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  • Permit Activity last week.  
    • PA –53 permits; Chief active in Bradford and Sullivan Counties; Talisman back in Bradford; Hilcorp getting more permits in Lawrence County; and Rex in Butler County
    • OH –15 permits; Chesapeake in Harrison County; Hess getting more permits in Belmont County

Expo/Industry events for the next few months:

PA Energy Games September 6, 2014, Hughesville, PA

  • The #1 event in Northern PA; well attended by E&P companies drilling in the five county area.

DUG Eagle Ford September 15 – 17, San Antonio, TX

Shale Insights September 24 – 25, Pittsburgh, PA

  • PA’s only Expo where all the E&P companies will be in attendance from Access Midstream to XTO Energy.  Come visit us at booth 535.  We’ll make introductions wherever we can.

The Fourth Annual West Virginia Oil & Gas Expo October 1, 2014

Flash-Fire-Workshop October 8th Pro Football Hall of Fame, Canton, OH

  • Bill Radford, Safety Basin Coordinator, Eclipse Resources will be the featured speaker. It will be a good networking event for everyone in safety compliance and you’ll learn latest about FR clothing and handling.

Shale Gas Symposium, October 8th Agri-Plex Expo Center, Allentown, PA

Utica Summit II, October 14th, Canton, OH

  • Learn about the downstream opportunities coming to OH and western PA as the result of the cracker plants and more.  National and local speakers will give you real insight into what’s coming.  

Midstream PA 2014, November 18TH, Penn State

  • PA’s first midstream conference.  Speakers from MarkWest, Williams, UGI and more.  You will learn what’s coming in midstream in 2015. Limited sponsorships and seating.  Look for more information in next week’s Facts & Rumors.

Latest facts and a rumor from the Marcellus and Utica Shale

  • Range hits a big one!  Range Resources just hit a super well.  A Marcellus super-rich well tested at 24-hour rate of 6,357 boe per day, or 38.1 Mmcfe per day (65% liquids), with a 7,065 foot lateral and 36 frac stages. This is the highest rate Marcellus well in the southwest portion of the play drilled to date by any operator.

    This lateral is much longer than their typical well. They seem to be experimenting with newer frac spacing, both in the lateral and between each. While it’s true there are no "gushers" in the gas industry, this yield shows what might be possible into the future with more clever drilling, spacing and fracking stages and technologies. There are likely to be hundreds of new improvements in the fracking process alone in the coming years.
  • First cracker in OH.  Appalachian Resins, Inc. (AR) plans to lease approximately 50 acres of land in Salem Township, Ohio, to build an integrated 600 million pound per year ethylene/polyethylene production facility, the Houston-based firm announced in an emailed statement to DownstreamToday.

    "There is no difference in our development activities, we have essentially only moved across the Ohio River," James Cutler, AR's CEO, said Sunday after announcing his company's signing of a land lease letter of intent with the Monroe County (Ohio) Port Authority. "We will not be integrating with an existing operating (brownfield) facility but will be more of a 'greenfield' location. However, we will have improved rail facilities."
  • $110 billion in Marcellus spending.  The top 20 Marcellus Shale operators will spend nearly $110 billion on drilling in the play through 2035, according to a new report released today by Wood Mackenzie. The research firm said the Marcellus holds more than $90 billion in remaining value. Capital expenditure in the Marcellus is expected to reach $10.9 billion this year.

    While rig counts in the Marcellus have decreased in the past two years, improved efficiency and a renewed focus on core sub-plays have stimulated growth. Wood Mackenzie raised its Marcellus Shale gas production forecast through 2020 from 14 billion cubic feet equivalent per day to 20 billion cubic feet equivalent per day. The Marcellus will soon account for 25% of total U.S. shale gas supply, the researchers said.
  • Williams plans expansion on the Transco interstate pipeline.  Williams has launched an open season for users interested in capacity on its Diamond East project, an expansion of the 10,200-mile Transco interstate pipeline to allow more Marcellus Shale gas to head to the northeast.

    The project will create an additional 1 billion cubic feet per day of firm natural gas transportation capacity to markets in the northeastern U.S. by mid-2018, the Tulsa-based midstream company said.

    The Diamond East Project is being designed to ship natural gas from points in Lycoming and Luzerne counties to Mercer County, N.J. The price tag of the project is estimated to be between $500 million to $800 million, depending on customer participation and volume commitments established during the open season, the company said.

    The open season, which started Aug. 26, is slated to end Sept. 23.

    "Diamond East is another example of Williams' commitment to add critical infrastructure that will connect growing Transco markets to abundant, economically-priced Marcellus production," said Rory Miller, senior vice president of Williams' Atlantic-Gulf Operating Area, in a statement.

    "Unlike competing projects designed to serve the New Jersey market pool, Diamond East is a cost-effective expansion along an existing Transco corridor," he said.

    Diamond East is subject to approval by the Federal Energy Regulatory Commission and other agencies.

    The project comes in addition to the $3.3 billion in capital expenditures planned through 2017 on Transco growth projects designed to serve markets in the Northeast, according to Williams.
  • CONSOL makes midstream venture official.  Consol Energy makes official its MLP plans for its midstream assets in the Marcellus Shale , as it and joint venture partner Noble Energy files with the SEC for an IPO in what will be known as Cone Midstream Partners. The companies say they hope to finish the IPO by early Q4, and Cone Midstream will trade on the NYSE under the ticker CNNX.
  • NGV sales sluggish.  Despite promises of a cheap, plentiful energy source that could meet America’s needs into the future, commercial natural gas vehicle sales are still struggling, the Wall Street Journal reports.

    Even during the best market for truck sales in eight years, the sale of natural gas trucks failed to meet projections by a significant margin. About 10,000 natural gas-powered trucks are expected to be sold this year, a slight boost from last year’s roughly 8,500 but far short of the 16,000 retailers hoped for.

    So what’s cooling enthusiasm for the fledgling four-wheelers? In large part, their cost. A natural-gas powered truck rings up around $50,000 higher than its diesel-powered cousins, and it’s not easy for truckers to recoup that cost. Though natural gas is cheaper than gasoline, it also creates less efficient mileage – a gas truck will travel about 200 miles to a diesel model’s 240. Even for commercial applications wherein a truck is expected to travel 125,000 miles a year that means a four-year wait until the cost balances out. As most trucks are replaced every three to four years, that means no real benefit to a trucker willing to make the switch.
  • XTO Presidents identifies opportunities and challenges facing WV.  XTO Energy President Randy Cleveland opened the Wednesday session to explain how the energy industry can help “put West Virginia first.”

    “If you're lucky you find yourself sitting on a treasure,” Cleveland said. “West Virginia is sitting on a treasure with generational implications for decades to come.

    “Of course, I'm talking about Marcellus Shale,” he said.

    Cleveland went on to explain the opportunities for economic growth and job creation in the state, as well as setbacks the state will have to overcome, in regards to Marcellus Shale gas production.

    “Shale gas is transforming the global energy landscape,” Cleveland said. “Marcellus is at the heart of this transformation.”

    Globally, natural gas demand is expected to rise tremendously over the next several decades, Cleveland said. This growth, he continued, will create new jobs and investment opportunities — not only in the energy industry, but also in the manufacturing and chemical production sectors — particularly in West Virginia.

    “As one of the four states with significant Marcellus acreage, West Virginia has a tremendous opportunity to capitalize on natural gas resources,” Cleveland said. “Our growth here will be tremendous.”

    However, Cleveland continued, West Virginia needs to change its political climate in order to keep up.

    “West Virginia needs business tax policies that remain competitive with other states,” he said.

    “We also need policies based on facts and sound science,” he continued. “West Virginia would benefit from modernizing its laws to maximize efficient energy production and minimize destruction to the environment.”

    Additionally, Cleveland pointed out the need for the “ingenuity and hard work of countless men and women” in the industry, and the consequential greater need for a skilled workforce.

    “There's a growing gap between available jobs being created and pool of skilled workers,” he said, adding that America lags behind in terms of college grads with STEM degrees and high school grads with trade skills, such as welding and pipefitting.

    But it's not only students who will need to gain industry expertise, Cleveland said: “The U.S. will need more regulators at the state level who have an understanding of oil and gas operations.”
  • MarkWest expands in Butler County, PA. A natural gas processing complex in Butler County will see another expansion to handle growing production from the Marcellus and Upper Devonian shale formations, MarkWest Energy Partners said.

    The Denver-based midstream company said the expansion of the Keystone complex in Evans City is backed by new agreements with Rex Energy, a driller based in State College, and EdgeMarc Energy, a driller based in Canonsburg.

    MarkWest plans to build Bluestone III and Bluestone IV, both of which are 200 million cubic feet per day (MMcf/d) plants that are expected to begin operations in late 2015 and early 2016, respectively.

    In addition, MarkWest will build 40,000 barrels per day (b/d) of additional de-ethanization capacity and more than 20,000 b/d of additional propane and heavier natural gas liquid fractionation capacity, the company said.

    Rex Energy recently expanded its footprint in the region with the acquisition of about 208,000 acres from SWEPI, LP, an affiliate of Royal Dutch Shell for $120 million in cash.

    Tom Stabley, CEO of Rex Energy, said the deals with MarkWest “firmly position us to execute our development plans for both our legacy acreage and the new Shell acreage in the Butler Operated Area. Looking forward, having secured the right to additional capacity in future expansions provides a strong foundation for our long-term development plans in the region."

    The Keystone complex currently consists of the Bluestone processing and fractionation complex and the Sarsen processing facility, which combined currently provide 210 MMcf/d of processing capacity and 26,500 Bbl/d of fractionation capacity, according to MarkWest.

    The Keystone complex is anchored by Rex Energy and in May 2014, MarkWest began operations of the 120 MMcf/d Bluestone II plant and 10,000 b/d each of ethane and propane plus fractionation capacity to continue supporting Rex Energy’s growing rich-gas production, MarkWest noted.
  • WV opening state-owned land for drilling.  West Virginia is shopping for bidders for natural gas drilling rights on state-owned land beneath the Ohio River.

    According to an Associated Press report, the West Virginia Division of Natural Resources is seeking bids from energy companies who would be interested in drilling under the river in Marshall, Wetzel and Pleasants counties. The division announced the opportunity via a legal notice in the Wheeling Intelligencer and News-Register newspaper last Friday.

    The state will grant exclusive rights and privileges to the highest bidder, according to the notice. Applications will be accepted through September 11.|

    Natural gas drilling is an important component of the modern West Virginia economy, particularly since recent EPA carbon emission restrictions are expected to kill more jobs in the state’s already-floundering coal industry. Revenue from production and transportation of petroleum products have been a shot in the arm for energy-producing states since the beginning of the shale boom.
  • Drilling starts at Pittsburgh Airport.  Executives from Consol Energy Inc. and officeholders gathered at Pittsburgh International Airport Monday – not to draw attention to the aircraft flying thousands of feet above -- but to the strata of rock that lie thousands of feet below.

    In a press event that drew reporters from regional, national and international news organizations, Consol kicked off a multi-well oil and natural gas drilling program on 9,000 acres at the airport, a project executives say provides a $1 billion opportunity for both the energy company and the airport.

    “We’re looking at a flagship project where, as little as a couple years ago, nobody in the region, myself included, would even contemplate that we'd be looking at this kind of opportunity of this scale and magnitude,” said Consol Energy CEO Nick Deluliis.
  • PA number of unconventional drilling permits up substantially.  The Department of Environmental Protection (DEP) reported last week year-to-date through June 30, the number of unconventional drilling permits let jumped nearly 30%, Shale Media Group (SMG) finds.

    From January through June of this year, 998 total wells were drilled, down from 1,030 wells drilled in the year-ago period. The number of unconventional wells drilled, however, rose to 642 from 626 in the January-June 2013 period, SMG learns.

    Top unconventional-well operators through the first half of this year included: EQT, 78 wells; Chesapeake Energy, 68; Range Resources, 67; Cabot Oil & Gas, 51; and Southwestern Energy, 50.

    In the year ago period, Range led the way in wells operated with 74, followed by Southwestern, 68; Chevron, 43; Cabot, 39; and EQT, 37 wells.

    Unconventional permits let through the first half of 2014 totaled 1,705, up from 1,410 one year ago.

    Leading the way in terms of operators were Chesapeake, with 445 permits awarded; Range, 144; Southwestern, 119; CNX, 99; and Cabot, 94 permits awarded.

    Between January 1 and June 30, 2013, Chesapeake was tops in terms of permits awarded, garnering 322; followed by Range, 133; Southwestern, 124; SWEPI (a Chevron affiliate), 83; and EQT, 77 permits awarded.

    Looking at Pennsylvania counties leading the way in terms of producing wells brought online year-to-date through June, Bradford was Number 1, with 904 wells; followed by Washington, 758; Susquehanna, 711; Lycoming, 628; and Greene County, with 528 producing wells.

    One year ago, January through June, Bradford was tops in terms of producing wells brought online, with 728; followed by Washington, 592; Susquehanna, 514; Greene, 452; and Lycoming, 450.
  • Another cracker plant in the Gulf.  Yet another international petrochemical giant has announced plans to build a multi-billion-dollar facility on the U.S. Gulf Coast, taking Ras-Laffan-offshore-project advantage of inexpensive natural gas liquids feedstock, Shale Media Group learns.

    The facility will have an annual capacity of 900 million pounds of propylene oxide (PO) and 2 billion pounds of tertiary butyl alcohol (TBA) and its derivatives.

    The plant is expected to sell PO in the global marketplace to meet growing demand for polyurethanes, primarily used for manufacturing bedding, furniture, carpets and car seats. TBA and its derivatives will be sold to meet the need for high octane gasoline-blending components, as well as for use in manufacturing synthetic rubber and lubricant additives.

    “While we have not finalized the exact location of the plant, the abundant natural gas liquids associated with shale gas make the U.S. Gulf Coast an advantaged feedstock region,” said Pat Quarles, Senior Vice President of Intermediates and Derivatives, LyondellBasell.

    “This project combines our leading proprietary PO/TBA technology with low cost feedstock and demonstrates our continued commitment to capturing maximum advantage of market opportunities.”

    Earlier this year, the American Chemistry Council reported more than 177 natural gas-related facilities worth more than $122 billion are under construction, planned or are being taken out of mothballs in the U.S. to take advantage of inexpensive natural gas and natural gas liquids.

    The preliminary timetable for the new facility is to have the plant online in 2019.
  • McKean County, PA to Erie pipeline.  National Fuel Gas Supply Corp.’s proposed 97-mile Northern Access 2016 Project gasoline to carry natural gas from Marcellus shale gas fields in McKean County, Pa. to Elma in Erie County will pass through a corner of Allegany County and cross most of Cattaraugus County.

    The proposed Northern Access 2016 Project is a $410 million investment by the pipeline supply company, a division of National Fuel Gas Corp. It starts in Sergeant Township in McKean County, crosses the New York border in Ceres in Allegany County and then crosses into Cattaraugus County in the northeast corner of the town of Portville.

    The project is designed to transport regionally produced natural gas supplies into the interstate natural gas pipeline system and to provide reliable supplies of energy to the northeastern U.S. and Canada, according to Karen Merkel, a National Fuel Gas spokesman.

    The company expects about 700 jobs to be created during pipeline construction.

    The new pipeline will also generate additional property tax revenues for the county, towns and school district it passes through.
  • Blue Racer Mahoning County, OH project back on track.  Blue Racer Midstream LLC’s plans to construct a multi-million-dollar processing plant in southeastern Mahoning County appear to be back on track, according to documents obtained by The Business Journal.

    A Capital PEC Report published by Industrial Info Resources Inc., based in Sugar Land, Texas, shows that Blue Racer would like to begin construction on a $70 million natural gas processing plant just outside Petersburg in Springfield Township by September 2015.

    The report was last updated in April, and states that preliminary design of the $70 million plant would continue through March and construction bids would be released by next June. Completion of the plant is scheduled for June 2016, documents show.

Rig Count

  • Baker Hughes Rigs count for the August 22nd reporting week.
    • PA
      • Marcellus 48 rigs – down 1
      • Utica 2 rigs – unchanged    
    • Ohio
      • Utica 42 – unchanged
    • WV
      • Marcellus 28 unchanged
    • TX
      • Eagle Ford – 200 up 1
      • Permian Basin – 466 down 4
    • NM
      • Permian Basin – 89 up 1
    • ND
      • Williston – 183 down 2
    • MT
      • Williston – 8 unchanged
    • CO
      • Niobrara – 57 unchanged

TOTAL U.S. Rig Count 1896 down 7

PA Permits for August 21, to August 28, 2014

       County             Township             E&P Company
1.    Bradford              Columbia             Talisman
2.    Bradford              Columbia             Talisman
3.    Bradford              Columbia             Talisman
4.    Bradford              Columbia             Talisman
5.    Bradford              Columbia             Talisman
6.    Bradford              Orwell                 Chesapeake
7.    Bradford              Overton               Chief
8.    Bradford              Overton               Chief
9.    Bradford              Overton               Chief
10.    Bradford            Overton               Chief
11.    Bradford            Overton               Chief
12.    Bradford            Overton               Chief
13.    Bradford            Overton               Chief
14.    Bradford            Overton               Chief
15.    Bradford            Smithfield            Chesapeake
16.    Bradford            Smithfield            Chesapeake
17.    Bradford            Stevens               Southwestern
18.    Butler                Lancaster            Rex
19.    Butler                Lancaster            Rex
20.    Butler                Middlesex           Rex
21.    Butler                Muddycreek        Rex
22.    Butler                Muddycreek        Rex
23.    Butler                Muddycreek        Rex
24.    Fayette             Franklin              Chevron
25.    Fayette             Franklin              Chevron
26.    Greene             Center                CONSOL
27.    Greene             Center                CONSOL
28.    Greene             Dunkard              Chevron
29.    Greene             Jefferson             Arlington
30.    Greene             Jefferson             Vantage
31.    Greene             Jefferson             Vantage
32.    Greene             Jefferson             Vantage
33.    Lawrence         Mahoning             Hilcorp
34.    Lawrence         Mahoning             Hilcorp
35.    Lawrence         Mahoning             Hilcorp
36.    Lawrence         Mahoning             Hilcorp
37.    Lawrence         Mahoning             Hilcorp
38.    Lawrence         Mahoning             Hilcorp
39.    Lycoming         Cogan House       Range
40.    Sullivan            Cherry                 Chesapeake
41.    Sullivan            Elkland                Chief
42.    Sullivan            Elkland                Chief
43.    Sullivan            Elkland                Chief
44.    Sullivan            Elkland                Chief
45.    Sullivan            Elkland                Chief
46.    Susquehanna   Silver Lake           WPX
47.    Tioga               Gaines                Ultra
48.    Washington      Buffalo                Range
49.    Washington      Buffalo                Range
50.    Washington      Chantiers            Range
51.    Washington      Chantiers            Range
52.    Washington      North Strabene    Range
53.    Washington      Robinson            Range

OH Permits – week ending August 23rd, 2014

       County                 Township             E&P Companies

1.    Belmont                Kirkwood               Hess
2.    Belmont                Kirkwood               Hess
3.    Belmont               Kirkwood                Hess
4.    Belmont               Kirkwood                Hess
5.    Belmont               Kirkwood                Hess
6.    Guernsey             Wheeling                EnerVest
7.    Guernsey             Wheeling                EnerVest
8.    Harrison               North                      Chesapeake
9.    Harrison               North                      Chesapeake
10.    Harrison             North                      Chesapeake
11.    Harrison             North                      Chesapeake
12.    Jefferson            Salem                    Chesapeake
13.    Noble                Seneca                   Antero
14.    Noble                Seneca                   Antero

Take advantage of the bullish outlook and become a member in

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