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Expo/Industry events for the next few months

Shale Insight
September 21-22, 2016
David L. Lawrence Convention Center
Pittsburgh, PA 

Utica Summit
October 11, 2016
Embassy Suites
Canton, OH 

Midstream PA 2016
October 13, 2016
Penn Stater Conference Center
State College, PA 
Limited seating- sign up early   

Aug 23 - Aug 24
Pig Roast and Tech Conference
Sign Up  

Get Your Business Found on Mobile Devices
Webinar – September 14, 2016

Register Now!  

Latest facts and a rumor from the Marcellus, Utica, Permian, Eagle Ford, Bakken and Niobrara Shale Plays 

  • Cabot to Double Production by 2018.  Phil Stalnaker fills an important role for Cabot Oil & Gas.

    Stalnaker, vice president and manager-north region, and his team will help the Houston, Texas-based E&P company determine where to drill next as Cabot prepares to double its natural gas production in the Marcellus Shale in Pennsylvania.

    But Stalnaker is getting nervous as Cabot looks to double production by late 2018, as new infrastructure projects come online, according to his boss.

    Cabot will be the biggest beneficiary of the two pipelines waiting for final approvals.  Williams is hoping the Atlantic Sunrise pipeline will be approved by the end of 2017 which when completed will give Cabot access to the Transco pipeline which runs to the south to the Carolinas and Georgia.

    The second pipeline is The Constitution pipeline which is run into New York and up to New England.  It will take much longer for the construction of this pipeline.  

    Bloomberg Business News just published an article that states that the Constitution will probably be approved in the next two years of oil equivalent per day. That was 58% oil, 24% natural gas and 18% natural gas liquids, the company said.

    Cabot is one of the most successful drillers in the Marcellus.  I’m sure it will reach these goals.
  • Shell to Build Pipeline for Cracker Plant.  Royal Dutch Shell is planning to build a 94-mile pipeline in three states to move ethane to its recently announced cracker plant in Western Pennsylvania, Kallanish Energy has learned.

    The Falcon Ethane Pipeline System, including two “legs,” would extend into Ohio and West Virginia.

    Construction on the pipeline would likely begin in late 2018, at about the same time work is expected to get under way on the cracker plant in Potter Township, Beaver County, roughly 30 miles northwest of Pittsburgh, on the Ohio River.

    The pipeline would move ethane from the MPLX/MarkWest Energy Partners processing facility in Houston, in Pennsylvania’s Washington County, as well as two processing facilities in Ohio’s Harrison County: at Cadiz, another MPLX/MarkWest facility; and a processor at Scio, operated by Utica East Ohio Midstream.

    The plant would need roughly 105,000 barrels per day (BPD) of ethane, the company has said.

    The pipeline would be built by Shell Pipeline Co, a Royal Dutch Shell subsidiary.

    Land acquisition for the line began this month, officials told local media. No cost estimate for the pipeline was released.

    Last June, Shell Chemical Appalachia made its final investment decision to proceed with the multi-billion-dollar cracker facility near Monaca.

    The plant will take liquid ethane from shale drilling in the Marcellus and Utica shales and convert it into ethylene that would be used to make plastics, textiles and pharmaceuticals.

    Years ago, Shell had said the plant might cost $2 billion to $3 billion, but has offered no estimates in recent years. Some have estimated that the plant will likely cost $5 billion to $6 billion.

    The project will provide 6,000 construction jobs and 600 permanent full-time jobs when the cracker is completed early in the next decade.

    The cracker would produce 1.6 million tons per year of polyethylene.

    Shell is also adding facilities to turn ethylene into polyethylene pellets.

    A Thai-based company, PTT Global Chemical, is also looking to build a similar $5.7 billion cracker in Ohio’s Belmont County.

    A decision on that facility at Shadyside will likely be made early next year.

    Also involved in the Ohio plant is Japan-based Marubeni Corp.
  • Shell Making More Moves in Beaver County, PA.  Now with the final approval, Shell buying properties around the cracker plant.  In the last few weeks, Shell has purchased or indicated it will be purchasing the following:
    • 104 acres behind the Beaver Valley Mall
    • 4 acres along Route 18 in Potter Township, Beaver County, PA
    • Possible sale – PGT Trucking with facilities on Route 18 in Potter Township, Beaver County, PA is moving its office to the Hopewell Business Park.  This could indicate a pending sale to Shell.
  • Pro-Fracking – Pro-Renewables.  Anti-fracking, pro-renewable energy activists can’t grow solar or wind power without fossil fuel backup, according to a new working study in the National Bureau of Economic Research.

    A trio of economists, led by Elena Verdolini of the Euro-Mediterranean Center on Climate Change and the Fondazione Eni Enrico Mattei in Milan, Italy, along with colleagues David Popp from Syracuse University and Francesco Vona of the French Economic Observatory, found natural gas-fired power generation complements – enables — deployment of renewable energy generation.

    Bottom line: To be against fracking is to be against renewable energy, Kallanish Energy finds.

    In their survey of 26 Organization of Economic Cooperation and Development (OECD) countries, the economists found natural gas and renewable power generation increase in nearly a one-to-one ratio.

    The reason is because intermittent solar and wind energy cannot be stably integrated into the power grid unless there is a back-up source of electricity, when the sun doesn’t shine and the wind fails to blow.

    The researchers state 8 megawatts (MW) of back-up capacity are required for any 10 MW of wind capacity added to the grid.

    They cite other research that suggests the ability to store solar electricity for 20 hours is necessary for photovoltaic power to work as a base-load resource. Since no such massive storage technology currently exists, only fast-reacting fossil fuel power generation can fill in the gap.

    The researchers also point out projections of falling renewable technologies costs fail to take into account the costs of constructing and maintaining fast reacting fossil fuel (chiefly natural gas) back-up power.

    “The estimated indirect costs of renewables are at least an order of magnitude greater than those associated with dispatchable fossil-fuel technologies,” the study’s authors state.

    “If you have an electric car, you don’t need a diesel car in your garage sitting there. But in the case of renewables, it’s different, because if you have renewable electricity and that fails, then you need the fast acting gas sitting in your garage, so to speak,” Verdolini told the Washington Post.
  • More U.S. Oil Being Exported to More Countries.  The number of countries receiving U.S. crude oil exports has grown since restrictions on such shipments were eased in December 2015, Kallanish Energy has learned.

    U.S. crude oil exports averaged 501,000 barrels per day (BPD) in the first five months of 2016, says the U.S. Energy Information Administration, part of the Department of Energy.

    That is an increase of 9%, or 43,000 BPD more than the full-year 2015 average, the agency said.

    Sixteen countries are now receiving U.S. crude exports.

    The biggest 2016 importers of U.S. crude, excluding Canada, are Curacao, receiving an average 54,000 BPD; the Netherlands, 39,000 BPD; Japan, 17,000 BPD; Italy, 15,000 BPD; and the Marshall Islands, which is receiving 14,000 BPD of U.S. crude.

    Venezuela’s state-owned oil company, Petroleos de Venezuela, operates a refinery on the island of Curacao.

    Trade press reports indicate the shipments to Curacao are likely being used as diluent where a light U.S. crude is blended with a heavy Venezuelan crude, either for processing on the island or for re-export to the state-owned company’s customers, EIA said.

    Also on the export list are France, the United Kingdom, the Bahamas, China, Panama, Israel, Nicaragua, Columbia, Switzerland and Peru.

    Monthly shipments to other countries together are starting to surpass shipments to Canada, which have dropped in recent months to roughly 308,000 BPD, EIA found.

    U.S. oil exports had grown previously with most of those shipments going via pipeline to Canada, which was excluded from previous restrictions.

    From 2000 to 2013, U.S. exports rarely surpassed 100,000 BPD. But by 2015, the U.S. was exporting 422,000 BPD to Canada and 26,000 BPD to five other countries.

    In recent years, crude oil exports to countries other than Canada were often re-exported volumes of foreign crude oil or Alaska crude oil, both of which are exempt from export restrictions.

    U.S. crude exports have grown despite small price spreads between international crude oils and domestic crude oils, as well as other factors that should reduce crude oil exports, such as falling U.S. crude production and added shipping costs, EIA said.

  • Shale Gas Will Drive Global Production.  Shale gas production worldwide (primarily in the U.S.) will jump 300% between 2015 and 2040, pulling all natural gas production up 62% during the same time frame, the Energy Information Administration reports.

    Gas production from shale worldwide jumps to 168 billion cubic feet per day (Bcf/d) in 2040, from 42 Bcf/d in 2015, and will account for 30% of world natural gas production by the end of the period.

    Natural gas production worldwide is projected to increase to 554 Bcf/d in 2040, from 342 Bcf/d in 2015, EIA projects, Kallanish Energy reports.

    “Although currently only four countries — the U.S., Canada, China, and Argentina — have commercial shale gas production, technological improvements over the forecast period are expected to encourage development of shale resources in other countries, primarily in Mexico and Algeria,” EIA states. “Together, these six countries are projected to account for 70% of global shale production by 2040.”

    In the U.S., shale gas production accounted for more than half of U.S. natural gas production in 2015 and is projected to more than double, from 37 Bcf/d in 2015, to 79 Bcf/d by 2040 — 70% of total U.S. natural gas production in the reference case in EIA’s Annual Energy Outlook 2016.

    Canada has been producing shale gas since 2008, reaching 4.1 Bcf/d in 2015. Shale gas production in Canada is projected to continue increasing and to account for almost 30% of Canada’s total natural gas production by 2040.

    China in the past five years has drilled more than 600 shale gas wells and produced 0.5 Bcf/d of shale gas as of 2015. Shale gas is projected to account for more than 40% of the country’s total natural gas production by 2040, which would make China the second-largest shale gas producer in the world after the U.S.

  • More Coal Plants Converting to NatGas.  Duke Energy plans to modify its two Cliffside coal-fired boilers to allow them to co-burn natural gas, Kallanish Energy finds.

    While modifications could be completed as early as spring 2019, the Charlotte, North Carolina-based company needs approval of a natural gas pipeline to supply the two retrofitted boilers, a project this week put before the North Carolina Utilities Commission by PSNC Energy.

    A Duke spokesman refused to give further details about the project, saying it was much too early to put a project cost on the massive undertaking.

    Located in Rutherford County, North Carolina, the Cliffside units include the 825-megawatt (MW) Unit 6, completed in 2012, and the 560 MW Unit 5, completed in 1972.

    Four other coal-fired units, much older than Units 5 and 6, were decommissioned in late 2011.

  • Parsley Does Permian Deal.  Parsley Energy said, it’s acquiring undeveloped acreage and producing oil and gas properties in Glasscock County, Texas, as well as associated mineral and overriding royalty interests from an unnamed seller for $400 million.

    The purchase includes roughly 10,000 leasehold acres near existing Parsley leasehold in the Midland Basin in Glasscock County, and estimated current net production of roughly 270 barrels of oil-equivalent per day (BOE/d) from 60 vertical wells. Nearly 100% of the leasehold is held by production.

    “The pending acquisition of leasehold and associated assets establishes Glasscock County as another key development area for Parsley Energy,” said Bryan Sheffield, CEO of Parsley.

  • Concho Does Deal in the Permian.  Concho Resources is acquiring roughly 40,00 acres in the Midland Basin for $1.625 billion from Reliance Energy, Kallanish Energy reports.

    The deal expands Concho’s holdings to about 150,000 acres and production of 30,000 barrels of oil-equivalent per day (BOE/d).

    The purchase is expected to boost Concho’s production by 20% in 2017, officials said.

    “This transaction demonstrates Concho’s commitment to the Midland Basin as a core operating area and highlights our continued efforts to consolidate complementary leasehold,” said Tim Leach, Concho’s CEO. “In line with the objectives of our southern Delaware Basin acquisition in the first

  • Could Williams Be Involved in Another Deal.  Williams Cos. recently turned down a takeover bid by pipeline rival Enterprise Products Partners, the Financial Times reported Thursday, citing people briefed on the negotiations.

    Enterprise Products remains interested in Williams and may make another offer, according to the FT.

    Enterprise Products spokesman Rick Rainey declined comment.

    News of Enterprise’s interest comes less than two months after Energy Transfer Equity walked away from its deal to buy Williams. Last year’s plunge in oil prices threw into question the economics of that merger, and Energy Transfer won a court case concerning a tax issue that allowed it to terminate its offer.

    Williams’s future — and CEO Alan Armstrong’s place in the company  — has come under the microscope since Energy Transfer terminated the takeover, Kallanish Energy finds. Within two days of the deal officially ended, six Williams board members resigned after failing to oust Armstrong as chief executive.

    Earlier this month, Armstrong said the company was going to remain focused on building natural gas pipelines connecting supplies in remote shale formations to fast-growing markets.

    Williams cut its dividend 69% and said it would instead invest about $1.7 billion in its Williams Partners unit to help pay for “growth projects.”

  • Continental Sell Acreage in the Bakken.  Independent producer Continental Resources said Thursday it’s selling to an unnamed buyer what the company calls “non-strategic” properties in North Dakota and Montana for $222 million, Kallanish Energy reports.

    The sale includes roughly 68,000 acres of leasehold primarily in western Williams County, North Dakota, approximately 12,000 acres of leasehold in Roosevelt County, Montana, and net production of roughly 2,800 barrels of oil-equivalent per day (BOE/d).

    “This is our third sale of non-strategic assets this year, with total expected proceeds of more than $600 million,” said Harold Hamm, founder and CEO of Continental. “We plan to apply proceeds to reduce debt and strengthen our balance sheet.”

    In May, Continental announced the sale of approximately 132,000 acres of leasehold in the Washakie Basin in Wyoming for $110 million. On Aug. 3, the Oklahoma City, Oklahoma-based company announced the signing of a deal with an undisclosed buyer to sell roughly 29,500 acres of “non-strategic” leasehold in the eastern SCOOP play in Oklahoma for $281 million.

    “Our guidance for the year has not changed. The combination of Continental’s high quality drilling inventory, strong balance sheet and $560 million investment in drilled, but uncompleted wells (DUCs) provides the company with a robust platform for high-value future growth,” Hamm said.

    The $560 million investment includes both operated and non-operated DUCs, with roughly 80% in North Dakota.

    Continental currently has roughly 215 gross operated DUCs in inventory, of which approximately 165 are in the Bakken play. The company said it expects the total to grow to roughly 240 gross operated DUCs at year-end 2016, with approximately 190 in the Bakken.

    The company said its Bakken DUCs have an average estimated ultimate recovery (EUR) of 850,000 barrels of oil-equivalent (BOE) per well, and can be completed at an average cost of between $3 million and $3.5 million per well.

  • Marathon Gauging the Market for More Condensate and NatGas Distribution.  MPLX is holding an informal open season to gauge shippers’ interest in expanding its Cornerstone Pipeline to move condensate and natural gasoline from Ohio’s Utica Shale.

    The company is accepting comments through Sept. 15, on three options to grow its pipeline system near Canton, Kallanish Energy has learned.

    Options include additional pipelines of different sizes in the Midwest and connecting to Lima, Ohio, and Detroit.

    There is also a plan to run a pipeline east to Youngstown and Steubenville in Ohio, Midland in Pennsylvania and Wellsville in West Virginia.

    A second binding open season on the proposals will be held later.

    Marathon Pipe Line and Ohio Rover Pipe Line, both subsidiaries of MPLX, are developing the 50-mile Cornerstone Pipeline.

    It will run from Cadiz to East Sparta to Canton and a Marathon Petroleum refinery.

    The $250 million project calls for 42 miles of 16-inch pipeline and eight miles of 8-inch line to handle 45,000 barrels per day (BPD) of product.

    The pipeline, now under construction, is key to the company’s efforts to get Utica liquids to markets.

    The pipeline had also been proposed for two additional liquids but interest was insufficient, officials said.

    The Cornerstone Pipeline is expected to go into service in the fourth quarter.

    In late 2014, the Canton refinery added a condensate splitter to handle Utica condensate. It can handle 25,000 BPD.

    Marathon Pipe Line is already planning to extend the pipeline eight miles from Cadiz to Hopedale to serve processing plants in Ohio’s Harrison County.

    Construction is planned in the third quarter and that section of pipeline could be operating by the first quarter of 2017.

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

Rig Count 

  • Baker Hughes Rig Count the week of August 19, 201
  • PA     
    • Marcellus 17 up 2
  • Ohio 
    • Utica 14 unchanged
  • WV 
    • Marcellus 8 up a
  • TX
    • Eagle Ford 36 unchanged 
  • TX & NM
    • Permian Basin – 196 up 7
  • ND
    • Williston – 27 down 2
  • CO
    • Niobrara – 18 unchanged
  • TOTAL U.S. Land Rig Count 470 Up 9

PA Permits August 11, to August 18, 2016

      County              Township                E&P Companies

1.    Armstrong            Rayburn                Exco
2.    Beaver                New Sewickley            PennEnergy
3.    Greene                Center                        EQT
4.    Greene                Center                        Vantage
5.    Greene                Washington                Vantage
6.    Washington            Carroll                     EQT
7.    Washington            Carroll                     EQT
8.    Washington            Carroll                     EQT
9.    Washington            Carroll                     EQT
10.    Washington            Carroll                    EQT
11.    Washington            Carroll                    EQT
12.    Washington            Carroll                    EQT
13.    Washington            Donegal                 SWN
14.    Washington            East Finley             Consol
15.    Washington            East Finley             Range
16.    Washington            Jefferson                Range
17.    Washington            Jefferson                Range
18.    Washington            Jefferson                Range
19.    Washington            Jefferson                Range
20.    Washington            Jefferson                Range
21.    Washington            Jefferson                Range
22.    Washington            Jefferson                Range            

OH Permits for weeks ending August 13, 2016

       County                   Township                  E&P Companies

1.    Guernsey                Londonderry                Ascent Resources
2.    Guernsey                Londonderry                Ascent Resources
3.    Guernsey                Londonderry                Ascent Resources

Joe Barone 610.764.1232
Vera Anderson 570.337.7149

Northeast Supply Enhancement