Gas Permit Applications Flat in Mon

DEP denied the one filed since February

Morgantown Dominion Post
19 September 2012
By David Beard

Monongalia County continues to see a lull in horizontal gas well permitting, though neighboring Preston and Marion counties have continued to see growth since The Dominion Post’s last report, in February.

Increased production may be on the horizon, one industry official said.

Since February, there has been only one new application for a horizontal Marcellus well: Chesapeake Appalachia’s Willard Simpson Mon 8H. The Department of Environmental Protection (DEP) received the application in March and denied it in May.

This is the only permit denial recorded on the Marcellus lists for the three counties. DEP officials weren’t available late Tuesday afternoon to comment. Chesapeake said the denial letter would be on file at the DEP, but noted there were problems with the access road.

The DEP has 15 other Mon County permits on file. Chesapeake’s other most recent pending application, for the Leslie Keaton Mon 3H, to be sited south of Goshen Road, was returned to the company in June for further work.

During this period, Chesapeake completed work on three wells and put them into production: Reliance Minerals 3H, south of the Keaton site, completion reported in March; and Esther Clark 1H and 3H, near the Mon-Wetzel border, both reported last week.

In February, Preston County had 40 active permits with four more pending. As of Tuesday, the DEP shows 52 records on file, all in the Marcellus shale, but three of them conventional vertical wells. Four of those are pending — all by Canada-based Enerplus Resources.

Enerplus had two other permits approved, one in late February, one in August; three returned for more work, all in June; and one reported complete, also in June.

Chesapeake had two permits approved in May and three others reported complete — two in March, one in August.

Texas-based Chief Oil & Gas canceled one permit application in February, but had site reclamation of two wells on its Grimm Lumber pad approved in July.

Texas-based Novus Operating Co. reported two wells — one of them vertical — approved in July.

February’s report showed 75 permits on file in Marion County with three more pending. As of Tuesday, DEP showed 95 records on file.

St. Marys-based Trans Energy has one application pending. Two were approved since last report, and one was returned for more work.

Exxon subsidiary XTO had nine permits OK’d and reported six complete. It withdrew one application.

Chesapeake had two permits approved and reported six complete — with site reclamation on five wells OK’d.

Glenvillebased Waco Oil & Gas reported four permits complete — all on its Donna pad in Plum Run, Marion County. This pad has been the subject of several reports in The Dominion Post: It lies immediately adjacent to the home of Stacie and Casey Griffith, who have recounted the struggles of having a dream home turn into an industrial site. Three of the Donna wells appear twice on the Marion list because Waco bought the land from the original owner.

Pittsburgh-based EQT reported two wells complete with reclamation of one site OK’d.

Low gas prices affecting production

Gas industry officials have attributed the slow activity in this area chiefly to low natural gas prices. They plunged from a fall 2007 peak above $10 per mcf (thousand cubic feet) to about $5 through fall 2010, then continued a steady decline, according to the industry sites and

The mcf price fell from $4 a year ago to below $2 in May, then climbed a bit and as of Tuesday stood at $2.77.

At this price, many operators find the return on investment for “dry” gas, mostly methane used for heat and power, too low. Dry gas lies under this area.

Some companies, such as Chesapeake, have been turning their attention to the “wet” gas — also containing ethane, propane, butane and oil — west and north of here in the Marcellus and deeper Utica formations. The additional products produce additional revenue for the operators.

But Corky DeMarco, West Virginia Oil and Natural Gas Association executive director, offered an optimistic outlook. Some are forecasting prices back in the $4 range in 2013, “which would stir production again, not only in the wet gas area but the dry gas also.”

Some of that forecast is predicated on this winter being tougher than last — when a supply glut and low demand sent prices plummeting, he said.

And in the longer view, DeMarco said, a hoped-for proliferation of natural gas vehicles — encouraged by the likes of West Virginia’s governor and other regional leaders — and the possibility of exporting liquified natural gas to Europe and Asia could help further drive demand and price.