Thursday, May 31, 2012

Penn. Marcellus News Update, 5/31/12

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Senate panel backs mine water use in fracking
A bill to encourage use of coal mine water in hydrofracking operations by offering liability protection to drillers won approval last week from a Senate committee.
The vote by the Senate Environmental Resources and Energy Committee comes as state environmental officials are developing polices to offer Marcellus Shale drillers incentives to tap hundreds of millions of gallons of acid mine drainage.
The goal of these policies is to couple the natural gas industry's need for massive amounts of water in hydrofracking operations and the long-standing problem of cleaning up 5,000 miles of waterway in Pennsylvania impaired by acid mine drainage.
Six Pennsylvania representatives introduced bills that would revoke provisions of Act 13, which has been the subject of lawsuits and criticism from health care professionals and municipalities, and of a court-ordered injunction
MarkWest Energy Partners. L.P. MWE -2.46% today announced the closing of the previously announced acquisition of Keystone Midstream Services, LLC (Keystone) from Stonehenge Energy Resources, L.P., and subsidiaries of Rex Energy Corporation (Rex Energy) REXX -0.89% and Sumitomo Corporation (Sumitomo).
The acquisition consideration was $512 million. Keystone's existing assets are located in Butler County, Pennsylvania and include two cryogenic gas processing plants totaling 90 million cubic feet per day of processing capacity, a gas gathering system and associated field compression. Concurrent with the closing of the transaction, Rex Energy and Sumitomo have dedicated an 895 square mile area to MarkWest. MarkWest will gather and process rich gas, and fractionate the natural gas liquids under long-term, fee-based agreements.
MarkWest's acquisition of Keystone expands the Partnership's leading position in the liquids rich Marcellus Shale area into northwest Pennsylvania and eastern Ohio.

Energy companies use hydraulic fracturing, or fracking, to create fissures in rock like shale that allow oil and gas to escape. In the process water, sand and chemicals are pumped at very high pressures into wells drilled deep into the ground.
"If you think the reputational risks are bad with people coming from Ecuador, wait until they come from Pennsylvania and Colorado," said Larry Fahn, president of investor pressure group As You Sow, while arguing for a Chevron shareholder proposal on the risks of hydraulic fracturing.
Yet concerns about the oil and gas production practice among shareholders were notably more subdued. After a similar fracking resolution at the 2011 meeting had support from a surprisingly high 41 percent of Chevron shareholders, a similar proposal got 27 percent backing this year.
Support among Exxon Mobil Corp. (XOM.N) shareholders for such a resolution rose to just under 30 percent from 28 percent last year.
There was also a Chevron resolution on appointing a board director with environmental expertise, but an early vote count showed 23 percent supported it, down from 25 percent last year.
A well-known expert on the natural gas boom is again facing criticism over his ties to industry and a lack of transparency in how he presents work to the public, fueling debates over research that has been published by major universities.
Timothy Considine was lead author on a shale gas report recently issued by the University at Buffalo and a previous report from Pennsylvania State University. Critics say both reports presented research in misleading ways and failed to fully disclose funding sources.
Considine, now at the University of Wyoming, has received funding from industry groups such as the Marcellus Shale Coalition, the Wyoming Mining Association, the American Iron and Steel Institute, and the American Petroleum Institute.
Even as the amount of natural gas produced in the Keystone State quadrupled between 2009 and 2011, the number of actual wells fell as drillers used new technology to extract more gas from a single rig, according to a new study by the U.S. Energy Information Administration.
The development of more efficient horizontal drilling technology severely slowed the number of vertical wells drilled between 2009 and 2011, a period that represents a time when the drilling boom became visible above the Marcellus Shale natural gas formation. At the same time, falling commodity prices have forced companies to slow activity so far this year.

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