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Expo/Industry events for the next few months

Marcellus Utica Midstream Conference
January 24-26, 2017
David L. Lawrence Conference Center
Pittsburgh, PA 

PIOGA Winter Meeting
February 1, 2017
Rivers Casino, Pittsburgh, PA

Upstream PA 2017
March 21, 2017
Penn Stater Conference Center
State College, PA  

Appalachian Storage Hub Conference
June 15, 2017
Hilton Garden Inn
Southpointe, PA 

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

EQT – Range or EQT – Antero Deal?  A North Carolina hedge fund has suggested Pittsburgh-based EQT merge with Antero Resources or Range Resources, Kallanish Energy reports.

The proposal came from Chapter IV Investors that owns fewer than 1% of the shares in all three energy companies, all active in the Appalachian Basin’s Utica and Marcellus Shale plays.

Chapter IV Investors, with offices in Charlotte, sent an 11-page letter on Dec. 28 to EQT, calling, for the merger to boost value and create a bigger company. It then issued a Jan. 3 press release.

Such a merger could create the largest and best-positioned natural gas producer in the U.S. with an enterprise value that exceeds $25 billion and control of a high-growth midstream business, said Chapter IV founder and spokesman W. Barnes Hauptfuhrer.

The company called its plan “an incredibly compelling opportunity that should be explored.”

EQT officials told the Pittsburgh Business Times business newspaper it was not actively seeking to merge with either company.

Texas-based Range Resources issued its own statement, saying it has not been contacted by EQT and that it does not plan to initiate any such discussions.

Officials of Colorado-based Antero Resources were unavailable for comment, the Business Times reported.

Antero Purchases Rex’s Utica Assets.  Pennsylvania-based Rex Energy is selling its Utica Warrior South assets in eastern Ohio to Colorado-based Antero Resources for $30 million.

The deal includes roughly 4,100 non-core acres in Guernsey, Noble and Belmont counties, plus 14 gross wells producing about 9 million cubic feet-equivalent per day.

Rex Energy is selling its entire interest in that area although it has additional assets in Ohio’s Carroll County and to the east in western Pennsylvania.

Proceeds from the sale will be used to reduce debt and for general corporate operations, the company said. The deal is expected to close in the first quarter 2017.

The company has been informed by its bank lenders that once the deal is closed, its existing $190 million borrowing base under the revolving credit facility will be maintained, Kallanish Energy has learned.

“With limited opportunity to expand our development in Warrior South and high quality assets located in near proximity to Antero’s operations, we view this transaction as a win-win for both companies,” said Rex Energy CEO Tom Stabley, in a statement.

The deal will strengthen Rex Energy’s balance sheet and improve liquidity, he said.

FERC Approves Atlantic Sunrise Pipeline.  Federal regulators say a large natural gas transmission line planned to run through parts of central Pennsylvania will create limited environmental impacts.

The Federal Energy Regulatory Commission (FERC) released its final environmental impact statement (EIS) for the proposed Atlantic Sunrise pipeline Friday.

The Atlantic Sunrise is a $3 billion expansion of the Transco system. It’s designed to move Marcellus Shale gas from Susquehanna County in northeastern Pennsylvania as far south as Alabama and to the Cove Point export terminal on the Chesapeake Bay.

“We determined that construction and operation of the project would result in some adverse environmental impacts,” FERC staff writes. “But impacts would be reduced to less-than-significant levels with the implementation of Transco’s proposed and our recommended mitigation measures.

Chris Stockton is a spokesman for Williams, which operates the Transco system. He says the company is pleased with the final EIS.

“It really represents to us the culmination of about two years of effort,” he says. “At the end of the day, I think it reflects our commitment to minimize impacts to people and the environment.”

Stockton says Williams anticipates receiving final FERC approval for the project as early as February.

The pipeline has faced fierce opposition from some landowners along the route.

According to FERC, construction is expected to affect 3,741 acres of land, including 388 water bodies. Commission staff also found eight federally listed species that could be potentially impacted within the project area. Permanent operation of the pipeline would require a total of 1,235 acres of land, and the remaining area disturbed during construction would be restored.

FERC Approves 3 Spectra Energy Projects.  The Federal Energy Regulatory Commission has given Spectra Energy approval to proceed with three projects on its Texas Eastern Transmission system to move natural gas from the Utica and Marcellus Shale plays to market.

The company got federal approval last week to construct and operate the Access South, Adair Southwest and Lebanon Express projects, Kallanish Energy reports.

Together, the three projects will boost shipments of natural gas by 662 million cubic feet per day (MMcf/d).

The projects call for construction of 16 miles of new pipeline, mostly in southern Ohio, plus boosting compression and adding meters to flow natural gas in both directions along the Tetco system.

The projects will boost shipments from southwest Pennsylvania to Ohio, Kentucky and to Mississippi. FERC had approved the projects’ environmental review last August.

FERC Approves Leidy Project.  The Federal Energy Regulatory Commission on Tuesday granted approval for construction to begin on Dominion Transmission’s Leidy South Project, Kallanish Energy reports.

The $210 million project will boost compression along a three-state pipeline system to boost shipments of Marcellus Shale natural gas to Mid-Atlantic States.

The plan calls for adding three compression stations in Pennsylvania, one in Maryland and two in Virginia, plus building a new metering and regulating station in Virginia. With the added compression, up to 155 million cubic feet per day of natural gas will be flowed. Work is slated to be completed by October.

Customers that will benefit from the project include Panda Power Fund’s proposed natural gas-fired power plant near Leesburg, Virginia. The Stonewall Plant would produce 750 megawatts of electricity, enough to power 750,000 homes.

Rover Pushing FERC for approval.  The developer behind the Rover natural gas pipeline, which would run through Stark and Wayne counties in Northeast Ohio, wants federal government approval right away for the multibillion-dollar project.

The reason? Bats and trees.

Specifically, the endangered Indiana and threatened northern long-eared bats that roost in trees along part of the 710-mile multistate pipeline route, Rover Pipeline LLC said in a letter to the Federal Energy Regulatory Commission.

Energy Transfer Partners, the Texas company behind Rover Pipeline LLC, said it needs to cut down trees in a January-March “window” in order to protect the bats as well as migratory birds before they start nesting.

The $4.2 billion pipeline is intended to transport as much as 3.25 billion cubic feet of natural gas daily from the Marcellus and Utica shales in Pennsylvania and Ohio to market hubs. Energy Transfer is also the company attempting to complete the nearly 1,200-mile shale crude oil Dakota Access pipeline.

If the Rover Pipeline project does not get approved by the end of this month, it could be delayed a year, costing thousands of jobs and causing other economic harm to communities along the route, the Dallas company said in a Dec. 16 letter to the three commission members.

As of Wednesday, FERC commissioners had not acted upon the request. The commission releases orders daily but does not say when it will issue a specific order, a FERC spokeswoman said.

The developer said it needs to clear trees on nearly 3,000 acres along 511.4 miles in Michigan, Ohio, Pennsylvania and West Virginia during a period approved by the U.S. Fish & Wildlife Service.

“Construction of the Rover Pipeline Project must commence by no later than mid-January 2017 to avoid or mitigate significant environmental concerns raised by construction activities in West Virginia, Pennsylvania, Ohio and Michigan,” the three-page letter says.

Antero Resources and Midstream’s Capital Budgets.  During 2017, Antero Midstream plans to expand its existing Marcellus and Ohio Utica Shale gathering, compression, fresh water and advanced wastewater treatment infrastructure to accommodate Antero Resources Corporation's (NYSE: AR) ("Antero Resources") development plans. Today in a separate news release, Antero Resources announced its 2017 drilling and completion capital budget of $1.3 billion, which is forecast to generate production growth of 20% to 25% over 2016 guided production, and that it is targeting a 20% to 22% compound annual growth rate for net production for the years 2018 through 2020. For 2017, Antero Resources plans to operate an average of four drilling rigs in the Marcellus Shale and three drilling rigs in the Ohio Utica Shale. Antero Resources plans to complete 135 wells in the Marcellus Shale and 35 wells in the Ohio Utica Shale utilizing advanced completion designs. Antero Resources' release can be found at

Commenting on the Antero Resources 2017 capital budget and guidance and long-term production growth targets, along with its impact on Antero Midstream's growth, Paul Rady, Chairman and CEO of Antero Resources and Antero Midstream, said, "In addition to the 20% to 25% expected production growth in 2017, Antero Resources is targeting 20% to 22% compound annual production growth for 2018 through 2020, which in turn supports Antero Midstream   throughput growth and a best-in-class distribution growth target of 28% to 30% annually through 2020. We believe that we can achieve this long-term distribution growth target strictly through the organic buildout of infrastructure to support Antero Resources. Importantly, we do not anticipate that this organic infrastructure buildout will require any external financing beyond our current ATM program and we expect to maintain debt to adjusted EBITDA in the 2.0-times range. Antero Resources' increased capital efficiency, premium price realizations driven by its firm transportation portfolio, production sold forward at attractively hedged prices, and more than 14 years of highly economic core drilling inventory at the 2017 completion pace, all contribute to the ability to deliver strong long-term growth which will benefit Antero Midstream."

Antero Resources will spend $1.3 billion drilling plus $200 million for land acquisition in 2017, with production expected to grow by 20% to 25% in 2017 from 2016 guidance, Kallanish Energy learns.

The independent producer intends to spend 70% of its funds in the Marcellus Shale in West Virginia and 30% of the budget in the Utica Shale in Ohio. The major driller in the Appalachian Basin said it expects to drill 170 horizontal wells in 2017 – with 135 wells in West Virginia and 35 wells in Ohio.

Forty of the West Virginia wells were ones that had been drilled but uncompleted (DUCs). Antero said it expects to have 30 DUCs by Dec. 31, 2017.

Antero expects net daily production to jump from 2.16 billion cubic feet-equivalent per day (Bcfe/d), to 2.25 Bcfe/d by year-end 2017. Production of natural gas liquids is to grow by 21% to 32% in 2017 — a range of 88,500 barrels per day (BPD) to 96,500 BPD.

The company expects a 50% jump in consolidated cash flow from operations in 2018, said president and chief financial officer Glen Warren, in a statement.

The company said it expects to operate four drilling rigs this year, one in West Virginia and three in Ohio. It intends to boost the number of Marcellus wells per pad from six to nine in 2017, and to drill six wells per pad in the Utica in 2017.

Antero said it will be more active drilling in Ohio in 2017, if the Rover natural gas pipeline is not delayed. That project is awaiting approval from the Federal Energy Regulatory Commission.

Anadarko Selling Marcellus Assets to Alta Resources.  Anadarko Petroleum said Wednesday it’s selling its operated and non-operated upstream assets and operated midstream assets in the Marcellus Shale of northcentral Pennsylvania to an Alta Resources Development unit for roughly $1.24 billion.

The Houston-based independent, which bought Gulf of Mexico assets from Freeport McMoRan for $2 billion in September, said Wednesday’s sale excluded the Marcellus assets of its sponsored master limited partnership, Western Gas Partners.

“With this transaction, we have announced or closed monetizations totaling well in excess of $5 billion in 2016, while principally focusing Anadarko’s U.S. onshore activities on our world-class, oil-levered assets in the Delaware and DJ basins,” said Al Walker, Anadarko CEO.

The Marcellus Shale divestiture includes roughly 195,000 acres and, at the end of the third quarter, sales volumes totaled approximately 470 million cubic feet per day (MMcf/d), Kallanish Energy reports.

The transaction is expected to close during the first quarter of 2017. Jefferies marketed the assets, and Sidley Austin served as Anadarko’s legal counsel.

Anadarko’s asset sale is the latest in the Marcellus play. Norwegian oil company Statoil ASA sold its assets in the area to EQT Corp early this year, while Canadian energy producer Enerplus put up for sale its natural gas assets in the region in October.

Mitsui Unloading Marcellus Assets to Alta Resources.  Japanese trading company Mitsui said Thursday it’s selling a portion of its holdings in Pennsylvania’s portion of the Marcellus Shale play to Alta Resources Development for $207 million, Kallanish Energy reports.

The move comes as part of Mitsui’s efforts to improve its energy and mineral resources portfolio and the deal will help it focus its future investments into more productive areas where it will retain its interests, Mitsui said, in a statement.

Mitsui E&P USA’s (MEPUSA’s) share of current daily production in the area to be sold is roughly 70 million cubic feet per day (MMcf/d), which represents 23.3% of MEPUSA’s total daily production in the Marcellus Shale of roughly 300 MMcf/d.

Thursday’s deal and the deal announced Wednesday, in which Anadarko Petroleum is selling its Marcellus assets in Pennsylvania to Alta for $1.24 billion, marks a return to the Marcellus for Houston-based, privately-held Alta.

After the sale of its Arkansas Fayetteville Shale assets in 2008, Alta began an aggressive leasing campaign in the Marcellus Shale play in Pennsylvania, specifically in the dry gas area of Susquehanna County in northeast Pennsylvania. Alta sold its Marcellus assets in 2010.

Eclipse Selling Utica Assets.  State College, Pennsylvania-based Eclipse Resources said Monday it has completed the $63.8 million sale of roughly 9,900 acres in eastern Noble and western Monroe counties, Ohio, to an undisclosed buyer.

The assets sold were predominately undeveloped acres in the Utica Shale play and included net production of roughly 1 million cubic feet-equivalent per day (MMcfe/d), Kallanish Energy learns.

“We are excited to complete this non-core acreage divestment that further enhances our liquidity as we prepare to accelerate our growth in the coming year,” said Benjamin W. Hulburt, Eclipse CEO. “The acreage we divested was not in our near-term drilling program, did not permit us to drill wells with lateral lengths that meet our internal planning requirements, and would have required future lease extension payments.”

Proceeds from the sale will be used to fund the independent producer’s operations and for general corporate purposes.

NatGas Power Plant Coming to Guernsey County, OH.  Two companies have filed initial paperwork with an Ohio state agency to build a natural gas-fired power plant near Cambridge in east-central Ohio, Kallanish Energy reports.

The 1,650-megawatt (MW), combined-cycle plant is being developed by California-based Apex Power Group and New York-based Caithness Energy. The paperwork was filed with the Ohio Power Siting Board.

The Guernsey Power Station would be fueled by natural gas from the Utica and Marcellus Shale plays in the Appalachian Basin.

The plant would be built in southern Guernsey County, adjacent to the Rockies Express natural gas pipeline.

Construction could begin in early 2018 and the plant could be operational in late 2020, subject to financing arrangements and approvals.

The project is expected to create 500 construction jobs and 25 full-time jobs at the plant. The electricity produced would be marketed in Ohio, Pennsylvania and West Virginia.

The project was announced last April as a $1 billion, 1,100 MW plant to serve roughly 1 million average-sized homes.

It is one of seven gas-fired power plants being developed or under construction in Ohio.

Boone Has Trump’s Ear.  Oil industry icon T. Boone Pickens, who was once noncommittal about supporting President-elect Donald Trump, has now become one of his top energy policy advisors, Kallanish Energy understands.

The FOX Business Network reported Pickens advised Trump throughout the campaign on how to handle the energy challenges that face the U.S., and remains willing to give council to the President-elect and his nominee for Secretary of Energy, former Texas Governor Rick Perry.

Jay Rosser, spokesman for Pickens, admitted to Fox Pickens was in touch with Trump numerous times, and confirmed he is open to assisting the incoming president in the future.

“Boone has had several discussions with President-elect Trump throughout the campaign, and has clearly outlined his thoughts on the energy challenges and opportunities to help ‘Make America Great Again’ on the backs of our abundant American energy resources,” Rosser said. “Boone also had a great relationship with Rick Perry, the incoming secretary of the Department of Energy. If asked, I know Boone will continue to share his thoughts on this important subject.”

The Trump transition team didn’t return calls to Fox Business for comment prior to publication.

Though it’s unclear the last time Pickens spoke with Trump, he did publish a LinkedIn article in December, outlining what the Trump administration needs to do in order to turn Trump’s goal of energy self-sufficiency into a reality.

He breaks down his proposed energy plan into two parts, “Don’t screw up what we have going for us,” and “Don’t settle for what we’ve done so far.”

Bans on Anti-Fracking Claims.  UK’s Advertising Standards Authority (ASA) said Wednesday it has “informally resolved” a complaint against Friends of the Earth (FOE), with the environmental charity agreeing not to repeat claims against hydraulic fracturing (fracking), Kallanish Energy reports.

The decision comes after a 14-month investigation found FOE could not substantiate a number of scare stories against fracking, following a complaint filed by British oil and gas firm Cuadrilla over two flyers issued by the charity.

ASA noted FOE was unable to support claims chemicals used in fracking were dangerous to humans, and that a fracking site in the U.S. caused an increase in asthma – a risk Britain would also be exposed to — it had claimed. Other advertisements suggesting fracking would result in house prices falling and increased risks of cancer are no longer allowed to run again.

Halcon to Start Drilling in the Eagle Ford.  Halcon Resources has announced it intends to resume drilling in the Eagle Ford Shale in South Texas in 2017, Kallanish Energy reports.

Due to low commodity prices, Halcon has not operated a drilling rig in the Eagle Ford in nearly a year.

The company intends to drill in Eagle Ford’s El Halcon area after reviewing results of 18 recent offset operator wells and due to higher oil prices, it said. Its goal is to drill five wells there in the first half of 2017.

Halcon intends to use an enhanced completion technique utilizing slickwater fracks and high-intensity sand loading to improve fracturing, the company said.

The independent producer currently has roughly 80,000 acres in the Eagle Ford, 82% of which is held by production.

Halcon said it intends to spend $200 million in 2017 on drilling and completions and to generate 39,000 to 41,000 barrels of oil-equivalent per day (BOE/d). The midpoint of that production estimate would represent 8% growth from a year ago.

The company is expecting fourth quarter production of 38,000 to 39,000 BOE/d, although fourth-quarter production has been hurt by bad weather in Bakken drilling in North Dakota, the company said.

FERC to Approve Atlantic Coast Pipeline.  The Atlantic Coast Pipeline, which would deliver up to 1.5 billion cubic feet of Marcellus shale gas from West Virginia to customers in Virginia and North Carolina every day, has had enough adjustments to minimize its environmental impacts, according to the Federal Energy Regulatory Commission.

The Commission released a long-anticipated draft environmental impact statement on Friday.

The project by Dominion Transportation Inc. would run the pipeline 600 miles, beginning in Harrison County through Virginia and into southeastern North Carolina.

DUCs Falling in the Bakken.  Canadian geese have started south, pheasant hunting season opened to mixed reviews and drilled but uncompleted wells (DUCs) are clearly in the crosshairs of E&P companies in North Dakota.

At long last the Bakken Shale shows signs of awakening as multiple Bakken E&P companies are moving forward with DUC reduction programs, with further expansion scheduled in early 2017, including one effort on behalf of a publicly held mid-cap to complete 60 inventoried wells.

Officially, the North Dakota Industrial Commission reported E&P companies completed 71 wells in September 2016, while the number of wells waiting on completion dropped by 27 to 861 to close out third-quarter 2016. Service providers report an average 7% decline in DUC inventory heading into the final month of 2016.All good news. And it doesn’t stop there. Well stimulation firms are reporting an increase in per-stage pricing, making the Bakken the third tight formation play to report price increases for well stimulation. As elsewhere, the price increase relates to greater proppant consumption as E&P companies boost stage count on tighter spacing and add increased proppant loading per stage. Pricing edged above $42,000 per stage, on track with increases reported during fourth-quarter 2016 in the Eagle Ford and Marcellus shales.

Ethane to Asia. The first vessel classified as a “very large ethane carrier,” last week began shipping ethane from a Houston terminal to India, the first time the U.S. has exported the natural gas liquid used in making plastics, to Asia.

Ethane is primarily used to make ethylene, the primary building block of common plastics. The growing global demand for plastics is centered in Asia, especially China and India. China is considering whether to start importing ethane from the U.S., Debnil Chowdhury, IHS Markit’s director of natural gas liquids in North America, told the Houston Chronicle newspaper.

These markets are helping to reduce a glut of ethane and stabilize prices, good news for natural gas producers. “We’ve gone from having an ethane excess, to potentially having a balanced market by 2020,” Chowdhury said.

The vessel Ethane Crystal, is carrying ethane from Houston-based Enterprise Products Partners’ terminal at Morgan’s Point, east of Houston, on the Houston Ship Channel. The terminal, the world’s largest ethane export facility, opened this fall, initially shipping to Europe, the Chronicle reported.

The Enterprise facility is the nation’s second ethane export terminal after Sunoco Logistics Marcus Hook terminal near Philadelphia, which opened this spring, Kallanish Energy reports.

The American Bureau of Shipping ship classification organization dubbed the Ethane Crystal the world’s first very large ethane carrier, or VLEC.

Ethane gas is chilled below minus 100 degrees Fahrenheit and liquefied for transport. The Ethane Crystal can move up to 87,000 cubic meters of ethane per shipment, roughly three times as much as so-called Dragon Class ships, which began exporting ethane from the Enterprise terminal to Europe in September.

While the dragon ships, which carry up to 27,500 cubic meters of ethane, are cost-efficient for shipping product to Europe, they’re uneconomical to transport their size cargos to more distant destinations, such as India.

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

Rig Count 

  • Baker Hughes Rig Count the week of December 16, 2016 

    Please note the change in rig count is January 6, 2017 vs. December 16, 2016
  • PA     
    • Marcellus 33 up 2
  • Ohio 
    • Utica 20 up 2
  • WV 
    • Marcellus 8 down 2
  • TX
    • Eagle Ford 47 up 3
  • TX & NM
    • Permian Basin – 267 up 9
  • ND
    • Williston – 33 up 2
  • CO
    • Niobrara – 25 up 2
  • TOTAL U.S. Land Rig Count 640 up 26

PA Permits December 15, 2016 to January 5, 2017

       County                  Township              E&P Companies

1.    Allegheny                Forward                EQT
2.    Allegheny                Forward                EQT
3.    Allegheny                Forward                EQT
4.    Allegheny                Forward                EQT
5.    Allegheny                Forward                EQT
6.    Allegheny                Forward                EQT
7.    Allegheny                Forward                EQT
8.    Allegheny                Forward                EQT
9.    Beaver                Economy Boro            PennEnergy
10.    Beaver                Economy Boro            PennEnergy
11.    Bradford                Wilmot                Chief
12.    Bradford                Wilmot                Chief
13.    Butler                Clearfield                PennEnergy
14.    Butler                Clearfield                PennEnergy
15.    Butler                Clearfield                PennEnergy
16.    Greene                Morgan                EQT
17.    Tioga                Sullivan                Shell
18.    Tioga                Sullivan                Shell
19.    Tioga                Sullivan                Shell
20.    Tioga                Sullivan                Shell
21.    Tioga                Sullivan                Shell
22.    Tioga                Sullivan                Shell
23.    Washington            Amwell                Campbell
24.    Washington            Amwell                Range
25.    Washington            Nottingham                EQT
26.    Washington            Nottingham                EQT
27.    Washington            Smith                    Range
28.    Washington            Smith                    Range
29.    Westmoreland            Washington                Consol
30.    Westmoreland            Washington                Consol

OH Permits for weeks ending December 17, and 24, 2016

       County               Township               E&P Companies

1.    Belmont                Goshen                Rice
2.    Belmont                Wayne                Gulfport
3.    Belmont                Wayne                Gulfport
4.    Belmont                Wayne                Gulfport
5.    Belmont                Wayne                Gulfport
6.    Belmont                Wayne                Gulfport
7.    Harrison                Monroe                Chesapeake
8.    Harrison                Monroe                Chesapeake
9.    Monroe                Malaga                Antero
10.    Monroe                Malaga                Antero
11.    Monroe                Malaga                Antero
12.    Monroe                Malaga                Antero
13.    Monroe                Center                Gulfport
14.    Monroe                Sunsbury                Gulfport
15.    Monroe                Sunsbury                Gulfport
16.    Monroe                Sunsbury                Gulfport
17.    Monroe                Sunsbury                Gulfport
18.    Monroe                Sunsbury                Gulfport
19.    Noble                Seneca                Antero

Joe Barone 610.764.1232
Vera Anderson 570.337.7149

Northeast Supply Enhancement