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  • Permit Activity last week.  
    • PA –27permits; Armstrong and Washington; it’s all EQT and Range
    • OH –7 permits; Belmont County only
  • Expo/Industry events for the next few months:
    • PA Energy Games September 6, 2014, Hughesville, PA
    • DUG Eagle Ford September 15 – 17, San Antonio, TX
    • Shale Insights September 24 – 25, Pittsburgh, PA
    • The Fourth Annual West Virginia Oil & Gas Expo October 1, 2014
    • Flash-Fire-Workshop October 8th Pro Football Hall of Fame, Canton, OH
    • Shale Gas Symposium, October 8th Agri-Plex Expo Center, Allentown, PA
    • Midstream PA 2014, November 18TH, Penn State

Latest facts and a rumor from the Marcellus and Utica Shale

  • Marcellus production keeps growing.  Marcellus shale gas production, for the first time ever recorded, exceeded 15 billion cubic feet per day (Bcf/d) through July, and further anticipated production growth will allow Marcellus gas to meet demand in Pennsylvania, West Virginia and several other U.S. states.

    Located primarily in Pennsylvania and West Virginia, the Marcellus shale play is the United States’ largest producing shale gas basin, accounting for nearly 40 percent of U.S. shale gas production. Over the past four years, Marcellus region production has grown dramatically from 2 Bcf/d in 2010 to its current level, according to the latest Drilling Productivity Report from the U.S. Energy Information Administration (EIA).
  • Utica almost matches Eagle Ford.  The U.S. Department of Energy says the production of natural gas from Ohio’s Utica shale over its first 20 months is close to initial natural gas production from the highly touted Eagle Ford shale in Texas.
    And Utica shale production is slightly more than Haynesville shale in Louisiana produced over its first 20 months, the agency’s Energy Information Administration said in a new assessment.
    On the other hand, Utica production is not close to matching Marcellus shale in Pennsylvania and West Virginia for natural gas, the agency said. Marcellus was generating 3 billion cubic feet per day after 20 months; it is now producing 14 billion cubic feet per day.
  • Shell news about the cracker plant. Shell project meeting in Vanport Township on August 12 at which Shell Chemicals officials will give a presentation on the proposed ethane cracker plan in Potter Township.  The meeting will start at 6 p.m. at the Vanport Township fire hall, 435 Jefferson Ave.  For more information call Vanport offices 724.774.6420.

    Shell Air Quality Permit Application

    A recent air quality permit application filed with Pennsylvania regulators by Shell Chemical Appalachia LLC for a multi-billion dollar ethane cracker gives an early glimpse of the project after years of speculation about the company's plans.

    Although Shell has not committed to constructing the facility in western Pennsylvania, the 715-page document filed in May is the first step in a lengthy process to earn federal and state approval for a project more than two years in the making so far. According to Shell, if the cracker is constructed, it would be the first project of its kind to be built outside the Gulf Coast in 20 years.

    The company's application includes an impact analysis of air, soil and vegetation, concluding that the "facility's emissions are not expected to result in adverse effects to soils, crops, or plant species of concerns, within the vicinity of the project site."
  • More money moving to the Permian.  Capital investment in horizontal drilling operations targeting the Wolfcamp Shale should exceed $12 billion this year and surpass the amount invested in the booming Bakken Shale of North Dakota by 2017, according to a recent analysis by the firm Wood Mackenzie in Houston.

    That compares to about a $9 billion capital expenditure last year in the Wolfcamp, which is the most prolific of the Permian Basin’s six tight rock formations that produce most of the region’s crude. The amount reflects increasing horizontal drilling exploration and well production that continues to dominate the overall oil and gas activity in the region, including Wolfcamp activity in New Mexico.

    Combined production of crude and lighter condensate will grow to an average 200,000 barrels per day.
  • Hess focusing on wet gas.  The company has made news recently for selling Utica acreage, not drilling it. It sold 30,000 acres in the dry gas section of the Utica for $485 million in the second quarter, and Aubrey McClendon’s American Energy Partners LP spent $924 million to buy 74,000 dry gas Hess Utica acres earlier this year.

    But New York-based Hess plans to sell its retail gasoline business, which is prominent along the East Coast, by the end of the year, and transition into a pure exploration and production company.

    “In the Utica, we and our partner, (Consol Energy Inc.), have a premier acreage position in the wet gas window featuring highly productive wells with high liquids content and high net-revenue interests,” CEO John Hess said in a second-quarter earnings call this week.
  • More pipelines in OH.  A second interstate pipeline is being planned to ship natural gas from the Utica and Marcellus shale regions across Stark County.

    Energy Transfer’s planned Rover Pipeline would carry up to 3.25 billion cubic feet of natural gas per day from West Virginia, Pennsylvania and Ohio, according to the project website.

    The main pipeline would leave the gas-processing plant in Leesville, cut across the northeastern edge of Tuscarawas County, then head west across southern Stark and Wayne counties on its way to the Midwest Hub in Defiance, according to a project map. From there, more pipelines would be built to take natural gas to Michigan and Canada.

    In total, the Rover mainline will include 380 miles of 36-inch and 42-inch diameter pipe and five compressor stations, plus 197 miles of supply laterals ranging in diameter from 24 to 42 inches, according to the project website.

    If approved by the Federal Energy Regulatory Commission, the mainline from Leesville to Defiance is expected to open by December 2016. The section between Defiance and the Union Gas Hub in Canada would begin serving the Michigan and Ontario markets in June 2017.

    American Energy-Utica, Antero Resources and Range Resources will be the largest shippers on the Rover pipeline, according to an Energy Transfer press release. Energy Transfer is based in Dallas, Texas.

    Another proposed pipeline, the NEXUS Gas Transmission Project, would cross eastern and northern Stark County, to deliver up to 2 billion cubic feet of natural gas a day from the Kensington processing plant in Columbiana County to Michigan and Canada. That project is seeking more users and still needs federal approval.
  • MarkWest’s Utica Shale operations headquarters.  Construction of MarkWest Energy Partners’ new administrative office in the Cadiz Industrial Park is putting area officials in a hopeful mood when it comes to the economic future of Harrison County with the groundbreaking for its new 20,000 square-foot facility.  This location will service as MarkWest headquarters for its Utica Shale operations in Ohio.
  • Eagle Ford producing 1 million barrels per day.  The development of the Eagle Ford shale formation in South Texas has transformed the area into a powerhouse of oil production.

    Al Pickett from the Permian Basin Petroleum Association Magazine reports:

    Texas’ second-biggest play, the Eagle Ford Shale, boasts five of the top 10 producing counties in the state, including numbers one through four. While it’s not expected to eclipse the Permian Basin, the Eagle Ford will approach the Permian’s numbers in coming years.

    In less than six years, the Eagle Ford Shale in South Texas has gone from a prospect that started as a gas play to a world-class oil play that has become one of the nation’s top three oil-producing regions.

    The prolific Permian Basin, of course, remains the king of North America’s crude oil-producing areas, producing more than a million barrels a day on the Texas side of the basin alone. In March, the Williston Basin in North Dakota and Montana, buoyed by horizontal drilling in the Bakken Shale, became the second region to top one million barrels a day in crude oil production.

    The Eagle Ford is about to become the third region to reach one million barrels of crude oil production per day.

  • Williams propose pipeline in NE PA.  A proposed 178-mile pipeline in northeastern Pennsylvania that aims to connect Marcellus Shale production to the Mid-Atlantic and southeast is advancing.

    The Federal Energy Regulatory Commission said it is preparing an environmental impact statement for the proposed Atlantic Sunrise expansion project.

    The pipeline, proposed by Tulsa-based midstream company Williams, will connect to the company’s Transcontinental Gas Pipeline (Transco), a 10,200-mile, 10.2 billion cubic feet per day (Bcf/d) natural gas system that spans South Texas to New York City.

    The 1.7 Bcf/d Atlantic Sunrise project will include construction in Pennsylvania, Virginia, Maryland, North Carolina and South Carolina.
  • Rex Energy is looking to bring in one or two rigs to PA. (RUMOR)
  • Pioneer focuses on the Permian Basin.  Pioneer Natural Resources said it’s selling all of its assets in the Hugoton field and the Barnett Shale for $495 million in cash. The sale of these assets will allow it to strategically redeploy capital to its core, oil-related Spraberry/Wolfcamp assets in the Permian Basin of West Texas.
  • Ultra Resources looking west.  Ultra Resources will be putting its resources in developing its holdings in Colorado and is walking away from the Marcellus.
  • Aubrey moves into midstream.  An Aubrey McClendon firm is teaming up with a Texas midstream company to build a $500 million pipeline to serve Ohio’s Utica Shale region.

    American Energy-Midstream LLC has entered a joint venture with Dallas-based Regency Energy Partners LP to build and operate Regency’s previously announced Utica Ohio River Project.

    The 52-mile, 36-inch pipeline from the Utica Shale in southeast Ohio will connect to existing pipelines, including the Rockies Express Pipeline that runs to the Midwest and Texas Eastern Transmission, an 8,947-mile pipeline that extends from Texas to New York City.

    The upsized pipeline would be capable of handling more than 2 billion cubic feet of natural gas per day initially, and that could be expanded to 3.5 billion cubic feet per day

    Regency will construct and operate the line with completion planned for the third quarter of 2015. It would pay 75 percent of the costs, with American Energy-Midstream paying the reaming 25 percent.
  • Marcellus helps Chevron improve profits.  With market conditions improving for crude oil, Chevron Corporation reported narrow improvements in revenues and profits for the second quarter of 2014. The company also was boosted by production growth in the Permian Basin, Marcellus Shale and Gulf of Mexico, although some of these improvements were offset by higher operational costs. Industrial Info is tracking $142 billion in active projects involving Chevron.
  • Antero shipping gas to LA.  Antero Resources has agreed to sell a portion of its Utica shale natural gas for foreign export from the Gulf Coast.

    The company intends to sell up to 200 million cubic feet per day to Texas-based Cheniere Energy Inc. to be turned into liquefied natural gas for shipment by tankers to overseas destinations.

    The gas will be shipped from Ohio via pipelines to the Sabine Pass Liquefaction LLC and its plant in Louisiana’s Cameron Parish. The volume being turned into LNG will increase as the plant grows.
  • MarkWest capacity plans and project updates. MarkWest Energy Partners will add 720 MMcfd of natural gas processing capacity and 110,000 b/d of NGL fractionation capacity in seven projects spread among West Virginia, Pennsylvania, Ohio, and East Texas.

    In this year’s second quarter, the company placed into service two gas processing plants with 320 MMcfd of capacity in the Marcellus shale, a 200-MMcfd plant in the Utica, a 20,000-b/d ethane and heavier fractionation in the Marcellus, and a 40,000-b/d of de-ethanization capacity in the Utica.

    In all, 19 processing and fractionation projects are under construction.


    The company will build a seventh 200-MMcfd processing plant at its Sherwood complex in Doddridge County, W.Va., to handle production from Antero Resources Corp. The plant will expand total capacity at Sherwood to 1.4 bcfd by third-quarter 2015.

    Later this month, MarkWest will start up the Sherwood IV plant, also supported by production by Antero Resources.

    And, MarkWest will build a sixth processing complex in the Marcellus—to be called the Hillman complex—in Washington County, Pa., based on rich-gas production by Range Resources. The complex will initially consist of Hillman I, a 200-MMcfd processing plant with associated de-ethanization. It is to start up during first-quarter 2016.

    Propane and heavier NGLs recovered at Hillman will move by a pipeline to the nearby Houston, Pa., complex for fractionation.

    The plans follow announcements earlier this year regarding capacity additions at the Mobley complex in Wetzel County and the Majorsville plant in Marshall County, W.Va.


    In nearby Harrison County, Ohio, MarkWest Utica EMG will develop Cadiz III, a 200-MMcfd processing plant expected to begin operations in first-quarter 2015. It will increase total processing capacity at Cadiz to 525 MMcfd.

    The complex currently consists of a 125-MMcfd cryogenic processing plant. During September, MarkWest Utica EMG will start up the 200-MMcfd Cadiz II plant to handle rich-gas production from Gulfport Energy and other producers.

    In July, MarkWest Utica EMG completed the 200-MMcfd Seneca III processing plant in Noble County, Ohio. The plant processes production from Antero Resources under a long-term, fee-based contract and has expanded total processing capacity of the Seneca complex to 600 MMcfd.

    Responding to “continued growth of Antero Resources and other producers,” MarkWest Utica EMG expects to complete the Seneca IV 200-MMcfd plant in second-quarter 2015.

    Also in July, MarkWest Utica EMG completed a 40,000-b/d de-ethanization plant at Cadiz to provide producers with the “ability to meet residue-gas quality specifications and downstream ethane pipeline commitments.”

    Purity ethane produced at the new Cadiz facility will be delivered into the ATEX pipeline, said the company.
  • Antero’s ethane could be going to Sweden.  Borealis AG, an Austrian petrochemical company controlled by Abu Dhabi, signed a long-term ethane supply contract with Antero Resources (AR) as it pushes ahead with a plan to import cheaper U.S. feedstock for its plant in Sweden.

    Antero has significant holdings in the Utica shale in southeastern Ohio.  The ethane would be shipped from the Marcus Hook terminal near Philadelphia, starting in late 2016.

Rig Count

  • Baker Hughes Rigs count for the August 1st reporting week.
    • PA
      • Marcellus 52 rigs – up 1
      • Utica 2 rigs – unchanged    
    • Ohio
      • Utica 43 – unchanged
    • WV
      • Marcellus 27 unchanged
    • TX
      • Eagle Ford – 204 down 7
      • Permian Basin – 472 up 5
    • NM
      • Permian Basin – 90 up 2
    • ND
      • Williston – 177 down 1
    • MT
      • Williston – 8 up 2
    • CO
      • Niobrara – 52 down 3
    • TOTAL U.S. Rig Count 1889 up 6

PA Permits for July 31, to August 7 2014

       County                Township             E&P Company
1.    Armstrong            Kittanning              EQT
2.    Armstrong            Kittanning              EQT
3.    Armstrong            Kittanning              EQT
4.    Armstrong            Kittanning              EQT
5.    Armstrong            Kittanning              EQT
6.    Armstrong            Kittanning              EQT
7.    Centre                  Snow Shoe            Range
8.    Clearfield               Bigler                   Campbell Oil & Gas
9.    Greene                  Morgan                EQT
10.    Greene                Morgan                EQT
11.    Greene                Washington          EQT
12.    Greene                Washington          EQT
13.    Washington         Amwell                 EQT
14.    Washington         Amwell                 EQT
15.    Washington         Amwell                 EQT
16.    Washington         Amwell                 Range
17.    Washington         Buffalo                  Range
18.    Washington         Cecil                     Range
19.    Washington         Cecil                     Range
20.    Washington         Independence         Range
21.    Washington         Independence         Range
22.    Washington         Independence         Range
23.    Washington         Independence         Range
24.    Washington         Jefferson                Range
25.    Wyoming            Mehoopany            Chesapeake
26.    Wyoming            Mehoopany            Chesapeake
27.    Wyoming            Mehoopany            Chesapeake

OH Permits – week ending July August 2nd, 2014

       County                 Township                E&P Companies

1.    Belmont                Union                      Amer. Ener. Utica
2.    Belmont                Union                      Amer. Ener. Utica
3.    Belmont                Union                      Amer. Ener. Utica
4.    Belmont                Somerset                Gulfport
5.    Belmont                Somerset                Gulfport
6.    Belmont                Somerset                Gulfport
7.    Belmont                Somerset                Gulfport

Take advantage of the bullish outlook and become a member in

Joe Barone 610.764.1232
Vera Anderson 570.337.7149
Andrea Bagnell 610.256.1898


Northeast Supply Enhancement