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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   

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

Rex Expanding in the Utica.  Pennsylvania-based Rex Energy has begun production from two pads in Ohio’s Utica Shale, is   getting a new high-pressure collection system in western Pennsylvania and is expanding its joint venture with Benefit Street Partners.

The company also announced that it expects to begin shipping natural gas from the Butler area of western Pennsylvania to the Gulf of Mexico and the Midwest, starting on Nov. 1, Kallanish Energy is reporting.

The three-well Goebler pad and the two-well Perry pad are in the company’s Warrior North area of Carroll County in eastern Ohio.

The Goebeler wells were drilled to an average lateral length of approximately 7,360 feet and completed in an average of 41 completion stages. The Perry wells were drilled to an average lateral length of approximately 6,350 feet with an average of 36 completion stages

Benefit Street Partners has elected into the next four wells in the Warrior North area: the four-well Vaughn pad. That increases Benefit Street’s total capital commitment from $98.1 million to $120.1 million.

Rex Energy is currently drilling the second of four wells on the Vaughn pad and expects to place the four wells into sales in December.

The reduction of pressures in the Moraine East area in Pennsylvania with the high-pressure lines will allow for more consistent flow rates and improvement in liquids recovery, the company said.

The four-well Fleegler II pad in the Moraine East is scheduled to be placed in service in the first week in October, according to Rex Energy. There are three Marcellus wells and one Upper Devonian well with average laterals of 6,500 feet.

Rex Energy is expecting to transport 130,000 MMBtu per day from the Butler area on the Lebanon West II pipeline to the Lebanon interconnect in Warren County in southwest Ohio.

The 100,000 MMBtu will go to the Gulf and 30,000 MMBtu will go to the Midwest. The Midwest shipments will be temporary until those shipments to the Gulf Coast become available next April.

Rex Energy said about half of its natural gas will be going to new higher-priced markets in the Midwest and on the Gulf of Mexico. The company has hedged its remaining 50% of gas.

The company, based in State College, is predicting that third quarter production will be at the high end of previously announced guidance: in the range of 190-195 MMcfe/d.

Halliburton Is Active in Zanesville, OH.  Halliburton has more rigs out now than it has had in a while and more rigs may be coming in.  (RUMOR)

Does the Vantage IPO Mean More IPOs Are Coming?  The following article appeared in the Financial Times this week.  Does this mean that more O&G IPOs could be on the horizon?  We’ll have to wait and see.  I’ll let you know if more come.

This news bodes well for the companies work with Vantage in Greene County, PA.  2017 will probably be a pretty good year for these companies.

Vantage Energy, a Colorado-based gas producer, fired the starting gun on an initial public offering on Tuesday in would be the first float by a US exploration and production company on a stock exchange in more than two years.

The move is a sign of rising investor interest in flotations of US oil and gas companies despite the continued fragility of crude prices. Appetites have been stirred by the 21 per cent advance by the sector this year, far outpacing the broader S&P 500.

That has led to a record pace of follow-on issuance in the sector this year, with nearly $24bn raised as companies seek to fortify balance sheets saddled with debt, according to Dealogic. The door on IPOs, however, has until now remained closed. Banks have failed to complete a $5m or larger float in 2015 or 2016 so far,

the Dealogic data shows. 

Vantage said it planned to raise as much as $100m in the offering on the New York Stock Exchange under the ticker symbol VEI. The $100m is a place holder figure and likely to rise after banks begin a marketing roadshow. 

The group produces primarily in the Marcellus region of Pennsylvania, the largest shale gas field in the US and the most successful in recent years. Total production in the Marcellus Shale rose strongly up until the end of last year and has since levelled off, but still accounts for about a quarter of all natural gas output in the US.

In its SEC filing, Vantage said its Marcellus wells had some of the highest initial production rates of any county in the region, and it had also achieved encouraging early results from its wells in the deeper-lying Utica formation.

Greene County in Pennsylvania, where Vantage has its Marcellus drilling rights, is close to the convergence of several existing or planned pipelines, helping it achieve better prices and increase production.

Vantage also has assets in the Barnett Shale of north Texas, a region that was the first to be opened up by horizontal drilling and hydraulic fracturing. Gas production in the Barnett has been in decline since 2012, but there have been recent signs of a possible revival, including a move by Total of France to buy a package of assets there from Chesapeake Energy.

NEXUS Gets the Approval To Go Into Medina County, OH. Pipeline surveyors will be able to enter landowner’s property after a yearlong court battle reached what may be its final chapter in Medina County.

In a decision released Monday, an appeals court upheld the ruling of Medina County Common Pleas Judge Christopher J. Collier.

The document supports a ruling by Collier last year, which stated that surveyors working on the 255-mile NEXUS Gas Transmission pipeline were permitted to enter private property under Ohio law.

The proposed $2 billion project would pump natural gas from eastern Ohio through Medina County and Michigan and into a hub in Canada.

While it’s unclear if the four landowners involved will appeal their case further, a pipeline opponent and leader of the Coalition to Reroute NEXUS, Paul Gierosky, said the case successfully served its purpose.

“We are disappointed,” he said. “However, denying survey access was only a tactic to delay the project to allow time to draw attention to the failed process used for routing and approving pipeline projects.

“We knew it’s not going to stop the pipeline,” the York Township resident said. “We needed time and it gained a lot of time here.”

The pipeline is still on track for a November 2017 in-service date, according to NEXUS spokesman Adam Parker.

NEXUS has an application filed with the Federal Energy Regulatory Commission seeking approval for construction to begin in the first quarter of 2017.

In an email to The Gazette, Parker said the company agrees with the decision of the three 9th District Court of Appeals judges and added similar decisions have been made in 11 other counties in Ohio and two courts of appeals.

“We agree with the Court’s recognition of NEXUS’ right to enter private property to conduct survey activities under Ohio law,” he wrote. “As of today, the Sixth and Ninth District Ohio Courts of Appeal have both specifically ruled that Ohio law provides NEXUS and similar companies this right.”

David Mucklow of Summit County, one of the attorneys for the landowners, expressed disappointment with the decision.

Mucklow said he believes he made a strong presentation based on an Ohio law, which he argued contradicts the Ohio Constitution. The law cited in the Medina County decision states landowners do not need to be reimburse for damage to their land during utility work, which contradicts the constitution’s call for repayment of damages, he said.

“If you’re the property owner, the burden is on you,” he said.

In a separate case, NEXUS filed suit against multiple landowners in July to gain access for environmental surveys on a species of bats, but Collier ruled to wait for the outcome of the appeals case.

No new filings had been posted Tuesday in the bat case.

Gierosky said the window of time for the bat survey closed in August, meaning the surveys cannot be completed until 2017.

Parker did not directly comment in his statement to The Gazette on the status of the bat survey.

Mountain Valley Pipeline Will Be Start Soon.  This pipeline has been under the radar of many people.  I’ve heard from a number of persons that construction should begin shortly.

As proposed, the Mountain Valley Pipeline (MVP) project is a natural gas pipeline system that spans approximately 301 miles from northwestern West Virginia to southern Virginia – and as an interstate pipeline will be regulated by the Federal Energy Regulatory Commission (FERC). The MVP will be constructed and owned by Mountain Valley Pipeline, LLC, which is a joint venture of EQT Midstream Partners, LP; NextEra US Gas Assets, LLC; Con Edison Gas Midstream, LLC; WGL Midstream; Vega Midstream MVP LLC; and RGC Midstream, LLC. EQT Midstream Partners will operate the pipeline and own a significant interest in the joint venture.

With a vast supply of natural gas from Marcellus and Utica shale production, the Mountain Valley Pipeline is expected to provide up to two million dekatherms per day of firm transmission capacity to markets in the Mid- and South Atlantic regions of the United States. The MVP will extend the Equitrans transmission system in Wetzel County, West Virginia, to Transcontinental Gas Pipeline Company’s (Transco) Zone 5 compressor station 165 in Pittsylvania County, Virginia.

The pipeline will be governed by the United States Natural Gas Act, which requires a Certificate of Convenience and Necessity from the FERC before construction can commence. As currently planned, the pipeline will be up to 42 inches in diameter and will require approximately 50 feet of permanent easement (with 125 feet of temporary easement during construction). In addition, the project will require three compressor stations, with identified locations in Wetzel, Braxton, and Fayette counties of West Virginia.

Latest News on Kinder’s Utopian Pipeline.  Kinder Morgan officials said the hundreds of eminent domain lawsuits they filed against landowners in the path of the Utopia Pipeline are just part of the building process, but an attorney representing numerous property owners said the company is just trying to intimidate them into signing “lowball” contracts.

The Houston, Texas-based pipeline giant plans to have the $500 million Utopia Pipeline running by early 2018. The project will ship 75,000 barrels of Marcellus and Utica shale ethane from Harrison County for export to Canada along its 215-mile path each day. The ethane would then go onward to Corunna, Ontario, Canada for cracking.

Kinder Morgan Vice President Allen Fore said over 60 percent of the land required for Utopia has been secured through signed right-of-way agreements. However, he said the company has filed eminent domain lawsuits against numerous landowners.

The DUC’s Are Dropping.  The U.S. has 5.065 drilled but uncompleted (DUCs) wells, as of September 2016, says the U.S. Department of Energy.

That total is projected to shrink to 5,031 wells in October. That would be drop of 34 DUCs or 0.67%, according to the latest Drilling Productivity Report from the Energy Information Administration.

The number of DUCs is expected to decline by 36 in the Eagle Ford Shale in South Texas, 16 in the Marcellus Shale in Pennsylvania and West Virginia and 11 in the Niobrara Formation in Colorado and nearby states, Kallanish Energy is reporting.

Those are the biggest drops among the seven shale drilling areas.

The number of DUCs is projected to grow by 38 in the Permian Basin, a very active drilling area in West Texas.

The agency said that number is likely to grow from 1,310 in September to 1,348 in October.

That is the only drilling area expected to show an increase in DUCs in the coming month

OH EPA Approves 5 Compressor Stations on the Nexus Pipeline.  The Ohio Environmental Protection has approved air permits for five compressor stations planned along the Nexus Pipeline for natural gas from the Utica and Marcellus shales, Kallanish Energy is reporting.

The stations are planned near Wadsworth, Waterville, Clyde, Salineville and Hanoverton.

The decision could be appealed to the Ohio Environmental Review Appeals Commission within 30 days.

The approval came last week and is a key step forward for the 255-mile pipeline across northern Ohio.

The $2 billion project still needs final approval from the Federal Energy Regulatory Commission. That is expected before Nov. 30.

The pipeline would run north from the Toledo area to Detroit and then east into Ontario. It would also connect to other Midwest pipelines and to the Gulf of Mexico.

The pipeline would be 36 inches in diameter and it could transport up to 1.5 billion cubic feet per day.

It is being developed by Texas-based Spectra Energy and Michigan-based DTE Energy.

The pipeline could be in operation in fourth quarter 2017. Construction could begin in early 2017

The project has run into local opposition in the Akron-Canton-Medina area and near Toledo.

The city of Green has been pushing to reroute the pipeline to the south away from more-developed suburban areas between Akron and Canton. That plan has been supported by a vocal grass-roots group, the Coalition to Reroute Nexus (CORN).

Permitting Down in Texas in August.  In August, the Railroad Commission of Texas issued a total of 660 original drilling permits with 275 of those permits being filed for the Permian Basin in West Texas.

That total is down from 864 permits in August 2015 or 23.4% decline, says the state agency that oversees drilling in Texas.

The permits included 512 permits for new wells, eight to re-enter plugged wells and 140 to re-complete existing well bores, Kallanish Energy has learned.

The total includes 203 oil wells, 24 natural gas wells, 392 gas or oil wells, 26 injection and 15 other permits.

In August, the commission also processed completion permits: 545 oil, 223 gas, 46 injection and eight other completions. Those totals have dropped from 2015.

Total 2016 Texas well completions, to date, are 8,107. That is down from 14,665 during the same period in 2015, the commission reported this week. That is a 44.7% drop.

The Texas rig count as of Sept. 9 was 245, according to well services provider Baker Hughes. That represents about 48% of the active rigs in the United States.

Resource Energy Does Bakken Deal.  Resource Energy Can-Am announced last week it has entered into a stalking horse asset purchase agreement with Samson Resources to acquire certain assets in the Bakken Shale play in the Williston Basin, Kallanish Energy reports.

The Colorado-based company will purchase the assets in North Dakota and Montana for $75 million.

The assets are being acquired under Section 363 of the Federal Bankruptcy Code. The asset purchase agreement must now be approved by the U.S. Bankruptcy Court for Delaware.

Oklahoma-based Samson Resources filed for Chapter 11 bankruptcy protection a year ago.

Labor and API Blast Obama on North Dakota Pipeline.  The American Petroleum Institute and the North American Building Trades Union say they are troubled by President Obama’s action to supersede a federal judge and halt construction on the $3.8 billion Dakota Access Pipeline in North Dakota, Kallanish Energy is reporting.

The president’s action “set a dangerous precedent,” says Jack Gerard, API president, in a statement. He said the Obama administration had unfairly changed the rules in the middle of the game.

Such federal interventions could delay or halt work on other needed infrastructure and energy projects, he said.

Union president Sean McGarvey calls Obama’s move an “unprecedented action.”

The president had, in effect, overruled a federal judge who had approved the construction and stopped a lawful project, he says.

Obama halted construction on a 40-mile section of pipeline near the Standing Rock Sioux reservation.

Officials said it is unclear what happens next on the pipeline that is 60% complete and is being developed by Texas-based Energy Transfer Partners.

According to the Associated Press, ETP CEO Kelcy Warren said in a memo to employees on Monday: “I am confident that as long as the government ultimately decides the fate of the project based on science and engineering, the Dakota Access Pipeline will become operational. … So we will continue to obey the rules

and trust the process.”

Last Friday, U.S. District Judge James Boasberg refused to block construction of the pipeline. He denied the request of the Native Americans for a temporary injunction against the 1,172-mile pipeline that would transport Bakken Shale oil to Illinois.

The tribe argued that the pipeline project violates federal laws and would threaten drinking water and disturb sacred sites. It had challenged federal permits granted by the U.S. Army Corps of Engineers.

The pipeline construction has triggered a series of protests that have drawn thousands of protestors.

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

Rig Count 

  • Baker Hughes Rig Count the week of September 16, 2016
  • PA
    • Marcellus 21 unchanged
  • Ohio 
    • Utica 14 unchanged
  • WV 
    • Marcellus 10 unchanged
  • TX
    • Eagle Ford 38 unchanged
  • TX & NM
    • Permian Basin – 202 up 2
  • ND
    • Williston – 27 down 1
  • CO
    • Niobrara – 16 up 1
  • TOTAL U.S. Land Rig Count 482 down 3

PA Permits September 8 to September 15, 2016

County            Township                E&P Companies

1.    No permits this week.

OH Permits for week ending September 10, 2016

       County            Township                E&P Companies

1.    Belmont                Goshen               Rice
2.    Belmont                Goshen               Rice
3.    Belmont                York                   XTO
4.    Belmont                York                   XTO
5.    Jefferson              Salem                Chesapeake
6.    Monroe                Center                Gulfport
7.    Monroe                Center                Gulfport

Joe Barone 610.764.1232
Vera Anderson 570.337.7149

Northeast Supply Enhancement