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Facts & Rumors # 307

October 6, 2018

Shale Logo Newsletter

Expo/Industry events for the next few months

Utica Summit
October 10, 2018
Walsh University
North Canton, OH

Shale Insight
October 23-25, 2018
David Lawrence Conference Center
Pittsburgh, PA

For other events visit

Latest facts and a rumor from the Marcellus, Utica, Permian, Eagle Ford, Bakken and Niobrara Shale Plays

Williams Receives Approval for Atlantic Sunrise.  Oklahoma-based Williams says it plans to begin service on its $3 billion Atlantic Sunrise natural gas pipeline tomorrow, Kallanish Energy reports.

The announcement came after the Federal Energy Regulatory Commission approved beginning service on the pipeline in five Eastern states: Pennsylvania, Maryland, Virginia, North Carolina and South Carolina.

Backed by long-term shipper commitments, the project increases the design capacity of the Transco pipeline, the largest-volume natural gas pipeline system in the U.S., by 1.7 billion cubic feet per day (approximately 12%) to 15.8 Bcf/d, Williams says.

In the process, the project further strengthens and extends the bi-directional flow of the Transco system, directly connecting Marcellus gas supplies with markets as far south as Alabama, according to Williams.

“This project makes the largest-volume pipeline system in the country even larger, further executing on our strategy to connect premier natural gas supply areas with the best markets in the country,” says Alan Armstrong, Williams president and CEO, in a statement.

“The project is significant for Pennsylvania and natural gas-consuming markets all along the East Coast, alleviating infrastructure bottlenecks and providing millions of consumers direct access to one of the most abundant, cost-effective natural gas supply sources in the country,” he said.

Greenfield construction on the Pennsylvania portion of the project began in September 2017. The project featured the installation of 186 miles of Greenfield pipe, 12 miles of pipe looping, 2.5 miles of pipe replacement, two new compressor stations and compressor station modifications in five states.

The Greenfield segment of the Atlantic Sunrise project, known as the Central Penn Line, is jointly owned by Transco and Meade Pipeline Co. Meade is owned by WGL Midstream, Cabot Oil and Gas and EIF Vega Midstream.

Transco delivers natural gas to customers through its more than 10,000-mile pipeline network with a mainline extending 1,800 miles from South Texas to New York City, flowing through 12 states.

Some of the natural gas may be exported as liquefied natural gas at Cove Point LNG in Maryland.

Trump Nominates McNamee for FERC Position.  President Trump is pushing Department of Energy official Bernard L. McNamee of Virginia to a vacant seat on the Federal Energy Regulatory Commission, Kallanish Energy reports.

McNamee, a supporter of keeping coal and nuclear power plants open, must be confirmed by the Senate. That appears unlikely until after the mid-term elections in November.

He would replace Pennsylvania’s Robert Powelson, who left FERC last August to head a water trade group. The term expires June 30, 2020.

Trump said he intends to nominate McNamee to the post in a Wednesday statement from the White House.

McNamee appears to be more closely linked to the White House’s efforts to boost coal than Powelson, according to some observers.

Since last May, McNamee has served as executive director of the Department of Energy’s Office of Policy. Previously, he served as deputy general counsel for energy policy at Doe.

He has served four attorney generals in Texas and Virginia, worked as a policy advisor for a Virginia governor and served as a domestic advisor to U.S. Sen. Ted Cruz, R-Texas.

Is “Peak Oil” Making a Comeback!  Market participants and analysts are all focused on the imminent oil supply gap that is opening with the U.S. sanctions on Iran just five weeks away. But beyond the shortest term, a larger and more alarming gap in global oil supply is looming—experts forecast that unless large oil discoveries are made soon, the world could be short of oil as early as in the mid-2020s. The latest such prediction comes from energy consultancy Wood Mackenzie, which sees a supply gap opening up in the middle of the next decade. At the current level of low oil discoveries and barring technology breakthrough beyond WoodMac’s assumptions, that supply gap could soar to 3 million bpd by 2030, to 7 million bpd by 2035, and to as much as 12 million bpd by 2040. It’s not that discoveries aren’t being made, they just aren’t enough to offset the natural decline at mature fields while global oil demand is still expected to continue to rise. The main reason for lower discoveries is that spending on exploration has drastically plunged since the 2014 oil price crash. The good news is, according to Wood Mackenzie, that the volume of new discoveries is correlated with spending on exploration. So if spend were to increase, the chance of more and major oil discoveries gets higher.

Trump to Push Pipelines in 2019.  President Trump is likely to make a renewed push to permit and build oil and natural gas pipelines next year, his top economic adviser said Thursday. Larry Kudlow said a new pipeline push would be both a continuation of Trump’s aggressive energy deregulation streak and his ongoing infrastructure agenda. “We need infrastructure, including pipelines,” Kudlow said at an Economic Club of Washington event. “We need east to west, we need west to east.” Kudlow said the need for pipeline is especially strong in the natural gas industry, where drillers, thanks to the boom in fracking and horizontal drilling, are producing more gas than there is pipeline capacity to carry. He said an executive from an unnamed energy company that drills in the Permian Basin in Texas and New Mexico came to the White House Wednesday and spoke with both him and Trump. “He’s got more than he knows what to do with. They’re burning it off, flaring,” Kudlow said of the unnamed executive. Kudlow indicated that Trump’s push is likely to include federal actions to override states that have blocked pipelines. David Rubenstein, president of the Economic Club, asked Kudlow what the hurdles have been to pipeline development. “The states have some problems. But we also have some leverage at the federal government,” Kudlow replied.

U.S. Needs to Expand NatGas Development.  U.S. Interior Secretary Ryan Zinke said Friday in Pittsburgh that the country should continue to expand natural gas and offshore development to push it closer to energy independence. Shrugging off the idea that the country might be approaching a time of “peak oil” or “peak energy,” after which production would begin to decline, Zinke said the country’s energy portfolio has changed dramatically in the past 10 years. He spoke at an energy and manufacturing summit hosted by the nonprofit Consumer Energy Alliance. Pennsylvania, which is second only to Texas in producing natural gas, is poised to expand development, said Alan Armstrong, president and CEO of energy infrastructure company Williams. “Today, the U.S. is the top destination for somebody wanting to invest in petrochemicals. So, in just a 10-year time frame, we’ve gone from being one of the worst places to invest in the petrochemical industry to one of the very best places. And Pennsylvania’s gas, and the product coming out of here, is one of the places that are making a big difference in that.”

More Midstream Partnering in the Permian.  Sugar Land-based Lotus Midstream plans to join Exxon Mobil and Plains All American to construct a multibillion-dollar crude oil pipeline system from West Texas to Houston and Beaumont. Lotus, a new company backed by private equity funding, is entering the race with Exxon and Plains to build out pipeline networks that stretch hundreds of miles across Texas to deliver crude from the booming Permian Basin to refining and port hubs near Houston. Lotus, Exxon and Plains All American Pipeline are expected to create a formal joint venture soon.

Richmond Judges Hear 4 Anti-Pipeline Cases.  (Thanks, MDN)Line ’em up and knock ’em down. Last Friday a panel of judges from the U.S. Court of Appeals for the Fourth Circuit (in Richmond, VA) heard four cases against Mountain Valley Pipeline (MVP) and Atlantic Coast Pipeline (ACP), one after another.  Both pipeline projects, very important to the Marcellus/Utica region, are in various states of litigation, brought on by the odious Sierra Club and co-conspirators like the Southern Environmental Law Center.

Mariner East 2 Held Up.   Energy Transfer Partners and their Sunoco Logistics unit had previously predicted the Mariner East 2 NGL (natural gas liquids) pipeline would be up and running no later than Sept. 30. That date came and went, and the pipeline is still not ready. According the ET, the reason is due to “regulatory issues.”

Oil and Gas Companies Winner in Trump’s Trade Deal.  Count the oil and gas industry among the winners of the new NAFTA — or as Trump is rebranding it, the United States-Mexico-Canada Agreement, or USMCA. The oil business convinced the White House to keep a number of features of the old NAFTA deal in the new agreement, including provisions that help protect U.S. oil companies’ investments abroad and allowed for tax-free transport of raw and refined products across borders. “We’re mostly happy that it’s been preserved, that many of the provisions in the original NAFTA that had supported the integrated North American energy markets are still in place,” said Aaron Padilla, senior adviser for international policy at the American Petroleum Institute, the nation’s biggest oil and gas lobbying group. Among their biggest concerns was the preservation of a system of resolving international trade disputes called “investor-state dispute settlement,” or ISDS.

Cybersecurity for Pipelines.   A top Department of Homeland Security official met with oil and gas industry executives yesterday to discuss keeping hackers out of U.S. pipeline networks. Chris Krebs, undersecretary of DHS’s National Protection and Programs Directorate, said a new “pipeline cybersecurity initiative” would take aim at emerging threats to the hundreds of thousands of miles of crude oil and natural gas pipelines that crisscross the U.S. He joined senior officials at the Department of Energy and Transpiration Security Administration yesterday at a closed-door meeting with the Oil and Natural Gas Sector Coordinating Council, a group of CEOs and security professionals from various refining, pipeline and oil-drilling trade organizations. Pipeline companies’ cyber defenses have come under federal scrutiny as natural gas has grown increasingly vital to U.S. national security. In the past three years, natural gas has eclipsed coal as the No. 1 fuel source for electric power generation in the U.S., according to data from the U.S. Energy Information Administration.

More Problems for Mountain Valley Pipeline.  The 4th Circuit U.S. Court of Appeals dealt a major blow to the West Virginia pipeline project Tuesday when it vacated its Army Corps of Engineers permit, finding that the project didn’t meet the requirements for a nationwide permit to harm streams and wetlands. The court vacated that verification and said it would explain its reasoning more fully in a forthcoming opinion, Pro’s Ben Lefebvre reports. The project’s developer, Mountain Valley Pipeline LLC said in a statement that it is assessing whether it can continue construction in areas that don’t impact streams and wetlands along the 160 miles of the route covered by the vacated permit, and that it plans to apply for a new Army Corps permit following changes to West Virginia’s state certification process. The company said it expects to secure a new permit in early 2019 and hopes to have the pipeline fully in service by the fourth quarter of 2019.

EQT Still Expects to Meet MVP Deadline.  EQT Corp said Oct. 3 it still expects to finish the $4.6 billion Mountain Valley pipeline from West Virginia to Virginia in fourth-quarter 2019 despite a recent decision by a federal court to vacate a federal permit for the project.

The Fourth Circuit Court of Appeals on Oct. 2 sided with environmental groups in a dispute about a permit that allowed the company to cross rivers in West Virginia.

Specifically, the court vacated the Clean Water Act Section 404 stream and wetland crossing permit, called the Nationwide 12 permit, issued by the U.S. Army Corps of Engineers.

EQT said the decision affects steam and wetland crossings along about 160 miles of the pipeline route in West Virginia.

EQT said in an email it was “evaluating options to understand its ability to continue with construction activities that do not include stream and wetland crossings along this portion of the route.”

Permits 9 27 to 10 4

Joe Barone 610.764.1232

Vera Anderson 570.337.7149

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Utica Summit 2019