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  • Permit Activity last week.  
    • PA –10 permits; Talisman in Bradford; Seneca continues to move west – McKean County
    • OH –12 permits; Antero in Monroe

Expo/Industry events for the next few months:

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.  Learn more about safety, network during breaks and lunch, all courtesy of Cintas, Bulwark and
Register now! It’s next Wednesday.

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.  
See what will be happening with the cracker plants in PA, OH and WV
Register now

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.

Register now to reserve your seat

Latest facts and a rumor from the Marcellus and Utica Shale

  • Thoughts for the week
  1. Nat Gas prices up; Oil down.  For those not following the natural gas and oil markets, the price of nat gas has risen above $4 and has been trading there most of this week.  We’ll have to see if the price climbs as the weather gets colder.  

    Oil on the other hand has been declining.  As of Thursday, it was trading below $90.  A number of experts thought that $90 was the support level, but the price broke through that.  The Saudis need the oil price to be around $90 to support their economy.  We’ll have to see if they cut back on production.
  2. The Golden Age of Energy in America”.  As I attend various expos through the Marcellus and Utica and the ones in Texas.  I’ve not made up to the Bakken or out to Colorado, but everyone in the business is incredibly upbeat and positive about their companies’ future.  Previous energy booms have been isolated to certain parts of the country primarily Texas, Oklahoma and Louisiana.  The success of hydrofracking in shale has spread the opportunities to many states throughout the country – PA, OH, WV, ND, MT and CO.
  • New player in SW PA.  A company called Acoma Energy is calling landowners in Washington County, PA looking to lease land.  (RUMOR)

    Does anyone know anything about Acoma Energy?  It’s encouraging to see that new companies are still coming into the Marcellus looking for opportunities to drill.
  • EQT in North Versailles, Allegheny County, PA.  EQT is holding preliminary talks with county representatives and landowners about drilling in the township.
  • Southwestern Energy celebrates 5 years in the Marcellus.  Southwestern Energy Company President and CEO Steve Mueller joined employees of the company yesterday in Tunkhannock to celebrate the company’s first five years of production in the Marcellus Shale play; five years that have been extraordinarily productive and successful. More importantly, because the company has acquired major additional acreage in the Marcellus Shale region, this foundation provides a superb stepping off point for further growth in the future. Southwestern Energy has already produced approximately 348 billion cubic feet (Bcf) of natural gas from the play with drilling focused mostly in the Northern Tier area of Pennsylvania, where much of the added acreage also lies. The company anticipates reaching 1 Bcf per day by the end of 2014.

    Southwestern Energy Milestone Is Just the Beginning

    “Milestones such as this should be celebrated,” said SWN President and CEO Steve Mueller. “We’re proud of the work our employees have done in Pennsylvania, the partnerships we’ve built locally and the contributions we’re making to the country’s energy supply through our work in the state.”

    Southwestern Energy, in 2013, announced the acquisition of approximately 162,000 net acres, bringing its total acreage position to approximately 292,446 net acres. The company has already developed wells in Susquehanna, Bradford, Sullivan and Lycoming Counties and has other undeveloped acreage in Wyoming and Tioga Counties; making the Northern Tier region of the Marcellus Shale region a centerpiece of its drilling program going forward, although it has large lease holdings as well in the Southwest, the West and New Brunswick.
  • Final hurdle cleared to ship Marcellus Nat Gas overseas.  A federal regulatory agency has approved plans to ship Marcellus Shale gas from Pennsylvania overseas. The decision clears the way to begin converting a former import terminal in the Chesapeake Bay to export liquefied natural gas. Dominion Energy’s Cove Point plant can now move forward with plans to export more than 5 million metric tons of liquefied natural gas each year. Cove Point is the fourth export terminal approved by the Federal Energy Regulatory Commission, or FERC. It will be the first connected to the Marcellus Shale by pipeline.

    The offshore loading pier at Dominion's Cove Point facility now sits idle.  The switch from an idled import terminal to an export facility results from a domestic shale boom, and greater need for energy abroad. Dominion has agreements with energy companies in India and Japan to liquefy natural gas, and ship it overseas. The Japanese company, Sumitomo, made a deal with Cabot Oil and Gas last December to purchase 350,000 MMBtu per day of natural gas from Cabot’s Marcellus wells and send it through pipelines to plant on Maryland’s Eastern Shore. That agreement is to last 20 years, signaling how much gas Cabot has within its holdings in Northeast Pennsylvania. Figures released in August by Pennsylvania Department of Environmental Protection show Cabot’s wells to be some of the most productive in the state.

    The project breathes new life into the idled plant, which Dominion Energy spokesman Jim Norvelle says will create thousands of new construction jobs during the 3 year project, and 100 new full-time workers at the plant. He says Dominion will be paying an additional $40 million dollars in property taxes to Calvert County, MD.

    But Dominion Energy, Cabot Oil and Gas, and Calvert County’s coffers aren’t the only winners. Utilities in Japan and India also stand to benefit. Benjamin Gage is an LNG analyst with IHS International. Gage says Marcellus Shale gas provides a dependable alternative to Middle East and Southeast Asian natural gas for Japan’s Sumitomo, as well as the Indian company Gail.
  • Aubrey hires former employee.  American Energy Partners LP has tapped a former Chesapeake Energy Corp. executive to oversee its operations in the Utica and Marcellus shales.

    The Oklahoma City-based firm hired John K. Reinhart as chief operating officer for two of its four play-specific affiliates.

    Reinhart, 45, spent the last eight years of his 20-year career with Chesapeake. Most recently he was the company’s senior vice president of operations and technical services, leading a team of 1,400 employees.

    In his new role, Reinhart will oversee American Energy’s operations in Ohio’s Utica Shale and the Marcellus Shale in West Virginia.

    I heard this rumor that Aubrey is walking into Chesapeake offices and asking Chesapeake employees to come and join him at American Energy Partners.  Some Chesapeake employees are getting up and walking out with Aubrey (RUMOR)
  • Moving Nat Gas overseas.  As a bevy of liquefied natural gas export projects inch their way along, one organization is trying to activate shale supporters to lean on their legislators to speed the process.

    Our Energy Moment — a coalition of companies, institutions and individuals tied to shale development founded in Louisiana in 2013 — staged its first event in Pennsylvania on Thursday at the Sen. John Heinz History Center in the Strip District. The event, which included short speeches from former Gov. Tom Ridge and from U.S. Rep. Keith Rothfus, R-Sewickley, was a chance for the organization to recruit Pennsylvania companies and business leaders to join their cause.

    Joining the coalition is free, said Jason French, the group’s spokesman and director of government and public affairs at Cheniere Energy, a Houston-based developer of LNG export terminals along the U.S. Gulf Coast. The group wants to recruit enough companies that the organization will be able to reach out to its members if and when relevant legislation is in need of their support.

    “This began in Louisiana and Texas, but it’s going to spread,” Mr. French said. “It was important for us that our third stop be in Pennsylvania because the energy revolution, the story is really here.”

    Mr. French described the organization as “grassroots,” working behind the scenes to promote their cause, and “grass tops,” centered on events and forums, such as the one held Thursday.

    There is no facility in the continental United States that is able to ship liquefied natural gas to countries that do not have free-trade agreements with the U.S., which means producers in Pennsylvania don’t have access to high-demand markets in Asia. More than a dozen projects are in the planning phase — and two are under construction after receiving final government approval — but completion of any of the projects is still years away.

    Opening overseas markets to Marcellus shale gas is important for producers looking for better returns on their investments. Natural gas prices are about half of what they were in 2008 — good news for consumers but bad news for developers who have spent billions of dollars drilling in southwestern Pennsylvania and elsewhere.
  • Chesapeake’s success in the Utica. Though Texas’ Eagle Ford shale will be the main driver of Chesapeake Energy’s oil production growth for the next few years, the company’s acreage in Ohio’s Utica shale should also be an important contributor to its natural gas liquids (NGLs) production growth. Chesapeake was one of the first companies to recognize the potential of the Utica Shale, having discovered it in 2010.

    Now, Chesapeake is the most active driller and largest leasehold owner in the Utica, with about 1 million net acres under its belt. In the Q2 2014, Chesapeake’s Utica shale production was 67 million barrels of oil equivalents per day(mboe/d), up 373% from a year ago and up 34% from the first quarter of 2014. Of the total production, Oil accounted for 10%, natural gas 60% and natural gas liquids like ethane, butane and propane about 30%. While that’s an impressive rate of growth, it could have been even higher. At the end of last year, the company had 208 wells in various stages of completion, with many awaiting pipeline connections.
  • Utica Nat Gas to Nova Chemicals in Canada.  Kinder Morgan Energy Partners announced it has received a long-term transportation agreement from Nova Chemicals Corp. to ship ethane and ethane-propane mixtures from the Utica Shale through its $500-million Utica to  Ontario Pipeline Access (UTOPIA) project.

    The deal, the company said, means the project can advance, although more capacity remains available.

    The UTOPIA system is currently in a binding open season for shippers to reserve capacity. The open season began Sept. 5 and will close Oct. 6, according to Kinder Morgan.

    Nova Chemicals is headquartered in Alberta, Canada, but has operations in Moon Township, Allegheny County, PA.
  • NiSource splits. NiSource announced its splitting-off its pipeline operations into a separate, publicly-traded, standalone company, Columbia Pipeline Group.

    Columbia Pipeline (CPG) will operate 15,000 miles of transmission lines and nearly 300 billion cubic feet (Bcf) of underground gas storage capacity once the separation is final next year, NiSource said.

    The transaction will result in two energy infrastructure companies: NiSource, a fully regulated natural gas and electric utilities company, and Columbia Pipeline, a pure-play natural gas pipeline, midstream and storage company. The separation is expected to occur in mid-2015.

    “Separating our regulated utilities and pipeline businesses is a significant and logical step in our proven long-term strategy that has delivered substantial value to investors and enhanced service for our customers,” Robert C. Skaggs Jr., CEO, NiSource, said.
  • Japanese and Thais looking for cracker plant in the Marcellus or Utica.  A partnership between Thailand’s largest chemical company and a Japanese trading and investment house is shopping the region for an ethane cracker site.

    Allenport’s Mon River Industrial Park in Washington County PA is one of three locations being evaluated by the group, which joins Bangkok-based PTT Global Chemical and Tokyo-based Marubeni Corp.

    This is the fourth potential cracker project seriously considering the Appalachian region to capitalize on the supply of natural gas liquids, specifically ethane, that are abundant in parts of the Marcellus and Utica shale formations.

    Royal Dutch Shell was the first company to announce it is evaluating the Horsehead Corp. complex in Potter Township, Beaver County, for a world-scale ethane cracker. The multibillion-dollar plant would convert ethane into ethylene, a feedstock for the petrochemical industry.

    And last year, Brazilian company Odebrecht Organization said it had chosen Parkersburg, W.Va., to study as a site for its proposed Appalachian cracker facility, dubbed Project Ascent.

    Appalachian Resins announced early this year that it is planning on building a “smaller” cracker plant in Monroe County, OH.

    All three companies are still evaluating and haven’t yet made their final decisions to build.

    Shell’s spokeswoman Kim Wyndon said it’s too early in everyone’s evaluation process to speculate what impact three crackers would have on the region, if all are indeed built. She could only speak for Shell’s motivation for choosing an Appalachian site.|

    “The supply was there and we knew we would have the workforce capabilities that were needed,” she said.

    Odebrecht’s David Peebles, who is vice president of Ascent, said the addition of a third cracker project would start to create a concentration of ethane plants in the region and help drive a manufacturing renaissance here.

    “This is like the Silicon Valley for the polymer industry,” he said.

    Sources familiar with the PTT-Marubeni effort, who requested to remain anonymous, confirmed the group has been looking at the Tri-State area for the better part of a year.

    The evaluation process has clued in state and local economic development officials, as well as the environmental regulators and transportation interests, they said

    Aside from the Allenport, a site in West Virginia and another in Ohio are on the table for the PTT-Marubeni project, sources said. The three states have competed fiercely for the other two major cracker projects.

    The 400-acre Allenport location is the former home of Wheeling Pittsburgh Steel. It has 16 buildings once used in manufacturing and for warehousing, and barge and rail access. In 2012, the industrial park was designated a Keystone Opportunity Expansion Zone, a state classification that grants companies that locate there tax exemptions and abatement for 10 years.

    Joel Kreider, a director with real estate firm Newmark Grubb Knight Frank who represents the property, declined to comment.
  • Magnum’s well moves to the top of the biggest wells list in the Utica.  According to Akron Beacon Journal, a Tyler County, West Virginia natural gas well has produced 46.5 million cubic feet (Mmcf) per day since it went online a little more than a week ago.

    Magnum Hunter Resources operates the well, named Stewart Windland 1300U. The well is ranked among the Utica Shale’s top-producing wells, such as one of Rice Energy’s wells in Belmont County, Ohio. At 10,825 feet deep and a lateral of 5,289 feet, it is boasts one of the highest flow rates in the Utica play.

    “It is the second Utica well drilled in West Virginia, where the shale formation is deeper and more expensive to tap. Chevron Corp. drilled the first in Marshall County earlier this year.”
  • WV Expo, a good one.  The WV Oil & Gas Expo in Morgantown was a big success.  There was considerable buzz throughout the day.  In speaking with a number of exhibitors, everyone seemed pleased with the event.  I know a number of E&P Companies and midstream company representatives were walking the aisles.  Congratulations to Asayo for a great Expo!
  • PSU strengths its position in the Shale Plays.  Penn State University said  that General Electric Co. will give the school up to $10 million to create a new center for natural gas industry research.

    Penn State President Eric Barron said in a statement that the center will produce tangible benefits to the industry, to communities that are affected by drilling or related activity, and to consumers.

    GE said the money will support research projects, equipment, and undergraduate, graduate, and postdoctoral fellowships at The Center for Collaborative Research on Intelligent Natural Gas Supply Systems. Barron planned to speak about the center during a luncheon with GE Senior Vice President Mark Little. GE is based in Fairfield, Connecticut.

    The new center will include faculty from the Smeal College of Business, Earth and Mineral Sciences, Engineering, and Information Sciences and Technology.
  • E&P Companies bid to drill under the Ohio River.  Facing a possible budget shortfall for the 2015 budget, state commerce officials in West Virginia have accepted bids from oil and gas companies to drill about a mile under a 14-mile-long portion of the Ohio River that lies within the Marcellus shale.

    “We received four bids on three different segments of the river. They were all portions of the river that were nominated by companies that were interested in developing those areas. They are already operating in those areas,” a spokesperson for the West Virginia Department of Commerce told Rigzone.

    The four separate bids received by the Department of Commerce before the close of the bidding process were:
  1. Noble Energy Inc. bid a 20-percent royalty payment and $211.11 per-acre cash bonus
  2. Statoil ASA bid a 20-percent royalty payment and $8,125 per-acre cash bonus
  3. Triad Hunter LLC bid a 18-percent royalty payment and a $7,100 per-acre cash bonus
  4. Gastar Exploration Inc. bid a 20-percent royalty payment and $3,500 per-acre cash bonus

Rig Count

  • Baker Hughes Rigs count for the September 26th reporting week.  Again we believe Baker Hughes count is on the light side
    • PA
      • Marcellus 55 rigs – down 1
      • Utica 2 rigs – unchanged    
    • Ohio
      • Utica 42 – unchanged
    • WV
      • Marcellus 25 unchanged
    • TX
      • Eagle Ford – 207 up 2
      • Permian Basin – 461 down 5
    • NM
      • Permian Basin – 95 up 1
    • ND
      • Williston – 189 unchanged    
    • MT
      • Williston – 8 unchanged
    • CO
      • Niobrara – 58 unchanged
  • TOTAL U.S. Rig Count 1931 unchanged

PA Permits for September 25, to October 2, 2014

       County             Township            E&P Company
1.    Bradford            Orwell                  Talisman
2.    Bradford            Orwell                  Talisman
3.    Bradford            Orwell                  Talisman
4.    McKean            Norwich                Seneca
5.    McKean            Norwich                Seneca
6.    McKean            Norwich                Seneca
7.    McKean            Norwich                Seneca
8.    Tioga                Sullivan                 Shell
9.    Tioga                Sullivan                 Shell
10.   Washington      North Strabene      Range

OH Permits – week ending September 27, 2014

       County                 Township                E&P Companies

1.    Belmont                Mead                    XTO
2.    Belmont                Washington           Gulfport
3.    Belmont                Mead                    XTO
4.    Belmont                Mead                    XTO
5.    Carroll                   Augusta                Chesapeake
6.    Monroe                 Franklin                 Antero
7.    Monroe                 Franklin                 Antero
8.    Monroe                 Franklin                 Antero
9.    Monroe                 Franklin                 Antero
10.  Monroe                 Franklin                 Antero
11.  Monroe                 Franklin                 Antero
12.  Noble                   Marion                   Antero

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