Oil and Gas Boom in 2012

January 2, 2013
Shale Play

By CASEY JUNKINS

Shale Play

WHEELING, W.Va. - Hopes for thousands of new jobs to be created in the region by Royal Dutch Shell's multi-billion dollar ethane cracker led the conversation in 2012 concerning the Marcellus and Utica shale industry.

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Shell eventually decided to build the giant petrochemical plant near Monaca, Pa., instead of placing it at one of the potential local sites. But many are hoping downstream opportunities will pop up from the cracker's location about an hour from Wheeling.

The economic benefits of natural gas drilling to the region can be seen as developers continue building more short-term housing options for the hundreds of workers who have come to the area. A fair share of problems and contentious issues cropped up during the year, most notably Chesapeake Energy's plan to drill a well about 1,300 feet from Wheeling Park High School. Following protests from Ohio County Schools and local concerned residents, Chesapeake decided to change its drilling plans. Chesapeake also pleaded guilty in 2012 to violating the federal Clean Water Act during some Wetzel County operations, which resulted in a $600,000 fine.

Ethane Cracker

For months, officials in Ohio and West Virginia worked to secure the large petrochemical plant, largely because they said it should generate about 10,000 construction jobs, hundreds of high-paying chemical jobs and thousands of related development jobs. However, Shell decided on the Pennsylvania site instead, listing access to resources and space for future expansions.

Immediately upon Shell's decision, public officials and industry leaders in both Ohio and West Virginia began casting stones at one another for failing to attract the cracker. Officials believe Shell's preferred West Virginia location would have encroached on land owned by Mountaineer Casino, Racetrack and Resort. In addition to the cost of building a new facility, Mountaineer would face a vote regarding the use of its gambling devices if it needed to move outside Hancock County. One of the sites many believed Shell considered in Ohio was the closed FirstEnergy R.E. Burger power plant, just south of Shadyside.

As 2012 comes to a close, Shell is still trying to work out some local issues at the Pennsylvania site, while West Virginia-based Aither Chemicals is working on a deal to build another cracker plant somewhere in the Mountain State.

Leasing/Drilling/Fracking

Natural gas and oil leasing continued in both Ohio and West Virginia this year, as some landowners signed contracts for $5,900 per acre, with as much as 20 percent of the production royalties.

In West Virginia, Chesapeake led the way in terms of drilling and fracking wells in the Northern Panhandle. The only active driller and fracker in Ohio, Brooke or Hancock counties, Chesapeake also activated some wells to start pumping gas out of the ground in these counties. In Marshall, Wetzel and Tyler counties, Chesapeake is joined by drillers such as Chevron, Gastar Exploration, Trans Energy, CNX Gas Corp., Noble Energy, Stone Energy, EQT Corp. and Antero Resources in extracting gas from the Marcellus Shale.

In Ohio, Chesapeake is joined by XTO Energy, Hess Corp. and Gulfport Energy in drilling in the Utica Shale field. Gulfport's Shugert well in the western Belmont County area known as Egypt Valley is producing as much as 28.5 million cubic feet of natural gas per day.

Pipelining

To transport gas and oil out of the Marcellus and Utica shale fields, companies are bringing pipeliners from across the U.S. to help build the network. Transmission lines are ones that lead to, for example, an interstate pipeline to carry gas across the nation. Gathering lines lead the gas from the wellheads to a processing plant or compressor station, from which it will then go to the transmission lines.

Though many of the pipelines are now in place, there are still more to be installed. There have been a few problems along the way as well, including the complaints of some local residents who did not want pipeliners to place campers close to their homes.

There have also been some issues in Marshall County, as officials with Public Service District No. 4 have been trying to keep track of the pipeliners' activity. There are multiple reports of rural waterlines being cut or exposed by pipeliners, which officials said endangers residents' health.

Processing

After more than a year of construction, the $500 million Dominion Resources natural gas processing and fractionation plant at Natrium nears completion as 2012 draws to a close. Also, Caiman Energy sold its Marshall County facilities to Williams Partners during the year for $2.5 billion. MarkWest Energy has also expanded its Majorsville complex in eastern Marshall County.

In Ohio, the Cadiz MarkWest complex is now up and running. The interim refrigeration plant is the first phase of the new plant to open, with many more operations still to begin at the large facility, just off Ohio 9 south of Cadiz. Also, Chesapeake and its partners plan to open a $900 million natural gas processing complex with facilities in Harrison and Columbiana counties some time in 2013.

 
 

 

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