine is added, the bromides react with the chlorine and cause trihalomethanes, which are a concern.

Last but not least, Corbett made remarks publicly in opposition of forced pooling... a sort of eminent domain proceeding in which a company, if they have the majority of the land surrounding you, could be granted permission by the state to drill horizontally underneath your property. Such laws exist in most states with natural gas production, the reasoning being that the number of wellpads to drain an area would be reduced if companies do not have to work around certain properties. No surface operating rights would be granted.

I support all of these decisions by the governor, and so does the majority of the natural gas industry (with maybe the exception of the forced pooing issue). But those critics who claim Corbett is in bed with the gas industry are finding themselves on shakier and shakier ground as his tenure proceeds.

Corbett, like the rest of us, is for safe, responsible drilling and is showing that he will use whatever means necessary to achieve that goal, no matter whose wallet it effects. We applaud him for doing so.

Bradford Well "Blowout" Update

2011-04-26T08:53:00.000-07:00

Temporary Hydro-fracturing Wellhead at MDS Energy well in Kittanning

As more details about the reported well blowout in Bradford County, PA start to come out, it is beginning to appear more and more like an equipment failure, specifically in the temporary wellhead used to route the fracturing fluids into the well.

The Post-Gazette reported today that the wellhead was replaced, which certainly leads one to believe that is where the problem was. It is still too soon to tell with the information that has been released but if this turns out to be the case it will be good news... of sorts. If it's the wellhead that's to blame, it is a much simpler problem to remedy than some sort of issue with the subsurface casing (steel pipe) or cement string. However, in this especially sensitive time, I fear any that the truth about this may find itself lost in the murky waters of sensationalist headlines and extremist spin.

Here's hoping that the EPA, DEP and all those involved do a comprehensive, transparent, and unquestionable study of this incident that cannot be easily dismissed.