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Pennsylvania Driller Buys Chesapeake Leases in New York
A Pennsylvania driller has bought more than 56,000 acres of leasehold, hundreds of producing natural gas wells and nearly 200 miles of natural gas pipeline and other infrastructure in New York state from a subsidiary of Chesapeake Energy Corp. It said it plans to drill vertical wells on the acquisition acreage this year.
Minard Run Oil Co. (MROC), based in Bradford, PA, closed on the deal with Chesapeake Appalachia LLC on Dec. 14. The sale included 56,130 acres of leasehold and almost 195 miles of gathering lines and compression, metering and production stations in Cayuga and Seneca counties. It also included 413 natural gas wells drilled into the Queenston formation, a shale gas layer below the Marcellus but above the Utica Shale. Financial terms of the agreement were not disclosed.
COO John Bulmer said the company “plans to continue to expand its presence in the Finger Lakes region of New York state by drilling and developing its newly acquired undeveloped oil and gas leasehold rights and by seeking additional producing property acquisition opportunities. Further, on a broad scope, it is [our] intention to continue to increase [our] asset base and cash flow by expanding activities into new geological and geographic areas of the Appalachian Basin and into other nearby geological provinces.”
Bulmer told Gannett News Service that MROC plans to drill 20-30 vertical wells on the acquired acreage this year and hopes to begin permitting the wells in the spring. He also said the company would be reviewing the leases to check land titles.
Although high-volume hydraulic fracturing (fracking) is currently illegal in New York, fracking with small stimulation treatments is legal.
MROC was involved in a lengthy legal dispute over surface and groundwater withdrawals in the Allegheny National Forest for oil and gas operations.
The company — along with the Pennsylvania Independent Oil and Gas Association (PIOGA), the Allegheny Forest Alliance and Warren County, PA — had argued that the U.S. Forest Service (USFS) should be held in contempt for refusing to follow U.S. District Judge Sean McLaughlin’s order from December 2009 to process requests by operators to drill in the forest (see Shale Daily, July 21, 2011). The plaintiffs also accused the USFS of violating a 1980 federal law on surface landowner rights.
Last March, McLaughlin refused to overturn the USFS’ ban on water withdrawals in the forest and denied the contempt motion, but ordered the forest service to process Notice to Proceed (NTP) documents within 60 days (see Shale Daily, March 29, 2012).
The case was Minard Run Oil Company v. United States Forest Service et al. (Case No. 1-09-CV-125).
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