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Permit Activity last week.

  • PA – 16 permits; Range in Washington County.
  • OH –12; Rice in Belmont County and Gulfport in Harrison.

Expo/Industry events for the next few months:

Marcellus-Utica Midstream
Jan. 27-29, 2015
David Lawrence Convention Center
Pittsburgh, PA

Billions are going to spent in Midstream the next couple of years. Get the latest information to prepare your company for this multi-year opportunity.


Latest facts and a rumor from the Marcellus and Utica Shale

  • Aubrey ends the year with another deal.  American Energy Partners LP has acquired HG Energy LLC's Ohio acreage, giving the company ownership of two of the top 10 natural gas wells in the state.

    The Oklahoma City-based company acquired the wells as part of a $475 million purchase over the summer of 27,000 acres in Monroe County. The company's Utica shale subsidiary, American Energy – Utica LLC, said at the time it bought the land from East Resources Inc. and West Virginia-based HG Energy.

    American Energy Partners picked up nine producing wells in the deal. Two of them are very productive, landing among Ohio's top 10 Utica shale wells in the third quarter, according to the Ohio Department of Natural Resources. Another American Energy's well was 12th, meaning a quarter of the top dozen wells in the state belong to a company that formed only last year.
  • Could the Spaniards becoming to the Marcellus.  Madrid-based oil company Repsol announced that it has reached a definitive agreement to acquire Calgary-based Talisman Energy Inc. in an all-cash deal for $8 a share, or $8.3 billion. The price represents a premium of about 56% to Monday’s closing price. Including Talisman’s debt, the transaction is valued at more than $13 billion.

    The combined market value of the two companies will be around $32 billion, vaulting Repsol back into the ranks of the 20 largest oil companies in the world.

    Perhaps the most intriguing thing about the transaction is the timing. Talisman’s shares have been hit hard by falling crude prices. The share price topped $11 in late June and closed below $4 just last week.

    Talisman’s main U.S. assets are located in the Marcellus shale play in Pennsylvania and the Eagle Ford shale play in south Texas. The company also holds stakes in Canadian shale plays and producing properties in the Asia-Pacific region.
  • Range reduces its capital budget for 2015.  Despite cutting its capital budget, Range Resources said it believes it can achieve production growth of 20 to 25 percent on account of improving capital efficiencies.  Included in those efficiencies is increasing optimized well designs.

    The company expects that during 2015 the horizontal part of its wells will run out longer and will have more points at which it fractures the shale.

    Range Resources is budgeting for $1.3 billion in capital outlays, of which $1.07 billion is going towards drilling and recompletions.  This is a drop from the $1.19 billion the company had budgeted in 2014 for these activities.

    An estimated 92 percent of the company’s spending will be directed toward projects in the Marcellus Shale fields.  Four percent will be put toward the Appalachian basin.

    Range also announced that its Utica/Point Pleasant well located in Washington County, Pennsylvania achieved an average 24-hour test rate of 59.0 Mmcf per day against simulated pipeline pressure and conditions during the initial flow back.

    The well was drilled and cased to a true vertical depth of 11,693 feet with the 5,420 foot horizontal lateral completed with 32 frac stages. Initial calculations indicate a 0.88 psi/foot pressure gradient. This initial production ("IP") rate equates to a 10.9 Mmcf per day IP rate per 1,000 foot of lateral. We believe this is a record for any horizon drilled in the Appalachian Basin and also represents the highest IP rate of any Utica well.

    Range believes this well confirms its geological interpretation and enhances the value of Range's stacked-pay acreage position in southwest Pennsylvania. The well is owned 75% by Range. Range has a current leasehold position of approximately 400,000 net acres in the southwest Pennsylvania area which it considers as prospective for the Utica/Point Pleasant.
  • Pipeline project announced in spite of falling prices.  Houston-headquartered Enterprise Products Partners on Monday, Dec 15, announced the start of a binding open season to seek shipper support for a proposed expansion of the portion of its Panola Pipeline natural gas liquids system between Carthage, TX, and Mont Belvieu, TX.

    The project is designed to support Haynesville Shale and Cotton Valley oil and gas producers by providing enhanced access to the world’s largest NGL fractionation complex, located in Mont Belvieu. Originating near Carthage in Panola County, the NGL pipeline system extends 181 miles, serving multiple destination points at Mont Belvieu, including facilities owned and operated by Enterprise.

    Depending on shipper response to the open season, the Panola expansion project would accommodate roughly 50,000 barrels per day (BPD) of incremental capacity, achieved via additional pipe, pumps and related equipment. The additional capacity is expected to be available in the first quarter of 2016.

    The open season closes Jan 16.
  • Magellan extends open seasons.  Magellan Midstream Partners on Monday, Dec 15, announced the fifth extension of the open season for shipper commitments on the proposed Saddlehorn Pipeline, Shale Energy Business Briefing finds.

    Binding commitments, originally due Oct 22, for this fifth extension are now due on Jan 30, 2015.

    The Saddlehorn project includes construction of a roughly 600-mile, 20-inch pipeline capable of transporting up to 400,000 barrels per day (BPD) of crude oil from Platteville, CO, to Magellan's storage facilities in Cushing, OK.

    With sufficient support for additional origins, Magellan said it may also add three new origin points for receipt of crude oil in Weld County near Riverside, Briggsdale, and Pawnee, CO.

    As previously announced, Magellan has received binding commitments to Saddlehorn from an Anadarko Petroleum subsidiary and Noble Energy. In addition, Magellan has entered into letters of intent with Anadarko and Saddle Butte Pipeline II for potential equity ownership in the pipeline.

    The line is expected to be operational during the second quarter of 2016.
  • PwC report bullish on manufacturing in the U.S. Continued access to low-cost, abundant shale-produced natural gas could mean an annual cost savings of $22.3 billion to US manufacturing by 2030, according to a new study by consulting firm PwC.

    According to PwC's report, “Shale Gas: Still a Boon to US Manufacturing?” PwC estimates continued shale gas activity will create 930,000 shale gas-driven manufacturing jobs by 2030 and 1.41 million by 2040.

    The savings and job estimates are comparable to the analysis done in PwC's 2011 study, which projected annual cost savings of $11.6 billion and roughly one million jobs by 2025.

    "There's no doubt the shale gas boom in the US helped trigger resurgence in manufacturing," said Robert McCutcheon, US Industrial Products Leader, PwC. "Reducing costs, creating jobs, and supporting investments and innovations are among the many impacts this game-changing resource has brought to the US manufacturing space.”

    “Assuming shale continues to serve as a catalyst for the manufacturing sector, we revised our cost savings and longer term employment estimates significantly upward, and could see those numbers go even higher as more businesses and global interests look to exploit shale opportunities," McCutcheon added.

    Among the industries continuing to benefit from low-cost, abundant natural gas are energy-intensive manufacturing sectors such as metals, chemicals, and petrochemicals, which all use natural gas as feedstock. According to the report, growing prospects for building pipelines for the infrastructure that's needed to support natural gas demands in the US could also bring additional benefits to American manufacturers that support those build-outs.  

    The survey also found a continued increase in the number of companies telling the investment community how shale gas activity affects their business. In 2013, 40 US manufacturers included shale gas impacts in their public filings, up from 29 in 2011.

    "More companies are publicly disclosing a link between natural gas production as a material advantage for their business and a source for growth in demand for their products," noted McCutcheon.

    PwC's report also identified developments that could potentially impact the benefits of shale gas development to US manufacturers, including environmental issues, supply exceeding demand, insufficient natural gas refueling infrastructure, and changes in tax policy that could affect capital investment.
  • XTO and Summit announce midstream deal.  Summit Midstream Partners LLC Dec. 15 that it has reached an agreement with XTO Energy Inc. to develop and operate a new natural gas gathering system servicing XTO's natural gas production from Belmont and Monroe counties in southeastern Ohio.

    The gathering system will be owned and developed by a new indirect subsidiary of Summit Investments — the privately held company that owns and controls the general partner of Summit Midstream Partners LP and also owns a 49.5 percent limited partner interest in SMLP — Summit Midstream Utica LLC. XTO will serve as the anchor shipper and has dedicated approximately 29,000 acres to Summit Utica under a long-term, fee-based gathering agreement.

    Summit Utica will gather, compress and deliver natural gas produced by XTO into multiple downstream delivery points, including Regency Energy Partners LP's high-pressure Utica Ohio River Trunkline project — currently under construction, the 52-mile, 36-inch gathering trunkline will be capable of delivering 2.1 billion cubic feet per day to the Rockies Express Pipeline (REX) and Texas Eastern Transmission.

    Summit Utica will consist of over 115 miles of gathering pipeline with four natural gas compressor stations and will have an initial design capacity of approximately 500 million cubic feet per day. The $400 million, multi-year development of the Summit Utica gathering system is currently underway and first flows to Regency Utica Ohio River are expected in the second half of 2015.
  • NY bans fracking.  Cuomo said that it’s unhealthy to frack.  Is there a lamer excuse out there?

Rig Count

  • Baker Hughes Rigs count for the December 13th reporting week.  Again we believe Baker Hughes count is on the light side
    • PA
      • Marcellus 51 rigs – down 1
      • Utica 3 rigs – unchanged
    • Ohio
      • Utica 47 up 2
    • WV
      • Marcellus 32 up 2
    • TX
      • Eagle Ford – 204 down 2
      • Permian Basin – 454 up 21
    • NM
      • Permian Basin – 94 up 1
    • ND
      • Williston – 179 down 1
    • MT
      • Williston – 9 unchanged
    • CO
      • Niobrara – 54 down 1
  • TOTAL U.S. Rig Count 1893 down 27

PA Permits for December 11, to December 18, 2014

       County               Township            E&P Companies

1.    Armstrong            West Franklin      PennEnergy
2.    Bradford                Overton              Chesapeake
3.    Bradford                Rome                Chesapeake
4.    Bradford                Sheshequin        Chesapeake
5.    Centre                  Snow Shoe         Range
6.    Greene                 Center                Consol
7.    Greene                 Center                Consol
8.    Sullivan                Shrewsbury         Exco
9.    Susquehanna        Ararat                 Cabot
10.    Susquehanna      Ararat                 Cabot
11.    Susquehanna      Jackson              Southwestern
12.    Washington         Hanover              Range
13.    Washington         Hanover              Range
14.    Washington         Robinson            Range
15.    Washington         Robinson            Range
16.    Washington         Robinson            Range

OH Permits – week ending December 13, 2014

       County                Township            E&P Companies

1.    Belmont                Goshen                Rice
2.    Belmont                Goshen                Rice
3.    Belmont                Goshen                Rice
4.    Belmont                Goshen                Rice
5.    Belmont                Goshen                Rice
6.    Columbiana           Fairfield                Hilcorp
7.    Columbiana           Fairfield                Hilcorp
8.    Harrison                Moorefield            Gulfport
9.    Harrison                Moorefield            Gulfport
10.    Harrison               Moorefield            Gulfport
11.    Monroe                Seneca                Eclipse
12.    Monroe                Seneca                Eclipse

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