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NewsLetters

  • Permit Activity last week.  
    • PA – 37 permits; Seneca in Elk County; EQT in Greene and Range in Washington.
    • OH –7 permits; American Energy Utica in Jefferson and Chesapeake in Carroll and Tuscarawas.

Expo/Industry events for the next few months:

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.  It will be a great networking opportunity.

Register now to reserve your seat http://midstreampa2014.com/wordpress/

OOGA Oilfield Expo and Technology Conference, Dec 3-4, Cleveland

Look for an exciting program that will provide information for both conventional operators and shale producers.

Chesapeake, Enervest and Ergon have become platinum sponsors.  The Expo is certainly gaining momentum.  

http://ooga.org/expo/

http://www.shaledirectories.com/site/oil-and-gas-expo-information.html

Latest facts and a rumor from the Marcellus and Utica Shale

Thoughts for the week  

  1. OH is catching up to PA in the rig count

    According to the October 24th Baker Hughes rig count report, there are 49 rigs in PA and 44 rigs in OH.  PA has 44 rigs in the Marcellus and 5 in the Utica while all the rigs in OH are in the Utica.  I think the rig count in PA is under reporting because E&P Companies are drilling in the Devonian Shale, but Baker Hughes is not reporting those rigs.  PA could have a few more rigs.

    What is difficult to understand is the permitting activity in PA versus OH.  There is considerably more activity in PA than in OH.  PA is averaging between 30 to 40 permits per week.  OH has between 10 and 18.  We know that the drilling in PA has become incredibly efficient.  For instance, PA is producing 20% more nat gas in 2014 than it did in 2013.  Last year this time there were 57 rigs in the Marcellus and 2 in the Utica.  This past week the count was 49 in the Marcellus and 5 in the Utica.

    One has to wonder if the election has any impact on the rig count in PA.  It looks like Tom Wolf, the Democratic gubernatorial candidate, continues to lead. (So get out and vote).  Wolf has taken aim at the E&P Companies and wants to institute a severance tax.  Will the Wolf potential win impact the PA rig count?  Could rigs be moving to OH and/or WV if he wins?  

    We’ll closely monitoring the rig activity and will providing you with our perspective on the activity.  
     
  2. U.S. energy boom can withstand lower prices.

    According to the Wall Street Journal, oil prices would need to fall another $20 per barrel to slow the drilling activity.  The rig count this past week actually increased by 9 rigs.  The breakeven oil prices per barrel for the major shale are:
  • Permian Basin -- $58 to $75
  • Bakken -- $60 to $75
  • Eagle Ford -- $53 to $65

 

  • What the Williams – AccessMidstream merger means. The merger will create one company worth $50 billion in enterprise value. The combined company will be a dominant pipeliner in the gas-rich Marcellus Shale and one of the biggest energy master limited partnerships in the nation.

    Tulsa-based Williams Cos. Inc. announced the merger agreement Sunday night. The two sides have been working on it since Williams acquired the general partner and control of Access earlier this year in a $6 billion deal.

    Williams hopes to complete the merger by January 2015. The combination follows other big midstream deals, including Enterprise’s buy of Oiltanking Partners, the CrossTex-Devon pipeline merger and Tesoro Logistics’ $2.5 billion acquisition of QEP Resource’s natural gas gathering and processing business.

    The move positions Williams Partners, as the merged company will be called, into the top realm of energy infrastructure MLPs, up there with Enterprise, Energy Transfer Partners and Kinder-Morgan. A master limited partnership is a corporate structure in which the cash flow is not taxed until it is distributed to unitholders.

    Williams, which employs more than 1,000 people in Tulsa and more than 5,000 companywide, also will gain a major presence in Oklahoma City with the acquisition and potential merger. Access Midstream Partners employs 600 in Oklahoma City and 1,500 companywide.

    Tom Droege, Williams spokesman, said the merger will not adversely impact employee head counts in either city. In fact, the companies currently have 250 job openings combined, mostly in engineering and project management positions, he added.

    Pipeline and Gas Journal editor Share predicted that the merged Williams may end up as the biggest player for pipelines and processing in the Marcellus and Utica shales of the eastern U.S. Williams owns several interstate pipelines, including the 10,000-mile Transco, while Access also has assets in north Texas and Oklahoma.

    Altogether, Williams Partners owns and operates approximately 15,000 miles of natural gas gathering and transmission pipelines, 1,800 miles of natural gas liquids pipelines, 11,000 miles of oil and gas gathering and numerous processing facilities.

    Access owns and operates midstream assets across nine states, including nearly 6,500 miles of natural gas gathering pipelines. The two companies’ combined capacity is 15 billion cubic feet per day and 33,000 miles in total pipelines.
     
  • Antero Midstream’s IPO will raise funds for growth.  Antero Midstream Partners LP, which owns Antero Resources' midstream energy assets in the Marcellus and Utica Shales, announced terms for its IPO on Monday. The Denver, CO-based Company plans to raise $750 million by offering 37.5 million shares at a price range of $19 to $21. At the midpoint of the proposed range, Antero Midstream Partners LP would command a fully diluted market value of $3.0 billion.
     
  • LNG plant coming to Pittsburgh area.  A veteran of the natural gas fuels business is proposing to build a liquefied natural gas production facility along the banks of the Ohio River.

    Robert E. Petsinger, chairman and CEO of Marcellus Marketing Inc., the company that's been formed to build the plant, said he's aiming to fill a growing demand for LNG as a fuel for heavy-duty engines, such as those powering 18-wheelers, locomotives, river towboats and mining and gas well drilling equipment.

    Petsinger said the plant would be set up to produce 600,000 gallons per day and sell to variety of customers. One of those customers would be Marcellus Fueling Inc., another company he's formed to own and operate 50 LNG and LNG-derived compressed natural gas stations.

    The plans are to build those stations within a 500-mile radius of Pittsburgh, he said.

    All told, the projects are estimated to cost $440 million. He said the companies are completing financing.

    As envisioned, the LNG plant would have rail access and two river docks for fueling for towboats and loading "bunker barges," which are essentially floating fuel tanks.
     
  • Carrizo buys more acreage in the Eagle Ford.  Carrizo Oil & Gas, Inc. announced that it has completed the acquisition of additional leasehold and producing interests in the Eagle Ford Shale from Eagle Ford Minerals, LLC ("EFM"), for $250 million in cash, subject to a closing adjustment credit of $7 million, as well as an update to its third quarter guidance.

    Eagle Ford Shale Acquisition Highlights
    • 6,820 net acres located primarily in LaSalle, Atascosa, and McMullen Counties, TX; the acreage is 100% operated by Carrizo
    • Net production of approximately 2,670 Boe/d (85% oil) in the third quarter of 2014 from 81 gross (20.1 net) wells
    • Net proved reserves, based on Carrizo's internal estimates, of 16.7 MMBoe (82% oil, 34% developed)
    • Adds approximately 93 net undeveloped Eagle Ford Shale drilling locations based on Carrizo's current development plan
       
  • Consol will be focusing on Nat Gas. Consol Energy Inc. is considering spinning off its flagship coal mining operations into a separate, publicly traded partnership as it continues its transformation into a natural gas-focused company.

    Leaders of the Cecil-based firm, which this year created a similar partnership to operate gas gathering pipelines, said Tuesday they are focusing on a company asset with a simple revenue source that could attract its own investment and require little capital expense.
     
  • NiSource’s Columbia Pipeline Group’s project inventory top $12billion.   Columbia Pipeline Group modernization, growth project inventory tops $12 billion.

    CPG continues to develop and execute on an extensive inventory of near- and long-    term growth, modernization and midstream investment opportunities, many of which are tied to the company's strategic asset position in the Utica and Marcellus Shale production regions. CPG expects to invest $12-$15 billion in modernization and growth projects over the next 10 years, with a number of major projects currently in active development. Key execution highlights for CPG include:
     
    • Just this month, CPG placed into service its West Side Expansion project. This approximately $200 million project, placed in service ahead of schedule and on budget, enabled a portion of Columbia Gulf Transmission's (Columbia Gulf) system to become fully bi-directional, among other system enhancements. Fully subscribed and anchored by long-term contracts, the project will transport approximately 500,000 dekatherms per day of Marcellus Shale production to Gulf Coast and southeast markets. The approximately $25 million Giles County growth project also was placed in service this month, which supports the conversion of a large end-user's coal boilers to natural gas. Columbia Gas of Virginia (CGV) also extended its distribution system by approximately four miles to support the customer conversion.
       
    • In August, CPG confirmed details of its planned $1.75 billion investment in the Leach and Rayne XPress projects. The projects will create a major new pathway for delivering natural gas supplies to market, providing transportation capacity of about 1.5 billion cubic feet per day for Marcellus and Utica Shale gas on the Columbia Gas Transmission (Columbia Transmission) system and about 1 billion cubic feet per day on the Columbia Gulf system. The projects, expected to be placed into service by the end of 2017, include approximately 150 miles of new transmission pipeline and new compression facilities at multiple sites in Ohio and West Virginia.
       
    • CPG's WB XPress project also is advancing and expected to clear remaining conditions precedent during the fourth quarter of this year. The approximately $870 million project would transport about 1.3 billion cubic feet of Marcellus Shale production on the Columbia Transmission system to pipeline interconnects and East Coast markets, including access to the Cove Point LNG export terminal. The project is expected to be placed in service during the fourth quarter of 2018.
       
    • The company is encouraged by customer interest following the recently completed non-binding open season for the Mountaineer XPress project. The project's scope is currently being refined and discussions with potential shippers regarding capacity commitments are underway. The project would provide further transportation capacity out of the Marcellus and Utica Shale production basins.
       
    • NiSource Midstream Services (NMS) has started work on its approximately $120 million Washington County Gathering project, which is anchored by a long-term agreement with a subsidiary of Range Resources Corporation. The project will consist of gathering pipelines and compression facilities in western Pennsylvania to transport production into a nearby Columbia Transmission pipeline. The project is expected to be in service in late 2015, with additional expansion expected as gas production grows.
       
    • NMS also is expanding and optimizing its Big Pine Gathering System to support Marcellus Shale production in Western Pennsylvania. The approximately $65 million investment in facility enhancements, which will add an incremental approximately 175-million-cubic-feet-per-day of system capacity, are expected to begin service in the third quarter of 2015
       
  • EXCO Resources update in the Eagle Ford and Appalachian Basin.
     
    • South Texas Region
    • EXCO operated an average of two drilling rigs focused on development of the Eagle Ford shale. We drilled 11 gross (2.7 net) operated wells and completed 14 gross (2.9 net) wells in the Eagle Ford shale during the quarter. Its drilling program during the quarter consisted of manufacturing and testing in the core area and adjacent areas under a farm out agreement.
       
    • Appalachin
    • In the Appalachia region, EXCO remains focused on base production efficiency from our Marcellus shale and conventional assets.  It has been able to effectively manage our base production declines as a result of increased automation and surveillance equipment to reduce downtime as well as artificial lift installations.
    • EXCO is currently constructing a pad site for limited appraisal drilling in early 2015 targeting the Marcellus shale in Northeast Pennsylvania near recent successful well results. A significant portion of our acreage in the Marcellus shale is held-by-production, which allows us to control the timing of the development in this region.
       
  • Anadarko 3rd Qtr. Results.
     
    • Eagle Ford  

      Anadarko’s net sales volumes averaged approximately 76,000 BOE/d during the quarter. Total liquids sales volumes averaged more than 53,000 Bbl/d, which is a 59% increase over the 3rd quarter of 2013 and a15% increase over the 2nd quarter of 2014.

      The company drilled 99 wells (averaging 8.1 days per well) utilizing eight rigs and brought 91 new wells on line during the quarter.  Anadarko continued to increase its drilling efficiencies in the play. The company set new quarterly records for average feet drilled per day (1,881 feet) and average cost per foot ($92).
       
    • Marcellus

      Anadarko’s net sales volumes for the quarter averaged approximately 534 MMcf/d, an increase of 3% over the 3rd quarter of 2013.

      During the quarter, the company operated one rig and spud six wells, while the non-operated area averaged three rigs and spud 16 wells.
       
  • Noble Energy 3rd Qtr. Update.  

    Marcellus
    • Net operated production volumes averaged approximately 130 MMcfe/d, up more than 50 percent from the second quarter of 2014 and nearly 250 percent from the third quarter of last year.
    • Drilled 23 operated wells at an average lateral length of more than 8,600 feet.  Included in the wells drilled for the quarter was the Moundsville-6A well, with a 12,425 foot lateral.  This well represents an Appalachian Basin and Company record for lateral length, with the lateral drilled in just three days, and located 100 percent within target reservoir.
    • Commenced production on 23 operated wells, including nine wells completed with Reduced Stage and Cluster Spacing.  Included in the wells brought online during the quarter were the Company's first pads in the Oxford and Shirley areas of West Virginia (Doddridge and Tyler counties, respectively).  Initial production from these areas is performing in line with the Company's best wells in the Majorsville area.
    • Joint Venture partner CONSOL Energy drilled 27 wells during the quarter (8,100 foot average lateral length), including seven Upper Devonian wells.  These wells represent the Joint Venture's first Upper Devonian wells in 2014.  Initial production from these wells is anticipated in early 2015.
    • CONSOL Energy brought 14 wells to first gas sales.  Eleven of these wells were completed with Reduced Stage and Cluster Spacing.

Niobrara

  • Record quarterly horizontal volumes, which totaled 74 MBoe/d for the third quarter of 2014, up more than five percent from the second quarter of 2014 and 30 percent from the same quarter of last year, after excluding the impact of volumes associated with the exchange executed in late 2013.
  • Drilled 75 wells in the quarter, including 22 extended reach laterals, for an average lateral length of more than 6,000 feet.
  • Commenced production on 73 operated wells, including 14 extended reach lateral wells (86 standard length equivalent wells).  Approximately 50 percent of the wells brought online during the quarter were evaluating downspacing performance.
  • Included in the wells brought online in the quarter were 23 wells from the Wells Ranch 30 Section, with six of the wells developed at 16 wells per section spacing and seventeen wells developed on a 32 well per section spacing pattern.  The downspaced wells include wells in each of the Niobrara benches.  On average, the downspace wells are performing in line with standard spacing wells on the pad and slightly better than the Wells Ranch type curve after more than 30 days on production.

 

  • Another LNG export terminal approved.  Pacific Northwest LNG Export Terminal Authorized by Department of Energy.  The Energy Department Thursday announced it has conditionally authorized LNG Development Company (controlled by Leucadia National) to export liquefied natural gas from a Warrenton, Oregon, terminal, beginning in 2017.
     
  • Rover Pipeline status.  ET Rover Pipeline, a subsidiary of Energy Transfer, is a new interstate natural gas pipeline company that will transport natural gas from processing facilities located in the Marcellus and Utica shale areas to market regions in the United States and Canada.

    The Rover pipeline project will move natural gas from processing plants and interconnections in Pennsylvania, West Virginia, and Ohio to Energy Transfer’s existing Panhandle Eastern Pipe Line and the ANR Pipeline near Defiance, Ohio.

    The planned pipeline route will stretch through Defiance, Fulton, Henry, Wood, Hancock, Seneca, Crawford, Richland, Ashland, Wayne, Stark, Carroll, Harrison, Belmont and the tip of Monroe counties.

    Additionally, the Rover Pipeline Project expects to construct a segment from the Defiance, Ohio, area through Michigan and ultimately to the Union Gas Dawn Hub, in Ontario, Canada, providing producers with access to storage facilities, and end-users in Michigan and Canada.
     
  • Range 3rd Qtr. Update.  

Southern Marcellus

  • Production for the third quarter averaged 943 (778 net) Mmcfe per day for the division, a 36% increase over the prior year. The division's third quarter net production included 431 Mmcf per day of gas, 49,423 barrels per day of NGLs and 8,531 barrels per day of condensate.
  • During the third quarter, the division brought on line 28 wells in southwest Pennsylvania, with 19 wells in the super-rich area, six wells in the wet area and three wells in the dry area. The per well average 24-hour initial production rate ("IP") for the new wells averaged 15.9 (12.3 net) Mmcfe per day, (7.8 Mmcf per day of gas, 977 barrels per day of NGLs and 363 barrels per day of condensate), with an average lateral length of 4,660 feet with 24 stages.

Northern Marcellus Division

  • In northeast Pennsylvania, production for the third quarter averaged 269 (228 net) Mmcfe per day for the division, a 25% increase over the prior year. During the third quarter, Range drilled six wells and turned seven wells to sales and is expecting to turn an additional seven wells to sales in the fourth quarter.
  • Production from a four well pad brought on line in the third quarter had a per well average 24-hour IP of 19.8 Mmcf per day. After 27 days on line, the wells produced at an average per well of 14.8 Mmcf per day. These four wells were drilled with an average lateral length of 4,885 feet and 25 frac stages. Lateral lengths and number of frac stages are expected to increase going forward, with laterals approaching 6,000 feet with 30 frac stages planned in 2015.

Rig Count

  • Baker Hughes Rigs count for the October 24th reporting week.  Again we believe Baker Hughes count is on the light side
     
    • PA
      • Marcellus 47 rigs – down 3
      • Utica 5 rigs – unchanged    
    • Ohio
      • Utica 44 – up 2
    • WV
      • Marcellus 34 up 3
    • TX
      • Eagle Ford – 216 up 7
      • Permian Basin – 472 up 3
    • NM
      • Permian Basin – 96 up 4
    • ND
      • Williston – 180 down 1
    • MT
      • Williston – 11 unchanged
    • CO
      • Niobrara – 57 unchanged

TOTAL U.S. Rig Count 1918 down 12

PA Permits for October 23, to October 30 2014

      County                 Township            E&P Companies

1.    Allegheny              Indiana                Range
2.    Beaver                  Darlington            Chesapeake
3.    Beaver                  Independence       Range
4.    Beaver                  Marion                 Penn Energy
5.    Cameron               Shippen               Seneca
6.    Elk                       Jones                   Seneca
7.    Elk                       Jones                   Seneca
8.    Elk                       Jones                   Seneca
9.    Elk                       Jones                   Seneca
10.    Greene                Richhill                Noble
11.    Greene                Richhill                Noble
12.    Greene                Washington         EQT
13.    Greene                Washington          EQT
14.    Greene                Washington          EQT
15.    Greene                Washington          EQT
16.    Greene                Washington          EQT
17.    Greene                Washington          EQT
18.    Greene                Washington          EQT
19.    Greene                Washington          EQT
20.    Greene                Washington          EQT
21.    Greene                Washington          Vantage
22.    Indiana                Center                  CONSOL
23.    Lycoming            Pine                      Range
24.    Sullivan               Forks                    Chesapeake
25.    Susquehanna      Liberty                   Chesapeake
26.    Susquehanna      Oakland                 WPX
27.    Susquehanna      Oakland                 WPX
28.    Washington         Jefferson                 Range
29.    Washington         Robinson                Range
30.    Washington         West Finley            Range
31.    Washington         West Finley            Range
32.    Washington         West Finley            Range
33.    Washington         West Finley            Range
34.    Wyoming            Braintrim                Chesapeake
35.    Wyoming            Braintrim                Chesapeake
36.    Wyoming            Braintrim                Chesapeake
37.    Wyoming            Braintrim                Chesapeake

OH Permits – week ending October 25th, 2014

       County            Township             E&P Companies

1.    Belmont             Richland              XTO
2.    Carroll                Perry                  Chesapeake
3.    Carroll                Perry                  Chesapeake
4.    Jefferson            Wayne                Amer. Ener. Utica
5.    Jefferson            Wayne                Amer. Ener. Utica
6.    Jefferson            Wayne                Amer. Ener. Utica
7.    Tuscarawas        Perry                  Chesapeake

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Joe Barone jbarone@shaledirectories.com 610.764.1232
Vera Anderson vera@shaledirectories.com 570.337.7149

 

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