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Permit Activity last week. 

  • PA – 8; Cabot in Susquehanna County
  • OH –1; Maybe winter weather caused the drop off in permits

Expo/Industry events for the next few months:

OOGA Winter Meeting – March 11-13, 2015, Columbus, OH

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

Upstream PA 2015 – April 16, 2015 Penn State

OH Valley Expo April 28 – 29, 2015 St. Clairsville, OH

Latest facts and a rumor from the Marcellus and Utica Shale

  • Notes from the Marcellus – Utica Midstream Conference.
    • Kudos to Hart Energy for a superb conference which saw record attendance in the range of 2200 attendees.  I credit the record breaking attendance to the industry’s need to get the latest information.  As we see the oil and gas industry is very dynamic, and literally, situations change overnight.  I encourage vendors to the industry to attend as many information events as you can in order to stay current with the status of drilling or midstream activity.\
    • Thank you to Barry Davis, EnLink’s President and Chief Executive Officer, for  calming the concern over falling prices.  His presentation illustrated the price declines since the mid 1980’s.  The price declines showed the nature of the price decline cycles.  The current declines are not as bad as previous ones.  Price recovery, back to  50% of the original price usually occurs within 100 to 300 days.
    • Davis also called the Marcellus – Utica shale plays the “best of the best.”  In other words, PA, OH and WV are not going to experience as steep a decline in drilling as the other shale plays.
    • Because the Marcellus-Utica are the “best of the best,” companies that left PA, OH and WV to follow the higher oil prices are returning to the Appalachian Basin.  A number of companies from Texas, Louisiana and Oklahoma stopped by our booth enquiring about Shale Directories membership.  
    • “High Energy” is how I describe the MUM Conference.  Exhibitors and attendees went to the conference not knowing what to expect with all doom and gloom in the press.  But from Tuesday networking reception to the close of business on Thursday, the attitude seemed to grow in optimism and confidence as the result of the presentations and meetings.
  • Williams spending in the Utica.  It looks like Williams will be spending $300 million this year in the Utica.  (RUMOR)
  • Gulfport laying down two rigs.  Gulfport is laying down two rigs and telling vendors if they work with them in 2015, 2016 will be a good year. (RUMOR)
  • Hess cuts budget.   Hess spending in the Utica shale play will drop 42 percent this year, as the oil and gas giant joins the cavalcade of cautious companies reining in U.S. shale development.

    Hess plans capital expenses of $290 million, down from $500 million last year as the company transitions "at a measured pace in this price environment and as infrastructure builds out," the company said late Monday.

    The Houston energy company sold off a chunk of its acreage last year, but is still bullish on the wet-gas acreage it shares with Consol Energy Inc.. Hess expects to operate two rigs in that joint venture and bring 25-30 new wells online, down from four rigs and 39 new wells in 2014.

    The company has reduced its overall capital budget 16 percent, to $4.7 billion in 2015 from $5.6 billion last year.
  • Big midstream deal.  Energy Transfer Partners and Regency Energy Partners, two gas companies with extensive shale interests, have announced in a joint statement a merger agreement worth $18 billion.

    The merger is set to be a unit-for-unit transaction, with an initial cash payment to Regency unitholders; Energy Transfer will also assume $6.8 billion of net debt and additional liabilities as part of the deal which is set to close during the second quarter of 2015.

    At the completion of the deal, Energy Transfer and Regency will be the second largest master limited partnership which the companies expect will “create substantial cost savings, capital efficiencies and valuable ancillary benefits… [And] strengthen the overall growth platform for the combined company.”

    The merger is set to provide specific benefits to joint operations in the Permian Basin and Eagle Ford Shale region, including anticipated liquid growth from the companies’ existing joint venture, Lone Star.

    In addition, the companies expect the deal to boost Energy Transfer’s Rover interstate pipeline project, which is to provide transport for 3 billion cubic feet of natural gas per day, across the Marcellus and Utica shale plays.

    According to the joint statement, the deal will facilitate Energy Transfer to “become a major player in the Marcellus and Utica shales” with the merger accelerating this ambition to the “near-term”.
  • Antero’s good news!  Antero Resources, one of the largest drillers in the Marcellus and Utica Shale region, issued a press release yesterday to crow about some important numbers. The first important number is 66%–as in Antero’s “proved reserves” of natural gas (and liquids and oil) jumped 66% in 2014–to a mind-blowing total of 12.7 trillion cubic feet equivalent (Tcfe). Proved reserves means using existing technology and under these economic conditions, Antero can reasonably, with very high confidence, extract at least 12.7 Tcfe. Astonishing. Another number to crow about: $0.61, as in it costs the company only 61 cents per thousand cubic feet (Mcf) to find and develop/extract that gas. Of course what’s missing in that number is the midstream component–processing and pipelining it to market. But still, it shows that these large companies can still make money even in a low cost environment, which is reassuring.
  • Penn Energy cuts E&P budget.  Add one more company to the rolls of natural gas firms that are cutting back in the wake of lower energy prices.

    PennEnergy Resources LLC stopped drilling new wells in October, according to a report over the weekend in the Beaver County Times. Penn Energy has leases in Beaver, Butler and Armstrong counties.
  • Shell to cut $15 billion.  The oil market slump has forced energy giant Royal Dutch Shell to cut investment by $15 billion over the next three years.

    "Shell has options to further reduce spending, but we are not over-reacting to current low oil prices," the company said.

    In announcing its fourth-quarter results on Thursday, Jan 29, the Anglo-Dutch super major said full-year profit came in at $19 billion, up from $16.7 billion for the previous year. Profit for the three months ending Dec 31, totaled $4.2 billion, up from $2.2 billion from the year-ago period.

    Shell divested roughly $15 billion in assets before the crude oil plunge took effect; and CEO Ben van Beurden said he intends go forward by adopting a “prudent approach” as the price debacle continues.

    From comments at the MUM Conference, it appears that the activity in Monaca, PA, the site of Shells cracker, is moving closer toward a formal announcement of the building of the cracker’s construction.
  • Consol cuts E&P budget only 10%.  Consol Energy Inc. expects to avoid the more drastic spending cuts other shale companies are announcing as it plans for continued growth of natural gas production.
  • The Cecil-based gas and coal company on Friday said it will spend about $1 billion on natural gas development in the Marcellus and Utica shales, a drop of less than 10 percent from the $1.1 billion in 2014 capital spending it announced a year ago. Some competitors have cut spending for this year by 40 percent because natural gas prices hit two-year lows.

    “Despite a challenging commodity price environment, our 2015 capital budget will not only support our growth this year, but more importantly, it will also support our 2016 production volumes as well,” CEO Nick DeIuliis said in announcing the spending plan and the company's most recent financial results.
  • US House pushing LNG exporting. The US House of Representatives passed a bill on Wednesday, Jan 28, to speed permits for exports of liquefied natural gas, legislation that even if passed by the Senate faces a sure veto from President Obama.

    Lawmakers voted 277-133 to approve the bill, sponsored by Republican Bill Johnson of Ohio, which would force the US Department of Energy (DOE) to decide within 30 days on applications to export LNG.

    However, analysts said the measure doesn’t do enough to push permissioning at the Federal Energy Regulatory Commission (FERC), which also is responsible for clearing LNG projects.

    The DOE considers applications for LNG exports after the FERC assesses their safety and environmental impacts.

    Washington has fully approved at least five LNG projects. The first new project, Cheniere Energy's Sabine Pass, which was fully approved in 2012, is expected to start shipping later this year.

    Shale oil and gas companies once again are barred from drilling new wells under state forests and parks in Pennsylvania.
  • Wolf bans drilling on PA state lands.  Gov. Tom Wolf has signed an executive order reinstating a moratorium on new leases for shale oil and gas drilling under state-owned forests and parks.
  • WV opens bids for drilling on state lands.  Companies have bid millions of dollars to drill for oil and natural gas beneath several state-owned lands in West Virginia.

    On Friday, the state Department of Commerce opened bids for Marcellus shale fracking under several tracts of land.

    Antero Resources bid about $8,100 per acre, or $2.3 million total, for mineral rights under Jug Wildlife Management Area in Tyler County. Jay-Bee Production Company bid between $5,000 and about $16,300 per acre for different parts of the same land.Noble Energy bid about $5,100 per acre, or $685,000 total, to drill under Fish Creek and adjacent land in Marshall County.

    StatOil USA Onshore Properties Inc. bid $9,000 per acre to drill under part of the Ohio River in Wetzel County.

    The state requires an additional 20 percent royalty on what's extracted.
  • Top 5 companies with most shale gas wells drilled in SW PA:
  1. Range Resources Corp. (NYSE: RRC) — Appalachia LLC, Canonsburg, 811 wells drilled locally
  2. EQT Production Co., Pittsburgh, 428 wells drilled
  3. Chevron Corp. (NYSE: CVX), Coraopolis, with 324 wells drilled
  4. Consol Energy Inc. (NYSE: CNX), Canonsburg, with 234 wells drilled
  5. Atlas Resource Partners LP, Pittsburgh, 234 wells drilled

Rig Count

  • Baker Hughes Rigs count for the week ending Jan 23.
    • PA
      • Marcellus 51 rigs – up 1
      • Utica 2 up 1
    • Ohio
      • Utica 44 down 4
    • WV
      • Marcellus 25 unchanged
    • TX
      • Eagle Ford – 181 down4
      • Permian Basin – 363 down 3
    • NM
      • Permian Basin – 85 down 3
    • ND
      • Williston – 147 down 9
    • MT
      • Williston – 6 down 3
    • CO
      • Niobrara – 49 unchanged
  • TOTAL U.S. Rig Count 1633 down 43

PA Permits for January 22, to January 29 2015

      County            Township               E&P Companies

1.    Beaver               Franklin                Abarta
2.    Butler                Concord                Rex
3.    Butler                Concord                Rex
4.    Susquehanna     Rush                    Cabot
5.    Susquehanna     Rush                    Cabot
6.    Susquehanna     Rush                    Cabot
7.    Susquehanna      Rush                   Cabot
8.    Susquehanna      Springville            Chief

OH Permits – weeks ending January 24, 2015

       County            Township                E&P Companies

1.    Jefferson           Smithfield                Amer. Ener. Utica

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Northeast Supply Enhancement