Saturday, June 5, 2010

Over 1 million gallons of frack fluid escaped during spill

Click here to view recent update on yesterday's gas well explosion in Clearfield County, PA: CHANNEL 6 NEWS FOOTAGE.

PA well explosion shoots gas, drilling fluid 75 ft into the air. DEP not notified until hours later, FAA restricts flights within 3 miles of site.

The authors mention that blowout preventers (like the one that failed in Louisiana)  are typically used in situations like this so that workers can control the pressure inside.  After reading this article, I'm still not clear on whether or not a blowout preventer was used.  So did the contractors forget to install one or if they did...did it, too, fail?  

Marcellus gas well blows out in Pennsylvania; gas, drilling fluid shoot 75 feet into air*
By Marc Levy and Jennifer C. Yates, AP

PENFIELD, Pa. -- An out-of-control natural gas well in a remote area of Pennsylvania shot explosive gas and polluted water as high as 75 feet into the air Friday before crews were able to tame it about 16 hours later.

The gas never caught fire and no injuries were reported, but state officials worried about an explosion before the well could be controlled. The well was brought under control just after noon after it started spewing gas and brine, said Elizabeth Ivers, a spokeswoman for driller EOG Resources Inc.

Houston-based EOG, formerly part of Enron Corp., was drilling into the Marcellus Shale reserve, a hotly pursued gas formation primarily under Pennsylvania, New York, West Virginia and Ohio that some geologists believe could become the nation's most productive natural gas field.

There are more than 1,000 Marcellus Shale wells in Pennsylvania alone, some of them within view of homes, farmhouses and public roads.

There were no homes within a mile of the well that blew out.

The accident happened just after the crew finished a process called hydraulic fracturing -- in which millions of gallons of water, sand and chemicals are blasted underground to shatter tightly compacted shale and release trapped natural gas. They were clearing out debris from the well when gas shot out of it, said Dan Spadoni, a spokesman for the Department of Environmental Protection.

Workers evacuated the site and contacted county authorities, said John Sobel, a Clearfield County commissioner. The DEP said it wasn't notified until 1:30 a.m. -- more than five hours after the blowout.

The polluted water flowing out of the well and into the woods was stopped by a trench and a pump installed by a contractor, Spadoni said. Companies that specialize in securing out-of-control wells were called in, he said.

The blowout could test the ability of state regulators, who promised an aggressive investigation into the accident.

"The event at the well site could have been a catastrophic incident that endangered life and property," Department of Environmental Protection Secretary John Hanger said in a statement. "This was not a minor accident, but a serious incident that will be fully investigated by this agency with the appropriate and necessary actions taken quickly."

If the agency finds that mistakes were made, it will take steps to prevent similar errors from repeating, he said. He said it was too early to tell the extent of any environmental damage.

Details about the accident were still sketchy, but the agency was told that unexpectedly high gas pressure in the new well prevented the crew from containing it, Spadoni said.

Ivers said she could not immediately respond to questions about how the accident happened. Public safety and protection of the environment are of the utmost importance, the company said in a statement.

David Rensink, the incoming president of the American Association of Petroleum Geologists, said gas well blowouts are very rare and can be very dangerous to control, since a spark can set off an explosion.

Typically, a blowout preventer -- a series of valves that sit atop a well -- allows workers to control the pressure inside, he said.

Just such a device figured into the massive oil spill off the coast of Louisiana. The oil rig's blowout preventer was supposed to shut off the flow of oil in the event of a catastrophic failure, but it didn't work.

The Pennsylvania well is on the grounds of a hunting club in a heavily forested section of Clearfield County, near Interstate 80 -- about 90 miles northeast of Pittsburgh.

On Friday afternoon, a worker blocked a dirt road to the site, while trucks hauling water tanks streamed past him. He said he was not allowed to talk about what had happened.

As a precaution, the Federal Aviation Administration issued a flight restriction Friday morning, saying no planes below 1,000 feet should go within three miles of the site. The restriction was lifted it shortly after the well was capped.

*This article appeared in of Greater Binghamton on 6.4.2010

Monday, May 31, 2010

Oil giant Shell acquires company with Northern tier gas leases

Published: May 29, 2010

Royal Dutch Shell PLC is the latest petroleum giant to acquire a company with substantial holdings in the Marcellus Shale, buying the Warrendale, Pa.-based East Resources Inc. for $4.7 billion.

A small company, but one of the biggest players in the Marcellus region, East Resources has control over 1.25 million acres from West Virginia to New York. Most of its holdings are in Pennsylvania, including large tracts in Tioga and Bradford counties.

The entree of global giants could alter the pace and character of the development of the Marcellus Shale in the state. At the same time, some observers say having larger companies involved could offer a layer of security for property owners who leased mineral rights to a smaller company that have since become acquired by multibillion-dollar companies.

ExxonMobil, with annual revenues in excess of $300 billion, is putting the final touches on its $31 billion acquisition of XTO Energy, another independent oil and gas producer. As recently as 2008, global petroleum giants showed little interest in unconventional sources of natural gas such as shale.

"The scale of this has surprised Big Oil," said Kenny DuBose of, an online resource for mineral rights owners.

Mineral leases convey to the acquiring company, so a corporate takeover should be seamless to the property owner, said Steven Saunders, a Scranton-based environmental and oil and gas attorney. Most agree the only visible difference may be the source of the royalty checks.

New York-based Hess Corp., which has more than $30 billion in annual revenue, has partnered with Newfield Exploration Co. to invest about $100 million so far on roughly 126,000 acres of leaseholds in north- ern Wayne County.

Acquisitions, buyouts and other types of partnerships are not unusual in the energy development industry, analysts said.

"Leases are traded all the time, and the only thing that should change is the source of your check," said landowner consultant Earle Robbins of R & R Energy Consulting. "A good lease will require that the company notifies you when that happens."

A large corporation has greater resources to honor lease obligations, particularly if something goes wrong. They also have greater ability to drill and start paying royalty checks.

"With a small company you worry if they can indemnify you, but that's less of a concern with a behemoth corporation," Mr. Saunders said. "You don't want things going the other way, where your lease ends up with a guy working at the 7-11 and drilling on nights and weekends."

The initial leasing and development of Marcellus Shale has been pioneered by smaller companies specializing in unconventional sources of natural gas. Increasingly, these companies have found themselves needing financing.

Having laid out so much money in leasing, exploration and initial drilling, they still have little opportunity to sell gas without pipeline systems. Many have had to turn to outside investors for the funds needed to develop wells before the expiration of the first wave of leases.

Last year, East Resources turned to a private-equity firm for $350 million.

Mr. Robbins said one subtle change may be the way the new company interacts with landowners.

"East has been a good company to work with and they are responsive," said Mr. Robbins, who has a lease with East Resources. "One thing that may change is the relationship and how a bigger company will handle things."

In Tioga County, the number of companies with leases consolidated from 25 to 30 to about five or six as companies swapped and traded leases, Mr. Robbins said. He expects continued consolidation and petroleum giants in the Marcellus region which will hasten drilling and development.

In 2007, East Resources was one of the first companies to up the ante on lease prices, offering $80 and $100 per acre lease at a time when most were accustomed to $2 to $5 an acre, Mr. Robbins said. Recent leases have been signed for $5,700 per acre.

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