Atlas Energy..........Titan of the Marcellus

Atlas Energy Resources this morning announced the completion of yet another record breaking vertical in the Marcellus Shale. The well produced 5.0 mmcf in its first 24 hours inline and in the last 25 days has produced over 81 mmcf. Atlas utilized the same two stage frac that has proven so effective on its last six verticals. The first five wells where the technique had been used averaged initial production of 2.1 mmcfd. The average of the last seven now stands at 2.5 mmcfd.

Rich Weber, President and Chief Operating Officer, commented that the results are indicative "not only the effectiveness of our completion designs, but also the quality of our acreage."

Even though this last completion is showing greater recovery efficiency than any Marcellus horizontal on record, Weber is hopeful that the frac design will still yield outsized results when applied to horizontals. He noted, "The potential of horizontal wells having frac designs with up to eight stages is very exciting given the exceptional results from our two stage verticals."

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Permits Here....Get Your Permits Here...Get 'em While They're Cheap

PA DEP Gets Approval to Raise Marcellus Permit Application Fees

Pennsylvania's Environmental Quality Board today approved a Department of Environmental Protection request to impose new fees for Marcellus Shale drilling permits that will replace the $100 flat fee with a variable fee structure based on well depth. Though fees have not increased in the state since 1984, the new structure will result in a cost of $900 for a 1500' deep Marcellus Shale well plus $100.00 for each 500' of total depth. Applying for a typical Marcellus well permit with a total depth of 10,000' will cost $2,600 by the early Spring of 2009.

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Representative DeWeese Encourages DEP

Drop the Sledge and Hire More Staff

In a letter to acting Secretary of Environmental Protection John Hanger, Representative & Majority Whip, Bill DeWeese, Greene, Fayette & Washington counties, encouraged Hanger to rescind any blanket decree afflicting scientifically sound operators in the Marcellus Shale. He is, of course, referring to the DEP order banning the treatment of frac water in the Monongahela River Basin by municipal treatment plants. This decree, designed to reduce the TDS (total dissolved solids) in the river has resulted in a range of consequences from a total shut down of fraccing operations to the addition of significant costs to transport frac flowback to one of the few available treatment plants in the state. According to DeWeese, the decree makes no distinction between those operators and those of a lesser quality who might have inadequate or few pollution controls in place.

He also suggested that the agency expedite the permitting process so the natural gas industry doesn’t gravitate outside of the borders of the Commonwealth.

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SRBC Announces Streamlined Permitting Process for Consumptive Water Use

The Susquehanna River Basin Commission announced today that the permitting process for consumptive use of water from the basin has been streamlined. Among the streamlining provisions in the amended regulations, all requests for consumptive water use by the national gas industry will now be handled through SRBC’s simplified approval-by-rule process (commonly known as a general permit). To make this change possible, SRBC likewise expanded the sources of water that applicants can consider for their consumptive water use, including public water supplies, discharges from wastewater treatment facilities and other reclaimed waters, and withdrawals from other sources approved separately by SRBC.

Other key changes in SRBC’s regulations include:
- Regulating projects on a drilling-pad basis.
- Requiring project sponsors to certify compliance with state and/or federal laws for the treatment and disposal of flowback fluids or produced brines.
- Incorporating the August 14, 2008 determination by the SRBC Executive Director (which went into effect on October 15, 2008) that all quantities of water withdrawn or used for natural gas well development be reviewed.
- Limiting SRBC’s approval to five years versus the standard approval of 15 years for other types of projects.

The regulatory amendments will go into effect January 1, 2009, or when they have been published as final in appropriate federal and state registers, whichever comes later.

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Rex Energy Updates Marcellus Drilling

Rex Energy today announced the completion of two vertical Marcellus Shale wells in Westmoreland County, Pennsylvania. The wells were drilled in the deeper portion of the Marcellus play and had peak flow rates of 400 and 1,200 Mcf per day respectively before being turned in. Each well continues to stabilize at daily production rates of 300 - 500 Mcf per day. The 800 mcfd average IP is considerably lower than the 2,100 mcfd rates reported last week by Atlas Energy for its latest verticals, but Rex expects to be able to increase production with further optimzation. A third vertical in the county will be completed later this month.

Citing the need to maintain a balance between liquidity and exploration, the company also annouced a reduction in 2009 capex to US$49mm, 70% of which will be directed into the Marcellus Shale. Expectations are for completions of 6-8 horizontals in 2009.

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Atlas Energy Remarks on Remarkable Verticals

Atlas Energy Resources announced today the completion of five new vertical wells with a two stage frac process that is resulting in average 24 hour IP rates of 2.1 mmcfd. Previously, with the exception of a Fayette county vertical at 3.6 mmcfd, Atlas' most recent verticals were yielding an average IP of 1.3 mmcfd. The new technique also appears to be resulting in a shallower decline rate than prior efforts.

The company also announced that its second horizontal has been cased and is awaiting an eight stage frac, while its third and fourth horizontals have been spud.

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