Shale Daily

A proposed severance tax on natural gas drilling in Pennsylvania may be dead this year, but the issue could return during the 2011 legislative session and it lives on in the campaigns of the candidates for governor. With Democratic Gov. Ed Rendell leaving office in January and the makeup of the state’s currently Democrat-dominated House and Republican-dominated Senate likely to change with the Nov. 2 election, Pennsylvania’s Marcellus policies could be looking at a facelift next year.

RPM Energy LLC and Kohlberg Kravis Roberts & Co. (KKR) have formed RPM Energy Partners LP to target joint venture opportunities with exploration and production companies in unconventional plays. They offer RPM’s expertise and KKR’s deep pockets.

The Marcellus Shale could hold as much as 500 Tcf of natural gas, according to some. That gas is conveniently close to markets in the Midwest and Northeast; however, the natural gas liquids (NGL) associated with some Marcellus production are far from what is considered to be their ideal home, namely the U.S. Gulf Coast. And that’s a problem, analysts have noted lately.

EnerVest Ltd. and affiliated partnerships including EV Energy Partners LP have agreed to buy oil and gas properties in the Barnett Shale from Talon Oil & Gas LLC for $967 million. The price, subject to adjustments, includes 3-D seismic across all of the acreage and hedges from the seller. The majority of the 20,207 gross acres is in the core of the Barnett Shale in North Texas. The properties produce 87 MMcfe/d from 212 active wells, with 1.1 Tcfe in reserves. The acquisition adds the Barnett Shale as EnerVest’s fourth core operating area. Production from the wells is 29% natural gas liquids/71% natural gas, the company said. EnerVest said it will produce 384 MMcfe/d from 18,530 wells with 2.7 Tcfe of reserves upon closing of the acquisition, which is scheduled for Dec. 30.

Growing natural gas liquids (NGL) production — particularly that of ethane — is a positive story for the petrochemical industry as well as oil and gas producers. However, talk of an NGL glut is growing louder as the industry continues to grow production — particularly from liquids-rich shale plays — and build out infrastructure. Opinions vary on what is to come.

Houston-based Cabot Oil & Gas Corp., whose onshore operations are focused on three shale plays — the Marcellus, Eagle Ford and Haynesville/Bossier — said Tuesday it smashed quarterly production records in 3Q2010, with output hitting 36 Bcfe, which was a 41% jump year/year. Sequential production also rose 18%, exceeding guidance targets.

In a move that could be seen as retribution for state Senate Republicans’ negotiating tactics and opposition to a proposed natural gas severance tax, Pennsylvania Gov. Ed Rendell Tuesday signed an executive order placing an immediate ban on leases for oil and gas development on any land owned and managed by the state’s Department of Conservation and Natural Resources (DCNR).

Alexander B. Grannis, chief of the New York Department of Environmental Conservation (DEC), was fired by Gov. David Paterson late last Thursday after an unsigned memo was leaked to the press disparaging staff cutsthat would, among other things, impede the agency’s effectiveness to oversee natural gas drilling in the Marcellus Shale.

Because of strong drilling in North America’s onshore basins, oilfield equipment manufacturer National Oilwell Varco Inc. (NOV) said Tuesday its rig equipment backlog at the end of September was worth an estimated $4.87 billion — more than at the end of the second quarter.