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Expo/Industry events for the next few months

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

http://shaleinsight.com/

Great Fallfest
Wyoming County PA
September 24, 2015

http://business.wyccc.com/events/details/the-great-fallfest-mixer-2015-139

Midstream PA 2015
October 1, 2015
Penn State

http://midstreampa2015.com/

WV Oil and Gas Expo
October 7, 2015
Morgantown, WV.

www.wvoilandgasexpo.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

 

  • OH’s top three producers.  Natural gas production from Ohio’s Marcellus and Utica Shales was 221.9 Bcf during the period, while oil production was more than 5.5 million bbl (see Shale Daily, Aug. 28). That’s up from 88 Bcf and 2.4 million bbl a year ago (see Shale Daily, Sept. 9, 2014). Overall, production increased by nearly 13% from 1Q2015, going from 210 Bcfe to 255.3 Bcfe in the second quarter (see Shale Daily, June 1).

    Chesapeake Energy Corp., Gulfport Energy Corp. and Antero Resources Corp. combined to produce about 180 Bcfe during the period. Moreover, the Ohio Department of Natural Resources’ report shows that of the state’s 24 dominant shale producers, just five others — Rice Energy Inc., Eclipse Resources Corp., Hess Corp., Ascent Resources LLC and Consol Energy Inc. — contributed meaningfully to second quarter production.

    Chesapeake’s 491 Utica wells in the state produced 96.3 Bcfe to top the list, followed by Gulfport, which produced 56.9 Bcfe from 137 wells, and Antero, which produced 26.5 Bcfe from 75 wells. Chesapeake alone produced more than a third of the state’s natural gas, or roughly 37%, with 83.2 Bcf. Many of its wells are located in Carroll County, which once again was the state’s top producing area, where 366 wells combined to produce 67.6 Bcfe of Ohio’s shale production.

    Belmont County was the second top-producing area, where 103 wells produced 64 Bcfe, followed by Harrison County, where 172 wells produced 39.2 Bcfe. The state’s most prolific wells were located in Belmont County, where Rice Energy Inc.’s results proved most impressive. Of Ohio’s top-50 producing wells, eight of them belonged to Rice Energy.

    Two wells at the company’s Gold Digger pad there reported about 1.5 Bcfe each of production during the quarter. Rice’s other six wells on the list each produced more than 1.2 Bcfe during the quarter. Gulfport Energy also reported six leading wells in Belmont County that produced more than 1 Bcfe each. Both Ascent and Antero reported wells with more than 1 Bcfe during the quarter. Ascent’s wells are located in Belmont County, while Antero’s are located in Monroe County.

    Last quarter’s data is reflective of the steps producers have taken in the last year to respond to the commodities downturn. Carrizo Oil & Gas Inc. and Hess were among the state’s leading producers in 1Q2015, reporting 81 Bcfe and 46 Bcfe respectively. While some operators have hunkered down in the Appalachian Basin, others have shut-in more production or switched their focus to other fields.

    Antero, for example, remains one of the basin’s most active producers with 11 rigs running. Gulfport has narrowed its focus almost entirely to the Utica, neglecting a patchwork of assets in places such as the Canadian oil sands and Louisiana’s Gulf coast in favor of the play’s dry gas (see Shale Daily, May 8, 2014). Chesapeake has always been a leading producer in Ohio, where it was the first to drill a series of wells in 2011 and 2012 when commercial shale production began to ramp-up.

    Rice Energy reported just 16 wells in the state during the quarter, but it finds itself leaning more heavily on its 55,000 net acre position in Belmont County. The company ramped-up its Utica program at the beginning of this year.

    Data from the state’s top-50 Utica wells shows that they produced an average of 11.4 MMcfe/d during the second quarter, according to an analysis by Topeka Capital Markets analyst Gabriele Sorbara.

    “The Utica Shale continues to post impressive results and the data is a testament to wells that are performing roughly in line with expectations,” he said. “More importantly, well results should improve further as operators continue to transition to longer laterals, enhanced completion methods and implement a choke management methodology.”

    The company's biggest well, on the Kruprzak well pad in Carroll County, produced 824.3 million cubic feet of gas, up from 628.1 million in the first quarter.
     
  • EIA lowers oil production estimates.  The U.S. Energy Information Administration on Monday lowered its assessment of domestic crude production by 40,000 barrels per day (BPD) to 130,000 BPD for each of the first five months of 2015.

    Texas production was revised sharply lower, and more revisions could come because the EIA is still working to validate new estimates for Oklahoma and West Virginia.

    The August report, which tallies production totals through June, is the first to use data provided directly by companies. The EIA previously used information submitted to state agencies.

    According to the EIA, its company surveys represent more than 90% of oil production in the U.S.

    “Domestic oil production has grown rapidly in recent years. More recently, with major changes in oil prices over the past year, policymakers and markets are closely watching how domestic production responds. These new data series provide a better way to assess production trends,” EIA officials wrote in a Monday blog post.

    The expanded survey revealed drillers pumped 9.3 million barrels of oil a day (MMBPD) in June — the lowest amount since January and a decline of 100,000 BPD vs. May.

    Overall, production during the first half of the year averaged 9.4 MMBPD, and output peaked at 9.6 MMBPD in April. The EIA’s initial high-mark estimate was 9.7 MMBPD in March.

    The monthly report shows broad spending cuts by U.S. producers have slowed the flow of oil.

    Oil prices have plunged more than half from their highs in 2014, largely due to concerns over an abundance of supply. Companies including ExxonMobil slashed their 2015 budgets, and the global industry eliminated around 150,000 jobs to counter waning prices.
     
  • Cabot Upstream and Midstream Update.  The shale oil and gas industry is broken into three sectors: upstream, midstream, and downstream. Upstream is the first stage and involves exploration and production. The midstream stage is associated with the processing, storing, transporting, and marketing of natural gas. The final stage, downstream, is after production through the point of sale.

    The midstream sector alone accounts for a multi-billion dollar industry in the Marcellus and Utica Shale plays in Pennsylvania, Ohio, and West Virginia. The discovery of these plays along with the advent of hydraulic fracturing and horizontal drilling has led to a shift in America’s natural gas supply landscape. As a result, the popularity of this abundant domestic resource with environmental advantages has soared, while natural gas prices have even dropped to historic lows in some regions. However, a lack of pipeline infrastructure has prevented many consumers across the country from realizing the product’s full economic advantages.

    One company that is extracting this American economy changing product from the ground is Cabot Oil & Gas Corporation, an independent oil and gas company active in the development, exploitation, and exploration of shale oil and gas properties. Cabot focuses on natural gas development in the Marcellus Shale in northeastern Pennsylvania and on oil development in the Eagle Ford Shale in south Texas. According to Cabot’s website, “As of December 31, 2014, the Company had approximately 7.4 trillion cubic feet equivalents (Tcfe) of total proved reserves.”

    Once the natural gas is extracted from deep below the earth’s surface by Cabot, it needs to ultimately reach the consumer. Brittany Thomas, Coordinator of External Affairs, Cabot Oil & Gas Corporation, explained, “Cabot is the largest producer of Marcellus Shale in Pennsylvania and we rely on pipelines to move the produced gas in northeastern Pennsylvania to consumers all across the eastern seaboard. Williams [an energy infrastructure company] is our midstream partner in the Commonwealth so it is important to work closely with them on gathering lines to existing pipelines, as well as planning for the future with the construction of new pipelines. Williams is currently planning and constructing two pipelines to take natural gas from our area of production into new markets like Boston, Philadelphia, and Washington D.C. The Constitution Pipeline will run north to eventually service the northeastern coast and the Atlantic Sunrise Pipeline is planned to head south towards the nation’s capital.”

    Constitution Pipeline

    The Constitution Pipeline is a major transmission pipeline project that will connect abundant Marcellus Shale natural gas supplies in northeastern Pennsylvania to major northeastern markets. The approximately 125 mile project will extend from Susquehanna County, PA, into Broome, Chenango, and Delaware Counties in NY, then end in Schoharie County, NY at the Iroquois Gas Transmission and Tennessee Gas Pipeline systems.

    Chris Stockton, Spokesperson, Williams, says, “The Constitution Pipeline is creating a direct connection between New England, New York, and one of the most abundant and cost-effective natural gas supply basins in the world. This direct connection simply doesn’t exist today. New England and New York remain dependent on natural gas originating in Canada and the Gulf of Mexico, while far more cost-effective supplies are literally in their back yards waiting to be tapped.”

    Stockton added, “Consider this; last December, natural gas futures in New England traded at the highest rates in the world, while a few hundred miles southwest in Pennsylvania, natural gas futures traded at the lowest rates in the world. The reason is the lack of pipeline capacity. In fact, New England paid higher gas prices last winter than Japan, India, or Europe, all of which are dependent on imports. The US recently surpassed Russia and Saudi Arabia as the world’s top producer of petroleum and natural gas. As a result, US oil imports are dramatically falling. The Marcellus Shale is expected to provide more than half of the country’s natural gas by 2020. The problem is that the pipeline infrastructure in this region is still basically the same as it was prior to the advent of the Marcellus. That is why pipeline projects like Constitution are so critical.”

    The Constitution Pipeline has been designed to carry 650,000 dekatherms of natural gas per day through a 30-inch underground pipeline, which is enough natural gas to serve approximately three million homes. “The need for this critical infrastructure was apparent way back in 2012, but for three years the market has had to wait while we navigate what is a very long permitting process. The biggest challenge is designing the project so that it avoids or minimizes impacts on people and the environment, while working closely with dozens of different state and federal permitting agencies. For Constitution Pipeline, for example, we introduced the project to the public and began the FERC pre-filing process in the spring of 2012. Since then, we have made changes to more than 50% of the 125-mile route,” explained Stockton.

    The Constitution Pipeline has not begun yet, but is getting close. Williams received Federal Energy Regulatory Commission (FERC) approval in December; however, the company is still waiting for a few key state and federal permits, before they can obtain their FERC Notice to Proceed. Stockton updated, “Right now we are hoping to begin construction in September, but again, that is dependent upon obtaining our remaining regulatory authorizations.” In terms of being fully operational, Williams’ goal is to begin making deliveries in the second half of 2016.

    Natural gas production is expected to slow this month for the first time across the country as drillers struggle against low commodity prices and oversupply.

    Even so, states in the Marcellus and Utica shale plays spanning Pennsylvania, West Virginia and Ohio are expected to still produce more gas than they can use and export the fuel out of the region.

    “We are anticipating that the Northeast will be a net exporter for the average of 2015,” said Anne Swedberg, senior energy analyst for Denver-based Bentek Energy. “We are already seeing volumes leave the region this summer.”

    The rest of the country is expected to catch up later, becoming a net exporter by 2017.

    Now, most Marcellus gas is going to the Midwest, the Southeast and Canada. Eventually it will have access to Mexico through pipelines and globally through liquefied natural gas exports.

    Through 2017, there will be about 3.4 Bcf/d of capacity additions on two major interstate pipelines, Kinder Morgan’s Tennessee Gas Pipeline and Spectra Energy’s Texas Eastern Transmission.

    In terms of global markets, a bevy of projects are in the works to export liquefied natural gas. The closest such facility, Dominion Resource’s Cove Point project in Maryland, will be able to ship 0.7 Bcf/d of LNG overseas starting in late 2017. Late this year, Cheniere Energy’s Sabine Pass will begin shipping LNG from the Gulf Coast.

    The Marcellus reached a record high of 20.4 Bcf/d on Aug. 24, according to Bentek estimates, “which puts it in line with Texas,” Ms. Swedberg said. In 2010, the region produced about 2 Bcf/d.
     
  • Marcellus and Utica Shipping Natural Gas out of the Region.  That record high may be due to the completion of pipeline maintenance in the area, allowing more gas to be shipped from the wellhead, the U.S. Energy Information Administration noted.

    The Marcellus and the deeper Utica formation drive much of U.S. production. The Marcellus alone accounted for 21 percent of the country’s natural gas production in the first five months of 2015, according to the EIA.

    Meanwhile, abundant gas without enough pipelines to ship it means prices in the Northeast continue to trade below the national benchmark, Henry Hub, prompting energy firms to slow their drilling plans.

    On Friday, Henry Hub traded at $2.70. Meanwhile, the Dominion South spot price in southwestern Pennsylvania clocked in at $1.17 and Leidy Hub in northcentral Pennsylvania didn’t crack a dollar at 92 cents.

    For instance, in August, State College-based Rex Energy is planning to sell assets and partner up with other companies to develop its remaining acreage as it hopes to weather the downturn in the oil and gas sector. The company also plans to continue to drill with a single rig through 2016.

    The lack of infrastructure has led to a huge backlog of wells that will drive production growth, even as drillers scale back.

    “There are about 2,300 wells in the inventory, representing about 14 Bcf/d of trapped production,” Ms. Swedberg said on a webcast on Aug. 19.  

    “When we look at that backlog well inventory, we expect production to grow through 2017 due to people bringing those wells into the system,” she said.

    In November, infrastructure projects should bring about 3.9 Bcf/d of new capacity to the Northeast, with production forecasted to grow about 3.4 Bcf/d at that time, according to Bentek.  

    In the short-term, gas production from the seven major shale regions is expected to slip for the first time.

    Shale production reached a high in May of 45.6 billion cubic feet per day (Bcf/d) and is expected to drop to 44.9 Bcf/d in September, according to the U.S. Energy Information Administration.

    “In each region, production of new wells is not large enough to offset production declines from existing, legacy wells,” the EIA said.

    In the Marcellus, natural gas production is expected to drop by 60 million cubic feet per day between August and September.
     
  • Aubrey doing deals in Mexico.  Aubrey McClendon is teaming up with the former president of Mexico to drill for oil and gas south of the border.

    What was an anomaly two weeks ago is now becoming a trend.

    McClendon, the U.S. shale wildcatter who helped bring Ohio's Utica shale play to prominence, continues going international in his quest for more oil and gas. American Energy Partners LP, the company McClendon founded after leaving Chesapeake Energy Corp. (NYSE:CHK), is targeting shale in Mexico, which could have as much as 60 billion barrels of oil.

    The announcement comes on the heels of the company revealing a similar arrangement to drill in Australia.

    The American driller is partnering with Mexico City private equity fund called EIM Capital that is led by former Mexican President Vicente Fox and CEO Franco C. Hamdan.

    Terms of the partnership were not disclosed, but American Energy "will make a significant investment" to EIM Capital, the company said Tuesday. McClendon said the agreement is valuable for both companies and the Mexican economy.

    “This is a major opportunity for Mexican energy production," Fox, who led Mexico from 2000 to 2006, said in a statement. "We look forward to working closely with the Mexican government to advance this monumental project and enhance Mexico’s current energy policy.”
     
  • Chief closing its Pittsburgh area office.  The Dallas-based energy company entered the region in 2006 when it began acquiring land to extract natural gas from the Marcellus Shale formation. A private company, it drilled its first well in the region in 2007 and established an office in Wexford, about 20 miles north of Pittsburgh.

    Confirming a rumor posted to Marcellus Daily News Wednesday morning, Chief spokeswoman Daria Fish confirmed Chief is closing its Wexford office.

    "Chief Oil & Gas has consolidated some key technical functions to its corporate offices in Dallas and to its regional office in Montoursville, Pennsylvania," Fish wrote in a statement to the Pittsburgh Business Times. "These changes were made to improve efficiency and communications. They do not reflect any change in the company’s commitment to the Marcellus and the Commonwealth of Pennsylvania. Chief Oil & Gas continues to employ 45 full time staff members in the Marcellus asset in northeastern Pennsylvania and produced over 200 BCF of natural gas in 2014. The Wexford office will be closing at the end of October."
     
  • OH Cracker Plant Becoming Reality.  This past Thursday, Kasich joined with the CEO of the Thai chemical company considering building a $5.7 billion ethane cracker plant in eastern Ohio. He's expected to give more specifics on the plant, including which engineering firms and construction groups will work on the first phase of the project.

    The governor and PTT Global Chemical Public Company Ltd. CEO Supattanapong Punmeechaow are expected to announce the start of the project's first phase, which includes an investment of more than $100 million over the next year for engineering and design work at the Belmont County site, according to people familiar with the matter.

    It was Kasich and Punmeechaow's first public comments on the potential deal, first revealed in April by Columbus Business First. So $5.7 billion is at stake, giving Kasich a good reason to step away from his presidential campaign to come back to Columbus.

    After a year, the boards for PTT and its Japanese partner, Marubeni Corp., will decide if they will move forward on the project. PTT is a subsidiary of a Thai-owned oil and gas company that ranks No. 94 on Forbes' list of the 500 biggest corporations in the world. It's one of three large cracker plants being considered in Ohio, West Virginia and Pennsylvania.

    JobsOhio President John Minor will be on hand at the press conference; his group's undisclosed “aggressive incentive package" helped lure the PTT/Marubeni partnership to Belmont County.

    If built, the petrochemical facility would take over land currently occupied by an old FirstEnergy Corp. coal-fired plant in the tiny village of Dilles Bottom.

    Oil and gas drilling in Appalachian shale has led to ethane cracker considerations in the area. Ohio's Utica shale and the Marcellus shale in Pennsylvania and West Virginia have drastically increased natural gas production in the area; components taken from it can be converted and cracked into all types of chemical products.

    Today, most of it happens in the Gulf Coast.
     
  • Shell keeps moving forward on Beaver County, PA Cracker Plant.  While there's still no final word on whether it will be moving forward with plans to construct a multibillion-dollar cracker plant in Beaver County, Shell Chemicals Ltd. has started building a bridge over Route 18 that will allow construction crews to haul dirt from one side of Route 18 to the other without disrupting traffic, according to a report in the Beaver County Times.
     
  • Schlumberger does another deal.  Oilfield services firm Schlumberger said Wednesday it has acquired for an undisclosed price Novatek and Novatek IP, U.S.-based companies that specialize in synthetic diamond technology primarily used in drillbits in the oil and gas industry.

    Building on the long-time collaboration between the two companies, the acquisition provides a new platform for Schlumberger to pursue its vision of continuously improving drilling performance for customers, according to Schlumberger.

    “Novatek’s synthetic diamond manufacturing technology is already a key component of our drillbit offering,” said Khaled Al Mogharbel, president of Schlumberger Drilling Group. “With the addition of Novatek, we will enhance our research, engineering and manufacturing capabilities …”

    Novatek boasts a 60-year history of product development with a portfolio of more than 600 patents, Kallanish Energy understands. Core development of synthetic diamond technology and other technologies will continue at the company’s lab in Provo, Utah, where most of the employees are based.
     
  • Fluor gets project for PPT cracker plant contract.  Fluor Corporation FLR, +0.45% announced today that PTT Global Chemical Public Company (PTTGC) has selected a Fluor-led team to perform front-end engineering and design work for its proposed petrochemical complex in Belmont County, Ohio. The team includes Fluor, Technip and SK E&C. Fluor will book the undisclosed contract value into backlog in the third quarter of 2015.
     
  • Mariner East 2 project awards contract.  Sunoco has launched open season on its Mariner East 2 project with the award of a $300 million refrigerated-storage construction contract at Marcus Hook, Pa., to engineering firm Chicago Bridge & Iron Co. (CB&I).

    The scope of work includes the construction of four large low-temperature tanks that will be used for the storage of refrigerated ethane, butane and propane for distribution to the local and international markets.

    The Mariner East project involves building a pipeline to deliver propane and ethane fractionated from the liquid-rich Marcellus Shale areas to the Marcus Hook facility for processing, storage and distribution to various domestic and waterborne markets.

    The Mariner East 2 project will increase the pipeline capacity from 70,000 b/d outlined in Mariner East 1 to a total of 345,000 b/d.

    CB&I provided the $270 million refrigerated ethane and propane storage tanks at Marcus Hook as part of the Mariner East 1, where refrigerated propane deliveries to Europe and other destinations commenced in fourth-quarter 2014, and the first ethane cargo delivery imminent.

    Sunoco additionally operates some 2 million bbl of NGL storage capacity in five underground caverns, from which sources estimate around 1 million is dedicated to propane. Butane and small volumes of propylene are also stored.

    The startup for Mariner East 2 is expected at the end of 2016, subject to regulatory and permit approvals.
     
  • Consumers save if the U.S. starts exporting crude.  Consumers could save on fuel costs if policymakers act now to lift trade restrictions on U.S. crude oil, said API, citing a new report from the U.S. Energy Information Administration (EIA).

    “The EIA report provides a final, non-partisan confirmation that ‘70s-era trade restrictions on U.S. oil are bad for American consumers,” said Kyle Isakower, API vice president of regulatory and economic policy. “America is now a global energy superpower, and we shouldn’t have trade policies that make it harder for the U.S. to compete with other suppliers, like Iran and Russia.  The EIA report only reinforces the economic benefits of exports outlined in every other major study — more U.S. jobs, greater U.S. energy production, and downward pressure on fuel costs.

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 September 4, 2015
     
  • PA
    • Marcellus 34 unchanged
    • Utica 1 unchanged
  • Ohio
    • Utica 18 down 1
  • WV
    • Marcellus 17 unchanged
  • TX
    • Eagle Ford – 93 down 4
    • Permian Basin  208 unchanged
  • NM
    • Permian Basin – 45 down 2
  • ND
    • Williston – 71 down 1
  • MT
    • Williston – 1 unchanged
  • CO
    • Niobrara –28 unchanged
       
  • TOTAL U.S. Rig Count 864 down 13

PA Permits for August 27 to September 3, 2015

      County              Township             E&P Companies

1.    Allegheny           Forward                EQT
2.    Allegheny           Forward                EQT
3.    Armstrong          East Franklin         Campbell
4.    Butler                Clay                      Rex
5.    Elk                    Jones                    Seneca
6.    Elk                    Jones                    Seneca
7.    Elk                    Jones                    Seneca
8.    Elk                    Jones                    Seneca
9.    Elk                    Jones                    Seneca
10.    Elk                  Jones                    Seneca
11.    Fayette            Luzerne                 Chevron
12.    Tioga               Bloss                    Talisman

OH Permits – week ending August 29, 2015

County            Township                E&P Companies

No Permits this week in Ohio.

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

 

Utica Summit