What is the Marcellus Shale?
The Marcellus Shale is an organic rich rock formation that underlies most of Pennsylvania
and West Virginia and parts of eastern Ohio and south-central New York. The Marcellus
may contain up to 500 trillion cubic feet of natural gas—enough to meet the nation's
needs for this clean-burning energy source for nearly 20 years.
How is natural gas extracted from the Marcellus Shale?
Natural gas in the Marcellus was once too difficult and expensive to extract and
transport. Recent advances in gas well development technology have made it commercially
viable to tap this massive natural gas resource. Extracting natural gas from dense
shale formations requires horizontal drilling and a process known as hydraulic fracturing
that uses far greater amounts of water than traditional natural gas exploration.
Drillers pump water mixed with sand and other proppants into the shale formation
under high pressure to fracture the shale around the well, which allows the natural
gas to flow more freely.
How is natural gas drilling regulated in Pennsylvania?
In the United States, most onshore oil and gas activity is regulated by state governments
instead of national legislation. More than 350,000 oil and gas wells have been drilled
in Pennsylvania since the first commercial oil well was developed in 1859, but the
state didn't begin regulating drilling until 1956. Oil and gas exploration and drilling
is now regulated under all or part of the state oil and gas laws, the Clean Streams
Law, the Dam Safety and Encroachments Act, the Solid Waste Management Act, the Water
Resources Planning Act, and the Worker and Community Right to now Act. The Pennsylvania
Department of Environmental Protection (DEP) is responsible for reviewing and issuing
drilling permits, inspecting drilling operations, and responding to water quality
complaints. DEP inspectors conduct routine and unannounced inspections of drilling
sites and wells statewide. Other agencies directly responsible for monitoring the
effects of drilling on water quality and aquatic life include the Pennsylvania Fish
and Boat Commission, the Susquehanna and Delaware River Basin Commissions, the U.S.
Fish and Wildlife Service, and Pennsylvania's county conservation districts.
Who owns the minerals in the Marcellus and how are the rights to explore for them
acquired?
In the United States, two-thirds of the onshore subsurface minerals are owned by
individuals, not the government. Energy companies enter into an agreement called
a lease with the mineral owners that allows for the exploration and production of
oil and gas. Most leases call for an upfront payment called a bonus to the owner
to secure these rights. If exploration is successful and production begins, the
owners under the lease are entitled to a percent of the sales revenue, called a
royalty. Generally, the lease owner does not have to pay any exploration or production
expenses.
What are Hess's plans for development in the Marcellus?
Hess has leased 52,900 acres in the Marcellus, mainly in northern Wayne County,
PA, as a sole operator. We have an interest in another 74,000 acres in Wayne County
as a 50/50 partner with Newfield Exploration, where Newfield is the operator. Hess
currently plans to drill four to six vertical exploration wells this year. Only
after this initial work and completion of a number of horizontal assessment wells
will we determine a development plan.
VISIT WWW.HESS.COM FOR MORE INFORMATION.
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