BusinessCreator, Inc.


Expo/Industry events for the next few months

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


Utica Upstream
April 6, 2016
Pro Football Hall of Fame
Canton, OH

Upstream PA 2016
April 19, 2016
Penn Stater Inn
State College, PA

Latest facts and a rumor from the Marcellus and Utica Shale

  • Marathon Names MPLX President.  Marathon Petroleum named Donald Templin, who currently serves as executive vice-president of supply, transportation, and marketing, president of its MPLX midstream subsidiary effective 1 January.

    MPLX recently acquired the midstream assets of MarkWest, the largest NGL processor in the Marcellus shale, and announced plans to build an alkylate plant and additional liquids pipelines in the region.

    Pamela Beall, Marathon's senior vice-president of corporate planning and strategy, will assume the same role at MPLX at the first of the year.

    Both Templin and Beall will remain at Marathon's headquarters in Findlay, Ohio.
  • Kinder Morgan Pushes Northeast Energy Direct Pipeline. Following a series of forums in the Albany area, Kinder Morgan plans to continue outreach as it pushes forward with plans for a natural gas pipeline from Pennsylvania to Massachusetts.

    Some protestors on both sides of the issue gathered outside at the final forum on Thursday, according to media reports. That's not unusual for infrastructure projects like the $5 billion Northeast Energy Direct pipeline, said Allen Fore, vice president of public affairs for Kinder Morgan.

    The pipeline is projected to create about 2,300 temporary construction-related jobs in New York, according to Kinder Morgan.

    “There are those who support and those who oppose,” he said. "There are also those who don’t have an opinion or need more information — these forums are really designed for those people."

    The pipeline is projected to create about 2,300 temporary construction-related jobs in New York, according to the company. The bulk of those will be union jobs, as the company has committed to hiring union contractors to build the pipeline.

    The pipeline would transport as much as 1.2 billion cubic feet per day of natural gas across the Northeast.

    The project is supported by both the Business Council of New York State Inc. and union groups. It faces an uphill battle in the face of environmental groups' opposition and a grassroots movement.

    Fore said the company will continue to work with landowners and meet with elected officials to build support for the project. Kinder Morgan has been working with Troy-based public relations firm Gramercy Communications for more than six months and hired a top Albany lobbying firm, Statewide Public Affairs, about two years ago.

    Kinder Morgan is the parent company of Tennessee Gas Pipeline, which is seeking approvals to build the pipeline. The project faces similar challenges in New York as other pipelines in the works.

    New York state has blocked hydraulic fracturing, the method used to extract natural gas from the Marcellus Shale that would be transported by this pipeline. The one-year anniversary of that ban was hailed by environmentalists while some business groups called for a re-do.
  • Cabot 2016 CAPEX Spending.  In 2016, Cabot is further lowering its capex budget to $615 million. 93% of this budget will be allocated to drilling, completion, and facilities, of which 74% will be allocated to the Marcellus Shale and 26% to the Eagle Ford Shale.
  • Cracker Plants Update.  With companies spending hundreds of millions in 2015 on planning for two potential petrochemical plants along the Ohio River, officials in three states hope 2016 is the year that billions of dollars are committed to their construction.

    The recent crash in natural gas and related products' prices cast some doubts on whether decisions on building the so-called ethane crackers will come soon.

    Proponents of Royal Dutch Shell's proposed complex in Beaver County and PTT Global Chemical's possible cracker in Belmont County, Ohio, can point to plenty of recent positive developments.

    Shell this year closed on the property in Potter, landed key environmental permits, began an $80 million remediation of the former Horsehead Corp. zinc smelter site and started building an access bridge over Route 18. PTT commissioned $100 million in studies to examine the feasibility of building at a shuttered power plant across the river from Moundsville, W.Va.

    Whether either company makes a final decision on building in 2016, though, will require getting a handle on global commodity markets that became more volatile this year.

    “These companies are trying to make decisions on what market conditions will be … three to five years from now,” said David Mustine, senior managing director for shale energy and petrochemicals at JobsOhio, a workforce and economic development group in Columbus.

    Both plants would take ethane — a component of the gas that comes from some Marcellus and Utica shale wells in Western Pennsylvania, Northern West Virginia and Eastern Ohio — and convert or “crack” it under high heat into ethylene and polyethylene, the building blocks of many common household products and plastics.

    Ethane prices plunged with the glut of natural gas this year, which would make it cheaper for Shell or PTT to make those building blocks. But so did the price they could get for the petrochemicals.

    The overall slowdown in the energy industry hurt manufacturers that rely on it for business. The drop in natural gas and oil prices also means Shell, as a producer of both fuels, has less money to invest.

    “Some of the manufacturers and companies who stand to benefit most from locating a cracker in this region have been hit hardest by the low gas prices,” said energy consultant Kathryn Klaber of the Sewickley-based Klaber Group, who formerly led the Marcellus Shale Coalition.

    Getting one or two crackers along the Ohio River is more likely if oil, gas, and related petrochemicals hit what Klaber called a sweet spot where companies on both the production and consumption sides “can benefit from fair, long-term, reasonable prices.”

    The governors of all three states recently pledged to work together to convince at least one company to build, and to attract downstream manufacturers that would see value in buying cheap polyethylene locally instead of shipping it up from Gulf Coast crackers.

    All three states can supply the ethane and benefit from its conversion here, Klaber and Mustine said. And that supply isn't going anywhere soon, even as exports increase.

    A recent study by Cleveland State University researchers predicted that in 2020, shale gas companies will produce 200,000 barrels a day of ethane above what can be processed and moved out on pipelines, enough to feed four crackers.

    “This excess production should be attractive for petrochemical companies locating or considering a location” in the region, the study's authors wrote.
  • Black Swan Events in 2016.  OilPro magazine has done a superb job listing a number of black swan events that could impact the oil and gas industry in 2016.  Take a read.
  • Pipelines to New England.  Spectra Energy’s Algonquin Gas Transmission asked FERC in November for a pre-filing review of the proposed Access Northeast pipeline. The company expects to file a formal application in about a year and hopes to put the first phase of the project in service by November 2018.

    Also in November, developers of the Northeast Energy Direct pipeline through Massachusetts and southern New Hampshire filed certificates of need with FERC. The Kinder Morgan project would transport Marcellus shale gas from Pennsylvania. The developers hope for FERC approval in the fourth quarter.

    The first oil exports from the United States left the Port of Corpus Christi on Thursday afternoon aboard the “Theo T” tanker heading for Europe just weeks after Congress repealed the nearly 40-year-old export ban.
  • Oil Exports Will Keep the Eagle Ford Busy.  The exports — using Eagle Ford oil pumped by ConocoPhillips and transported by NuStar Energy — mark a momentous change in the midst of one of the worst price crunches in the history of the industry. As of Thursday, the American benchmark West Texas Intermediate was hovering around $37.50 a barrel — down $15 from a year ago and more than $60 from Dec. 31, 2013.

    But the lifting of the ban could spell some relief for Eagle Ford producers as their oil is closer to export points than American-produced crude in North Dakota’s Bakken shale, said Omar Garcia, president and CEO of the South Texas Energy and Economic Roundtable.

    “The job impact and revamping and rigs starting to drill again, it’s going to be a gradual process,” Garcia said. “It’s not going to be something that’s going to happen overnight. But it will impact the shale in the long term and allow us to continue to drill and add jobs in the Eagle Ford.”

    As for the first exports leaving Corpus Christi, NuStar Energy communications assistant ant Molly Haerer said in an email that “NuStar has invested heavily in the Port of Corpus Christi and the Eagle Ford to be in a position to load large cargoes of crude for export. We like the Port of Corpus Christi because it is largely less congested than the port in Houston.”

    Garcia echoed that message, saying that midstream pipeline companies have pumped billions of dollars into projects in order to take advantage of export possibilities. The region is still seeing an inflow of money as well.
  • Consol to drill in the Utica at Pittsburgh Airport.  Consol Energy Inc. will drill a test well into the deeper Utica shale from one of its Marcellus gas well pads on Pittsburgh International Airport property.

    The Cecil-based natural gas and coal producer said Tuesday it received approval from Findlay zoning officials to replace one of the 12 Marcellus wells it planned for Pad 4 at the airport with a Utica well. No date has been set for drilling.

    Like other several other major shale producers, Consol is getting huge results from a few new wells tapping the dry Utica layer, which runs beneath the Marcellus and can produce large amounts of gas with few related liquids. Consol is fracking a Utica well in Greene County and finished wells in Monroe County, Ohio, and in Westmoreland County.

    The wells will help company officials map the geographic extent of the productive part of the rock layer.

    Because of persistently low prices, Consol has halted its drilling program while it fracks wells in its inventory, though drilling from an existing well pad can be done more cheaply.

    The company signed a deal with Allegheny County officials that paid the county Airport Authority a $46 million upfront fee and promised additional royalties on eventual production from wells drilled from six pads in Findlay and Moon.

    Consol expects production to begin this spring from all six wells drilled from Pad 2 and one of the four wells drilled from Pad 1.

    Four of the 12 wells planned for Pad 4 have been drilled and are awaiting completion. Design and engineering is underway on two more pads. Work has yet to begin on Pad 5, which in August received approval from Moon officials
  • What can we expect in 2016? Here is a rundown of some key trends to watch for: (Thank you,

    1. U.S. oil production contracts. Oil output in the U.S. has declined by about 300,000 barrels per day to 9.3 million barrels per day (mmbd/d). Most energy prognosticators, including the EIA and the IEA, see U.S. production falling by around 0.5 mb/d in 2016. The decline could be steeper than that, however, given the plunging rig count, high depletion rates, and extraordinary capex cuts. Time will tell.

    2. LNG supply up, prices down. While the oil market could be reaching for a bottom, LNG’s downturn could just be getting started. JKM prices, a maker for delivery in Asia, have fallen by two-thirds since the 2014 peak. February 2016 delivery cargoes are going for $7 per million Btu (MMBtu). But more global liquefaction and export capacity is set to hit the market in 2016, exacerbating the glut. The first export facility in the U.S. – Cheniere Energy’s Sabine Pass – will start up soon. Australia will see several large projects startup as well, including Chevron’s Gorgon and Wheatstone LNG facilities as well as Inpex’s Ichthys LNG terminal. China is not buying LNG at the rate that developers expected. With supply set to jump faster than demand, prices will remain low and could fall even further.

    3. Dividends on the rocks. For oil and gas companies, dividends are sacrosanct. Companies have drastically reduced spending on new projects and severely culled payrolls in order to stop the bleeding. But how long can they hold out before cutting dividends? Are dividends worth protecting if it means sacrificing future production growth? Eni already slashed its dividend in 2015, the largest company to do so. Marathon Oil recently cut its dividend as well. Could the oil supermajors be next?

    4. Renewables gain ground. 2015 was the best year yet for solar power, with over 7 GW of installations in the U.S., a record high. But the next few years could dwarf those numbers. The extension of the solar investment tax credit will lead to cumulative installations in the U.S. quadrupling to 100 GW by 2020. Wind and solar now routinely capture most of the new electricity generation capacity installed in the U.S., and are rapidly becoming mainstream options for electricity in many parts of the world.

    5. Iran returns. The historic nuclear agreement in 2015 will allow Iran to come back to the oil markets after over four years of isolation. Iran plans on bringing back 500,000 barrels per day almost immediately after sanctions are lifted, which could come as soon as January. Within a few months, Iran says it could bring another 500,000 barrels per day back. The extra supply will bring OPEC’s output above 32 mb/d, and will add to the giant global pool of oil.

    6. Natural gas levels off. Natural gas production continued to hit new record highs in 2015. But with storage levels rapidly filling up, having topped 4 trillion cubic feet in November, prices have dropped to their lowest levels in over 15 years. That is forcing some wells to be shut in, and the prolific Marcellus shale could already be in decline as a result. Absent a cold winter (with 70-degrees seen in New York City on Christmas Eve, the winter has gotten off to a warm start), storage levels could remain elevated next year, weighing on prices. There is a growing consensus that Henry Hub natural gas prices could stay below $3/MMBtu for the next few years.

    7. Geopolitical unrest. The fall in oil prices are sapping governments of much needed revenue. That, in turn, could destabilize certain places. Venezuela tops the list, with a default not out of the question in 2016. Foreign exchange is running low, and debt payments will come due. Iraq is another country in which low oil prices have affected its security situation. Looking across the global landscape at this point, it is hard to see governments falling because of oil revenues drying up, but the price collapse has weakened some especially oil-dependent governments.

    8. Defaults and bankruptcies. Through mid-November, 36 oil and gas companies filed for Chapter 11 bankruptcy, encompassing $13 billion worth of debt. That figure will rise in 2016. Reuters reported on a rising incidence of forced bankruptcies, in which creditors take delinquent oil and gas companies to court over failed payments. With the additional negative effects from the recent downturn into the mid-$30s per barrel still to be sorted out, the default rate should accelerate in the next few months.

    9. M&A. Royal Dutch Shell may have jumped the gun on purchasing BG Group in April, as it tried to get ahead of an oil price rebound. With a bit of hindsight, shareholders are now wondering if Shell overpaid. In any event, as the market bottoms out and starts to rebound, there will likely be a flurry of consolidation as stronger players scoop up weaker ones. Many expected that to occur in 2015, but aside from Shell’s landmark purchase of BG, there were only a handful of others. That will change in 2016.

    10. Prices rise. While everyone was wrong about the price rebound in 2015, all eyes are on late 2016 for the correction. IEA says that crude oil demand increased by 1.8 mb/d in 2015. The world will add another 1.2 mb/d next year, helping to erase most of the supply overhang. Rising demand will come as supplies fall. That could allow prices to rise to $60 per barrel by late 2016.
  • Consol Energy slashes 2016 E&P capital budget.  Consol Energy on Wednesday sharply cut its 2016 capital budget for its E&P division, Kallanish Energy reports.

    Capital expenditures (CAPEX) for E&P are now set at $205 million to $325 million -- $185 million lower than the previous guidance of $400-$500 million, based on the guidance midpoint.

    Total E&P capital, including midstream, has been cut by roughly $1 billion since 2014 – from $1.2 billion to the projected $205-$325 million -- with corresponding production projected to grow 60%, from 235.7 billion cubic feet-equivalent (Bcfe), to roughly 377 Bcfe, respectively.

    The reduction in 2016 E&P CAPEX “reflects continued benefits from drilling and completion efficiencies, and the deferral of mainly wet gas completions into 2017,” Consol said.

    "Consol’s updated 2016 plan reflects the company's operational flexibility to respond effectively to the continued weakness in commodity prices, as well as the company's commitment to de-lever the balance sheet through the execution of the organic free cash flow plan," said Nicholas J. DeIuliis, company CEO.

    DeIuliis added the expected weighted average rate of return on 2016 incremental capital is above 30%.

    The energy company believes it has a “meaningful lever” to pull to partially offset the deferral of activity via potential production benefits related to additional gathering system debottlenecking projects in the second half of the year.

    The additional debottlenecking projects could provide upside benefits to 2017 gas production volumes, Consol added.

    The lower end of the E&P CAPEX primarily reflects capital associated with completing roughly 37% of the company's inventory of drilled but uncompleted wells (DUCs). The higher end of the range adds back what Consol called a “modest” level of drilling activity, which could begin around mid-year.

    “The extent of drilling activity in 2016, if any, will primarily be a function of rates of return and commodity prices, and the assessment of the dry Utica wells drilled in 2015,” according to Consol.

    The company expects to make a decision regarding drilling capital allocation before mid-year 2016.

    It is no secret that the shale oil and gas industry is currently facing challenges. As a result many companies are laying off workers or remaining at their current levels. However, this is not the case with all companies. There are also success stories to be told.
  • Pioneer Will Keep Production Growing in 2016.  Pioneer Natural Resources made it clear that production growth will be its mantra this year. The company announced a $1.4 billion stock offering that is intended to fund its 2016 capital program, which is up ~$2.2 billion from 2015. The bulk of this spending will occur in the Spraberry and Wolfcamp plays of the Permian Basin, where the company hopes its success last year will be amplified this year.
  • Lola Energy Overview.  Lola Energy, a newly formed independent oil and gas company, is hoping to be one of those success stories and by all accounts looks to be on target for that achievement. Headquartered outside of Pittsburgh in Wexford, Pennsylvania, the company is led by an executive management team with extensive experience in the Appalachia Basin who also previously worked together at EQT. When combined, the company’s four person management team of Chief Executive Officer Jim Crockard, Chief Operating Officer Richard Hill, Chief Geosciences Officer Lindell Bridges, and Chief Commercial Officer Dave Bradley has nearly a century of experience in the shale oil and gas industry.

    During Crockard’s 14 year career at EQT, he helped transform the company into a leading independent shale oil and gas producer and led more than $2 billion of public debt and equity raises to fund EQT’s horizontal development programs as Corporate Treasurer. Most recently while serving as EQT’s Senior Vice President of Business Development & Land, Crockard was responsible for all upstream acquisitions, divestitures, joint ventures, and land operations.

    Additionally, 27 year veteran Hill, who previously served as EQT’s Executive Vice President of Drilling & Completions, has worked across the globe for producers such as BP, Texaco, and NOWSCO. Bridges, a highly regarded 30 plus year oil and gas veteran, pioneered numerous early technological advances in EQT’s Marcellus shale gas development program, while Bradley, who worked at EQT for 14 years, most recently served as the company’s Senior Vice President of Midstream Asset Management and Sales and supported the IPO of EQT Midstream Partners, LP.

    “I am ecstatic that we have assembled together a group of highly talented oil and gas professionals who have the deep experience in the Appalachian Basin required to pursue horizontal shale development opportunities in our own backyard. As a lifelong resident of Southwestern Pennsylvania it feels very rewarding to create a locally owned, locally accountable oil and gas operating company,” expressed Crockard. In fact LOLA Energy’s name represents exactly that and stands for Locally Owned, Locally Accountable.

    Crockard added, “We are a deeply experienced team that has already drilled over 2,100 horizontal shale wells while we were at EQT. Three of our four principals from that team are natives of Western Pennsylvania and have deep roots here in our backyard where we are investing. We have that know-how and capital, and are making new investments while the rest of the industry is largely scaling back their operations.”

    Supporting their advances, LOLA Energy announced on December 8, 2015 that it had secured a $250 million equity commitment from leading energy and resources-focused global private equity firm Denham Capital. The company will use the capital to pursue the leasing, acquisition, exploration, and development of oil and gas properties in the Marcellus and Utica Shale plays in the Appalachian Basin.

    Crockard relayed, “With the strong support of a sophisticated oil and gas private equity firm like Denham Capital, LOLA Energy is now ready, willing, and able to partner with our local landowners and their neighbors to economically develop their oil and gas rights in a safe and environmentally conscious manner.” Jordan Marye, Partner, Denham Capital, also added, “Denham is excited to partner with LOLA. We believe the founders’ deep, local roots and recent area successes provide a strong foundation to build a new exploration and production company in the country’s lowest cost gas basin.”

    The extensive past work experiences of LOLA’s management team gives the new company an advantage. “We know the best rock to drill; including which rock is good geologically but may not be able to be developed due to other market factors. We also know how to drill and complete horizontal shale wells as efficiently as anybody else in Appalachia. We will absolutely have an advantage as a result,” explained Crockard.

    In regards to the current state of the shale oil and gas industry, Crockard says, “We are fortunate to have not formed the company even a year ago; otherwise we might have made investments in a higher price environment that would be holding us back now.” In ways the current state of the industry has helped LOLA. “The opportunities to find attractive assets and hire quality employees have been better than we anticipated for our start-up phase,” explained Crockard, who added, “We have more qualified candidates than open positions at the moment, [and] we have more leasing and asset acquisition opportunities in front of us than we would have ever guessed were out there.”

    LOLA plans to bring 10 to 20 new jobs to the Greater Pittsburgh region within its first year of business and will utilize the services of local companies and professionals serving the shale oil and gas industry whenever practical. Crockard responded, “100% of our back office will be staffed in the Pittsburgh area; 100% of our technical and operations personnel will work and live in the greater Pittsburgh area as we are targeting our operations in the core of the Marcellus and Utica in Southwestern Pennsylvania, Northern West Virginia, and Eastern Ohio.”

    In terms of the obstacles that many shale oil and gas industry businesses are facing, Crockard explained, “The primary obstacles are assets not in the right location, technical teams not fully up to the learning curve for shale development, and companies unable to fund their debt and their development programs – or a combination of these.” In order to overcome these obstacles, Crockard says, “LOLA Energy is focusing on areas where we have worked where shale assets can be developed economically even in today’s commodity price environment. Our technical team helped define the learning curve for EQT. We are also private equity backed so we can work through this environment even if it gets worse.”

    Crockard believes, “We have deep local relationships and the technical know-how to execute our plans in the right place with the right people. As local residents and natives of the area, we fully intend to create win-win opportunities for our local landowners and local vendors that collaborate with us.”

    The company has already began acquiring shale oil and gas properties for horizontal shale oil and gas development in core areas of the Marcellus and Utica Shale plays. If the management team of LOLA Energy’s deep past technical experiences and commercial focuses are any indication of the future, this new endeavor looks to be another success story in the shale oil and gas industry.

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

Rig Count

  • Baker Hughes Rig Count the week of January 8, 2016
  • PA
    • Marcellus 25 down 1
    • Utica 0 down 1
  • Ohio
    • Utica 14 unchanged
  • WV
    • Marcellus 12 down 3
  • TX
    • Eagle Ford – 71 down 5
    • Permian Basin  177 down 4
  • NM
    • Permian Basin – 32 down 4
  • ND
    • Williston – 49 down 4
  • CO
    • Niobrara – 19 down 1
  • TOTAL U.S. Land Rig Count 637 down 36

PA Permits for December 17, 2015 to January 7, 2016

       County            Township          E&P Companies

1.    Allegheny          Findlay              Consol
2.    Armstrong         West Franklin    PennEnergy
3.    Beaver               Sewickley         PennEnergy
4.    Bradford             Albany             Chief
5.    Butler                Clinton             Range
6.    Butler                Concord           Rex
7.    Butler                Concord           Rex
8.    Butler                Concord           Rex
9.    Butler                Concord           Rex
10.    Butler              Jackson           PennEnergy
11.    Butler              Washington      EM Energy
12.    Elk                  Fox                 EQT
13.    Elk                  Fox                 EQT
14.    Greene            Morgan            EQT
15.    Greene            Morgan            EQT
16.    Greene            Morgan            EQT
17.    Greene            Morris              Consol
18.    Greene            Washington      Vantage
19.    Lycoming         Franklin            Exco
20.    Lycoming         Hepburn           Seneca
21.    Lycoming         Hepburn           Seneca
22.    Lycoming         Hepburn           Seneca
23.    Lycoming         McHenry           PA Gen Energy
24.    Susquehanna   Great Bend       SWN
25.    Susquehanna   Great Bend       SWN
26.    Susquehanna   Great Bend       SWN
27.    Susquehanna   Jackson            SWN
28.    Susquehanna   Liberty              SWN
29.    Susquehanna   Liberty              SWN
30.    Susquehanna   Liberty              SWN
31.    Susquehanna   Liberty              SWN
32.    Susquehanna   Liberty              SWN
33.    Susquehanna   Liberty              SWN
34.    Tioga              Liberty               SWN
35.    Tioga              Middlebury         Shell
36.    Tioga              Morris                EQT
37.    Washington    Amwell               EQT
38.    Washington    Amwell               Range
39.    Washington    Amwell               Range
40.    Washington    Amwell               Range
41.    Washington    Amwell               Range
42.    Washington    Amwell               Range
43.    Washington    Amwell               Range
44.    Washington    Buffalo                Range
45.    Washington    Carroll                 EQT
46.    Washington    Carroll                 EQT
47.    Washington    Carroll                 EQT
48.    Washington    Carroll                 EQT
49.    Washington    Carroll                 EQT
50.    Washington    Chartiers             Range
51.    Washington    Deemston Boro   Chevron
52.    Washington    Deemston Boro   Chevron
53.    Washington    North Strabene    Range
54.    Washington    North Strabene    Range
55.    Washington    North Strabene    Range
56.    Washington    North Strabene    Range
57.    Washington    North Strabene    Range
58.    Washington    North Strabene    Range
59.    Washington    South Strabene    Range
60.    Washington    South Strabene    Range
61.    Washington    West Finley         Range            

OH Permits – weeks ending January 2, 2015

       County        Township    E&P Companies

1.    Belmont        York          Rice
2.    Belmont        York          Rice
3.    Monroe        Salem        Statoil
4.    Monroe        Salem        Statoil
5.    Monroe        Salem        Statoil
6.    Monroe        Salem        Statoil

Joe Barone 610.764.1232
Vera Anderson 570.337.7149


Northeast Supply Enhancement