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NewsLetters

Permit Activity last week.  

  • PA – 8; Rice in Washington County
  • OH –10; Antero in Monroe County

Expo/Industry events for the next few months

Utica Midstream
June 10, 2015
Walsh University
North Canton, OH

The midstream business is very active in Ohio. There are 13 pipelines that are being built or in the early start up phases in Ohio. If you want to get the latest information from the major midstream companies, plan on attending Utica Midstream seminar. It will feature speakers from Williams, Marathon Petroleum, EnLink, Spectra Energy and Blue Diamond.

Register now! https://www.cantonchamber.org/utica-midstream

DUG East
June 23-25, 2015
Pittsburgh, PA

The DUG East conference and exhibition is the world’s leading event focused on unconventional resource development in the vast Marcellus and Utica shale plays, as well as emerging plays throughout the Appalachian region. Each year, thousands of oil and gas industry professionals gather for two days of world-class presentations and exclusive networking opportunities. Conference sessions are impactful and informative, covering a wide range of timely topics around exploration, drilling, completions and production.   

Visit us at booth 717

www.DUGEast.com

Latest facts and a rumor from the Marcellus and Utica Shale

  • Leasing activity hanging in there.  DrillingInfo recently examined a series of market indices including rig counts, permits and leasing. After seeing a decrease of 52.2% in rig count (2,051 rigs on 11/3/14 to 979 on 5/12/15) and 40.7% decline in monthly permits (6,807 on 11/1/2014 to 4,034 on 4/1/2014), it was expecting to see the same degree of pull back in leasing activity. This is where we made a surprising discovery.

    Instead of a draw down in the number of leases it was expecting, it discovered that the volume has not only remained virtually the same when compared to this time last year, it is on par to equal or surpass that volume. In Q1 of 2014, we processed 64,638 leases across the 538 counties we cover. In the same quarter of this year, we have already processed 56,396 leases with several counties still yet to officially file all March leases. Even if no other leases are reported for March, there would only be a 12.7% decrease in leasing activity. This indicates that companies are looking to gain leaseholds while the market is still sluggish and unleased minerals are valued at today’s commodity prices, ultimately concluding that by the time these new leases mature to producing wells, the market will have rebounded.
     
  • Reliance close to Eagle Ford sale.  India’s largest corporate entity, Reliance Industries Ltd. is reportedly close to selling its 45% stake in a joint venture with Pioneer Natural Resources in the Eagle Ford, with the sale expected to amount to around $4 billion.

    The assets were initially valued at $4.5 billion when a sale was first mooted, but a drop in crude oil prices and concerns surrounding extraction have reduced the value by around 10%.

    According to bankers working on the sale, complexities in contracts and negotiating have delayed the sale process for nearly a year.

    However, one banker is quoted as saying that Pioneer “remains very optimistic that it will announce the sale of this business within the first week of June.”

    Pioneer operates the area and holds a 46% stake in the venture, with Newpeck holding the remaining 9%.

    Reliance acquired its stake in the venture for $1.31 billion in June 2010 and has invested a total of $3.91 billion in the project, with a further $4 billion investment made in ventures with Carrizo and Chevron.

    However, the company reported a third reduction in revenue quarter-to-quarter, a 48% decline in pre-tax earnings in the quarter ending December 2014 and production volumes fell 5%; additionally, the company invested a further $234 million across its shale portfolio in the first quarter of 2015.

    A Reliance spokesperson responded to speculation: “It is Reliance’s policy not to comment on market speculation. If there are any required disclosures, the company will make them at an appropriate time.”
     
  • MarkWest to build in cryogenic gas processing plant in the Permian.  MarkWest Energy Partners, L.P. announced the completion of long-term, fee-based agreements to support producer development in the Delaware Basin of West Texas. Under terms of the agreements, MarkWest will install a 200 million cubic feet per day cryogenic gas processing plant (Hidalgo Complex) in Culberson County, Texas. The new facility is scheduled to commence operations during the second quarter of 2016.

    “We are very excited to announce this strategic commercial relationship with Cimarex and Chevron to support their development of the highly prospective Delaware Basin,” commented Frank Semple, Chairman, President, and Chief Executive Officer of MarkWest. “MarkWest has provided midstream services for Chevron in east Texas for more than a decade and we are privileged to have the opportunity to serve them, as well as our new customer and operator of the joint development, Cimarex Energy.”
     
  • Oil and gas production grows 1st Qtr. 2015 in OH.  Ohio’s shale wells continue to show increased oil and natural gas production, according to the Ohio Department of Natural Resources.

    The rate of production growth tailed off compared with previous quarters, but state officials said shale wells produced more oil and gas than in previous quarters. The report includes horizontal wells in the Utica Shale, as well as a handful of Marcellus Shale wells.

    During the first quarter ended March 31, shale wells in Ohio produced more that 4.4 million barrels of oil and more than 183.5 million billion cubic feet of natural gas, state officials said.

    ODNR’s latest quarterly report lists 926 shale wells, with 877 of those wells producing oil or gas. That’s a 12-percent increase compared with the number of producing wells listed in the final three months of 2014.

    First quarter production increased by more than 842,000 barrels of oil and more than 18 billion cubic feet of natural gas, when compared with the fourth quarter of 2014.

    The results are much higher than the 2014 first quarter when 418 horizontal shale wells produced more than 1.95 million barrels of oil and more than 67.3 billion cubic feet of gas.

    ODNR officials also pointed out that production gains during the first quarter topped the gains seen when comparing the fourth quarter and third quarter. Fourth quarter oil production climbed 25 percent compared with the third quarter, but the amount of additional production was 545,000 barrels or 300,000 barrels less than the first quarter production gains.

    State officials said shale wells averaged 80 days of production during the quarter. Average oil production per well was 5,019 barrels and average natural gas production was 209.3 million cubic feet.

    Antero Resources owned the most productive well during the quarter. The Frakes 2H well in Noble County’s Seneca Township produced 50,464 barrels of oil and 1.02 million cubic feet of gas, while the Frakes 1H flowed 29,522 barrels of oil and 679,830 cubic feet of gas.

    American Energy Utica wells in Harrison and Guernsey counties had some of the largest oil production. The company listed 12 wells that produced 25,000 barrels or more, and eight others that topped 10,000 barrels. Rice Drilling reported the most productive natural gas wells — three in Belmont County topped 1.4 million cubic feet produced.

    Stark County’s two producing shale wells posted numbers below the state averages, according to ODNR records. The Frank well in Marlboro Township produced 990 barrels of oil and 19,203 cubic feet of gas, while the Drevon in Osnaburg Township produced 384 barrels of oil and 9,872 cubic feet of gas.
     
  • Eclipse Resources operational update.  The Company is continuing to execute on its drilling plan for the year, and strongly believes that it is on pace to meet or exceed both its second quarter and annual guidance. For the month of April 2015, the Company estimated that its net production averaged approximately 190 MMcfe per day compared to its first quarter 2015 average of 159.6 MMcfe per day, or a 19% increase. The Company’s previously issued guidance for the second quarter of 2015 is 170 – 180 MMcfe per day. Based on the results for the quarter to date, the Company expects to be at the high-end of its previously issued guidance for the quarter.

    Additionally, the Company recently finished completion operations on its Sawyers pad in Monroe County, Ohio, consisting of three wells with inter-lateral spacing of 730 feet. This important spacing test is the Company’s first spacing test below 1,000 feet between wells on its Dry Gas Utica Shale acreage, which if successful, could increase the Company’s drilling locations by approximately 20%. The Company expects to put these wells into sales early during the third quarter of 2015.

    The Company’s operated rig is currently drilling on its Fuchs/Dietrich pads in eastern Monroe County, Ohio, that consist of eight wells with lateral lengths of approximately 8,600 feet. Drilling is continuing on pace with expectations, however, the Company is revising its timing expectations for putting these wells into sales as it awaits the final permitting before gathering lines can be completed. The Company originally expected to put these wells into sales in December 2015, and has now revised its expectations that the wells will go to sales in January 2016. This change in turn to sales timing is not expected to have a material impact on the Company’s 2015 production.

    The Company is also pleased to announce that due to operational efficiencies and aggressive cost management efforts, which have resulted in the Company running below its expected capital expenditure budget, it has elected to complete its four well Weekender pad in its Utica Shale “Lean Condensate” area, located in Guernsey County, Ohio. The Company expects to put these wells into sales in the third quarter of 2015. The Company does not expect that these additional completions will cause the Company to exceed its capital budget for the year.

    Commenting on the results to date, Benjamin Hulburt, Chairman, President and CEO said, “I remain very impressed with our team’s operational performance. Our ability to complete more wells than we planned while spending less capital is strong evidence of the team’s performance. Our initial production in the second quarter to date is extremely encouraging to me, and I believe bodes well for the company’s expectations for the entire year. We are eagerly waiting putting our Sawyers wells into sales early in the third quarter to evaluate the effect of the tighter well spacing. Additionally, we are also excited about putting our Fuchs/Dietrich units to sales in our “Dry Gas East” area early in 2016. If these wells perform according to our “managed choke” type curve expectations for that area, we would expect to put the units into sales at an initial combined production rate of approximately 150 gross MMcf per day (over 105 MMcf per day net).”
     
  • Shell Community Outreach meeting.  Shell conducted a community forum at the Beaver County Community College Golden Dome on May 28th, 2015. This has been one of a series of forums sponsored by Shell to provide updated information   regarding the proposed cracker facility as well as address questions from the public

    There were a number of speakers making brief presentations highlighted by Jeff Krafve, Shell Project Manager. Some of the topics covered were public safety, economic impact, transportation, parking, noise, water, and air quality, potential environmental waste from the facility, and support of community/non-profits.

    Shell staff highlighted their support of the Beaver County Conservancy, United Way, and other nonprofit activities. Upon final approval of the project, Route 18 will be moved along with the current I 376 interchange location. Regarding possible plant environmental waste issues, Shell plans to reuse all by- products and emphasized that little to no waste remains as a result of their manufacturing process.   Shell emphasizes being a good “environmental steward” and they will prioritize public safety. They will do their best to operate the plant around existing work and school activities in Beaver County.

    Shell is reviewing noise suppression technology to keep plant noise to a minimum. They are also planning to treat water on site.

    As far as making the final decision to build the cracker plant, Shell is considering three factors:
     
    • Obtaining all of the necessary public permits (air quality permit is pending).
    • There must be enough feedstock (wet gas supply) to keep the plant operating long-term into the future.
    • The cracker plant must make economic sense for the Shell portfolio.

There was no discussion about a decision date so stay tuned. Shell plans to have another community forum within a few months where the main topics will be jobs and opportunities. For more information about the Shell cracker facility please go to:   www.shell.us/poly-e or email to shellchemicalsproject@shell.com

Shell officials are to be commended for planning this forum. It was very informative and well done.

Submitted by Robert Johnson, President, ADKL
Phone: 412-848-5900
Email: rjohnson@adkl.org

  • Nat Gas power plant coming to Lordstown, OH.  An $800 million project whose future was uncertain a year ago is almost a done deal, officials say. At a special meeting last night, Lordstown Village Council unanimously voted to approve an incentive package for Clean Energy Future LLC to build a natural gas fueled electricity plant here.

    “This project is a long time coming,” Mayor Arno Hill told the audience before the vote.

    Clean Energy Future, based in Boston, has selected a site on Henn Parkway in the Lordstown Industrial Park.

    The incentive package approved by Village Council includes a 100%, 15-year tax abatement on all real and personal property. It requires Clean Energy Future to pay the Lordstown School District $500,000 when the company breaks ground, plus two more annual payments of the same amount. Once the plant is up and running, the school district will receive a $1 million annual payment for the first five years, $1.25 million the second five years and $1.5 million the third five years.

    Last June the village planning commission vetoed a zoning change that would have allowed the Clean Energy Future to build on a 57-acre site on Salt Springs Road.

    “Once the original site got voted down, we had to figure out where we could site it, where it was zoned correctly, and still get access to the correct electrical lines,” says Hill.

    The electricity plant would be capable of generating 800 megawatts of electricity, enough to power 500,000 households.

    “Originally I was against where the facility was going to be located because it would change the complexion of the community,” says Ron Krisher, a resident of the village.
     
  • Pipeline could open more drilling in Centre County, PA.  Superior Appalachian Pipeline began installing pipe in Snow Shoe Township May 18. The company should complete the project in September and make it operational in October. SAP Vice President of Development Ken Magyar said rain this summer could push back completion and operation dates.

    The pipeline will at first be connected to Dominion Transmission Inc.’s interstate pipeline and will likely be connected to Texas Eastern Transmission’s pipeline at a later date. Part of the planned route runs along a township road, so SAP paid the municipality about $220,000 for the right of way in April. Magyar declined to comment on the project’s total cost.

    Plans for the pipeline have been six years in the making.

    She also said there are four permitted wells in the township. Three are attributed to WPX Energy at the far western side of the township abutting the boundary with Clearfield County and the last by Range Resources is located to the northeast of Snow Shoe borough.

    The project was designed to gather and connect wells to the interstate pipeline.

    The pipeline could also be extended in the future, likely farther west, but production in the area has been slow to expand. Original plans called for about 14.5 miles of pipeline.

    The county has 64 drilled wells, 26 of which are actively in production. Another 23 are “regularly inactive.”

    The remaining 15 wells were plugged.

    Magyar said the pipeline could expand.

    “Expansion would continue in Centre County, and that will be determined by producers,” he said. “They’ll dictate where it goes, and we’ll follow.”

    DTI proposed separate plans, called the Leidy South Project that would upgrade its facility in Pleasant Gap. The project spans three states and will cost about $210 million.

    “Dominion Transmission has proposed the Leidy South Project to help meet the increasing demand for natural gas in the Mid-Atlantic Region,” DTI spokesman Frank Mack said via email. “The project would improve regional energy security by providing gas supply to existing and new electric power generation facilities, including Panda Power Funds’ Stonewall Plant, which has committed to the project.”

    DTI submitted the project to the Federal Energy Regulatory Commission on May 15

    If approved, which could happen by spring 2016, the project could begin in May 2016 and be in service by October 2017.
     
  • Sunoco Logistics to add another pipeline.  As Sunoco Logistics eyes its Mariner East 2 project, company officials are considering adding a second pipe to the plan that would potentially increase the daily flow of liquefied natural gas 10 fold.

    Sunoco Logistics confirmed Thursday that the company is acquiring the rights to build two 350-mile pipelines through Ohio and West Virginia to the Marcus Hook Industrial Complex as part of its Mariner East 2 project, which would bring natural gas liquids such as propane, butane and ethane for storage and distribution to domestic and international markets.

    “As part of Mariner East 2, we’ve been acquiring easements in Ohio and West Virginia,” Jeffrey Shields, Communications Manager at Sunoco Logistics, said. “We’ll be in Delaware County probably in the next month or so.”

    Having already planned on building one pipeline in this phase, Shields said, the company believes the addition of a second line now would be less disruptive to homeowners and property owners along the route, and it would save business costs.
     
  • Penn State Extension Division’s Marcellus Center for Outreach and Research Report on takeaway capacity.  Surging natural gas production in the Marcellus and Utica shales have ushered in a wave of pipeline proposals designed to increase takeaway capacity out of the Appalachian basin.


    courtesy MCOR

    Previous increases in takeaway capacity were largely upgrades and expansions of existing transmission lines. However as more takeaway capacity is needed, midstream operators are turning to 'greenfield' projects (new pipeline construction) to deliver natural gas to new, markets throughout the US and eastern Canada.

    Penn State Extension's Marcellus Education Team and Penn State's Marcellus Center for Outreach and Research (MCOR) recently mapped the currently proposed projects that represent significant miles of new greenfield natural gas or natural gas liquids transmission pipeline. Note that gathering lines, projects upgrades or expansion of existing pipelines are not included on the maps. All of these projects should be considered as 'pending' or 'proposed' until they secure commercial interest and navigate the regulatory process.



    The mapped projects represent 2,927 miles of proposed pipeline, with construction reaching into ten states. Combined, the proposed projects would have the ability to move 16.8 Bcf/day of natural gas plus 120,000 barrels/day of natural gas liquids out of the Marcellus. This represents significant additional takeaway capacity considering daily production in the Appalachian Basis is currently around 17 Bcf.

    Six of the projects would originate in Pennsylvania's Northern Marcellus production area and seven, including two liquids pipelines, would originate in the Western PA, Ohio and West Virginia tri-state area. Anticipated in-service dates for the majority of these proposed projects are late 2017 into 2018.

    Dave Messersmith is part of Penn State's Marcellus Education Team and has lectured nationally and internationally on the topic of shale gas development and natural gas pipelines.

    Contact Jim Ladlee (jrl110@psu.edu) at Penn State's Marcellus Center for Outreach and Research for high resolution maps and commercial use.

    Contact Information Dave Messersmith

Please note there will be no Facts & Rumors Newsletter next week.  I’ll be on vacation.

Rig Count

Baker Hughes Rigs count for the week June 5, 2015
     

  • PA
    • Marcellus 44 down 1
    • Utica 2 unchanged
  • Ohio
    • Utica 22 down 1
  • WV
    • Marcellus 20 up 2
  • TX
    • Eagle Ford – 103 down 7
    • Permian Basin  189 up 3
  • NM
    • Permian Basin – 44 down 2
  • ND
    • Williston – 76 down 1
  • MT
    • Williston – 0 unchanged
  • CO
    • Niobrara –28 unchanged
       
  • TOTAL U.S. Rig Count 868 down 7

PA Permits for May 28, to June 4 2015

       County                  Township              E&P Companies

1.    Beaver                    Greene                   Chesapeake
2.    Greene                   Center                    Consol
3.    Washington            South Strabane        Range
4.    Washington            South Strabane        Range
5.    Washington            South Strabane        Rice
6.    Washington            South Strabane        Rice
7.    Washington            South Strabane        Rice
8.    Westmoreland        Allegheny                Consol

OH Permits – week ending May 30, 2015

       County            Township              E&P Companies

1.    Harrison             Stock                   Chesapeake
2.    Monroe              Franklin                Antero
3.    Monroe              Switzerland           Consol
4.    Monroe              Switzerland           Consol
5.    Monroe              Franklin                Antero
6.    Monroe              Franklin                Antero
7.    Monroe              Franklin                Antero
8.    Noble                Marion                  Consol
9.    Noble                Marion                  Consol
10.  Noble                Jefferson               Triad Hunter


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

 

 

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