Monday, September 20, 2010

Chesapeake (NYSE:CHK) Must Inspect 171 Marcellus wells After Methane Leak

A methane leak in six wells of Chesapeake Energy Corp. (NYSE:CHK) has resulted in them being ordered to inspect 171 natural gas wells in Pennsylvania's Marcellus Shale.

Reports were received by Pennsylvania's Department of Environmental Protection over what was described as "bubbling water" on the Susquehanna River in northern part of the state.

Chesapeake believes it is methane gas from six wells about two or three miles from the area it was seen.

DEP Secretary John Hanger said in a statement, "Ventilation systems have been installed at six private water wells. Water has been provided to the three affected homes, and Chesapeake is evaluating and remediating each of its well bores within a four-and-a-half-mile radius of the gas migration, which is essential."

The reason for the order to examine 171 in the region were because the same well casing procedures were used on all of them.

Wells casings are used as a barrier to rock formations in order maintain the integrity of the well. They are placed in a well bore for that purpose.

Chesapeake recently had its price target cut by Credit Suisse (NYSE:CS) because of weak natural gas prices.

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