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Expo/Industry events for the next few months

Midstream PA 2015  SOLD OUT
October 1, 2015
Penn State

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

Utica Summit III
October 13, 2015
Canton, OH

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

PIOGA 2015 Eastern Oil and Gas
Conference and Trade Show

Latest facts and a rumor from the Marcellus and Utica Shale

  • Pipeline Resistance.  I do not know how many of you know the steps being taken across the Midwest and Northeast to stop pipeline construction.  Everywhere I travel I hear about trouble with pipelines getting authorized. I read numerous Google Alerts which identify stories about communities, organizations and individuals trying to stop pipeline construction.  Pipeline construction is critical for the Marcellus and Utica to evolve to the next phase of development.  The need for less expensive Marcellus and Utica natural gas in New England and the Southeastern parts of the U.S. is very important to the economic growth of these regions.  

    I read an article yesterday about the dire situation in Boston regarding natural gas.  Bostonians pay the highest natural gas prices in the U.S.  In January and February, they were paying $24.09 per million BTU’s in PA the price was $3.37. Economists are saying the New England could be in dire economic straights unless they can get less costly Marcellus natural gas.  

    In spite of these warnings, there is still considerable resistance to the building pipelines from PA to New England.

    Because of the pipeline resistance, some are beginning to think the considerable construction activity at Marcus Hook in Philadelphia is going to result not only in shipping LNG  to Europe, but sending natural gas to New England via container ships.
  • $2 Billion WV Pipeline.  The Federal Energy Regulatory Commission will review a proposed $2 billion natural gas pipeline in West Virginia before the developer formally submits an application.

    The commission notified Columbia Gas Transmission, LLC last week that it accepted the Mountaineer Xpress Project for the pre-filing review process.

    Parent companies Columbia Pipeline Group, Inc. and Columbia Pipeline Partners LP said Wednesday that an application will be filed with the federal commission in April 2016. If the pipeline is approved, construction would begin in the fall of 2017.

    The pipeline would run about 165 miles from Marshall County to Wayne County. The companies say in a news release that the pipeline would give producers in the Marcellus and Utica shale areas new options to transport gas into the interstate market.
  • MarkWest #1.  MarkWest Energy Partners received the top rating for the fourth time from satisfied midstream customers in a new survey by EnergyPoint Research, Kallanish Energy learns.

    Plains All American Pipeline placed second overall in EnergyPoint’s customer satisfaction survey, followed by Sunoco Logistics, Enable Midstream and Boardwalk Pipeline Partners in the “2015 Oil & Gas Midstream Services Customer Satisfaction Survey.”

    A total of 17 companies received the minimum number of evaluations needed to be included in the rankings, EnergyPoint said.

    “Prior to the decline in oil prices in 2014, midstream service companies were focused heavily on building out the considerable infrastructure needed to service the burgeoning needs of producers,” said Doug Sheridan, managing director of EnergyPoint Research.

    “As the segment transitions to a period marked by greater market equilibrium and increased competition, it will be those suppliers whose organizational mindsets are geared toward helping customers succeed – at both ends of the pipe – that retain and attract market share.”

    In addition to garnering the top overall rating, MarkWest also rated first in five other categories, including Appalachian Basin – Marcellus, Operations, Onshore Gas Gathering, Project Development and NGL (natural gas liquids) Fractionation.

    Runner-up Plains All American placed first in Crude Transportation and Crude Storage & Terminaling, while Sunoco took top honors in Onshore Crude Gathering, Texas Intrastate, Onshore Gulf Coast and the Mid-continent region.

    Enable rated first in Gas Processing & Treating and in the Ark-La-Tex region. Boardwalk, ranked fifth overall, rated first in Gas Transportation and Systems & Administration, according to EnergyPoint.

    Survey results were based on more than 2,000 company evaluations by 300-plus professionals at production, marketing and industrial customers of domestic midstream service providers. Companies were rated primarily on their performance over the 24-month period ending Aug. 31.
  • GE could save Halliburton – Baker Hughes deal.  Speculation is growing that General Electric could be the lone buyer that can afford oilfield services firm Halliburton’s castoff assets mandated by regulators and related to the Baker Hughes acquisition.

    On Monday, exactly 14 hours after it announced public stock and debt offerings would soon begin, Weatherford canceled plans to raise $1 billion via the offerings (see related story in this issue).

    It’s believed Weatherford won't have enough cash to buy the drill bit and drilling-services business Halliburton has to sell for antitrust regulators to approve the Baker Hughes buy.

    Cancelation of the equity and debt offerings could be good news for GE as it eliminates another bidder for Halliburton assets. Bloomberg has reported Nabors Industries, which also was seen as a potential bidder, has backed away.

    GE has been expanding its oil and gas unit as part of its focus on core industrial businesses while selling its banking and finance assets. In 2013, GE completed its purchase of oilfield pump maker Lufkin Industries for $3.3 billion.

    The company known for toaster ovens and lightbulbs, in 2013, wrapped up a three-year, $10 billion buying spree to bolster the growing oil and gas equipment unit that helped GE recover from the financial crisis.

    How GE’s oil division navigates the choppy market will determine the company’s fortunes for years. The $19 billion oil & gas division, now GE’s third-largest manufacturing division, accounts for 12% of GE’s revenue and roughly 20% of industrial sales, up from 4% a decade ago.

    The Department of Justice is reportedly complicating the Halliburton/Baker Hughes merger by requiring Halliburton to sell the $7.5 billion in assets it needs to offload to pass antitrust regulations to a single buyer, according to the New York Post.
  • Raymond James echoes SHALE INSIGHT rumor.  U.S. natural gas production has been holding steady in 2015, but stalled growth this year won’t erase the huge supply of gas driving down prices, according to the latest analysis by financial services firm Raymond James.

    Instead, similar to what’s happening in the oil patch, more efficient drilling and prolific shale wells will keep any 2016 cutbacks minor, while positioning the fuel for another production boom in 2017 and 2018. The resulting tide of natural gas means prices are likely to stay low despite this year and next’s flat production growth.

    After adding as much as 5.4 billion cubic feet per day in new production in 2014, the U.S.’s natural gas haul leveled off at about 73-75 billion cubic feet per day in early 2015, according to Raymond James.

    In total, the firm expects to see about 0.2 billion cubic foot decrease in natural gas production in 2016. In 2017, as producers step up drilling in more oil-focused plays, natural gas production in expected to grow by 1.8 billion cubic feet per day.

    And in 2018 the industry will once again be booming with a forecast 5.0 billion cubic feet per day of supply growth.

    Boom times could be back in 2017 and 2018.
  • Halliburton to cut more jobs; no mention of Baker Hughes deal.  Halliburton has said the company will be making additional job cuts that will specifically target management positions, Kallanish Energy Understands.

    According to an internal communication obtained by the Houston Business Journal, Jeff Miller, Halliburton's president, outlines Halliburton's cost-cutting measures.

    "We must continue to manage through this extended industry down cycle by implementing additional cost reduction measures to protect the interests of all stakeholders," Miller said in the memo. "Unfortunately, this means that additional staff reductions are underway, with the majority of the reductions in North America – the region hit hardest by market conditions."

    The communication added Halliburton will "flatten" its North America business by eliminating multiple levels of management and additional headcount "commensurate with market activity levels."

    The memo did not give any specific figures, but did say those directly affected by the job cuts would be notified within the next two weeks.

    The job cuts are unrelated to the pending acquisition of Houston-based Baker Hughes, according to the company.

    “Halliburton has made adjustments to its workforce based on current business conditions,” Susie McMichael, Halliburton senior public relations representative, tells Kallanish Energy. “Halliburton will continue to monitor the business environment and will adjust the size of our workforce to align with current business demands as needed.”

    McMichael added details of specific businesses and the number of employees is competitive information and therefore unavailable.

    As of July, Halliburton employed 8,000 in Houston, Texas. The company in its second-quarter earnings report revealed job cuts totaling 16% worldwide during the first half of 2015. At Dec. 31, 2014, Halliburton's global workforce stood at 80,000.

    French energy giant Total is planning to build a $2 billion steam cracker in Port Arthur, Texas, to produce up to 2.2 million pounds of ethylene a year, Kallanish Energy reports.
  • Another new cracker plant. This one’s in Texas.  Total contracted with The Woodlands, Texas-based CB&I for front-end engineering and design for a second cracking unit at the Paris-based company’s existing Port Arthur campus. A final decision on the project is expected next year and the project would be completed in 2019, Total announced Wednesday.

    Ethylene is the primary building block of most plastics; the growth of petrochemical projects in southern Texas is surging thanks to the influx of cheap natural gas from U.S. shale that serves as the feedstock to help make chemicals and plastics.

    In response to that natural gas glut, Total Refining and Chemicals President Philippe Sauquet said the company is working to strengthen its global petrochemicals and refining presence.

    “In the U.S., we want to capitalize on the shale gas revolution during which gas prices have plunged 66%,” Sauquet said. “In such an environment, the advantage to investing in petrochemical activities is access to a plentiful, inexpensive feedstock and to low-cost energy for our plants.”
  • Marcellus pipelines to be completed before winter.  Natural gas producers in the Marcellus Shale have long been victimized by inadequate processing and outbound transportation capacity. But IIR Energy's NatGasLive application is tracking several small pipeline construction projects in the Marcellus area that are scheduled to finish during the next six weeks, easing bottlenecks and bringing more low-cost gas to market.

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

Rig Count

  • Baker Hughes Rigs count for the week September 25, 2015
  • PA
    • Marcellus 32 unchanged
    • Utica 1 unchanged
  • Ohio
    • Utica 19 unchanged
  • WV
    • Marcellus 17 unchanged
  • TX
    • Eagle Ford – 85 down 3
    • Permian Basin  203 down 4
  • NM
    • Permian Basin – 47 up 1
  • ND
    • Williston – 66 down 1
  • MT
    • Williston – 1 unchanged
  • CO
    • Niobrara –27 unchanged
  • TOTAL U.S. Rig Count 834 down 4

PA Permits for September 17, to September 24, 2015

       County                 Township           E&P Companies

1.    Cameron                Shippen               EQT
2.    Greene                   Center                 EQT
3.    Washington            Carroll                  EQT
4.    Washington            Carroll                  EQT
5.    Wyoming                Easton                Southwestern
6.    Wyoming                Mehoopany          Chesapeake
7.    Wyoming                Meshoppen          Chesapeake
8.    Wyoming                Meshoppen          Chesapeake
9.    Wyoming                North Branch        Chesapeake

OH Permits – week ending September 19, 2015

       County            Township            E&P Companies

1.    Belmont            Pultney                XTO
2.    Belmont            Pultney                XTO
3.    Harrison            Cadiz                   Hess
4.    Harrison            Cadiz                   Hess
5.    Harrison            Cadiz                   Hess
6.    Harrison            Cadiz                   Hess
7.    Harrison            Cadiz                   Hess
8.    Noble                Wayne                Antero
9.    Noble                Wayne                Antero

Joe Barone 610.764.1232
Vera Anderson 570.337.7149

Midstream PA