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NewsLetters

Permit Activity last week.  

  • PA – 6; a slow week
  • OH –14; American Energy Utica in Belmont; Hess in Harrison; Antero in Monroe

Expo/Industry events for the next few months

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

If you are a business that serves the oil and gas economy in the Utica Shale, you will need the best information going forward in 2015.  Get the whole story from industry experts.  
https://www.cantonchamber.org/utica-upstream

Upstream PA 2015 – April 16, 2015 Penn State

Cabot Joins Speakers

Cabot Oil and Gas, one of the most productive E&P Companies in the Marcellus, will give you a perspective on 2015, a challenging year.

David Spigelmyer, Marcellus Shale Coalition President, will be the featured speaker.  Spigelmyer along with some E&P Companies providing an overview for upstream activity in 2015.  Additionally, industry experts will comment on oil and gas pricing and government actions impacting the oil and gas industry.  

John Felmy, Chief Economist, American Petroleum Institute, will give a comprehensive outlook for oil and gas pricing globally and its impact on Pennsylvania oil and gas industry.  

If you’re doing business in the upstream market in PA, this is a must attend seminar.

http://upstreampa2015.com/

Latest facts and a rumor from the Marcellus and Utica Shale

  • OOGA’s Winter Meeting was this past week.  Kudos to OOGA for another great meeting.  I found it interesting that in speaking with about 50 individuals only two told me that business was slow.  While the industry is slowing down, it appears that it is not moving at break neck speed any more.  In fact, it may be leveling off, however if prices move up considerably we, could be back to business at break neck speed.
     
  • Rumor from OOGA Winter Meeting.

    XTO is moving into Monroe County, OH (RUMOR)
    The Baker Hughes facility in Massillon could become a much larger yard to lay down equipment. (RUMOR)
    A new E&P Company will be moving in OH. (RUMOR)
     
  • Chesapeake sees huge potential in the Utica.  Chesapeake Energy Corp. has by far the most land in Ohio's Utica shale play. It was the first to blitz Ohio and it operates more than half of all Ohio wells.

    Yet despite holding more than a million acres of land, the Oklahoma City driller doesn't have much in what is shaping up to be Ohio's "sweet spot," a portion of Belmont and Monroe counties   where companies are finding the best natural gas production.

    "If you surveyed companies and people out there, they'd probably point you to that direction south of us as the 'core of the core,'" said Chris Doyle, executive vice president of operations for Chesapeake Energy's northern division.

    Chesapeake would certainly like additional acreage in the core, "But we create more value for the Utica position than any company out there, even if we're not in the core of the core," Doyle said.

    Doyle was enthusiastic about the company's plans for Ohio, and often focused on the company's long-term plans here, eschewing the flashy initial production numbers that often grab headlines.

    Why such confidence?

    It comes down to capital efficiency, he said. Chesapeake, like most other oil and gas drillers in Ohio, has had to significantly reduce its rig count and planned capital expenses nationwide for 2015 because of the fall in commodity prices. It plans to spend 37 percent less than last year, although a quarter of its spending is dedicated to the Utica, up from 10 percent a year ago.

    The company can drill its Utica wells for under $7 million. Competitors might average about $9 million per well and higher, Doyle said.

    McClendon's early entry helped his successors get a firm grasp on what's at stake there. It gave the company a head start. Chesapeake's average Utica well cost $7.7 million in 2012, and it took 24 days to move from drilling one well to the next. Two years later costs per well fell to $6.6 million, and the drilling cycle time fell by a third, according to an investor presentation.
     
  • Chesapeake tests waterless fracking.  Chesapeake Energy Corp. is partnering with GasFrac Energy Services Inc. to test waterless fracking at one of its Ohio oil wells.

    The most-active driller in the Utica shale play is in the early stages of the test on a Tuscarawas County well, the company confirmed.

    "One of our partners (EV Energy Partners) attempted to use the technology," said Chris Doyle, executive vice president of operations for Chesapeake's northern division. "We're using that technology and we want to test that out and see if it could drive additional value."
     
  • Large Utica Shale reserve in Tioga County, PA.  Tapping the Utica Shale in north central Pennsylvania could become the state’s next natural gas drilling boom, at least once the pipelines get built. Seneca Resources has announced the successful completion of a well on state forest land in Tioga County. Seneca, a subsidiary of National Fuel Gas Company, says its test well generated 22.7 million cubic feet of natural gas daily.

    National Fuel Gas Company CEO and President Ronald J. Tanski praised the results in a release, saying the development could lead to more Utica Shale gas drilling on state forest lands in Tioga County and other parts of the state.

    “This well, along with wells drilled by other operators in the area, have de-risked the Utica potential of our 10,000 acres on DCNR Tract 007. We estimate resource potential on this tract alone of approximately 1 trillion cubic feet. With these strong results in hand our team is evaluating options to develop this acreage in the next few years, depending on local gas prices and pipeline take-away capacity. We have additional Utica potential not only in Tioga County, but across much of our large Pennsylvania acreage position. Our next Utica exploration well is planned for fiscal 2016.”

    Last September, Royal Dutch Shell announced the successful completion of two Utica wells in Tioga County. This latest announcement, along with the two Shell wells nearby, could indicate that the sweet spot for Utica shale may extend beyond Ohio and southwestern Pennsylvania. In December, Range Resources announced a Utica well in Washington County has a daily flow rate of 59 million cubic feet of natural gas.

    Shell has been very active in Tioga County while some companies have slowed a bit.  Shell’s activity leads one to believe that it has really hit some significant wells.
     
  • US EIA holds Nat Gas prices steady through 2016. The US Energy Information Administration added just a few pennies to month-ago estimates for quarterly and annual US natural gas prices, pointing to relatively strong production, demand and storage numbers.

    In its latest short-term energy outlook, EIA put the new first-quarter Henry Hub average spot price target at $2.92/MMBtu, up 3 cents from last month's forecast. The second-quarter average now figures to be $2.93/MMBtu, 2 cents more than the February report, the agency said.

    Similar hikes were predicted for this year, up 2 cents to $3.07/MMBtu, and 2016, up 1 cent to $3.48/MMBtu.

    EIA noted that the Henry Hub spot price averaged $2.87/MMBtu in February, a decline of 12 cents from January.
     
  • New tougher DEP Regs. in PA. Pennsylvania environmental regulators are moving to tighten land and water protection rules on shale gas producers.

    The latest draft of regulations set in motion by 2012’s Act 13, an overhaul of the state’s drilling laws, would require new permits and standards for open-air wastewater impoundments, where leaks and design problems have led to multimillion-dollar fines against companies over the past year.

    The revisions Department of Environmental Protection officials outlined Monday, March 9, would add protective steps that companies must take if they want to drill near a school, playground or wetland; clarify rules on restoring water supplies fouled by gas wells; require more testing for and monitoring of nearby wells; increase regulation of noise around shale wells; and require electronic filing of reports. The department wants to ban waste pits at individual sites.

    “We're pleased to hear Acting Secretary Quigley emphasize the importance of 'protecting public health and the environment,' and undertaking a process that is 'thoughtful, deliberate, and transparent,' as DEP moves toward finalizing these vital regulations by spring of 2016," said John Norbeck, Acting CEO of environmental watchdog PennFuture. "It’s paramount that we have strong rules of the road for oil and gas operations in the state. Our citizens have been demanding this."

    "These proposed revisions focus on the need to protect public safety and the environment while enabling drilling to proceed," said John Quigley, Acting Secretary of the DEP.

    Some of the proposed changes “appear to be duplicative and unnecessarily costly solutions in search of problems that threaten jobs,” Dave Spigelmyer, President, Marcellus Shale Coalition, said, in a statement.

    The impoundment issue has ranked among the most nagging problems for drillers over the past few years. The department last year levied fines of more than $4 million each against Range Resources and EQT Corp. for leaky pools.

    “Tougher siting and containment controls for centralized wastewater storage makes sense,” said John Walliser, Vice President of the Pennsylvania Environmental Council, in a statement.

    The rules would allow the DEP to put certain conditions on permits for a well if the edge of the pad comes within 100 feet of a stream or wetland. If it's close to schools, parks or playgrounds, companies would have to show how they will protect those features.

    If a gas well fouls nearby water supplies, the new rules would require that the operator restore the water quality to a higher level.
     
  • 2016 CAPEX cuts cost SW PA $1.5 billion.  Five natural-gas producers with significant operations in southwestern Pennsylvania have reduced their capital budgets collectively by 23 percent — or $1.5 billion — according to numbers reported in operational guidance.

    The reductions are based on a Pittsburgh Business Times analysis of amounts reported by Consol Energy, EQT Corp., Range Resources Corp., Rex Energy, and Rice Energy.
     
  • Latest information on Shell cracker plant.  For the first time that I know of Shell has posted information about its cracker plant in PA.  Here’s the link with Shell latest information.

    https://www.shell.us/aboutshell/projects-locations/appalachia.html
     
  • Rice reports strong 2014.  After its first year as a publicly traded company and doubling its leased land in Marcellus and Utica shale plays, Canonsburg-based natural gas company Rice Energy Inc. reported fourth-quarter growth in natural gas production, according to its earnings release on Thursday.

    In the fourth quarter, the company reported net income of $103.8 million, or 76 cents per share, on revenue of $129 million. That’s up compared to a loss of $15 million, or 17 cents per share, on revenue of $27.9 million in the same quarter last year.
     
  • PA creates pipeline task force.  Pennsylvania environmental regulators are planning to create a collaborative task force to develop ways to “plan smarter” as companies build out tens of thousands of miles of pipelines in the next decade to bring Marcellus Shale gas to market.

    Acting Secretary of the Department of Environmental Protection John Quigley told the House Appropriations Committee during a budget hearing in Harrisburg on Wednesday about the pipeline initiative and other programs aimed at modernizing the agency’s operations and diversifying the state’s energy production portfolio.

    “Over the next 10 years, there will likely be 25,000 or 30,000 miles of gathering lines, and several thousand miles of interstate pipeline built across the face of the Commonwealth,” Mr. Quigley said. “It is very likely that every county in the state is going to be impacted by that development.”

    DEP is proposing to create a task force — modeled after a state collaboration that established voluntary wind turbine siting standards — that would include pipeline companies, nonprofits, municipalities, conservation agencies and others to propose ways to reduce community impacts and improve economic efficiency in pipeline planning.

    For the full year, Rice earned $218.5 million, or $1.70 per share, on revenue of $390.9 million. That’s an increase over 2013’s loss of $35.8 million, or 44 cents per share, on revenue of $88.7 million.

    In 2014, the company produced 97.7 billion cubic feet of natural gas, up from 23 Bcf in 2013.
     
  • Nat Gas power plants coming to WV.  Developer Andrew Dorn believes there is enough Marcellus and Utica shale natural gas and ethane to fuel multiple electricity generators throughout West Virginia, starting with the $615 million Moundsville Power facility he plans to have running before June 2018.

    Just one day after Dorn's son, Matt, announced Energy Solutions Consortium's intention to build two new natural gas power generators near the former Wheeling Corrugating plant in Beech Bottom, the Dorns entered a memorandum of understanding to build another such facility near Clarksburg, W.Va.

    Harrison County Administrator William Parker said the agreement the county's commissioners entered with ESC Harrison County Power "is very preliminary at this point."

Rig Count

Baker Hughes Rigs count for the week March 6th.
     

  • PA
    • Marcellus 45 rigs – down 7
    • Utica 2 unchanged
  • Ohio
    • Utica 35 down 1
  • WV
    • Marcellus 17 up 1
  • TX
    • Eagle Ford – 149 down 8
    • Permian Basin  276 down 14
  • NM
    • Permian Basin – 57 down 8
  • ND
    • Williston – 105 down 3
  • MT
    • Williston – 3 unchanged
  • CO
    • Niobrara – 31 down 5
       
  • TOTAL U.S. Rig Count 1195 down 75

PA Permits for March 5, to March 12 2015

        County            Township             E&P Companies

1.    Bradford             Tuscarora             Chesapeake
2.    Butler                Summit                 XTO
3.    Susquehanna     Bridgewater           Cabot
4.    Susquehanna     Bridgewater           Cabot    
5.    Washington       South Strabene       Range
6.    Wyoming           Mehoopany            Chesapeake

OH Permits – weeks ending March 7, 2015

       County               Township             E&P Companies

1.    Belmont                Mead                   XTO
2.    Belmont                York                    Amer. Ener. Utica
3.    Belmont                York                    Amer. Ener. Utica
4.    Belmont                York                    Amer. Ener. Utica
5.    Columbiana           Franklin               Chesapeake
6.    Harrison                Athens                Hess
7.    Harrison                Athens                Hess
8.    Harrison                Athens                 Hess
9.    Harrison                Athens                Hess
10.    Harrison               Athens                Hess
11.    Monroe                Seneca                Antero
12.    Monroe                Seneca                Antero
13.    Monroe                Seneca                Antero
14.    Monroe                Seneca                Antero


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