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Permit Activity last week. 

  • PA – 6 permits; Chesapeake continues to acquire permits and Hilcorp is back in Mercer County
  • OH –24; Hilcorp in Columbiana; Eclipse in Guernsey and Noble

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.

To ATTEND, SPONSOR or EXHIBIT, visit www.MarcellusMidstream.com

Visit Shale Directories @ #726

Save the dates for Upstream Seminars

Utica Upstream 2015 – April 8, 2015, Canton, OH

Upstream PA 2015 – April 16, 2015, Penn State

Latest facts and a rumor from the Marcellus and Utica Shale

  • It’s never too late.  A new E&P Company will start drilling in the Marcellus.  A father-son team, along with a private equity firm and energy investment bank, has started a new company to search for and produce Appalachian gas.

    Pittsburgh-based Laurel Mountain Energy LLC was formed by energy investment banks Tudor Pickering & Holt Co., private equity firm TPH Partners and Clark and David Nicklas.

    According to TPH Partners, Laurel Mountain will put most of its focus on the Marcellus, Utica and Upper Devonian shale formations.  This will be the first time TPH Partners has invested in a company located in this region.

    George McCormick, TPH Managing Partner, refrained from sharing the size of the company’s investment, but ensured that it is one that makes sense because the economics in the region are “extremely robust.”  The Appalachian basin is one of the lowest-cost basins being developed.

    McCormick says he believes that the company has partnered with an experienced management team:

    Our initial focus on the western Pennsylvania Marcellus play is akin to operating in Clark and David’s backyard. They have amassed a stellar track record of value creation in the area, and are clearly professionals, and people, of the highest quality and character.

    Clark Nicklas, Laurel Mountain CEO and Vista founder, said in a statement that the new company plans to build “quality asset portfolios with exposure to natural gas and liquids across multiple productive horizons.”

    David Nicklas, the son, will serve as the company’s president.
     
  • Just what we need more EPA regulations.  It’s not bad enough the price of oil is at multi-year lows and the government is looking to make it more difficult to make a profit.

    The Obama administration on Wednesday, Jan 14, proposed new regulations to curb methane emissions it says are negatively impacting the climate and will cut down wasted energy.

    Industry proponents immediately blasted the proposed rules, saying methane emissions are dropping due to technological advances and the new regulations could potentially kill the US energy renaissance.

    The new administration goal is to cut methane emissions from the shale oil and gas industry by 40% - 45% from 2012 levels by 2025. It claims the goal would save up to 180 billion cubic feet (Bcf) of wasted natural gas in 2025, enough to heat more than two million homes for a year.

    “Methane, the primary component of natural gas and the third-largest source of US greenhouse gas emissions, is a potent climate pollutant, trapping 25 times as much heat as carbon pollution over the course of a century, according to an administration statement from advisor John Podesta. “The good news is emissions from the oil and gas sector are down 16% since 1990. However, without additional action, emissions from this sector are projected to rise more than 25% by 2025.”

    To achieve its reduction goal, the administration announced a number of actions. The Environmental Protection Agency (EPA) will work with industry, states, tribes, and other stakeholders to propose “common-sense standards” this summer to reduce methane emissions from new and modified oil and gas wells.

    The Department of Energy will continue to drive technological advancement through new energy efficiency standards for natural gas and air compressors and a proposed $25 million in funding to develop and demonstrate technologies to identify and reduce natural gas leaks.
     
  • Oil price forecast for 2015.  Perhaps serendipitous to those looking for credible predictions on what’s to come for the world of energy, the U.S. Energy Information Administration (EIA) just released their latest edition of the Short-Term Energy Outlook. This is the first version to include forecasts for 2016.

    Where oil prices will crawl is on the minds of most. Crude oil markets continue to search for a bottom as prices declined again in December and continued to drop in the first week of January. West Texas Intimidate is expected to average $54.58 in 2015 but finally gain ground in 2016 with an average of $71. In comparison for 2015 and 2016 Brent crude oil is forecasted to average $57.58 and $75 respectively. December was the sixth consecutive month in which monthly average Brent prices decreased, falling $17 per barrel (bbl) from November to a monthly average of $62/bbl, which was the lowest rate since May 2009.
     
  • Plunge in Crude Oil Price to Boost US Natural Gas Exports: BTU Analytics
    While many experts and industry watchers have prognosticated the drop in crude prices will ultimately hurt the prospects for natural gas exports, BTU Analytics believes in the long-run, the drop in global supply will ultimately benefit exporters of natural gas from the US.

    “The boon to US natural gas exporters, and ultimately to US natural gas producers, will come in the form of a lack of supply investment in downstream markets around the world,” according to Tony Scott, a Partner with Lakewood, CO-based BTU Analytics.

    Scott’s example is the US neighbor to the south: Mexico. The country has committed to more than 5 billion cubic feet per day (Bcf/d) of pipeline expansion projects to capitalize on cheap US natural gas supplies sourced from the Permian Basin in West Texas and the Eagle Ford Shale Play in South Texas.

    Mexican natural gas production declined 0.6 Bcf/d between 2010 and 2013, as cheap natural gas in the US chased out higher cost conventional development in Mexico and the state-run PEMEX shifted capital to focus on oil assets.

    “US pipeline exports of natural gas ratcheted up over this time period, backing out planned imports of oil price-linked LNG,” Scott wrote in a Tuesday, Jan 13, blog. “In 2014, natural gas production in Mexico rebounded due to increases in associated natural gas production from investments in Mexican oil fields. One would expect the fall in crude to slow the pace of investment in Mexico’s oil field developments even with Mexico in the beginning stages of energy reform.”

    Scott believes if Mexican natural gas production returns to the rate of decline experienced from 2010 to 2013 (5% annually), Mexican production would decline by about 0.2 Bcf/d/yr, or 1 Bcf/d by 2020.

    “This decline would thus boost the demand for US sourced natural gas production and increase the utilization of the expansion pipes to Mexico,” according to Scott.

    In addition to the potential for natural gas supply declines in Mexico, demand for natural gas should rise over the next five years as new natural gas fired generation in the country is added to the mix.

    “While the drop in crude will be painful for some projects, producers in dry natural gas plays in the US like the Haynesville and Marcellus could see long-term benefit from a lack of investment in oil plays not just in the US but globally as well,” Scott said.
     
  • Shell kills Middle East petrochemical plant.  A multi-billion dollar petrochemical plant project more than three years in the making is being aborted due to the current economic climate in the energy sector. According to Fuel Fix, the Royal Dutch Shell project dubbed “Al Karaana” was a joint venture between Shell, which had a 20 percent stake in the project, and state-owned Qatar Petroleum, which had an 80 percent stake in the project.

    In a statement released Monday, Shell said that it decided not to move forward with Al Karaana after receiving bids form engineering and construction firms that “showed high capital costs, rendering it commercially unfeasible, particularly in the current economic climate prevailing in the energy industry.” Neither company commented on how much the development would have cost, but in 2011 Qatari energy minister Mohammed al-Sada estimated the cost to be around $6.4 billion.

    The project would have used natural gas feedstocks from projects in Qatar. In March 2014, the companies completed the front-end engineering design work and the project was waiting on a final investment decision since then.

    This abandonment of this plan could bode well for the Shell cracker plant in Beaver County, PA.
     
  • Shell will be shipping condensate overseas.  Royal Dutch Shell has been given federal regulatory approval to export light crude oil, aka, condensate, from the US, SEBB has learned.

    The energy giant had been working with the US Commerce Department, which said on Dec 30, it was starting to approve requests from US firms to sell condensate abroad.

    Under the 40-year-old ban on US crude exports, oil firms are allowed to export only refined products, but new guidance from the Commerce Department last month clarified what types of products can be legally exported.

    While the export ban requires an act of Congress to be lifted, the Obama administration's rules are eroding its impact by allowing firms to send condensate through a simple distillation tower, rather than a refinery, to export it.
     
  • Marcellus and Williams Energy 2014 stats:
     
    • Williams spent $100 million per month in 2014 building gathering lines and pipelines in the Marcellus/Utica region.
    • Scheel said the region is now producing about 15 billion cubic feet of gas per day (Bcf/d) and he expects that to grow by about 1 Bcf/d each year at least through 2020 (hitting 20 Bcf/d in 2020).
    • More than 750 people in the Pittsburgh region now employed by Williams, up from a handful in 2008.
    • Their payroll is about $77 million per year. And they’re “adding people every day.”
    • There’s 50 gigawatts of new power generation in the northeast coming that will be powered by Marcellus/Utica Shale gas.
    • Williams work with community colleges and universities to get the kind of people they need: mostly engineers and technicians.
    • Williams also needs electricians, mechanics, and other skilled laborers.
    • They have about 160 “open positions” that will need to be filled over the next year and a half.
    • There’s more gas in the Marcellus/Utica than we thought existed in the entire country just 10 years ago.
    • If the Marcellus/Utica Shale region was its own country, it would be the third largest producer of natural gas in the world.
    • 50 years from now the Marcellus/Utica will still be a great place for energy production. This is a generational opportunity–not going away any time soon.
    • The big problem is takeaway capacity–moving the gas from this region/production area to regions that can use it.
       
  • Utica Shale Update. The following update on Utica well activity is provided by the Ohio Department of Natural Resources for the week ending on January 10th.
     
    • DRILLED: 293
    • DRILLING: 295
    • PERMITTED: 466
    • PRODUCING: 712
    • TOTAL: 1,766
       
  • Twenty-four horizontal permits were issued during the week that ended Jan. 10, and 51 rigs were operating in the Utica Shale.
     
  • TOP 10 COUNTIES BY NUMBER OF PERMITS:
     
    • CARROLL: 455
    • HARRISON: 322
    • BELMONT: 212
    • GUERNSEY: 174
    • NOBLE: 152
    • MONROE: 143
    • COLUMBIANA: 129
    • JEFFERSON: 49
    • MAHONING: 30
    • TUSCARAWAS: 19
       
  • TOP 10 COMPANIES BY NUMBER OF PERMITS:
     
    • CHESAPEAKE: 742
    • GULFPORT: 211
    • ANTERO: 125
    • AMERICAN ENERGY UTICA: 115
    • ECLIPSE RESOURCES: 100
    • HESS: 68
    • CNX GAS: 49
    • REX: 41
    • HILCORP ENERGY: 38
    • PDC: 36
       
  • Hiring in the oil & gas industry to slow.  Due to declining oil prices and uncertainty with the current economic environment, four in 10 (44%) of US hiring managers in the oil and gas industry anticipate less hiring in the first half of the year compared to the second half of 2014, according to Rigzone's semi-annual hiring survey.

    Nearly a quarter (22%) of the hiring managers expect more hiring, and only 5% intend to not hire at all in the next six months.

    The survey results paint a picture of what Rigzone called “ambiguity for oil and gas professionals in the year ahead,” a steep change from survey results six months ago, when half of hiring managers planned to hire more.

    In fact, 48% of hiring managers said they've experienced a loss of budgeted positions due to market volatility, up from 18% who said they’d lost positions at the mid-year survey.

    Layoffs are also more likely, with 36% of hiring managers saying they're likely compared to 11% who said last July layoffs were coming.

    "The shift in outlook underscores how quickly companies are adjusting their plans to the current economy, with many oil and gas firms bracing for what could be a difficult 2015," said Bob Melk, President, Rigzone. "Companies are watching falling oil prices and putting a pause on some hiring plans as a result."

    While companies reassess filling open positions, candidates are becoming less choosy with their career choices, according to Rigzone. Twenty-two percent of candidates are rejecting offers, a five percentage-point drop from July. Plus, 37% of hiring managers note candidates are asking for more money, a sharp decline from mid-year when 61% experienced talent bargaining for more pay.
     
  • Wolf names secretary of DEP.  Governor-elect Tom Wolf today announced that he has chosen John Quigley, the former secretary of the Department of Conservation and Natural Resources, to be his secretary of the Department of Environmental Protection. Governor-elect Wolf has also selected Cindy Dunn, who previously served as the deputy secretary of conservation and technical service for the Department of Conservation and Natural Resources, to serve as his secretary of the Department of Conservation and Natural Resources.
     
  • New President at AEP.  American Energy Partners, LP (AELP) today announced that Jeffrey A. Fisher has been named Chief Executive Officer of American Energy Appalachia Holdings, LLC (AEA). Aubrey K. McClendon will continue as Chairman of the Board of AEA.

    Mr. Fisher, 54, had been serving as the Chief Operating Officer of AELP, a position he held since joining AELP in November 2013.  Before joining AELP, Mr. Fisher was Executive Vice President – Production of Chesapeake Energy Corporation, where he was responsible for upstream operations and integrated field development. While at Chesapeake, he also served as Senior Vice President – Production from 2006 to 2012; Vice President – Operations for Chesapeake's Southern Division from 2005 to 2006; and Operations Manager from 2003 to 2004. Prior to Chesapeake, Mr. Fisher held the positions of Asset Manager and Resource Manager for BP from 2000 to 2003. From 1993 to 2000, Mr. Fisher worked for Vastar Resources as Engineering Manager. Mr. Fisher began his professional career with ARCO in 1983 as an engineer and served in various technical and managerial positions in the exploration, production and midstream business segments of ARCO until 1993. He earned a Bachelor of Science in Mechanical Engineering from Oklahoma State University in 1983.
     
  • Nat Gas to New England and Canada’s Maritime Provinces.  Partners Portland Natural Gas Transmission System (PNGTS), TransCanada PipeLines (TCPL), and Iroquois Gas Transmission System (IGTS) announced on Monday, Jan 12, simultaneous joint open seasons will be conducted to allow for up to 300 million cubic feet per day (MMcf/d) of natural gas to be transported from the Wright Hub in Wright, NY, to markets in New England, New Brunswick, and Nova Scotia, as early as Nov 1, 2017.

Rig Count

  • Baker Hughes Rigs count for the week ending Jan 9.
     
    • PA
      • Marcellus 50 rigs – unchanged
      • Utica 1 down 2
    • Ohio
      • Utica 47 up 1
    • WV
      • Marcellus 27 unchanged
    • TX
      • Eagle Ford – 197 down 3
      • Permian Basin – 414 down 22
    • NM
      • Permian Basin – 88 down 6
    • ND
      • Williston – 162 down 7MT
      • Williston – 9 down 1
    • CO
      • Niobrara – 51 down 2
         
  • TOTAL U.S. Rig Count 1750 down 61

PA Permits for January 8, to January 15, 2015

       County               Township            E&P Companies

1.    Bradford              Rome                  Chesapeake
2.    Bradford              Smithfield            Chesapeake
3.    Bradford              Troy                    Chesapeake
4.    Mercer                Shenango            Hilcorp
5.    Mercer                Shenango            Hilcorp
6.    Sullivan               Elkland                Chesapeake

OH Permits – weeks ending January 10, 2015

       County                 Township             E&P Companies

1.    Columbiana            Fairfield                Hilcorp
2.    Columbiana            Fairfield                Hilcorp
3.    Columbiana            Fairfield                Hilcorp
4.    Columbiana            Fairfield                Hilcorp
5.    Columbiana            Fairfield                Hilcorp
6.    Columbiana            Fairfield                Hilcorp
7.    Columbiana            Fairfield                Hilcorp
8.    Columbiana            Fairfield                Hilcorp
9.    Columbiana            Fairfield                Hilcorp
10.    Columbiana          Fairfield                Hilcorp
11.    Columbiana          Fairfield                Hilcorp
12.    Columbiana          Fairfield                Hilcorp
13.    Guernsey             Wills                    Amer. Ener. Utica
14.    Guernsey             Wills                    Amer. Ener. Utica
15.    Guernsey             Wills                    Eclipse
16.    Guernsey             Wills                    Eclipse
17.    Guernsey             Wills                    Eclipse
18.    Guernsey             Wills                    Eclipse
19.    Noble                   Seneca                Consol
20.    Noble                   Seneca                Consol
21.    Noble                   Seneca                Eclipse
22.    Noble                   Seneca                Eclipse
23.    Noble                   Seneca                Eclipse
24.    Noble                   Seneca                Eclipse

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

 

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