Heavy rains caused slips, which broke gas pipelines in Marshall County, West Virginia.  The Intelligencer out of Wheeling, WV carried a couple of stories about it, the most recent of which you can find here.

Anybody who’s read much of this blog knows I am pro-development.  But I also think that if you’re considering signing a lease or a right of way agreement, you need to know what you’re getting into.  The fact is, there are dangers and downsides.  The more you know, the more you can mitigate, and the better you’ll negotiate.  When you’re talking with a landman and you can say, “I’m concerned about the dangers to my property and my family because I know that heavy rains caused two broken pipelines back in April of 2015 and there were five pipeline accidents in January of 2015, and don’t forget about the Sissonville explosion,” you’re more likely to get a favorable response than if you say, “I think pipelines are dangerous and scary.”

This doesn’t have anything at all to do with oil and gas, but it’s interesting anyways.  A gigantic rock fell on an interstate in Ohio.  Truly gigantic.  Check it out.

UPS, the shipping company, is building fifteen new compressed natural gas filling stations.   They already have eight in operation, so this will bring their total CNG filling stations to 23, if I do my math correctly.  UPS has been using CNG since 1989, and uses a number of other alternative fuels in its fleet.  They have an alternative fuels factsheet over at their website if you’d like to check into a few more details.

One of the new CNG filling stations will be located in Charleston, WV.  This is great for us!  Not that the filling station itself will bring a lot of new jobs or anything.  We need more CNG filling stations and more CNG vehicles.  The vehicles are one of the things that will drive up demand for natural gas.  More demand equals higher prices.  Higher prices equal more royalties paid and more development.

Unfortunately for Gastar, some of it’s tanks in Wetzel County caught fire early last Wednesday morning.  The cause is under investigation.  No injuries or damage have been reported so far.  It appears that even the pad wasn’t damaged.

Oil and gas production has been great for West Virginia, but it’s impossible to ignore the dangers that come along with it.  I’m all for development.  Just make sure that you educate yourself before you sign, and keep your eyes wide open after you sign.

West Virginia should really encourage development of technologies such as CNG in a Box.  It uses gas that would otherwise be wasted as flared gas to fuel vehicles that burn natural gas.  It’s quite obviously not an actual product yet, but man, it should be.

Let’s look at who wins with this.  1)  Consumers, since natural gas costs less than gasoline.  2) West Virginians, since we produce a huge amount of natural gas.  3) Car manufacturers, since they get to sell a new technology.  4) Environmentalists and producers, since gas that’s otherwise flared to the air gets put to use.  5) Environmentalists again, since clean-burning natural gas is used in place of dirtier gasoline.

The only losers are oil producers, but most of them are in the business of producing gas too, so maybe we can’t really list them as losers.  It’s probably a wash for them.

The trouble here is the old chicken/egg idea.  We need more natural gas cars to use the infrastructure, but we need more infrastructure for the natural gas cars.  Which do you build first?

The obvious answer is fleet vehicles, since companies and governments can eat the short-term costs and wait for the long-term savings.  But this technology looks like it would make it possible for gas stations to fire one of these things up at their normal site.  It might make it possible to build up the infrastructure first.

Pat McGeehan is a member of West Virginia’s House of Delegates.  He was also an opponent of HB 2688, the Forced Pooling bill.  It’s very likely that the bill is going to be coming back up this fall, and in preparation Mr. McGeehan has written an excellent editorial on why the Forced Pooling bill is a bad idea.  I’m not going to summarize it.  It’s worth reading the whole thing.

Southwestern bought a ton of West Virginia acreage from Chesapeake.  It was land that CHK was just sitting on.  SWN is really ramping up their drilling program on it.  This is excellent news for West Virginia mineral owners in the northern panhandle and Monongalia County.  It seems like CHK bought up most of the good minerals in those parts of West Virginia back before 2009.  I say that because there just hasn’t been that much development in those parts, and I know that CHK bought up a ton of land up there because I was working as a landman for them at the time.  I’d been wondering when development was going to start up in the northern panhandle, and why it hadn’t been more developed already.  It’s prime gas real estate.  There’s a ton of development in Ohio and Pennsylvania, just across the borders.  I couldn’t think of a good reason for the northern panhandle to not be developed, other than that CHK just didn’t want to.  My gut told me it was prime, but nothing was happening.  Now it seems that my gut was right, as SWN is getting after it up there.

Antero Resources has a well permitted in Ohio that has a 13,000 foot lateral, and a total depth (depth plus length) of 23,000 feet.  That’s a ridiculously long well.  That’s 4.35 miles!  That’s impressive.

The well name is the Turkey Unit 2H.  There are two other legs planned for the well pad.  The Turkey Unit 1H will be just as long as the Turkey Unit 2H, but the Turkey Unit 3H looks like it will be shorter.

I like to see longer legs because it minimizes surface disruption.  People live in and move to West Virginia because of it’s wild beauty.  Oil and gas development has changed that to some extent.  Parts of rural West Virginia are becoming increasingly industrialized, with well pads, pipelines, compressor stations, and other development associated with the oil and gas industry scattered all over the place.  This is particularly true of the northern panhandle, in Marshall and Wetzel Counties, and along the Route 50 corridor west of Clarksburg.

The other thing I like about longer laterals is efficiency.  Longer laterals mean more gas per dollar of investment.  One well pad develops the same number of acres as two, three, or four wells pads.  That means less cost.  When oil and gas companies are consistently making more money on their investment, they can afford to pay better bonuses and royalties to their mineral owners, and better money for acreage disruption to surface owners.

On a slightly different note, one thing that’s interesting to me is that the laterals will be about 700 feet apart.  That means that they expect the cracks from the frack job to extend out to about 300-350 feet out from the lateral.  I suspect they don’t want the cracks to touch, as they would lose frack pressure into the neighboring well.

Marshall County, WV is considering the possibility of decreasing property taxes due to the huge amount of tax income that gas production is providing the county.  The County Assessor has floated the idea with the Board of Education, and while the Board hasn’t said yes, it also hasn’t said no.  The BoE wants to take a more in depth look at the numbers, specifically what the county could do with the excess income, and how a decrease in property valuations would effect low, middle, and upper incomes.

If you want to dig into the nuts and bolts of the pipeline infrastructure that exists in the area, this article would be a good place to start.  The maps are amazing.  The spiderweb of pipelines that crisscross the region is pretty dense.  Even more amazing is that they’re building more all the time.  For me, imagining all the manpower that has gone in to and is going in to creating this infrastructure is mind blowing.