BusinessCreator, Inc.

NewsLetters

Expo/Industry events for the next few months

Marcellus Utica Midstream
January 26-28
David L. Lawrence Convention Center
Pittsburgh, PA

http://www.marcellusmidstream.com/

Latest facts and a rumor from the Marcellus and Utica Shale

  • PA DEP’s Pipeline Infrastructure Task Force Report.  (Thank You, PIOGA) A state task force on natural gas pipelines is making 184 recommendations touching on everything from location of pipelines to emergency response plans, all designed to promote "responsible" pipeline development in Pennsylvania. The 335-page document, crafted by the state Department of Environmental Protection's Pipeline Infrastructure Task Force, has been posted online for public review.
    “It is important to remember that the report is not meant to be the final word," said DEP Secretary John Quigley, who chaired the task force. "When we present our report to the governor in February 2016, I anticipate that the next step will be to determine the feasibility and implementation strategies for each recommendation.”
    The 48-member task force was created in May by Governor Tom Wolf to develop policies, guidelines and tools to assist in pipeline development, operation and maintenance.
    Recommendations in the draft were assembled by delegates from sectors affected by pipeline development, Quigley noted, including agriculture, communities, environmentalists, cultural resource advocates, industry officials, government agencies and emergency responders.
    That lengthy list of recommendations starts with "educate landowners on pipeline development issues." Other recommendations:

     ♦ Implement full-time environmental inspections during pipeline construction.
     ♦ Monitor water quality during construction.
     ♦ Establish planning coordination between county agencies and pipeline developers.
     ♦ Require pipeline abandonment plans.
     ♦ Standardize emergency response plans and provide 911 addresses for pipeline-related facilities.
     ♦ Do not locate pipelines parallel to waterways within their 100-year floodways.
     ♦ Conduct early outreach with affected communities.
     ♦ Minimize impact on local roads.Create various statewide bodies and processes, including an all-region DEP pipeline review committee, a statewide pipeline information center for the public, and a DEP design manual for pipeline construction.

    A 30-day public comment period on the draft report will run through December 14. [Read more]
     
  • Bakken Production Way Down. The shale boom in North Dakota has softened to a whisper. The Shale basin is producing 1.1% less crude than a year ago.  Crude in North Dakota is worth $7 less than in West Texas.

    The state’s Bakken oil region produced less oil in September than it did the previous year, the first time that’s happened in more than a decade. Output fell as low oil prices, exacerbated by the region’s remoteness, caused companies to scale back drilling operations and delay completing new wells.

    North Dakota’s portion of the Bakken produced 1.11 million barrels a day in September, down 1.1 percent from the same month a year ago, according to state data. Half the oil left the state by costly truck and rail routes, forcing producers to offer steep discounts. Along with an overall decline in crude prices, that’s prompted drillers to idle 67 percent of the rigs that were in the region last year.

    “The production drop was inevitable with the rig decline and the low-price environment,” Carl Larry, head of oil and gas for Frost & Sullivan LP, said by phone. “The cost of rail and trucking hasn’t gone down enough to keep production profitable, so it’s a precarious area to keep production steady or growing.”

    The year-over-year decline was the first since August 2004, when the region produced just 1,500 barrels a day. The drop was set in motion nearly a year ago, when falling oil prices made oil companies curtail spending and idle rigs.

    Companies that are drilling wells are waiting longer to complete them with hydraulic fracturing crews. The number of drilled but uncompleted wells, known as the fracklog, rose to 1,091 by the end of September, the first time it exceeded 1,000, according to data from state regulators.

    The price drop was felt harder in North Dakota because there’s only pipeline space for a fraction of the state’s output. Pipelines are cheaper than rail or truck transportation, so sellers have to offer discounts to make up for the difference in transportation cost. Oil at the wellhead in the Bakken region sold for $29.74 a barrel Friday, compared with $37.40 in West Texas, according to the trading unit of Royal Dutch Shell Plc.
     
  • We Are Finally Bombing ISIS Oil Trucks.  What Took Us So Long, Mr. President?  Global leaders met over the weekend in Antalya, Turkey, for the G-20 Summit. Following the conclusion of the meeting Monday, Russian President Vladimir Putin told the media that he had shared intelligence with this peers over the previous two days concerning oil as the principal source of ISIS's financing- specifically regarding the terrorist group's network of oil tanker trucks.

    On Sunday, the Russian leader met in a closed-door session with President Barack Obama. On Sunday night, the US-led coalition launched its first attacks on these oil trucks.

    Did what transpired in Obama and Putin's private meeting on Sunday prompt the US strikes? Did the Russian leader shame President Obama into bombing ISIS oil trucks?

    After more than a year of airstrikes against ISIS in Syria and Iraq, the US only started bombing oil tanker trucks, ISIS's principal distribution network, on Sunday. While the US-led coalition has executed strikes against oil refineries and other ISIS-controlled oil infrastructure in eastern Syria, engineers associated with the terrorist group have been able to quickly repair the damage, and thus keeps a main revenue source for ISIS- oil- flowing. Hundreds of these fuel trucks are waiting every day at ISIS distribution hubs to smuggle oil to Turkey and elsewhere. Only one distribution point was ever hit, and that airstrike was conducted by the Iraqi air force.

    Up until Sunday, the Obama administration had opted not to attack the ISIS fuel truck fleet due to concerns over the potential for civilian casualties. But the strategy shifted on Sunday, when US-led airstrikes hammered these vehicles according to a new "damage more for longer" strategy. The question is why the Obama administration implemented this shift so suddenly – and what it took so long to hit ISIS where it hurts most.
     
  • Chemical Industry Booming in U.S. Because of Low Cost NatGas.  Announced chemical industry investment in the U.S. as a direct result of low-cost, available, shale gas and natural gas liquids totals $153 billion – up a mind-boggling 112.5% in just the last 30 months.

    Projects associated with that huge projected expenditure likewise has leaped, Kallanish Energy reports. Between May 2013 and Sept 2015, the number of projects grew to 246 from 97 – a 153.6% jump, according to data from the trade group American Chemistry Council.

    “Chemical companies from around the world have begun or are planning new projects to build and expand their shale-advantage capacity in the U.S.,” according to the council. “Much of the investment is geared toward export markets for chemical and plastics products ….”

    The American Chemistry Council (ACC) adds that more than 60% of the announced investment is by companies based outside the U.S.
     
  • Nexus and Rover Pipelines Getting Support in OH.  A major Ohio farm group on Thursday endorsed the development of major pipelines to transport natural gas.

    The Ohio State Grange with 6,000 members and 145 local groups in Ohio said farmers will benefit from the development of pipelines to move natural gas from the Utica and Marcellus shales across Ohio. The rural-based group is supportive of the Rover and Nexus pipelines that would cross northern Ohio, officials said.

    The Wayne County commissioners and the Wayne County Farm Bureau Federation both opposed the Rover Pipeline because of its potential impacts on local farms. Locally, it would cross Wayne and Stark counties. A decision by the Federal Energy Regulatory Commission is expected next summer.

    The Ohio State Grange released a new report by Drs. Gary Wolfram and Charles Steele of Michigan’s Hillsdale College that concluded that farmers would benefit from affordable natural gas prices and lower costs for fertilizers and pesticides.

    More pipelines are needed to get that natural gas to users including farmers, Wolfram said in a teleconference.
     
  • Utica Bringing Jobs to OH.  CSU study predicts Utica Shale will fuel big demand for new jobs.  A third of the expected increase in jobs will require higher education.  The greatest challenge facing the oil and gas industry isn’t the low price of commodities, its demographics.

    In the next 5 years or so, baby boomers will retire from the industry, leaving a vacuum of skills and leadership.

    To capture new jobs from the anticipated “great crew change,” Ohio needs to educate workers for a range of highly skilled jobs, according to a three-part study released Wednesday by researchers at Cleveland State University’s Maxine Goodman Levin College of Urban Affairs.

       LABOR DEMAND

    Researchers from the college’s Center for Economic Development and Energy Policy Center estimate Utica drilling and production will generate 10,505 full-time jobs in Ohio by 2019; a third of those jobs will require higher education. That’s up from an estimated 7,558 jobs this year.

    Additionally, the anticipated investment of $4.7 billion over the next five years in interstate pipelines and natural gas processing plants will generate 5,000 construction jobs a year, according the report.

    Companies will continue to use transient workers for well-field development and to build interstate pipelines. Local employment will be in post-production activity, such as the maintenance of wells, pipelines and processing plants, according to the report.

    A drop in oil and natural gas prices has slowed drilling, but companies with the best-producing acreage and easiest access to pipelines are in the best position to weather the slump and create future jobs.

    “However, the shale resource is not going away, and the industry is here for the long term and will be positioned to benefit at the time when prices rebound,” the researchers wrote.

       CRACKER BOOST

    Building cracker plants in the region would spur even more job growth. Cracker plants turn ethane, a component of natural gas, into ethylene, a chemical used in plastics. Four crackers have been proposed in the Utica and Marcellus shale regions but none have been built.

    Constructing an ethane cracker and associated plants would create 7,400 construction jobs and 1,570 supply jobs for every $1 billion spent, according to the report. Crackers cost $5 billion or more.

    When completed, a cracker complex would employ about 400 people, and serve as a platform for economic development within the plastics and manufacturing industries, the report said.

    The researchers based their estimates on state, industry and company data, information presented at conferences and personal interviews.

    The Regional Economic Competitiveness Strategy Shale Committee commissioned the study, with support from the Economic Growth Foundation and JobsOhio.
     
  • Upper Marcellus Still Very Active.  Well stimulation service providers note the upper Marcellus remains the most active market in the current pricing environment because of cost advantages. Meanwhile, activity in the lower Marcellus and Utica has slowed.

    Regional effective capacity remains under 1 million in hydraulic horsepower (HHP) with about 35 crews active in the region. Both fleet and crews remain underutilized. About half of regional fleet capacity remains stacked.

    Service providers see demand for well stimulation services as stable through the first half of 2016.

    Survey respondents list the cost per stage at $40,000, essentially unchanged in the last 90 days, and reportedly at or near cash cost and ultimately unsustainable.

    The backlog of drilled but uncompleted wells continues to grow in Appalachia and operators are not expected to address the inventory until 2016.

    New well drilling represents more than 95% of regional well stimulation activity. There is a lot of discussion regionally on refracking wells but not much movement on the process.
     
  • Marathon Really Wants MarkWest.  For the second time in a week, Marathon Petroleum Corp. on Tuesday boosted its purchase offer for MarkWest Energy Partners, this time by about $200 million in cash.

    The deal, which MarkWest unitholders will vote on Dec. 1, is now valued at about $10.65 billion, according to Dow Jones News Wires.

    MarkWest, based in Denver, is the nation’s second largest natural gas processor.

    The second increase of the purchase offer came after former MarkWest Chief Executive Officer John Fox said the deal was a bad one, even after Marathon’s improved offer last week, when an additional $400 million in cash was offered.

    He was not impressed Tuesday with Marathon Petroleum’s second increase. Both revisions are “too small and too late … I am still against this awful deal,” Fox said. He recommended MarkWest unitholders vote against the deal.

    Marathon Petroleum said its second revised offer is its final one. MarkWest unitholders would receive the equivalent of $51.74 per MarkWest common unit.

    The actual value of the deal has decreased by about $4 billion since Marathon first made its offer in July. Marathon is offering cash and units of its MPLX subsidiary in exchange for MarkWest common units, and the value of MPLX units has plunged since July.

    In July, MarkWest unitholders would have received the equivalent of $78.64 per MarkWest common unit.

    Three of MarkWest’s largest unitholders have agreed to vote in favor of the deal, Marathon Petroleum reported Tuesday. They are Kayne Anderson Capital Advisors, Tortoise Capital Advisors, and The Energy & Minerals Group, which together represent more than 15 percent of MarkWest’s outstanding units entitled to vote.

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

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

Rig Count

  • Baker Hughes Rig Count the week of November 20, 2015
     
  • PA
    • Marcellus 29 UP 2
    • Utica 1 unchanged
  • Ohio
    • Utica 19 down 1
  • WV
    • Marcellus 14 down 2
  • TX
    • Eagle Ford – 75 up 2
    • Permian Basin  189 down 4
  • NM
    • Permian Basin – 36 unchanged
  • ND
    • Williston – 63 up 1
  • CO
    • Niobrara – 25 down 1
       
  • TOTAL U.S. Rig Count 727 down 7

PA Permits for November 12, to November 19 2015

      County            Township              E&P Companies

1.    Clarion                Toby                   EQT
2.    Greene                Washington        Vantage
3.    Greene                Washington        Vantage
4.    Greene                Washington        Vantage
5.    Lycoming            McIntyre             Anadarko
6.    Susquehanna      Franklin              SWN
7.    Susquehanna      Franklin              SWN
8.    Susquehanna      Franklin              SWN
9.    Susquehanna      Harford                Cabot
10.    Susquehanna    Harford                Cabot
11.    Susquehanna    Harford                Cabot
12.    Washington      Amwell                EQT
13.    Washington      Amwell                EQT
14.    Washington      Amwell                Range
15.    Washington      Blaine                  Range
16.    Washington      West Bethlehem   EQT
17.    Washington      West Bethlehem   EQT
18.    Washington      West Bethlehem   EQT
19.    Washington      West Bethlehem   EQT
20.    Washington      West Bethlehem   EQT
21.    Washington      West Bethlehem   EQT

OH Permits – week ending November 14, 2015

County            Township                E&P Companies

1.    NO PERMITS THIS WEEK

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

Midstream PA