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Expo/Industry events for the next few months

South Texas Oilfield Expo
July 29-30, 2015
San Antonio, TX

The 2015 South Texas Oilfield Expo will be held at the Henry B. Gonzalez Convention Center, July 29-30, in San Antonio, TX.

The South Texas Oilfield Expo brings thousands of oilfield buyers and sellers operating in the Eagle Ford Shale together every year to view new technology, network and make their best business deals. Over 1,000 booths and a continuing commitment to creating an industry-exclusive environment focused on deal-making and networking makes the 2015 South Texas Oilfield Expo the largest industry-exclusive Expo serving the Eagle Ford Shale.

http://www.southtexasoilfieldexpo.com/

Shale Insight 2015
September 16-17, 2015
Philadelphia, PA

http://shaleinsight.com/

Midstream PA 2015
October 1, 2015
Penn State

http://midstreampa2015.com/

Utica Summit III
October 13, 2015
Canton, OH

http://www.uticasummit.com/

DUG Eagle Ford + MIDSTREAM Texas
October 25-27
San Antonio, TX

http://www.dugeagleford.com/

Latest facts and a rumor from the Marcellus and Utica Shale

  • Nat gas surpasses coal.  For the first time ever, natural gas has overtaken coal as the primary source of U.S. electric power generation earlier this year. For years this milestone has been in the making, as the price of gas has fallen, and new regulations have increasingly made coal riskier for power generators, and the power gen  industry switches from coal to gas.

    SNL Energy, a research company, said in a new report utilizing data from the Energy Department that approximately 31% of electric power generation in April came from natural gas, and 30% from coal.

    The U.S. drilling boom that began in 2008 has increased domestic natural gas production by 30% and rendered the U.S. the world's largest O&G producer.

    U.S. coal production is forecast to decline by 7.5% this year, according to the EIA. Meanwhile, U.S. coal mining firms' shares and bonds have steeply fallen.

    In 2009, the Financial Times reports that there were 593 coal-fired power plants in the U.S. But by 2013, this was down to 518, with a total summer capacity of roughly 303 gigawatts.

    Since that time, the shift away from coal has picked up steam. During 2014, U.S. coal capacity fell by about 3.3GW, and the EIA forecasts it will shrink by an additional 12.9GW this year.
     
  • Rex makes changes at the top.  Rex Energy Corporation announced that it has appointed Robert W. Ovitz as Chief Operating Officer of the company. Mr. Ovitz, who most recently served as the Senior Vice President, Operations for the company, assumes the COO role from Patrick M. McKinney, who has served as COO since May 2010 and both President and COO since October 2011. Mr. McKinney will leave the company in August to pursue an opportunity in the investment banking industry.

    Effective immediately, Ovitz will assume responsibility for company-wide operations, with direct oversight of Appalachian and Illinois operations, reservoir engineering, and exploration and geology. He will be responsible for the alignment, prioritization and management of operational capital to execute the company's exploration, drilling and production strategies, and for ensuring operational excellence across the company.

    Tom Stabley, Rex Energy's Chief Executive Officer, will assume the role of President and Chief Executive Officer after Mr. McKinney's departure in August.  
     
  • Marathon buys MarkWest.  Marathon Petroleum Corp. of Findlay, OH, acting through its affiliate MPLX, announced an agreement to buy MarkWest Energy Partners, the largest owner of natural-gas processing plants in the Utica and Marcellus shale formations.

    The $15.8 billion deal gives Marathon natural-gas assets to go along with its longstanding slate of oil assets.

    “It’s really a vote of confidence for the future of Marcellus and Utica oil and gas,” said Jason Stevens, energy strategist for Morningstar. “This positions (the post-merger company) for the long run.”

    The acquisition is happening at a time when low gas prices have led some investors and analysts to question the viability of extracting gas from shale.

    “I believe this combination creates a best-in-class partnership,” said Gary R. Heminger, chairman and CEO of Marathon and MPLX, in a conference call with analysts.

    The transaction still needs approval by MarkWest unitholders and would likely close by the end of the year.

    Denver-based MarkWest would operate as a standalone business within MPLX, keeping its home office and retaining its top leaders, the companies said.

    MarkWest describes itself as the country’s second-largest processor of natural gas. It has built a commanding presence in the Marcellus and Utica shale formations, operating a network of plants that process natural gas and natural-gas liquids in Ohio, West Virginia and Pennsylvania. Natural-gas liquids include butane, ethane and propane.

    The deal values MarkWest at $20 billion and includes $4.2 billion in debt.

    While this is a significant deal involving large companies, the actual work of the companies is in a somewhat obscure part of the energy economy called the “midstream,” which covers the pipelines and processing plants that get oil and gas from the wellhead to market.

    Marathon is best known for its gasoline and the Speedway chain of convenience stores. Its market value is about $32 billion and ranked 25th in the country in the Fortune 500, second only to Kroger in Ohio.

    MPLX was created by Marathon in 2012 to utilize some of the tax advantages of a “master limited partnership” structure, and went into the today’s acquisition with a market value of about $5 billion. MarkWest also is a master limited partnership and has a market value of about $12 billion.

    “The combined projects that we can develop are compelling.” Frank Semple, MarkWest`s chairman, president and CEO, said in the conference call.

    His company makes money through user fees from energy producers, so it has been hurt as producers have cut back on their output because of low commodity prices. That said, MarkWest was in good shape to succeed if it had remained an independent company, said Stevens of Morningstar.

    “This really looks more like an opportunistic acquisition more than a bailout,” he said.
     
  • Antero 2nd Qtr. Update.  Marcellus Shale — Antero utilized shorter stage length (SSL) completions on all of its 13 horizontal Marcellus wells completed and placed on line during the second quarter of 2015.  The average lateral length for the 13 wells was approximately 8,300 feet and the average stage length was approximately 200 feet. During the quarter Antero drilled the longest lateral in Company history, the Hawkeye Unit 1H, which had a lateral length of 12,353 feet.

    Four of the 13 wells completed in the second quarter of 2015 have been on line for more than 30 days and had an average 30-day rate of 16.1 MMcfe/d while rejecting ethane (25% liquids).  The Company has 26 well completions planned for the remainder of the year including one seven-well pad and one five-well pad expected to be completed in the fourth quarter of 2015.  Antero is currently operating six drilling rigs and two completion crews in the Marcellus Shale play.

    During the quarter, Antero averaged 22 drilling days per well, representing a seven day improvement compared to the 2014 development program.  Additionally, Antero averaged 3.9 completed stages per day, a 26% increase over the 2014 completion program average of 3.1 stages per day. These operational improvements are driven by multiple enhancements, including increased mud pump circulation rates and improved plug drillout times.  Antero is currently drilling and completing wells at an average budgeted cost of $1.14 million per 1,000' of lateral in the Marcellus, representing a 16% improvement over 2014 well costs.  Approximately 50% of the well cost savings are from service cost reductions and 50% are from operational efficiencies.

    Utica Shale — Antero utilized SSL completions on all of its 10 horizontal Utica wells completed and placed on line during the second quarter of 2015.  The average lateral length for the 10 wells was approximately 10,600 feet and the average stage length was approximately 180 feet.

    All of the wells completed in the second quarter of 2015 have been on line for more than 30 days.  Two of these wells flowed on an unrestricted basis with an average 30-day rate of 16.3 MMcfe/d (46% liquids), while the remaining eight wells flowed on a restricted basis under the Company's flowback management program with an average 30-day rate of 11.0 MMcfe/d (47% liquids) and an average flowing wellhead pressure of 2,600 psi during those 30 days.  The Company has 35 well completions planned for the remainder of the year, including two separate seven-well pads and one six-well pad to be completed in the third quarter of 2015. Antero is currently operating four drilling rigs and two completion crews in the Utica Shale play.

    During the quarter, Antero averaged 30 drilling days per well, representing a four day improvement compared to the 2014 development program.  Additionally, Antero averaged 4.3 completed stages per day, a 34% increase over the 2014 completion program average of 3.2 stages per day.  The Marcellus operational improvements have also been applied in the Utica Shale play, generating similar efficiency gains.  Antero is currently drilling and completing wells at an average budgeted cost of $1.29 million per 1,000' of lateral in the Utica, representing an 18% improvement over 2014 well costs.  Approximately 65% of the well cost savings are from service cost reductions and 35% are from operational efficiencies.

    Seneca 4 was recently placed into service at the MarkWest Seneca processing facility located in Noble County, Ohio.  Antero now has firm access to a total of 600 MMcf/d of cryogenic processing capacity.  Ethane is currently being rejected at the Seneca processing facility and sold in the gas stream.
     
  • Kinder Morgan moves forward pipeline. Kinder Morgan said its Tennessee Gas Pipeline unit will build the $3.3 billion Northeast Energy Direct (NED) project's “market path” segment, from Wright, New York, to Dracut, Massachusetts, Kallanish finds.

    The natural gas pipeline will serve natural gas utilities and electricity generation customers in New England. NED is an extension of Kinder Morgan’s existing Tennessee Gas pipeline, which has delivered natural gas to New England since the 1950s.

    “We are excited that the market path component is moving forward and a determination now has been made on mainline capacity for the project, which is specifically targeted at serving the Northeast and New England’s identified future market needs,” said Kinder Morgan East Region Pipelines.
     
  • Oil production steady in the Bakken.  Crude oil production data published by the state of North Dakota on Friday contained something for both bulls and bears.

    Bears can point to the unexpected resilience of shale production in the face of lower oil prices while bulls can point to the fact that production is no longer growing after five years of tremendous gains.

    The state pumped an average of 1.2 million barrels per day (bpd) in May, an increase of 32,000 bpd compared with April, according to the Department of Mineral Resources (http://link.reuters.com/kan25w).

    Production remained steady with an average of just 80-90 rigs drilling in May, far fewer than the 120-130 rigs the department forecast at the start of the year would be necessary to maintain 1.2 million bpd.

    By concentrating remaining rigs on the most productive parts of the Bakken and raising efficiency, the state’s drillers have steadied output with fewer than half the rigs employed last October.

    But production has been essentially flat for the last nine months, bringing to an end the explosive output increases that had been reported for much of the previous seven years.

    State output has risen by an average of just 0.2 percent per month for the last six months, down from 3.3 percent per month in the half-year to September 2014, and the slowest rate for six years.
     
  • WPX makes big move in the Permian.  WPX Energy Inc., which has been remaking itself from a natural gas firm to more of an oil producer, took a big leap in that direction by announcing a $2.75 billion acquisition in the Permian Basin of west Texas and eastern New Mexico.

    The announcement Tuesday indicated that WPX is acquiring RKI Exploration and Production LLC for $2.35 billion plus assumption of $400 million in debt. The move taps WPX into 92,000 net acres and an average 22,000 barrels of oil equivalent per day in existing production — half of that in oil.

    The buy also expands WPX’s strategic focus to four basins in the western U.S. The others are the Williston in North Dakota, the Piceance in Colorado and the San Juan in New Mexico. The company has been working to divest itself from holdings in the natural gas-rich Marcellus Shale of the eastern U.S.
     
  • Rover commits to Ohio companies.  Rover Pipeline, LLC is pleased to announce it will spend more than an estimated $85 million with Ohio-based companies for goods and services related to the construction of the natural gas pipeline. The project will primarily serve domestic consumers by transporting natural gas from the rapidly expanding Marcellus and Utica shale production areas to U.S. markets in the Midwest, Great Lakes and Gulf Coast regions of the United States.

    Rover is currently placing orders for key components needed for the construction of the 711-mile pipeline from Ohio-based companies including Ariel Corporation, Industrial Piping Specialists and Emerson Process Management.  These orders include parts used for piping, compression, steel, and bearings, along with construction contractors, and pipeline workers.

    "We are pleased to be a part of the Rover Pipeline project and to be able to provide jobs for Ohio citizens who will be responsible for the design, manufacture, and support of the compression equipment Rover needs for the project," said Robert Drews, Director of Marketing for Ariel Corporation, Mt. Vernon, Ohio. "We are committed to supporting Ohio’s natural gas infrastructure, and local economies in Ohio.”

    In addition to the supplies Rover will purchase from Ohio-based companies, construction of the pipeline will help others throughout the state. The project is estimated to create approximately 6,500 construction jobs in Ohio. The spending power of these individuals at local restaurants, laundromats, grocery and convenience stores, pharmacies, etc., creates tremendous economic benefit to the cities and towns along the route. Rover also estimates that more than $90 million will be paid directly to landowners for easements in Ohio, and approximately $135 million in ad valorem taxes in Ohio the first year the pipeline is in service. Ad valorem taxes are paid annually.

    The current list of Ohio-based vendors is below, and further information about each vendor can be found on their websites. Additional vendors will be announced in the coming months.
     
    • Ariel Corporation (Mt. Vernon, OH)
      $34.7 million Ariel frames and cylinders for compressors
       
    • Industrial Piping Specialists (Struthers, OH) & Warren Group/Allied Fitting (Fairfield, OH)
      $27 million for weld fittings, weld flanges and additional pipeline materials such as bolts, gaskets, etc.
       
    • Emerson Process Management Automation, Inc. (Mansfield, OH)
      $10.6 million for actuation packages and line breaks for ball valve
       
    • Port of Cleveland, Marine Terminal Operator (MTO), and other local transportation providers (Cleveland, OH)
      $5 million for pipe discharging and handling
       
    • Tiger Sand & Gravel (Massillon, OH)
      $4.4 million for concrete sand
       
    • Pioneer Pipe/ Pioneer Group (Marietta, Ohio)
      2.4 million dollars for fabrication of flow control skids
       
    • Lincoln Electric (Cleveland, OH)
      $2.9 million for welding consumables
       
  • "Rover’s commitment to buying locally will have a number of tangible benefits. First and foremost, the project will provide domestic, long-term access to the natural gas that powers our homes and businesses,” said Gordon M. Gough, President and CEO of the Ohio Council of Retail Merchants. “Furthermore, there is a strong secondary benefit for Ohio retailers, with increased visits from current customers and new customers.”

    Information on the Rover Pipeline project can be found on the Rover Pipeline website, RoverPipelineFacts.com, or by calling the project’s toll-free number at 1-888-844-3718.  Information about the project can also be found on the FERC website at http://www.ferc.gov/, Docket No. CP15-93-000.
     
  • Ineos to send shale gas to Europe.  Two gas tankers built by the Sinopacific Offshore and Engineering were named and will soon be shipping shale gas to Europe from the United States, officials said.

    The ships will join an eventual eight-strong fleet of tankers operated by Swiss-headquartered petrochemical manufacturer Ineos Group Ltd, which will carry 800,000 tons of shale gas annually from the US to its European manufacturing plants.

    Jim Ratcliffe, Ineos’ founder and chairman, said the US$1 billion project will help revolutionize the European chemicals industry by reducing both feedstock and energy costs.

    “Bringing US shale gas to Europe is a huge undertaking, involving Ineos experts from across the globe. To see these two ships finally completed here in China means that this vast project will soon be fully operational.”

    The JS Ineos Insight and JS Ineos Ingenuity will join six other vessels in creating what the company described as a “virtue pipeline”, to transport over 800,000 tons of gas a year at minus 90 degrees centigrade across the Atlantic to plants in Norway and Scotland.
     
  • Warren Resources operational Marcellus update.  Warren is executing on its 2015 operational plan in the Marcellus, having successfully drilled and set pipe for two Upper Marcellus wells. Completion operations commenced for both Upper Marcellus wells in July 2015, and we expect completion operations to be finished by mid-August 2015. The Company is optimistic about the performance of these two Upper Marcellus wells, as gas shows were observed throughout both of the entire laterals during drilling, and regional offset operator Cabot Oil & Gas has reported encouraging preliminary results from its Upper Marcellus test, projecting single well EURs of over 11 Bcf for Upper Marcellus locations. If successful, these Upper Marcellus wells should set up approximately 48 additional well locations over Warren's acreage block and contribute to a significant addition of proved developed and proved undeveloped reserves. No reserves are currently booked for the Upper Marcellus locations.

    A key component of the Company's strategy is increase recovery factors through completion optimization. With actual production in the Marcellus continuing to significantly outperform NSAI proved estimates1, the Company is gathering critical data that it expects will boost recoveries when reserves are reported for year-end 2015.

    The Marcellus business unit continues to be a strong contributor in driving operational efficiencies, with drilling AFEs for the two Upper Marcellus wells coming in 5% under budget. The Company sees an opportunity to reduce CAPEX by 15% in future locations while maintaining exceptionally low lease operating expenses ("LOEs") in the range of $0.75 per Mcf after gathering and transportation costs. Warren was recently cited by ITG as having the lowest breakeven cost in the Marcellus.
     
  • Oil production to fall in August.  U.S. crude oil production from the seven most prolific shales nationwide is projected to fall for the fourth consecutive month in August, to 5.357 million barrels per day (BPD), the U.S. Energy Information Administration (EIA) said Monday in its latest Drilling Productivity Report.

    August will be the second consecutive month EIA has predicted a month-over-month decline of 91,000 BPD.

    Three of the seven regions, including the Bakken, Eagle Ford and Niobrara, will show a month-to-month production decrease, the Haynesville and Utica will show no change, and the Marcellus and Permian will register a slight increase in crude production, EIA projects.  

    Natural gas production from July to August will drop by 260 million cubic feet per day (MMcf/d), to 45.15 billion cubic feet per day (Bcf/d). The lone region expected to report a month-over-month gas increase is the Utica, up 22 MMcf/d.

    EIA data predicts oil output in the Permian, located in West Texas and New Mexico, will increase 5,000 BPD in August, to 2.05 million barrels per day (MMBPD). The figure is up from the 3,000 BPD increase the agency estimated for July.

    The Eagle Ford Shale in South Texas is projected to show the steepest decline in August from July (down 55,000 BPD) among U.S. shale plays, the EIA said, a continuing trend since the projected declines began to show up in May.

    Next month, EIA predicts Eagle Ford crude output will drop to 1.538 MMBPD.

    On the gas side, six of the seven plays are expected to show a production decrease in August from July, led by the 123 MMcf/d plunge, to 6.97 Bcf/d in the Eagle Ford. The Niobrara is expected to record a 51 MMcf/d drop in August, to 4.51 Bcf/d.

    The Utica Shale play is expected to report a 22 MMcf/d increase in gas production in August from July, to more than 2.66 Bcf/d, EIA reports. Even the Marcellus is projected to see a production decrease from July to August, down 41 MMcf/d, to 16.49 Bcf/d.
     
  • Utica is much bigger than first estimates. The amount of potentially recoverable natural gas within the Utica Shale play could be 782 trillion cubic feet (Tcf) -- more than 20 times more than the estimate just three years ago, just-released research projects.

    The data, made public Tuesday by the Appalachian Oil and Natural gas Research Consortium at West Virginia University, also projects the amount of crude oil contained in the Utica totals nearly 2 billion barrels – more than 200% higher than the official estimate released in 2012.

    “The revised resource numbers are impressive, comparable to the numbers for the more established Marcellus and a little surprising based on our Utica estimates of just a year ago, which were lower,” said Doug Patchen, director of the consortium and an acknowledged Appalachian Basin expert.

    The estimates represent the average of a wider range of possibly recoverable amounts of oil and gas in the Utica, which stretches beneath parts of Ohio, West Virginia, Pennsylvania and other states and includes neighboring oil- and gas-bearing geologic layers.

    A 2012 U.S. Geological Survey (USGS) assessment of the Utica and underlying Point Pleasant formation placed the technically recoverable undiscovered resources at 38 Tcf of gas, 940 million barrels (MMBbl) of oil and 208 MMBbl of natural gas liquids.

    The new assessment is also higher than estimates the researchers had calculated a year ago, when they determined 188.6 Tcf of natural gas and 830 MMBbl of oil could be extracted from the Utica play using existing technology. The year-old numbers also were released publicly for the first time Tuesday.

    “A Geologic Play Book for Utica Shale Appalachian Basin Exploration,” is the result of a two-year study by federal, state and university researchers. The partnership organized by West Virginia University includes members from oil and gas companies, the USGS and four state geological surveys, universities, a consulting company and the U.S. Department of Energy’s National Energy Technology Laboratory.

Visit our Blog for daily updates on what’s happening in the oil & gas industry

http://www.shaledirectories.com/blog/

Rig Count

  • Baker Hughes Rigs count for the week July 17, 2015
     
  • PA
    • Marcellus 40 down 3
    • Utica 3 up 1
  • Ohio
    • Utica 19 unchanged
  • WV
    • Marcellus 18 unchanged
  • TX
    • Eagle Ford – 98 down 4
    • Permian Basin  194 up 2
  • NM
    • Permian Basin – 48 up 1
  • ND
    • Williston – 68 down 2
  • MT
    • Williston – 1 unchanged
  • CO
    • Niobrara –29 up 1
       
  • TOTAL U.S. Rig Count 857 down 3

PA Permits for July 9, to July 16, 2015

County            Township                E&P Companies

1.    No Permits this week.            


OH Permits – week ending July 11, 2015

       County               Township              E&P Companies

1.    Belmont               Wheeling             Amer. Ener. Utica
2.    Harrison               Cadiz                  Hess
3.    Monroe                Ohio                    Statoil
4.    Monroe                Ohio                    Statoil
5.    Monroe                Ohio                    Statoil
6.    Monroe                Seneca                Antero
7.    Monroe                Salem                  Statoil
8.    Monroe                Salem                  Statoil
9.    Monroe                Salem                  Statoil
10.    Noble                 Enoch                  Antero

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

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