Encana pulls operations out of county

Date: February 28, 2011

Firm says drilling in Lake and Fairmount townships reveals insufficient natural gas.

MATT HUGHES mhughes@timesleader.com

The only company to drill Marcellus Shale gas wells in Luzerne County is pulling out of the region.

Encana Oil & Gas USA Inc. announced Thursday that the two exploratory wells it has drilled in the county are unlikely to produce natural gas in commercial quantities, and that the company has, as a result, decided to immediately cease operations in Luzerne and Colombia counties.

Encana and its partner company, Whitmar Exploration Co., have leased more than 25,000 acres in Luzerne County, primarily in the Back Mountain, and drilled two exploratory wells, the Buda 1H well located on property owned by Edward Buda off state Route 118 in Fairmount Township near Ricketts Glen State Park and the Salansky 1H well located on property owned by Amy and Paul Salansky off Zosh Road in Lake Township.

The company began completion operations at the Salansky well site, which included hydraulically fracturing a portion of the well, Nov. 10.

“We recently conducted a fracture stimulation, followed by a production test of the Salansky 1H well, which confirmed our initial findings,” Encana Group Lead for Land Kit Akers said in a letter mailed to leaseholders Wednesday. “Therefore, … we have decided to discontinue all activity in the area immediately.”

Akers said Encana will not extend leases signed in Luzerne and Columbia counties, its only Marcellus Shale assets in Pennsylvania.

“This is not terribly uncommon with in the industry; it does happen,” Encana spokeswoman Wendy Wiedenbeck said. “We are disappointed in the results as well, but communicated along the way that it was exploratory in nature.”

Wiedenbeck said Colorado-based Encana is also in the process of closing its field office on Public Square in Wilkes-Barre.

Encana leaseholder Gary Ide said that most leases he knew of that Encana had signed in the area offered smaller payments for the first year to two years, with an option to lease more should the test wells indicate that commercially viable quantities of gas exist in the area.

“They were not heavily obligated to pay large amounts until 2011,” Ide said. “I think part of their decision to test it now was based on that.”

Ide, the founder and president of landowner-group Citizens for Cleaner Energy, said he heard rumors as early as two weeks ago that the gas might not be as abundant as Encana and its leaseholders hoped, but was nonetheless surprised and disappointed to hear the news.

“I think we all knew that there was an edge to the Marcellus Shale somewhere, and now we know,” he said, adding “I am just taking everything at face value; that this is their business decision.”

Ide said his group, which promoted responsible drilling in the area and touted Encana as the poster child of gas industry best practices, will meet again.

“I think we\’ve got some things still to do,” Ide said. “We know that there are very substantial producing wells to the north of us as close as just a few miles. … We still want to discuss where we still have options.”

Edward Buda, on whose land Encana drilled its first exploratory well in the county, said he had already prepared himself for the worst news.

“You never really expect anything until you really have it, that\’s the best way to not be disappointed; it\’d be nice if it panned out but it didn\’t,” Buda said. “I told everybody … don\’t count on it until you have the money in your hand.”

Buda said he has spoken with Encana representatives who told him they would return in February or March to clean up and restore the well site. They will plug the well with concrete and mark the location the well was drilled, Buda said.

“They\’re going to plug it according to government specifications and then they\’re going to put a little marker on it,” Buda said, jokingly adding, “I guess you could call it an epitaph.”

Encana will also remove the stone well pad at the site and reseed the area below, Buda said.

Wiedenbeck said Encana will work to reclaim the sites over the next months in accordance with state Department of Environmental Protection guidelines.

“We will work closely with the Pennsylvania Department of Environmental Protection to ensure that all regulations are followed with respect closing out our operational activities,” Akers wrote in his letter to leaseholders.

As opposed to Buda, Amy Salansky, on whose farm the Salansky H1 well was drilled, said she was “thrilled” to hear of Encana\’s withdrawal.

“I get my life back and my land back,” Salansky said.

Salansky, a Lake Township supervisor, said she does not own the mineral rights to her property, and “had no choice” but to let Encana drill on her property. She received compensation for surface disturbance but would never have been paid royalties on gas extracted, she added.

“Encana was excellent working with us,” Salansky said. “They wanted 12 acres, they only took six. They treated me with respect. I just hope people understand that, even as a township official, I had no say in the gas drilling, and I received no rights or royalties.”

The news was also cause for celebration for Tom Jiunta, president and founder of the Gas Drilling Awareness Coalition, a Back Mountain-based group opposed to drilling in the Marcellus Shale, which the group feels presents a threat to air and water. Jiunta, of Lehman Township, recently submitted an ordinance to ban gas drilling in his township\’s Board of Supervisors.

“We\’re all happy; we\’re planning a little celebration tonight,” Jiunta said Thursday, “but we\’re cautiously optimistic, we\’re planning to continue the efforts to help surrounding communities.”

Jiunta said he suspected the result of its test wells Encana reported Thursday.

“I\’ve been getting e-mails from people keeping an eye on (the Salansky well) that it\’s like a ghost town,” Jiunta said. “Everybody\’s gone.”

Jiunta added, however, that his group plans to continue its efforts to create awareness of what it says are the risks of natural gas drilling, despite Encana\’s retreat.

Copyright: Times Leader

 

Joe Price
Attorney Joe Price is a seasoned Trial Lawyer serving Northeast, Central and Southeast Pennsylvania for the past forty (40) years. He has handled serious personal injury cases in courts throughout the Federal system including New Jersey and New York. Attorney Price is A.V. Rated by Martindale Hubble. He is Board Certified in Civil Practice by the National Board of Trial Advocacy since 1996.