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Permit Activity last week.  

  • PA – 6 permits;
  • OH –2 permits; Chevron acquiring its first permits in a while.  Will more be coming?

Expo/Industry events for the next few months:

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. Saudis trying to kill fracking.  The slide in oil prices has many wondering the role of the Saudis in the price decline.  An article in the WSJ on Saturday said that the Saudis are sending mixed signals.  At times they are stating that they are reducing output, but many question if this is really happening.

    I’m a “CNBC junkie.”  It’s always on when I’m in the office.  It’s interesting that about 20%-30% of CNBC’s reporting is about energy – oil, natural gas and shale plays.  As the price of oil has declined, all of the commentators on CNBC say that the Saudis are trying to kill fracking.  The Saudis are trying to maintain market share which is becoming more difficult as more oil comes on the market and demand softens.   

    Many CNBC commentators seem to agree that if the price of oil gets to $65 or $70 a barrel, drilling in the U.S. will decline.  The Saudis in the ‘80’s drove the price of oil down to again stop drilling in the U.S.

    If oil prices decline to the $65-$70 range what does that mean to oil rigs in the U.S?  When the price of natural gas took a dive to less $2 MMBtu, many of the gas rigs were moved out of PA and WV to drill for oil in Texas as fracking started in the Eagle Ford and Permian Basin.
  2. Boone Pickens’ perspective on oil prices.  As you know, I’m a CNBC junkie and Boone Pickens was on Thursday and gave his perspective on the oil and gas prices.  As I’ve stated some CNBC commentators think the Saudis are trying to kill fracking in America.  On Thursday, the price of oil closed at $84.06.

    Boone thinks the price of oil will go below $80, but not below $70.   The price below $80 will cause some consternation at the E&P Companies.  Boone does not think the Saudis will do anything until the November OPEC meeting where a decision will be made as to whether the Saudis will cut production and support the price or keep production up and drive the price down.

    The second option to keep production up will squeeze the E&P Companies.  We’ll have to watch to see how the E&P Companies will respond.  There are 1922 rigs drilling in the U.S.; around 1600 are drilling for and the remainder for gas.  Will rigs be laid down or will they switch to gas or will they keep drilling for oil?
  • Rex CEO keeps company moving forward.  In a shale play dominated mostly by out-of-town oil and gas companies, Tom Stabley emphasizes his Pennsylvania roots.

    The CEO of State College-based Rex Energy Corp. keeps the company he helped found 12 years ago focused on being a good neighbor as it expands its footprint across the northwestern tier of the Marcellus shale into Ohio's Utica shale.

    Stabley, 44, is a Williamsport native and University of Pittsburgh graduate who calls the state's wilderness home as an avid outdoorsman.

    Under his guidance, the company nearly doubled the land it holds for drilling in Appalachia with a $120 million purchase it closed last month with an affiliate of Royal Dutch Shell. The property stretches from Beaver and Lawrence counties through what Rex calls its Butler Operated Area into Venango County.

    Rex contracted a third drilling rig to explore the combined area next year, and signed an agreement with MarkWest Energy Partners to increase processing of gas and liquids through additions to that company's facility in Jackson in Butler County.

    All of that growth means Rex is adding to its workforce of about 70 employees in Cranberry, 80 in State College and 150 in Illinois.
  • Shell using laser to find shale gas.  Royal Dutch Shell is testing a new device that uses lasers to help identify shale gas reservoirs, Wyoming-based oilfield Service Company WellDog announced Tuesday.

    The device, which weighs more than 100 pounds, is dropped into a wellbore where it shoots lasers and measures the frequency at which that light is reflected. That information helps production companies identify what type of hydrocarbons is located underground and where they are.

    “The advantage of this is the sensor is down hole,” said WellDog CEO John Pope. “It’s a direct analyst of the exact oil or gas you’re trying to produce.”

    The device is still in the testing phases. WellDog has been collaborating with Shell on the technology for about two years, Pope said. The hope is developing a system that gives producers a more accurate sense of where to drill, ultimately making drilling and fracking more efficient.

    The effort comes at a time when operators are in a constant battle to reduce the costs of shale operations as
  • Natural gas supply levels lowest since 2000.  Natural gas for January in the Northeast is the most expensive in more than a decade on concern that pipelines may not be able to ship enough fuel, risking a repeat of last winter’s record prices.

    Supplies in the so-called consuming east region, which covers the Northeast to the Midwest, are at the lowest seasonal level since 2000, government data shows. Additional pipelines into New England from the Marcellus shale fields in Pennsylvania won’t begin service until at least late 2016.

    Buying gas at current levels now may turn out to be a bargain. While the fuel in New York for January is selling at $13.60 per million British thermal units, more than nine times current prices, gas surged to a record $135 last January as frigid weather boosted demand beyond what pipelines could deliver.

    “People are scared,” Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston, said Oct. 2 by phone. “The market is reflecting that despite prolific production growth in certain areas, the infrastructure has not been expanded to distribute that gas all the way across the country. There’s still a very real and very significant constraint.”

    Pipeline construction has lagged behind production gains, stranding fuel that would otherwise move into storage. Nationwide, output will reach a fourth consecutive record this year, the Energy Information Administration forecast.
  • Marcellus and Utica Nat Gas moving west.  According to Financial Times, a westbound pipeline has been proposed because of the quickly growing Marcellus and Utica shale plays of Pennsylvania, Ohio and West Virginia.

    The Rockies Express pipeline, which stretches to Ohio, was opened in 2009. With the addition of the east-to-west Rockies Express pipeline, more than one billion cubic feet of natural gas could be moved as soon as next year. Other pipelines have been proposed to take natural gas to places like the Gulf Coast and the Midwest.

    Since 2009, natural gas production in the Marcellus shale has risen 800 percent, and the Utica’s production has risen at the same rate, too.
  • Williams helping Brandywine Creek.  If you take a walk on Struble Trail located in Chester County, Pa., you'll likely see two new benches with the Williams logo on them.

    As part of our efforts to finalize Williams' Brandywine Creek pipeline project, we re-paved some of the trail and added the new benches was reported by a Williams’ representataive. Just a few days ago, our construction team worked together to assemble and install the benches on the side of the trail.
  • Forbes top 15 energy billionaires with their Forbes ranking.  Note how many billionaires are in pipelines.

    #24     Len Blavatnik     $20.6 B      London         diversified
    #28     Harold Hamm     $15.8 B      Oklahoma City, OK oil & gas
    #40     Richard Kinder     $10.8 B      Houston, TX     pipelines
    #42     George Kaiser     $10.5 B      Tulsa, OK         oil & gas, banking
    #67     Randa Williams     $6.7 B      Houston, TX     pipelines
    #68     Dannine Avara     $6.7 B      Houston, TX     pipelines
    #68     Milane Frantz     $6.7 B      Houston, TX     pipelines
    #68     Scott Duncan     $6.7 B      Houston, TX     pipelines
    #83     Ray Lee Hunt     $5.9 B      Dallas, TX         oil, real estate
    #84     Robert Rowling     $5.8 B      Dallas, TX         investments
    #85     Jeffery Hildebrand     $5.8 B      Houston, TX     oil
    #87     Kelcy Warren     $5.8 B      Dallas, TX         pipelines
    #91     Trevor Rees-Jones     $5.4 B      Dallas, TX         oil & gas
    #106     Terrence Pegula     $4.6 B      Boca Raton, FL     natural gas
    #137     Lynn Schusterman     $3.8 B      Tulsa, OK         oil & gas, investments
  • Mariner East approved.  Sunoco Logistics Partners and its proposed Marcellus Shale Mariner East project have public utility status, the Pennsylvania Public Utility Commission ruled Thursday.

    The decision was a victory for Sunoco, which is repurposing a petroleum pipeline to transport Marcellus Shale ethane and propane to Marcus Hook.

    The commission noted that Sunoco's pipeline routes and services have been certificated as public utilities since the early 1930s.

    "Sunoco's amended petitions adequately plead sufficient facts for the commission to find that it is both a 'public utility' and a 'public utility corporation,' " said PUC vice chairman John F. Coleman Jr. and Commissioner Pamela A. Witmer in a joint motion approved 4-1 by the commission.

    The ruling reversed an earlier advisory opinion by two PUC administrative law judges that Sunoco's Marcellus pipeline would not qualify as a public utility.
  • Stone Energy reports increased well drilling and increase capital expenditure budget.  Stone Energy Corporation provided an operational and capital expenditure update.  In Appalachia, its Utica Shale well has been successfully drilled with testing expected in the fourth quarter of 2014.  Additionally, we continue to realize efficiencies in our Marcellus drilling program and now expect to drill over 35 wells in 2014 compared to the original forecast of 30 wells.  

    As a result of the drilling successes, the follow-up development activity, the added Utica test well, the increased number of Marcellus wells and the Madison prospect, the Board of Directors has authorized an increase in the 2014 capital expenditure budget from $825 million to $895 million, which excludes major divestitures and acquisitions and capitalized SG&A and interest.  The final 2014 capital expenditure amount and the allocation of capital across the various areas is subject to change based on several factors including permitting times, rig availability, non-operator decisions, farm-in opportunities and commodity pricing.
  • Williams to sell Marcellus assets.  According to Tulsa World, WPX Energy is going to focus its efforts on the Williston in North Dakota, San Juan in New Mexico and Piceance Basin in Colorado.  Those assets in the dry gas-rich Marcellus Shale, however, are targeted for eventual sale, WPX spokesman Kelly Swan pointed out.
  • Elk herd loves fracking.  Nearly seven years into Pennsylvania’s Marcellus Shale drilling boom, wildlife officials say the state’s elk population continues to flourish despite concerns about industrial footprints, wildlife displacement and habitat degradation.

    “It hasn’t disturbed any habitat, in fact, it probably creates more than there was to begin with,” said Pennsylvania Game Commission elk biologist Jeremy Banfield, referencing companies who cover defunct well pads with grass, prime elk habitat.

    The elk population has nearly doubled since 2008, when the state’s Marcellus Shale drilling boom began, rising from 500 to more than 880 and increasing every year. The number is expected to reach 1,000 in 2015.
  • Lithuania trying to reduce Russia’s natural gas leverage. Lithuania interested in investment in shale gas, oil.  During his stay in the United States, Lithuanian Prime Minister Algirdas Butkevicius visited one of the most productive shale gas fields in the country, Marcellus, in the state of Pennsylvania and met with the representatives of the academic centre of Pittsburgh University, reports LETA/ELTA, referring to the prime minister's press service.

Rig Count

  • Baker Hughes Rigs count for the October 3rd reporting week.  Again we believe Baker Hughes count is on the light side
    • PA
      • Marcellus 54 rigs – down 1
      • Utica 3 rigs – up 1    
    • Ohio
      • Utica 40 – down 2
    • WV
      • Marcellus 28 up 3
    • TX
      • Eagle Ford – 210 up 3
      • Permian Basin – 461 unchanged
    • NM
      • Permian Basin – 95 unchanged
    • ND
      • Williston – 189 unchanged    
    • MT
      • Williston – 8 unchanged
    • CO
      • Niobrara – 59 up 1

TOTAL U.S. Rig Count 1922 down 9

PA Permits for October 2, to October 9, 2014

       County              Township            E&P Company
1.    Bradford             Terry                    Chesapeake
2.    Bradford             Tuscarora             Chesapeake
3.    Sullivan               Forks                  Chesapeake
4.    Susquehanna      New Milford          Southwestern
5.    Susquehanna      Rush                   Chesapeake
6.    Wyoming            North Branch        Chesapeake

OH Permits – week ending October 3, 2014

       County                Township                   E&P Companies

1.    Harrison                Washington                Chevron
2.    Harrison                Washington                Chevron

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Utica Summit 2019