Ky/Tenn Report

Volume 16, Number 8 August 2009

FALL TOGA MEETING, SEPT 10TH, OAK RIDGE COUNTRY CLUB-The fall TOGA meeting with be held Thursday, September 10th at the Oak Ridge Country Club. The Board of Directors will meet at 5:00 p.m. Items on the agenda include the new TVA power plant that will require 160 MMCFPD, the Oil & Gas Board's lack of action on policy, announced regulation changes by Paul Schmierbach, the 2009 TOGA Christmas Party, the 2010 TOGA Convention.

NO CHANGE ON 'POLICY", NEW REGS ON THE WAY-The Tennessee Oil & Gas Board took no action in response to the appearance by TOGA President Scott Gilbert at it's July 15th meeting, when he outlined the association's concern about the frequent use of written and unwritten policy by the Water Pollution Control staff. Paul Schmierbach, Water Pollution Control, told the board that the Water Pollution Control staff is currently working on new regulations that he expects to be presenting to the Board in the near future.

DRILLING PERMITS ON LINE IN FUTURE-Speaking at the Oil & Gas Board meeting, Paul Schmierbach said the staff is working toward making the drilling permit application process available on line. It is too early for a target date.

NEW OIL & GAS BOARD MEMBER- Steve Scarborough, Rockwood, has been named by Governor Bredesen, to the conservation post on the Oil & Gas Board.

ANNOUNCING PLATTS GAS CONFERENCE- Platts is holding its 2nd Annual Appalachian Gas conference on October 29-30 in Pittsburgh, PA. Topics this year include the effect of current gas prices and national demand on Marcellus development; changing regulations for water, wastewater, and hydraulic fracturing; current production costs, new technologies, and controls on production decline; funding sources, terms, and conditions; markets for Appalachian gas, including LDC, IPP, and utility perspectives; case studies on gathering, processing, storage, and pipeline infrastructure development. TOGA members receive a $400 discount. For more call 866-355-2930 or go http://www.platts.com/Events/2009/pc933.

NEW TVA ELECTRIC PLANT MAY UNLOCK STAT'S GAS POTENTIAL- The recent announcement by TVA of plans to build a natural gas-fired electric plant in Rogersville, may lead to the development of Tennessee's substantial natural gas potential, according to TOGA president, Scott Gilbert.

In a news release from TOGA headquarters, Gilbert said, "TVA will need up to 160 million cubic feet of natural gas a day for the plant scheduled to come on line in late 2011. Tennessee is now producing about 16 million cubic feet of gas, but has immense potential for to produce a great deal more gas. At this time, we are producing oil and gas from just 11 eastern and middle Tennessee counties, but there is reason to believe that most other eastern and middle Tennessee counties have potential for the production of gas or oil," he added. Gilbert noted that while there are several shallow and deep horizons capable of producing oil and gas in Tennessee, the most potential lies in a shale formation, called the Chattanooga Shale.

"The Chattanooga Shale lies like a blanket under the entire Cumberland Plateau and Highland Rim of eastern and middle Tennessee and in scattered locations in the rest of East Tennessee, at a depth of less than 1,000 feet to more than 4,000 feet." Said Gilbert, lead geologist for Vinland Energy. He noted that the shale gets deeper as you travel east. This rock formation, called the Chattanooga Shale in Tennessee is similar to the Marcellus Shale of New York and Pennsylvania and the Huron Shale of Eastern Kentucky. All three are Devonian Shales and underly almost the entire Appalachian Basin from New York to Alabama.

"Geologists agree that as a resource, the shale is huge, but the challenges are many. Shales are different from conventional source rocks and we are just now learning how to unlock the shale's potential," he added. Gilbert noted that the "shale play" started with the Barnett Shale play in Texas nearly a decade ago. The Barnett field is proven to have 2.5 trilling cubic feet of natural gas and is estimated to contain as much as 30 trillion cubic feet.

"The economic success of the Barnett Shale which began production in 1999, has spurred companies to search for other sources of shale gas including the Antrim Shale in Michigan, the Fayetteville Shale in Arkansas, the Haynesville shale in Louisiana as well as the Marcellus Shale in Pennsylvania and now the Chattanooga Shale in Tennessee.

"The Chattanooga Shale is not as deep as the Marcellus. Deeper wells have higher pressure, which generally result in more production but also higher costs, Gilbert pointed out. However, the Chattanooga is certainly worth exploring for and producing. Several Tennessee companies already have commercially successful Chattanooga Shale wells, both vertical and horizontal. Now with a very large potential market for our gas to TVA, we lack only the infrastructure, which will come with the additional leasing and drilling we anticipate," Gilbert predicted.

The proposed natural gas plant is to be located beside the John Sevier coal fired power plant, which supplies electricity to upper east Tennessee. The purpose is to reduce the emissions from the existing plant. The large majority of the coal currently burned in the John Sevier Plant is imported from neighboring states. The new gas fired plant will allow the State of Tennessee to provide homegrown, clean burning natural gas. Which result in more jobs and an increased taxes going into state coffers in the form of severance tax from the production of the gas.

TENNESSEE JULY PERMITS: Fentress County - Eric Cravens, Charles Franklin #1-A, 2000', Jamestown/ Hancock County - Ryholland Flelder, Inc., William Seal #1, 2400', Swan Island/ Overton County - Outdoor TN Oil Co, Inc., Jimmy Young II, 2000', Alpine/ Pickett County - Keblo Energy, LLC, William Crockett #2, 2000', Moodyville

KENTUCKY JULY PERMITS: Barren County - Maw Production Co, Chad Coomer, #1, Leipers Ls/ Clinton County - Steve Burchett Oil Co., Jimmy Upchurch, Est, BB2, James Holsapple, #3, Knox Gp; Rick-Rod Oil Company, Inc., Rocky Beaty, 12R, 13R, Crudewell Drilling, Inc., Sumner Steinmann, #3, Knox Gp/ Cumberland County - Overton Oil & Gas, Inc., David Melton, #9, Knox Gp; Hi-Mi Exploration, LLC, Archie Aaron, MF15-Revised, Murfreesboro; G&R Oil, Randy & Dottie Gibson, #02A, #03A, Knox Gp; Rick-Rod Oil Company, Inc., Dee Flowers, 2R, 3R, 4R, Eastern Energy Resources, Inc., Warren Carter, #5, Hart Oil, LLC, Chat Chowning, #10, #11, Knox Gp/ Harlan County - Daugherty Pet, Inc., Peen-Virginia Resources, DPI 1632, DPI 1633, Huron Mbr, Ohio Sh/ Letcher County - EQT Production Company, Equitable Production Company, #569289, #569291, #569354, #569305, #567657, #568473, Elkhorn Coal Company, #568033, #568031, #568030, Huron Mbr., Ohio Sh, #569290, #569336, #569353, #569355, #569306, #569238, #568474, Elkhorn Coal Company, #568032, Cleveland Mbr, Ohio Sh,/ Knox County - Amwes Exploration, LLC, Shirley Bentley, #3, Devonian, Lower Part

The Ky/Tenn Report is published monthly and distributed at no cost to oil and gas operators in Tennessee and Southern Kentucky. It is owned and operated by W.D. Goodwin, Inc., The editor is Bill Goodwin, e-mail: tmdbill@aol.com it is the official publication of the Tennessee Oil & Gas Association, 750 Old Hickory Blvd, #150-2, Brentwood, TN, 37027. Phone 615.371.6137, Fax 615.599-1806. Web site: www.tennoil.com.

KY/TENN REPORT
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