Archive for the ‘norse energy’ Category
Predictably, the Shale Shyster’s Publicity Stunt that was bankrolled by the Koch Brothers, got tossed on summary judgement. They claimed they had been damaged somehow (but no sum was specified) by an environmental review process – which they were not harmed by, environmentally, any more than anyone else. So they had no standing to challenge the review process based on environmental grounds.
Their lawsuit was flawed from the outset since it was billed as a regulatory takings claim, even though it never had any substance as a takings. And they lacked standing on environmental grounds to bring an Article 78 challenge against an environmental regulation, because they did not address what was wrong with the proposed regs from an environmental standpoint. In fact, none the plaintiffs had ever bothered to comment on the dSGEIS review that they said was taking too long. So the complaints got tossed for lack of standing.
As the judge explained, you cannot challenge a proposed environmental regulation on purely economic grounds:
So now these two Shale Shysters – Scott Kurkoski and Tom West – have to find some new dairy farmers to milk for legal fees. So they can carry this fracking farce to the appellate level. And get some more cheap publicity for losing lawsuits. What a plan.
This publicity stunt happened because:
1. The JLCNY is run by some seriously second rate people
2. The two shale shysters are incompetent attorneys
3. The shysters are adept at finding suckers to pay their legal fees
4. Upstate has a large supply of suckers
5. All of the above
A state judge on Monday dismissed a pair of lawsuits that sought to force Gov. Andrew Cuomo’s administration into deciding whether to authorize shale-gas drilling in New York. Court Dismisses Challenges to NY’s Fracking Review
Acting Supreme Court Justice Roger McDonough of Albany County tossed the lawsuits Monday afternoon, ruling that a group of upstate landowners and the bankruptcy trustee for a defunct oil-and-gas company lack standing to bring the legal challenge.
The Binghamton-based Joint Landowners Coalition of New York and the trustee for the Norse Energy bankruptcy liquidation, separately sued Gov. Andrew Cuomo and members of his administration last year, arguing that Cuomo has acted based on politics—not science—in delaying a decision on whether to allow large-scale hydraulic fracturing. So the plaintiffs sued the state based on a PR scheme concocted by their attorneys, not based on the law, in order to get some publicity.
The lawsuits were dismissed because neither the landowners group nor the bankruptcy trustee suffered any environmental harm, McDonough ruled. The state’s review of fracking, which was first launched six years ago, is guided by the State Environmental Quality Review Act, which requires an extensive analysis when a government action could have an impact on the environment.
”(The Joint Landowners Coalition has) not alleged that they will suffer any form of environmental harm as a result of (the state’s) actions/inactions relative to the (review) process,” McDonough wrote. “The three claims in the petition/complaint, and all of petitioners’ other submissions, make clear that the potential injuries are solely economic in nature.” But no economic losses were specified, nor was any proof of loss claimed.
(The plaintiffs were claiming that they were being harmed by an environmental review process, but they could not demonstrate that the process had damaged them environmentally any more than anyone else in the state. They had no way to even suggest a speculative economic loss .JLN)
State Attorney General Eric Schneiderman, whose office represented Cuomo’s administration in the court proceeding, praised the judge’s decision.
“The court’s decision to allow the state review of hydrofracking risks to continue is an important victory in our effort to ensure all New Yorkers have safe water to drink and a clean, healthy environment,” Schneiderman said in a statement.
Thomas West, an Albany-based attorney representing the bankruptcy trustee, said he would “likely” appeal the decision, “as soon as we get paid to do so.”
Decision here - 2014 07 14 Joint Landowners Coalition v DEC
The frackers mumbled about a takings which morphed into a half baked Article 78 which read as half baked takings claim. By two plaintiffs that never actually bothered to comment on the regulations that they said were taking too long. When the last time the DEC went to revise the GEIS, it never finished the process. Because the frackers didn’t want it finished.
New York hedge fund Mason Capital Management this week led a group that quietly bought a bankrupt hydraulic fracker that is suing the state to force it to reveal its controversial fracking study, The Post has learned.
The group used a holding company named “Any Acquisition,” in an attempt to shield its identity.
(So now the lawsuits are going to be “Any Acquisition v Town of Dryden” and “Any Acquistion v Dr Nirav Shah” ? Good luck with that in court. )
On Wednesday it reached a deal in federal bankruptcy court to buy Norse Energy for $2.65 million, a source with knowledge of the situation said.
Norse claims it owns leases to frack on roughly 180,000 acres in the state. Mason will also now be funding Norse’s legal case against the state, which is about to reach a critical stage, a source said. (Which means that Koch Money is funding both the JLCNY’s fracking publicity stunt and “Any Acquisition’s” publicity stunts. JLN)
In the little noticed case, bankrupt Norse has sued Gov. Cuomo, the New York Department of Environmental Conservation, and the state Department of Health to complete the Supplemental Generic Environmental Impact Statement relative to hydraulic fracturing. Norse had argued the study is legally is overdue.
There will be a hearing Friday on the case in Albany County Supreme Court. The state is moving to dismiss, while Norse had wanted a jury trial on the merits.
“They [the state] are going to say their conduct is not subject to judicial review,” plaintiff lawyer Thomas West told The Post, “and that none of the plaintiffs have standing in the matter.” (“Any Acquisition” now has has zero standing in the matter. JLN)
“We are going to press hard for a hearing, because our client had been harmed.” (“Any Acquisition” has not been harmed, so no damages claimed. JLN)
If it wins the case, Norse would have forced the state to release its results soon, and if the study concludes that fracking is safe, it could lead to drilling permits being issued by the end of the year, West said. (Norse is no longer a plaintiff. Norse no longer exists.)
Norse had teamed in the legal matter with the Koch brothers-funded, Joint Landowners Coalition of New York, sources said.
Mason and the Joint Landowners did not return calls for comment . (Nor did Norse . . . )
Chesapeake Instigates Legal Action Against New York Department of Environmental Conservation
Reuters April 1, 2014 Albany
Chesapeake Energy of Oklahoma, announced today through its lobbyist The Law Firm of Tom West, that it had found a surrogate plaintiff, Norse Energy, to file suit against the New York Department of Environmental Conservation (DEC), Commissioner Joe Martens, Governor Cuomo and Dr. Nirav Shah of the Department of Health. As The Law Firm of Tom West spokesperson Tom West explained, “Norse Energy has graciously offered to stand-in for my client in this matter.” When pressed why Chesapeake had found a company in bankruptcy to press the matter, Mr. West responded, “My client believes that a bankrupt Norwegian wildcatter more fairly represents the state of fracking in New York.”
By their plaintiffs you will know them. Why didn’t Chesapeake sue New York ? Why did the industry use a bankrupt rent-a-plaintiff as a surrogate ? A fair question. The state’s response to the lawsuit is that a bankrupt Norwegian penny stock company does not have standing to challenge New York’s rule making procedures. That such a challenge is frivolous, since Norse is not being re-organized, it is being liquidated. And, unlike West’s paying client Chesapeake, Norse has no assets worth contesting under the SGEIS – if the SGEIS – which has been delayed by industry lobbyists for years – was adopted tomorrow. Shown below are Norse’s HVHF drilling applications, mapped over the Acton Model of the Marcellus Shale.
None of these applications meet the minimum spacing unit size of 160 acres, so none of them could be permitted under New York’s drilling regulations – even if the environmental regulations – the SGEIS were in effect. The only Norse application that is close to the minimum would require a compulsory integration to get the remaining acreage. Meaning Norse, whose assets are being sold off, has no completed HVHF well permit applications in New York. So Norse, as Chesapeake’s surrogate in the matter, is arguing that it is being denied due process (under SGEIS review) when after 5 years and millions of dollars of investors’s money it has no HVHF drilling permit applications that are ripe for SGEIS review. That’s some surrogate plaintiff.
Then there is the landowners’ companion lawsuit against New York. That case is even shakier than the bankrupt Norse when it comes to ripeness: none of the plaintiffs have filed any HVHF drilling permit applications. So they cannot claim to be waiting on the SGEIS when they haven’t even bothered to file a drilling permit application that would be subject to SGEIS review.
And what of Chesapeake ? If there was any potential plaintiff to file a Section 78 action, they are it. And West is their lawyer. They have more HVHF drilling permit applications in the queue at the DEC than anybody. Even though they have disposed of their “non-core” (ie. junk) leases just across the border in Pennsylvania. Here’s the current list of HVHF Applications at the DEC that meet the minimum spacing unit requirements.
It costs Chesapeake nothing to leave the applications on the list, so there they sit, even though Chesapeake has no intention of drilling them. They’re not worth it. Chesapeake has no business interest in suing New York to expedite their review. Which is why its lobbyist has found it a surrogate – as a political stunt.
The only other company that has true standing in the matter is the other HVHF well applicant awaiting an SGEIS review. That would be Exxon, whose sole HVHF application is next to a trout stream in the Catskills.
Note that the putative plaintiffs in this fracking publicity stunt are a non-existent Norwegian penny stock scam now joined by an investor in that bankrupt Norwegian penny stock scam. Represented by Chesapeake’s lobbyist in Albany . . . . reprising his role as Shale Shyster.
15 January 2014, 4:03 pm
A hearing on a lawsuit that seeks to force a decision on shale-gas drilling in New York has been pushed back to March after the state Attorney General’s Office successfully asked for a delay.
State Supreme Court Justice George Ceresia late last week ruled in favor of the state’s request, delaying an in-court hearing on the suit until March 7. It had been scheduled for Jan. 24.
Last month, Albany-based oil-and-gas attorney Tom West filed what’s known as an Article 78 challenge on behalf of a shareholder and bankruptcy trustee for now-defunct Norse Energy. An Article 78 claim, which is used to challenge a state action, is generally put to an expedited schedule, with a hearing scheduled within weeks of its filing.
But the state argued that it would need more time to prepare, largely because the lawsuit makes claims based on the Department of Environmental Conservation’s 5 1/2-year review of high-volume fracking, the controversial technique used to help extract gas from the Marcellus Shale and other shale formations.
“Given the representation of two State Agencies and the Governor by this Office, the complexity of the underlying matter, and the Petitioner’s proposed Return, which would encompass over five years of documents produced and maintained by three offices, we had requested the courtesy of a 45 day adjournment to allow for a proper response to the combined Petition and Complaint,” Stephen Nagle of the Attorney General’s Office wrote on Jan. 9.
Ultimately, Ceresia sided with the state.
“While the Court understands the concerns of the petitioner (the Frack Zombies), and his contention that the (DEC fracking review) has been outstanding for more than five and one half years, it also recognizes that the proceeding herein was just filed on December 17, 2013, the matter is one of some complexity, and involves a record comprised of over five years of documents produced and maintained by three offices,” Ceresia wrote.
Big time . . .
New York Shale Play Gets Major Downgrade
NY Median IP Projections – Jerry Acton mapped his projections for median initial production at gas wells in New York based on production figures from wells in similar geology in Pennsylvania. Black diamonds represent uneconomic drilling.
BINGHAMTON, N.Y. — The real reason New York State has not allowed high-volume hydrofracking for natural gas in its Marcellus shale is that there is almost no gas that can be economically extracted, according to four retired professionals turned fracking analysts.
Their argument contradicts the gas industry’s narrative – widely accepted as fact by many landowners, investors, politicians and state regulators – that shale gas is a potential economic “game-changer” for poor, rural upstate New York.
For the past four years, two governors have repeatedly extended the state’s de facto moratorium on fracking while they tinkered with the rules. Since last fall, Gov. Andrew Cuomo has said he is waiting for the results of a vaguely defined health study, frustrating pro-gas groups with his apparent lack of urgency.
But the four analysts now argue that it’s geology – not health – that best explains Cuomo’s foot-dragging. In the governor’s cost-benefit analysis, they say, meager potential economic gains from drilling are not worth the environmental and political risk.
“The vast majority of the New York Marcellus shale is too thin (less than 150 feet thick) and too shallow (less than 4,500 feet) to yield economically recoverable natural gas,” said Jerry Acton, a retired systems engineer for IBM and Lockheed Martin who based his conclusions on drilling production results from neighboring Pennsylvania, where fracking is allowed.
Acton crunched four years of publicly available data supplied to regulators by Pennsylvania drillers. His analysis covered all 1,539 active natural gas wells drilled into the Marcellus shale in six counties that border New York. Acton found that median production results for specific towns and counties correlate closely with the depth and thickness of the shale layer drilled. The deeper and thicker, the better.
That finding points to trouble for drilling prospects in New York, Acton said, because its Marcellus layer is relatively shallow and thin. While a cluster of Pennsylvania gas wells only 40 miles southwest of Binghamton have been highly successful, they tap a Marcellus layer that is much thicker and deeper than any in New York. As Pennsylvania drillers moved west of that sweet spot into thinner, shallower sections with geology similar to New York’s, gas production levels plummeted.
Acton’s argument has not convinced Dan Fitzsimmons, president of the Joint Landowners Coalition of New York, a group of property owners who strive to profit by leasing land to drillers. Fitzsimmons said many factors influence the success of a gas well besides depth and thickness. And he noted that some Marcellus wells in southwestern Pennsylvania perform well in shale only 75 feet thick. “He’s an obvious anti,” Fitzsimmons said of Acton, referring to those opposed to fracking. “I don’t know who paid them.”
Acton coordinated his work with former Mobil executive Lou Allstadt, former Texas energy company executive Chip Northrup and geologist Brian Brock. They said their analyses were self-funded.
Allstadt once supervised Mobil’s oil and gas exploration and production in North America and Latin America, and in 1999 he coordinated Mobil’s side of that company’s $81 billion merger with Exxon. He initially favored fracking in New York but became a critic after losing confidence in the ability of the state Department of Environmental Conservation (DEC) to monitor and regulate it adequately.
Allstadt said his review of New York test wells dating back a decade, supports Acton’s theory that the state’s gas resources are actually quite modest. He noted that major oil and gas companies had drilled hundreds of test wells through the Marcellus and Utica shale formations in New York by 2008. “Long before the de facto moratorium on hydrofracking came into effect, the (major) players had already determined it wasn’t worth investing in New York shale plays, and they began investing elsewhere,” Allstadt said.
While Exxon Mobil still holds gas leases in Broome County (which includes Binghamton), Chevron, Gulf and other big players have moved on. In their absence, other players that are either more speculative or smaller, including Chesapeake, Talisman and Norse, moved in, only to register discouraging results.
That has not stopped industry groups from blaming the governor for holding up New York fracking. The Independent Oil and Gas Association of New York (IOGANY), the Business Council of New York and several landowner coalitions still claim that it is Cuomo’s refusal to grant fracking permits – not the state’s geology – that has postponed New York’s drilling boom and deprived the state of thousands of jobs.
2012 natural gas industry advertisement claimed New York’s drilling moratorium was depriving the state of “thousands of new jobs.”
IOGANY goes so far as to blame the recent bankruptcy filing of a unit of Norse Energy on the governor, overlooking the company’s dry holes in New York. “The shuttering of Norse’s New York operations is another deeply troubling result of New York’s political indecision regarding the future of natural gas exploration,” said Brad Gill, the association’s executive director.’
Norse went out of business because they couldn’t make money on vertical methane wells in New York and they could not find any productive Marcellus or Utica wells. Will address why at Cornell. JLN
The group declined to comment on Acton’s analysis through its chief spokesman, Jim Smith.
The gas industry began ratcheting up its talk of boom times in 2008 and 2009, following influential studies by Penn State geologist Terry Engelder, perhaps the leading evangelist for gas drilling in the Marcellus shale formation. Engelder was the first to describe fracking the Marcellus as an economic “game-changer.” Many others in industry, academia and politics have since borrowed the term to describe the benefits of fracking in general, including Ernest Moniz, President Obama’s Secretary of Energy.
In 2009, Engelder declared that the Marcellus, which runs under parts of New York, Pennsylvania, Ohio, West Virginia and Maryland, could “meet the natural gas demands of our country for more than 20 years, if the gas could be produced fast enough.”
The United States uses about 23 trillion cubic feet of natural gas per year. Engelder calculated that there is a 50 percent chance the Marcellus holds 489 trillion cubic feet of recoverable natural gas, including 71.9 Tcf in New York. The odds that New York holds at least 30 Tcf are 90 percent, he wrote in the same 2009 report.
But in 2011, the U.S. Geological Survey (USGS) estimated that the entire five-state Marcellus formation held 84 Tcf, about one-sixth of Engelder’s widely publicized comparable number.
Now Northrup argues that Engelder’s New York estimates are also too high. A retired planning manager for Atlantic Richfield, Northrup is a long-time oil and gas investor who holds an MBA from Wharton. He said he worked off the 2011 USGS Marcellus estimate to arrive at his own estimate of only 4.2 Tcf for recoverable Marcellus gas in New York. Northrup said he took into account existing state and local restrictions on drilling, including setbacks from rivers, lakes, aquifers and buildings, as well as total bans in the New York City and Syracuse watersheds and dozens of municipalities.
Engelder noted in an Oct. 28 email that his estimate was a gross figure that should not be directly compared to Northrup’s net figure, which included an 80 percent discount for restrictions on drilling. Engelder said that risk factor discount was inappropriately high because it presumes local farmers will support local bans after the moratorium is lifted.
“Applying Mr. Northrup’s risk factor of 80 percent to my calculations,” Engelder said, “my economically constrained estimates for New York” range from 2.7 Tcf to 6.3 Tcf. Northrup’s figure of 4.2 Tcf falls inside that range, he added.
We are addressing the geographic extent of potential shale gas production in New York, not the overall reserve estimates – because recoverable reserve estimates do not take economics or regulations into consideration. We do. JLN
Northrup also noted that New York’s natural gas drillers must contend with the relatively low market price for their product. The research firm Wood Mackenzie calculated that the average Marcellus gas well breaks even when the market price of gas hits $4.50/MMcf. It is well below that today – ironically because shale gas drilling nationwide drove it down. The Energy Information Agency predicts it will not hit the $4.50 threshold before the year 2020, under most scenarios.
In any case, New York drillers might need an even higher market price to break even because the state’s well production average would likely be dragged down by expensive dry holes. But rather than focusing on such limiting factors as geology and market forces, pro-drilling groups like the gas association, the Business Council and landowner coalitions have clung to Engelder’s view of the Marcellus shale’s potential and extrapolated their own jobs and wealth creation numbers. Their boosterism has been tinged with public bitterness that Cuomo’s rule-making process for fracking has stalled out, hamstringing state economic development.
In June 2011, the gas association touted a study from the Manhattan Institute that claimed that ending New York’s drilling moratorium “would spur over $11.4 billion in economic output” and create 15,000-18,000 jobs in the Southern Tier and western New York. Authors of that study later emerged as central figures in fracking-related academic scandals at Penn State and the University of Buffalo, but IOGANY still features their work on its website without reference to the controversies.
Weeks after release of the Manhattan Institute study, a group tied to the Business Council used industry assumptions to extrapolate even more enthusiastically the number of jobs. It projected that every gas well drilled in New York could create, directly or indirectly, 125 jobs.
For some, the Engelder spell was broken in August 2011 when the U.S. Geological Survey issued its estimate of recoverable gas from the Marcellus, slicing Engelder’s figure by 83 percent. According to the DEC, the USGS had based its figure on geology without factoring in industry-reported well production and decline data that may have contributed to Engelder’s number.
But when New York officials released proposed new drilling rules only days after the USGS bombshell, several of their charts reflected Engelder optimism rather than USGS caution.
For example, one chart in the DEC’s Supplemental General Environmental Impact Statement for high-volume fracking showed two scenarios for the number of Marcellus wells to be drilled in New York. Both were optimistic. In their “low” estimate scenario, the state could expect to see some 10,000 new wells drilled within a decade after the lifting of the drilling moratorium. In the “average” scenario, there would be 40,000 new wells.
The DEC then extrapolated those robust well-count numbers into eye-popping job growth estimates. That was particularly good news for the three upstate counties where the DEC expected half the state’s wells to be drilled: Broome, Chemung and Tioga. Under the agency’s “average” scenario, the three could expect a total of 14,999 new jobs (or 9.3 percent of their workforce as of 2010).
But Acton’s analysis of Marcellus drilling potential in those and other New York border counties was starkly more conservative. In his study of the 1,539 wells in 81 towns in six Pennsylvania border counties, Acton found that the median initial production per well was 3.9 million cubic feet per day. Wells in Wyoming and Susquehanna counties performed the best, with median production of 6.8 mmcf/d and 6.5, respectively. Moving west into shallower, thinner shale, the county medians tended to drop. Bradford was 4.4 mmcf/d, Tioga 2.7, Potter 1.6 and McKean 1.9. Well production did vary significantly within each county and even each town, but the median figures for both towns and counties tended to reflect the depth and thickness of the shale drilled.
Marcellus shale exposure above Marcellus, N.Y.
So while Wyoming, Susquehanna and Bradford counties were the best producers studied, the lower-performing Tioga, Potter and McKean were the most relevant geologically to an analysis that seeks to assess potential gas production in New York.
The Marcellus is less than 5,000 feet deep in most of New York’s border counties, making it even shallower than the layer in Pennsylvania’s three lowest performing border counties. Thickness is roughly the same. Acton attributed the performance of Pennsylvania wells at a given thickness and depth to New York areas with comparable characteristics. He found that wells in more than half of three New York counties – Broome, Tioga and Sullivan – can expect median production of between 2.1 and 4.0 million cubic feet per day. Smaller fractions of three other counties – Chemung, Chenango and Delaware – are also expected to produce at those levels. But the remaining sections of those six best-case counties fell in Acton’s lowest production category of less than 1.0 million cubic feet per day.
Five other counties that Engelder had listed as likely gas producers – Allegany, Steuben, Schuyler, Tompkins and Cortland – also fell in Acton’s lowest production category. (Engelder did not listed Sullivan County as a likely producer, but Acton did.)
Engelder agreed in part with Acton’s premise. “Regarding the notion that New York State is on the shallow, thin fringe of the Marcellus, this is true,” he said. “However, I think it is foolish to walk away from a natural resource without complete testing.”
Northrup said the majors did their tests. “If we are wrong and Engelder is right, the majors never would have left and the high-volume hydrofracking permit applications would be in the hundreds, not a baker’s dozen,” he said.
But Engelder added, “It is neither accurate nor fair to conclude that just because a company drilled through the Marcellus or Utica before the NYS moratorium, the company adequately tested either of these gas shales. They had a different drilling and testing program which did not target either of these shales. At very least, it can be said that the potential for wet gas in Allegany County was never considered.”
Both the Marcellus and Utica have been tested extensively in New York – at sufficient spacings to bracket the key variables to productivity in the study area. JLN
Fitzsimmons questioned the validity of Acton’s entire analysis, saying it is inappropriate to speculate on production potential based entirely on a well’s depth and the shale layer’s thickness. That ignores too many other key factors, he said, including the organic content of the shale, its thermal history, the quality of the frack and the length of the horizontal fracking lateral, among others.
We will address TOC and thermal maturity in context. JLN
Brock, the retired geologist, acknowledged the relevance of each of those and other factors. However, he defended Acton’s choice to draw conclusions based on depth and thickness because they are the dominant factors and because the information is available to the public.
Acton did concede Fitzsimmons‘ point that there are quite a few good gas wells in southwestern Pennsylvania drilled into shale only 75 feet thick. But he noted that those wells were also 6,500 to 8,000 feet deep – far deeper than any shale in New York. “Given enough pressure, you’ll get more out of a smaller reservoir,” Acton said. “It’s an odd combination that doesn’t exist in New York.”
Jerry Acton, Lou Allstadt, Chip Northrup, and geologist Brian Brock are making a joint presentation at Cornell University on Oct. 30 (Hollister Hall Room B-14 from 7-9 pm). It is open to the public.
This power point by Jerry Acton is an early version of the one he plans to use during his presentation Oct. 30 at Cornell University.
Peter Mantius is a reporter in New York. He covered business, law and politics at The Atlanta Constitution from 1983-2000. He has also served as the editor of business weeklies in Hartford, CT, and Long Island. He is the author of Shell Game (St. Martin’s Press 1995), a nonfiction book on Saddam Hussein’s secret use of a bank office in Atlanta to finance billions of dollars in arms purchases from Western countries before the 1991 Persian Gulf War.
16 5 4 48
Natural Resources News Service Tags: Andrew Cuomo, Binghamton, Brad Gill, Brian Brock, Broome County, Business Council of New York, chemung county, chesapeake, Chevron, Chip Northrup, Dan Fitzsimmons, dec, Department of Environmental Conservation, Ernest Moniz, Exxon Mobil, fracking, gas drilling, high-volume hydrofracking, Hydro fracking, IOGANY, Jerry Acton, Joint Landowners Coalition of New York, Lou Allstadt, Manhattan Institute, marcellus shale, new york state, Norse Energy, NY, Supplemental General Environmental Impact Statement, talisman, Terry Engelder, The Independent Oil and Gas Association of New York, Tioga County, U.S. Geological Survey, USGS —
- See more at: http://www.dcbureau.org/201310289248/natural-resources-news-service/new-york-shale-play-gets-major-downgrade.html#more-9248
First Anschutz sued the Town of Dryden over its fracking ban and lost. So Anschutz bailed on an appeal. Then Chesapeake’s lobbyist, Tom West got Norse Energy admitted in Anschutz’s place to appeal the case, which he lost. Now Norse Energy is in liquidation. Meaning there is no plaintiff – no damages, no claim against the town. So Tom West has to get the New York Supremes to pretend like there is actually something relevant to hear – other than Tom West’s fabrications, since the Middlefield case addresses the same legal issues. The Supremes may decide that Middlefield sufficiently tests Home Rule, and will decline to allow yet another Rent-a-Plaintiff stand-in be substituted in Dryden. Nobody v Dryden will have been resolved at the appellate level. Attorney David Slottje has the story:
|Here in New York, last week Norse Energy announced the conversion of its Chapter 11 bankruptcy case to a Chapter 7.|
|(There are generally two types of bankruptcy available to businesses: Chapter 11, and Chapter 7. Chapter 11 is a ‘reorganization,’ and Chapter 7 is a liquidation.)
Predictably, the ‘drill now, we’ll prove it’s safe later’ crowd is foaming at the mouth,insisting that Norse’s demise came about because NYS has not issued a finalized SGEIS for fracking. But let me tell you the REAL reason Norse filed bankruptcy.
Back in December of 2011, one of Norse’s drilling partners – Bradford Drilling Associates – brought suit alleging that Norse had engaged in fraudulent and deceptive practices so as to induce Bradford to invest $9 million in a Herkimer formation drilling program to be run by Norse.
(The subject drilling program was not in any way, shape, or form dependent upon finalization of the SGEIS; in fact, it appears that at the time the suit was commenced, Norse had drilled about one-half the number of wells contemplated by the contract between Norse and Bradford, albeit with significant cost overruns.)
The suit alleged (i) that Norse knowingly and intentionally made false and deceptive statements to Bradford about the drilling program because Norse was short of funds and needed an infusion of cash if it was to maintain operations as a going concern, (ii) that Norse was a profoundly incompetent operator – that significant cost overruns occurred because Norse utilized incorrect equipment and untrained crews, and (iii) that a result of “improper training, equipment, and oversight on the part of Norse” the “preventable and unnecessary death of a [gas field] worker” occurred.
Bradford filed its suit in Erie County (NY) State Supreme Court. (Erie County is in the western part of NY. According to various gasser blogs, because of the history of gas drilling operations in the western part of the state, state Supreme Court judges sitting there are particularly experienced and sophisticated about gas drilling matters.)
The Erie County Supreme Court judge hearing the matter concluded that Bradford was, in fact, likely to be successful on the merits of its claim, and ordered Norse to turn over $7,650,000 to Bradford (to be held in escrow) within two days of the date of the Order.
But Norse did not want to comply with the Judge’s order, and THAT is the primary reason the company filed for bankruptcy: to side step the order of the Erie County Supreme Court that Norse turn over $7,650,000 to Bradford.
[Under federal bankruptcy law, a company or person who files bankruptcy is referred to as a 'debtor.' When a debtor commences a bankruptcy filing, a concept called the'automatic stay' goes into effect. The automatic stay essentially halts actions by or on behalf of creditors to collect debts from the debtor. In this situation, one effect of the automatic stay was to prevent Bradford from enforcing the judge's Order that Norse turn over $7,650,000 to Bradford.]
| So where does this leave Tom West, Super Lawyer, and the Dryden Appeal? Kind of shriveled up . . .
|Many readers of this piece will recall that in September 2011 a company named Anschutz Exploration filed suit against the Town of Dryden (NY), alleging that Dryden’s protective law prohibiting certain gas drilling-related activities was invalid because the legal authority of towns to pass such a law was supposedly preempted or taken away by the state. During the pendency of that case, representatives of Anschutz boldly proclaimed that Anschutz would appeal if it lost at the trial court level.
Anschutz did lose, but they did not appeal. Instead, Anschutz apparently sold or transferred at least one or more of its Dryden leases to Norse, and Norse then stepped into Anschutz’ shoes to prosecute the appeal. The appeal was heard before the Third Judicial Department of the Appellate Division, and in May of this year that court ruled unanimously against Norse and in favor of the town, unequivocally holding that New York municipalities wishing to do so DO have the legal authority to pass local land use laws to prohibit gas drilling activities within their municipal borders.
(In NYS civil matters, the Appellate Division is the first level appellate court; the next level of appellate review is the Court of Appeals, which is the highest court in the state.)
Before Norse’s bankruptcy case was converted to a Chapter 7 liquidation, the Court of Appeals ruled that it would hear Norse’s appeal of the Third Department decision. Because of that, a number of people have written to us asking ‘What happens to the appeal in the Dryden matter, now that Norse is no longer a going concern?’
The answer is that it depends.
The leases obtained by Norse from Anschutz (for approximately 75 acres) are assets (that is, property) of the Norse bankruptcy ‘estate’, and are technically owned by the bankruptcy trustee. The Chapter 7 liquidation process envisions that the bankruptcy Trustee will cause the assets of the estate to be sold to the highest bidder, and the proceeds apportioned among the debtor’s creditors according to their respective priority.
Sometimes assets of a liquidating debtor are abandoned by the Trustee (if a buyer can’t be found), but presumably someone or some group will attempt to purchase Norse’s interest in the former Anschutz lease(s).
If a third party purchases the leases, and depending upon whether the purchased leases are by their terms even still in effect, the purchaser would then be free to ask the Court of Appeals to allow the purchaser to step into Norse’s shoes for purposes of prosecuting an appeal of the Third Judicial Department’s unanimous decision against Norse.
We spoke with the Clerk’s office of the Court of Appeals and were told that the Clerk will be sending out an inquiry to both Norse and the Town of Dryden, requesting their views as to the impact of the Chapter 7 bankruptcy on the pending case. The Court of Appeals will then consider the responses, and determine whether or not the Norse/Dryden appeal will continue.
The Cooperstown Holstein v Middlefield appeal will continue, no matter what happens with the Dryden case. So the Court of Appeals will, in any event, reach a decision on the home rule issue.
CEDC is a nonprofit, public interest law firm. We largely rely on the generous donations of individuals to enable our work to protect our environment, promote democracy and justice, and advocate for sustainable development.
We’d love to hear from you – write us at firstname.lastname@example.org
There, I said the obvious. Come to Cornell on October 30th and we will explain in grim detail why Norse went belly up. Why Anschutz didn’t bother to appeal the trial court ruling, and now why the fracking lobbyists will have to find another fracking zombie to stand in as a Rent-a-Plaintiff in Somebody With a Pulse vs Dryden.
Most of Norse NYS wells were vertical – not subject to the moratorium. Their wildcat tests of the Utica and Marcellus shale were dry holes. In the end, Norse proved to be more hot air than gas.
Norse Folds Because They Couldn’t Find Any Fracking Gas
ALBANY, N.Y. — A Norwegian company that invested heavily in upstate New York gas leases that it couldn’t develop under the state’s fracking moratorium has shuttered its U.S. operations and terminated its last eight employees.
Oslo-based Norse Energy Corp. announced last Friday it was converting from Chapter 11 to Chapter 7 bankruptcy, meaning it was ceasing operations and selling off remaining assets. Norse Energy Corp. USA, based in western New York, and its U.S. parent, Houston-based Norse Energy Holdings, sought bankruptcy court protection in December 2012.
Norse tried unsuccessfully in August to sell pipeline rights of way and gas leases on 130,000 acres in upstate New York to raise money to pay debts, according to company financial filings.
New York has had a moratorium on gas drilling using high-volume hydraulic fracturing, or fracking, since it began an environmental review in 2008. Gov. Andrew Cuomo has said he will decide whether to lift the ban after his health commissioner completes a health impact review.
While Norse blames its bankruptcy on the state’s moratorium, the ban only applies to the new techniques of horizontal drilling and high-volume fracking. Companies can still drill shallower vertical wells. Norse had hundreds of producing vertical gas wells in sandstone formations in central and western New York before its financial collapse.
New York’s roadblocks to the oil and gas industry include dozens of local bans and moratoriums. Norse is challenging one of these bans, in the central New York town of Dryden, in a case now before the state’s highest court, the Court of Appeals.
Norse is also contesting a lawsuit filed by landowners representing about 6,000 of the company’s leased acres. The company has extended the leases beyond their 5-year term, arguing that the state’s moratorium has prevented it from drilling. Landowners say the moratorium isn’t a valid reason to extend the leases. In a similar case, Chesapeake Energy recently walked away from about 200 leases rather than appeal a court decision in favor of the landowners.
In the case against the town of Dryden, attorney Tom West, representing Norse, said he expects the case to go forward even if the plaintiff no longer exists.
“Another operator would take over those leases, and we would substitute them in” for Norse, West said Thursday. “We surely can find somebody.”
Norse was substituted in after a trial-level state judge ruled against the first company to challenge Dryden’s ban, Denver-based Anschutz Exploration. Anschutz chose to let its New York leases lapse rather than pursue an appeal.
A representative of Norse didn’t return a phone message or email seeking comment on Thursday.
The New York supreme court has announced it will hear the appeal of Anschutz v Dryden, even though the original plaintiff, Anschutz Energy, dropped out of the case after the trial court ruled in favor of the Town of Dryden. To keep the case alive – for largely political purposes – the plaintiffs attorney found a replacement plaintiff – Norse Energy, who, in order to have standing as the substitute Rent-a-Plaintiff, bought a few Anschutz leases for $1 each.
If Anschutz had thought their claims really had any merit, they would have appealed the trial court ruling. They read the ruling and bailed.
Catch now is that Norse Energy is bankrupt, being sued by its former drilling partners, investors and – soon – its officers may be sued by the bankruptcy committee. Which means that Norse probably will not exist by the time the New York high court hears the case next year.
Meaning Chesapeake’s Albany lobbyist, Tom West, who is the Rent-a-Litigator acting on behalf of the bankrupt Norse Rent a Plaintiff, would have to find yet another plaintiff to continue the suit against Dryden – by finding a company to buy a few token leases (which may now no longer be in force) in order to pretend to be the aggrieved party.
Which begs the question: if the aggrieved party (Anschutz) did not bother to pursue the case, and the Rent a Plaintiff may soon no longer exist, who is paying Chesapeake’s lobbyist to perpetuate it ? (Hint: They are from Oklahoma and are owned largely by the Chinese)
Norse, which holds drilling leases on roughly 130,000 acres in New York state, entered bankruptcy court in December. Last month, a court approved its plan to move ahead with an asset sale. West said it is unlikely that any change in ownership would take place before the Court of Appeals hands down its decision. If that were to happen, he would have to secure the new leaseholders as plaintiffs.
Let me translate that for you from lawyerspeak : The actual plaintiff against the little town of Dryden is not a person, it’s not a company – it’s the whole sorry fracking conglomeration.
In Norse’s Second Quarter Report 2013, it says that it may not have funds to operate beyond the end of the year. From the report’s Corporate Overview, pg 3:
Total Norse staff will be reduced to eight. Houston and Buffalo office leases continue on a month-to-month basis. The Company continues to seek ways to reduce its burn rate even further.
The ability of the Company to remain a going concern requires further asset sales, equity issuances, and/or debt issuances. The Company remains concerned about being able to execute additional asset sales and/or raise debt/equity before the DIP loan runs out by the fourth quarter.
Meaning, they won’t be singing Auld Lang Syne in Oslo on New Year’s Eve but Goodnight Irene
Top court to review fracking ban laws
Court of Appeals weighs challenges to local governments
By Casey Seiler
Updated 11:18 pm, Thursday, August 29, 2013
Since the assets are worthless. The bankruptcy creditors committee has voted to go after the Norse Energy executives that allegedly crooked investors, welshed on road repairs, missed financial filing dates, could not find a gashole with both hands – and just generally ran Norse Energy into the ground. What a fracking surprise.
Norse Energy helped turn “frack” into a four letter word in Norwegian and English.
Creditor Committee Motion
26 August 2013
Norse Energy Corp. ASA (“NEC” ticker Oslo Stock Exchange, Norway) announces that bidding on its 363 (bankruptcy) asset sale resulted in less than expected bid values. The Company is now evaluating all of its options, including continuing the 363 (bankruptcy) sale process.
Also, as part of the bankruptcy proceeding, the creditors’ committee is seeking authority to pursue claims against the parent companies of Norse USA, certain Company officers and directors and others.
The Company will advise the market of significant developments.
For further information, please contact:
Or just have a tipstaff hit him with a summons. That might get his attention. . .
Meanwhile, Norse shares are now officially worth one US penny:
Loan Conversion Notification
28 August 2013
Norse Energy Corp. ASA (“NEC”) has received a notification of conversion of NOK 400,000 of its NOK 7,100,000 convertible loan at aconversion price per share of NOK 0.075, representing issue of a total of 5,333,333 new shares. The conversion will be effected as soon as possible.
As part of their bankruptcy restructuring agreement, Norse Energy Corp. held an auction of its assets that did not yield any sales, leaving officials uncertain as to the company’s next step.
“The activity was less than what we expected, and we’re evaluating our options,” said Norse chief legal officer Dennis Holbrook. “That’s sort of where we stand right now.”
The auction — or 363 asset sale — is a tool used by distressed companies to sell their assets. Buyers get on board to purchase assets at potentially low prices. These are viewed as efficient compared to sales that take place as part of a reorganization plan, and can provide buyers with benefits that can’t be obtained in a sale outside of a bankruptcy. Norse, which had been headquartered in Blasdell, declared bankruptcy on Dec. 6.
Holbrook said that last week Norse was unable to sell 130,000 net acres of land in Western and Central New York, plus rights of way pipeline construction associated with that leased acreage, and six wells that were drilled but not online.
For years, the company had been busy selling parts of its business and re-investing that money in New York to develop the Marcellus Shale formation in New York. In 2008, the company consolidated operations in Blasdell and in 2010 planned to hire 40 scientists, Ph.Ds, lawyers and others to grow their business. However, New York doesn’t allow the shale to be drilled, and is still awaiting results of a state environmental review.
“We had pinned all our assets in New York state, but it’s been an expensive proposition, waiting on New York for a number of years,” he said.
When the CFO bails from a bankrupt company, it’s time to head for the door.
So he wrote himself his last paycheck and bailed.
Norse Energy Announces Resignation of Chief Financial Officer
29 July 2013
Norse Energy Corp. ASA (“NEC” ticker Oslo Stock Exchange, Norway; “NSEEY” ticker U.S. OTC) announces that its Chief Financial Officer (CFO), Chris Steinhauser, has resigned effective 6 September 2013 to pursue other interests. Mr. Steinhauser will remain with the Company to assist with transitional matters until that date.
Norse further announces that, effective 7 September, Chief Executive Officer (CEO), Mark Dice, will assume the CFO duties, on an interim basis, in addition to his CEO responsibilities. “I would like to thank Chris for his many contributions to the Company and wish him the very best in his future endeavors,” commented Norse CEO Mark Dice.
Bye bye Chris. See you in the blogosphere.