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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
http://www.marcellusmidstream.com/ 

PIOGA Winter Meeting
February 1, 2017
Rivers Casino, Pittsburgh, PA
https://www.pioga.org/ 

Upstream PA 2017
March 21, 2017
Penn Stater Conference Center
State College, PA
http://upstreampa.com/  

Appalachian Storage Hub Conference
June 15, 2017
Hilton Garden Inn
Southpointe, PA
http://www.appastorage.com/ 

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

Shell Gets Conditional Use Permit for Cracker Plant.  Potter Township, Pennsylvania, supervisors Wednesday evening granted a conditional use permit for Shell Chemical’s massive $5-$6 billion ethane cracker complex in Beaver County, The Associated Press reported.

Twelve hours of hearings over two days in Mid-December ended without a decision because the township supervisors wanted Shell and environmental group Clean Air Council, which has issues with portions of Shell Chemical’s permit application, to file legal arguments about the permitting.

At Wednesday night’s two-hour meeting, the supervisors imposed noise limits, and pledged to investigate any complaints of light pollution or traffic disruptions that could occur once construction begins in the next two years, AP reported.

Shell still needs state environmental regulators to modify wastewater discharge and air emissions permits held by zinc smelter Horsehead, the property’s former owner. The company also must secure federal permits before construction begins Kallanish Energy reports.

Shell has said the plant will create 6,000 construction jobs and 600 permanent jobs once the plant opens.

Shell is moving as fast as it can to build the cracker plant, but it still has to get some permits.  Obviously, Shell is very confident it will receive the permits.

Gulfport Projects Production Increases.  Gulfport Resources produced 787 million cubic feet of natural gas-equivalent per day (MMcfe/d) in 2016’s fourth quarter, Kallanish Energy reports.

That is an increase of 22% over the fourth quarter of 2015, the Oklahoma-based company reported. For all of 2016, the company averaged 719 MMcfe/d, a 31% increase over 2015’s total.

The fourth quarter production was 87% natural gas, 9% natural gas liquids and 4% oil.

Gulfport’s average realized prices for 2016 were $1.12 per thousand cubic feet of natural gas, $35.65 per barrel of oil and 35 cents per gallon of natural gas liquids. That resulted in a total price of $1.46 per thousand cubic feet-equivalent.

The company said it has taken advantage of higher commodity prices in recent weeks to lock in hedges on oil and natural gas for 2017.

The company is one of the top drillers in Ohio’s Utica Shale play.

Laredo Boosts Capital Spending in the Permian.  Laredo Petroleum announced it is boosting its 2017 capital spending to $530 million and it expects to drill and complete 70 horizontal wells on multi-well pads, primarily in the Permian Basin, Kallanish Energy reports.

Production growth of 15% is expected in 2017, compared to 2016 full-year volumes, the company said. The 2017 capital budget provides $450 million for drilling and completions and $80 million for production facilities. Laredo spent $420 million on capital spending in 2016.

The drilling will be focused in the Upper and Middle Wolfcamp zones in the Permian Basin in West Texas and New Mexico. It expects to have four drilling rigs at work in 2017.

The budget does not include investments in the Medallion-Midland Basin pipeline system, the company said.

“Our 2017 capital budget takes advantage of our contiguous acreage position and production corridor investments to generate capital-efficient production growth,” said CEO Randy Foutch, in a statement.

He said the company expects to drill 10,000-foot laterals and nearly all production and produced water will be handled by Laredo Midstream Services, maximizing efficiency and reducing costs.

Most of the wells drilled in 2017 will be multi-well packages with four to five wells per pad, the company said.

Laredo said it expects to soon close a deal with an unnamed buyer to sell 2,900 net acres for $60 million.

Clean Energy Building Another Gas-Fired Power Plant in OH.  A Boston-based company has announced plans to build its second natural gas-fired power plant in Lordstown in Northeast Ohio, as battle lines are being drawn over the future of gas-fired power plants in Ohio, Kallanish Energy reports.

Clean Energy Future wants to build the new plant next to a now-under-construction power plant in the Trumbull County village.

The new facility is called the Trumbull Energy Center. The first facility is the Lordstown Energy Center. The plants will each cost about $900 million, officials said.

Construction on the first Lordstown plant, a 940-megawatt facility, got under way last April. It is scheduled to go into service in June 2018.

Financing for the second plant, also offering 940 MW, should be completed this year. Construction would begin in January 2018, and should be in service by May 2020.

Together, the two facilities will generate enough electricity to power about 1.7 million homes. They will be high-efficiency, combined cycle plants.

Partners in the plants include Siemens Energy, Fluor, BNP Paribas and Siemens Financial Services.

The need for such plants is growing as electric utilities shut down aging, dirty, coal-fired power plants, Clean Energy said. Lordstown is an ideal location because of proximity to natural gas pipelines transporting natural gas from the Utica and Marcellus Shale plays and electric transmission lines.

Utica Shale gas “is the lowest cost gas in the entire country,” Clean Energy said in a three-page statement.

Clean Energy Future said its plans are being opposed by Ohio’s electric utilities, including FirstEnergy, American Electric Power and Dayton Power & Light.

As part of re-regulating the electric industry the utilities are pushing in 2017 in the Ohio Legislature, non-utility gas-fired plants like those being built by Clean Energy Future would be banned. Only electric utilities could build new facilities.

Anadarko Now Selling Eagle Ford Assets.  Anadarko Petroleum last week agreed to sell its Eagle Ford Shale assets in South Texas for $2.3 billion, Kallanish Energy reports.

The buyers are Sanchez Energy and the Blackstone Group. The divestiture includes about 155,000 net acres in Dimmit and Webb counties.

At the end of 2016, the sales volumes from those properties totaled about 46,000 barrels of liquids per day and about 131 million cubic feet of natural gas per day, Houston-based Anadarko said. The transaction is expected to close in the current quarter.

“The ongoing success of our portfolio-management activities provides us with the flexibility to further accelerate capital investments in our higher-return oil opportunities in the Delaware Basin, the DJ Basin and the deepwater Gulf of Mexico, which drive our ability to deliver a 12% to 14%, five-year, compounded annual oil growth rate,” said CEO Al Walker, in a statement.

Anadarko’s sponsored master limited partnership, Western Gas Partners, will continue to own and operate its midstream assets in South Texas. It is expected to benefit from drilling commitments by the buyers in connection with the transaction, the company said.

Last month, Anadarko sold assets in Pennsylvania’s Marcellus Shale to Alta Resources for $1.24 billion. That sale covered about 195,000 acres in north-central Pennsylvania.

WPX Energy Buying in the Permian.  Oklahoma-based WPX Energy has agreed to pay $775 million to expand its Permian Basin holdings to more than 120,000 net acres, Kallanish Energy reports.

The purchase will also expand the company’s drilling inventory by adding more than 900 gross drilling locations in the Permian’s Delaware Basin in West Texas, the Tulsa-based company announced last week.

The deal includes 18,100 net acres in Reeves, Loving, Ward and Winkler counties, plus 920 gross undeveloped acres in what WPX calls the “geologic sweet spot” of the Delaware Basin.

The sellers are Panther Energy Co. II and Carrier Energy Partners.

“In just 18 months, WPX has firmly established itself as a leader in the Delaware Basin,” said CEO Rick Muncrief, in a statement.

The deal accelerates the company’s oil growth using cash on hand and operating cash flow without adding debt, he said. The deal is expected to close in about 60 days.

The acquisition includes production of roughly 6,500 barrels of oil-equivalent per day (BOE/d, 55% oil) from 23 wells, including 17 horizontal wells.

WPX said the incremental cash flow from the purchase will fund the existing two-rig drilling program on the acquired property. That will bring the company’s rig count in the Permian to seven.

The acquisition is expected “to be immediately accretive” and won’t increase 2017 capital spending, the company said.

The company said it is now targeting 30% oil growth and a 25% overall production growth in 2017, on a pro forma basis.

Working NatGas in Storage Continues Decline.  The volume of working natural gas in storage dropped for the eighth consecutive week, according to the latest data from the Energy Information Administration.

For the week ended Jan. 6, 3.16 trillion cubic feet (Tcf) of working gas was stored, down 151 billion cubic feet (Bcf), or 4.6% from the previous week’s total of 3.31 Tcf, Kallanish Energy finds.

The latest total was down 363 Bcf, or 10.3%, from the year ago total of 3.52 Tcf, and was down 4 Bcf, or 0.1%, from the five-year average of 3.16 Tcf.

All five storage areas EIA divides the Lower 48 States into reported a week-to-week drop in volume, with the largest drop reported in the Midwest Region, down 56 Bcf, or 6.1%, to 865 Bcf, from 921 Bcf.

The latest Midwest total was down 89 Bcf, or 9.3%, from the year-ago total of 954 Bcf, but was up 14 Bcf, or 1.6%, from the five-year average of 851 Bcf, EIA reported.

Exxon Mobil Does a Permian Deal.  The world's biggest publicly traded energy company is joining the land rush in the prolific Permian Basin.

Exxon Mobil announced Tuesday it will pay $5.6 billion in stock to acquire companies owned by Texas' Bass family that control parts of the Permian in New Mexico. The purchase roughly doubles Exxon's holdings in the basin, adding acreage with an estimated 3.4 billion barrels of oil equivalent.

The assets are located in the Delaware Basin, part of the larger Permian.

The deal is the largest oil and gas acquisition in the United States since crude prices crashed in November 2014, according to Houston-based oil and gas research firm PLS. It tops the previous record-setting $4.4 billion purchase of Memorial Resources by Range Resources in May.

"This acquisition strengthens Exxon Mobil's significant presence in the dominant U.S. growth area for onshore oil production," Exxon Chairman and CEO Darren W. Woods said in a statement. "This investment gives us an exceptional Delaware Basin position ... that can generate attractive returns in a low-price environment."

Hess Ups Drilling in the Bakken.  New York-based producer Hess Corp. will be spending more money on capital projects in 2017, Kallanish Energy reports.

The company has approved an exploration and production of $2.25 billion in 2017. That compares to actual E&P spending of $1.9 billion in 2016.

The larger budget calls for more drilling in the Bakken Shale in North Dakota and Montana, development activities in the Liza Field in Guyana, and restarting drilling at the Valhall Field in Norway, the company said.

Hess said it plans to add four rigs in the Bakken Shale by the end of 2017, and to bring online about 75 new wells at a cost of about $700 million, or 31% of the budget.

Funds were also included for non-operated wells and pad construction in preparation for 2018 drilling.

The company currently has two rigs working in the Bakken Shale that accounts for about one-third of the company’s production.

Bakken net production is predicted to average about 100,000 barrels of oil-equivalent per day (BOE/d), it said.

Hess said it expects production to increase from 8% to 12% in 2017. The company said it expects net production to average 300,000 to 310,000 BOE/d in 2017, excluding Libya.

It has offshore projects in the North Malay Basin and the Gulf of Mexico that will be coming on line in late 2017 and 2018, respectively, Hess said.

Rex Energy Projecting Growth in 2017.  Pennsylvania-based Rex Energy is projecting a two-year production growth rate of 10% to 15% in the Utica, Marcellus and Upper Devonian Shale plays, Kallanish Energy learns.

Production in 2017 is expected to jump by 15% to 20% over 2016’s total, the firm said.

Average daily production is projected to be in the range of 194 to 204 million cubic feet-equivalent per day (MMcfe/d), up 5% to 10% from the company’s 2016 production guidance. It will grow to 223 to 233 MMcfe/d in 2018, Rex said.

The company plans to spend $70 million to $80 million on capital projects in 2017, with 80% going to Marcellus, Upper Devonian and Burkett Shale development in Western Pennsylvania, and 20% to the Utica Shale in Ohio.

Rex said capital spending in 2017 and 2018 will be aligned with cash flow from operations and asset sales. It plans to spend $20 million to $40 million in 2018, all in in Western Pennsylvania.

The company said it expects to reduce its debt-to-EBITDAX (earnings before interest, taxes, depreciation and amortization in exploration) ratio by 50% by the end of 2018, driven by significant growth, improved basis differentials and enhanced price realizations.

Plans call for drilling 21 gross (11.1 net) wells in 2017, plus completing 26.0 gross (12.7 net) and starting production at 23.0 gross (11.2 net) wells. Most of the wells will go into production in the second half of 2017.

The company said it will benefit in 2017 from a full year of shipping natural gas to the Gulf of Mexico via newly completed pipeline connections and getting higher prices. About 50% of the company’s natural gas in 2017 will go to the Gulf Coast, Rex said.

The company and partner, investment firm Benefit Street Partners, are proceeding with a joint venture, with five new wells being drilled in 2017, at a cost of $15.8 million.

Bullish IEA Report on U.S. Shale Oil.  Oil-price gains will trigger a “significant” increase in U.S. shale output as OPEC and other producers reduce supply, according to the head of the International Energy Agency.

“U.S. shale-oil production will definitely react strongly,” executive director Fatih Birol told Bloomberg Wednesday in Davos, Switzerland, at the World Economic Forum. At $56 to $57 a barrel, “a lot of shale plays in the U.S. would make perfect sense to produce.”

Birol’s comments suggest the IEA has become more optimistic about the outlook for U.S. production, Kallanish Energy learns. Last month, the Paris-based agency said it expected U.S. tight oil to rise only “marginally” in 2017. The policy adviser to 29 nations releases its next short-term oil outlook today.

Oil prices have risen roughly 20% since OPEC reached a deal to curtail supply last November. The deal prompted a surge in activity in the U.S. — not an OPEC member — where oil and gas producers increased drilling the most since April 2014.

The oil industry is becoming more cost-efficient and a “big chunk” of global output is now profitable at $50 to $55 a barrel, Birol said, citing Brazil, Mexico and China as countries that will also boost production. There’ll be “lots more” supply in late 2017 or early 2018, he said.

Big Jump in Ethane Production.  U.S. ethane production is expected to grow by 36% from 2016 to 2018, says the U.S. Energy Information Administration.

Methane production will jump from 1.25 million barrels per day (MMBPD) in 2016, to 1.7 MMBPD in 2018, according to EIA’s latest Short-Term Energy Outlook (STEO).

The increased ethane production is expected to be consumed in the domestic petrochemical industry as well as shipped to other countries. Ethane is also being left in natural gas and burned.

The increased use by the petrochemical industry and exports to other countries are expected to support higher ethane prices, Kallanish Energy learns.

That means more ethane from natural gas drilling will be separated from natural gas and sold separately, EIA said.

From 2013 to 2016, expansions at existing ethane cracker plants contributed to a 170,000 BPD increase in ethane consumption in the U.S., EIA said.

By mid-2018, construction is likely to be completed at six new crackers and one restarted plant along the Gulf Coast. Those plants would be capable of using 450,000 BPD of ethane.

EIA expects U.S. ethane consumption to increase by 310,000 BPD, or 26%, between first-quarter 2013, and fourth-quarter 2018, as these plants ramp up operations.

Ethane is used almost exclusively as a petrochemical feedstock to produce ethylene, a compound used in the creation of many plastics.

By the fourth quarter of 2016, U.S. ethane exports via two shipping terminals and the Vantage Pipeline to Canada were handling roughly 130,000 BPD of product. The terminals are at Marcus Hook, Pennsylvania, and Morgan’s Point, Texas.

University of Chicago’s Study “Fracking” a Net Benefit.  The first nationwide study of the comprehensive local impacts of hydraulic fracturing finds that when costs and benefits are added up, communities on average benefit from allowing it.

In studying the economic impacts of the technology that’s become critical to U.S. oil and natural gas production, Michael Greenstone, the Milton Friedman Professor in Economics at the University of Chicago, and his co-authors take into account local changes in amenities, including factors that contribute to the quality of life such as truck traffic, criminal activity and beliefs regarding negative health effects. The researchers found such costs are outweighed by the benefits, which total $1,200 to $1,900 a year for the average household.

In the last decade, hydraulic fracturing, or fracking, has helped deliver lower energy prices, enhanced energy security, and lowered air pollution and greenhouse gas emissions. But there have been concerns over negative health and social impacts outweighing the economic benefits for local communities where such drilling takes place.

“This study makes it clear that on net there are benefits to local economies—which we believe is useful information for leaders in the United States and abroad who are deciding whether to allow fracking in their communities,” said co-author Chris Knittel, the George P. Shultz Professor of Applied Economics at the Massachusetts Institute Technology Sloan School of Management and director of the Center for Energy and Environmental Policy Research.

The benefits include a six percent increase in average income, driven by rises in wages and royalty payments, a 10 percent increase in employment, and a six percent increase in housing prices. On the costs side, fracking reduces the typical household’s quality of life by about $1,000 to $1,600 annually—excluding the increase in household income.

“Our estimates are based on the knowledge that communities currently have,” said Greenstone, who also serves as director of the Energy Policy Institute at Chicago. “So, for example, if new information emerges that indicates that there are larger negative local health effects than is currently believed, this would likely lead to declines in housing prices and overall welfare impacts. But based on what is currently known, the average community that has allowed fracking has enjoyed substantial net benefits.”

The authors also find that each region is affected differently, with some benefiting more than others. For example, the estimated effect on house prices was much larger in North Dakota’s Bakken shale and Pennsylvania’s Marcellus shale than in other regions.

“There appears to be a good deal of heterogeneity in the estimates across the nine shale regions in our sample,” said co-author Alex Bartik, a doctoral student at MIT. “These differences reflect both variation in how large fracking activity is relative to the local economy, as well as differences in local housing markets. In future research, we’re working on understanding this heterogeneity better.”

Despite the heterogeneity, the overall trend is clear. “All in all, the current data shows that on average the overall benefits to local communities outweigh the costs,” Greenstone said.

Noble Does Deal in the Permian.  Houston-based independent producer Noble Energy said late Monday it’s acquiring Midland, Texas-based Clayton Williams Energy in a $2.7 billion cash-and-stock deal, expanding its Delaware Basin footprint.

The price represents a 21% premium to Clayton’s average closing share price over the past 30 days, and a 34% premium to the price on Jan. 13, the last day prior to the deal.

Clayton shareholders will receive 2.79 shares of Noble common stock and $34.75 in cash for each share of common held, totaling 55 million Noble shares and $665 million in cash. Noble also will assume roughly $500 million of Clayton debt.

The deal significantly increases Noble’s position in the Delaware Basin, a portion of the larger Permian Basin where Noble recently acquired 7,200 net acres for $300 million, Kallanish Energy reports.

“This transaction brings all the key elements we value: excellent rock quality, a large contiguous acreage position adjacent to our own, and robust midstream opportunities, reinforcing the Delaware Basin as a long-term value and growth driver for Noble Energy,” David Stover, Noble CEO, said, in a statement.

Stover said the deal creates the industry’s second largest southern Delaware Basin acreage position and provides more than 4,200 drilling locations on roughly 120,000 net acres, with over 2 billion barrels of oil-equivalent in net unrisked resource.

Noble plans to increase production on the acquired assets to about 60,000 barrels of oil-equivalent a day (BOE/d) by 2020, from about 10,000 BOE/d currently.

The cash portion of the acquisition will be financed through a $4 billion revolving credit facility, from which Noble hadn’t drawn any funds as of the end of last year. The deal will bring annual cost savings to Noble of roughly $75 million. The deal is expected to close in the second quarter.

Petrie Partners Securities acted as exclusive financial adviser to Noble, while Skadden, Arps, Slate, Meagher & Flom acted as legal adviser. Evercore and Goldman, Sachs served as financial advisers to Clayton, and Latham & Watkins acted as legal adviser.

Thai Company Buying Assets in the Marcellus.  Banpu Pcl is a Thailand-based coal mining and power-generation company with total assets of around US$6.6 billion. Valued at US$63 million, the transaction was executed with Chief Exploration and Development LLC as the seller and is comprised of interests in more than 170 wells, operated by seven established Marcellus operators. The transaction is a continuation of Kalnin Ventures' strategy to build a scalable model of acquiring, managing, and eventually transferring non-operated portfolios for international entities such as Banpu Pcl.

"This transaction personifies our three-phased approach to driving value for non-operators in the region: ensure financial management of the assets, be a technical partner, and use technology and metrics to drive the performance and potential of the assets," said Christopher Kalnin, managing director and founder of Kalnin Ventures LLC.

As more Thai companies make purchases in the Appalachian Basin, the faster the PPTGC cracker will come online.

Yes, The Marcellus Is Pretty Hot Too.  There was nearly eight times more invested in asset and corporate acquisitions in the Marcellus shale in 2016 than 2015, according to new analysis in Evaluate Energy’s global M&A review for 2016.

Marcellus assets changed hands for a total of US$7.25 billion in 2016 – a massive increase on the US$920 million total recorded in 2015.

When an increase in M&A activity of this size occurs so quickly, the usual reason is that there were one or two deals with extremely high values skewing the figures. Here, however, this is not the case according to Evaluate Energy data.

Not only were Marcellus shale deal values up in 2016, but the 13 “large” deals with a value of over $100 million was in fact the highest number of large deals seen in the play since its first real M&A boom in 2010. This is indicative of a real, widespread increase in Marcellus M&A activity over the past 12 months.

The Marcellus has a core group of significant players, which includes some of the United States’ biggest natural gas producers. Some of these companies – including EQT Corp. (NYSE:EQT) and Antero Resources Corp (NYSE:AR) – were keen this year to take advantage of other companies deciding that their respective Marcellus positions were in fact now non-core assets. A handful of major international players were among the selling parties; Anadarko Petroleum Corp. (NYSE:APC), Statoil ASA (Oslo:STL) and Japan’s Mitsui & Co Ltd. all agreed a sale of Marcellus acreage for over $100 million.

New NGL System to Help Capture Stranded Gas.  Dresser-Rand has announced it has commissioned the first micro-scale natural gas liquefication system in Pennsylvania’s Marcellus Shale, Kallanish Energy reports.

The modular, portable unit was installed at the Ten Man LNG facility near Mansfield in Tioga County, in northeast Pennsylvania.

The four-module facility allows driller Frontier Natural Resources to “monetize stranded gas assets” and to move LNG to market despite the lack of pipelines, the company said.

The equipment arrives on eight trucks and takes up 5,500 square feet, or as much space as a basketball court, said the company, part of German-based Siemens Power and Gas. Dresser-Rand calls the new system LNGo. The company did not indicate how much the system costs.

The Pennsylvania facility has produced about 120,000 gallons of LNG in its first 20 days of operation, the company said. The system is designed to produce up to 7,000 gallons of LNG per day, or about 11 tons, according to Dresser-Rand.

The unit is self-powered, flexible and sustainable. It is designed primarily for areas with no natural gas pipelines or infrastructure and for areas where flaring may be a problem. That includes rough terrain and remote regions.

The company did not indicate how much the system costs, in making the announcement this week.

“This project demonstrates our unique capabilities to deliver innovative solutions for oil and gas applications that help our clients maximize the value of their assets,” said Michael Walhof, sales director, Distributed LNG Solutions, for Dresser-Rand.

OH’s Wayne National Forest Acres to Auctioned in March.  The U.S. Bureau of Land Management has scheduled a drilling auction in Ohio’s Wayne National Forest on March 23, Kallanish Energy reports.

The auction will make available for oil and gas drillers roughly 1,186 acres, the agency said. All the acreage is in Monroe County, one of the drilling hot spots for natural gas in Ohio’s Utica Shale play.

Last month, BLM auctioned off 719 acres in Wayne National Forest for the first time and generated about $1.7 million in bids. It was the first auction of public lands in Ohio for drilling.

Initially, the agency had planned to lease 33 parcels totaling 1,600 acres in Washington, Noble and Monroe counties, but 16 parcels were dropped at the last minute. The high bid was $5,806.12 per acre.

In October, the BLM said drilling would cause no major impacts to the national forest. The agency has been looking at allowing drilling on 18,000 acres in the national forest’s Marietta District.

BLM has been under pressure from landowners with mineral rights who support drilling, and from eco-groups that have been fighting the proposal.

At present, there are 1,200 vertical-only wells in the 240,000-acre national forest that is a mix of federal and private lands.

PA Governor Supports Mariner East 2.  Responding to a question from a reporter at an event hosted by the Chamber of Commerce for Greater Philadelphia last week, Gov. Wolf indicated he supports approval of the required state permits to build the controversial Mariner East 2 pipeline project. When questioned by 6abc anchor Matt O’Donnell about permit delays Wolf said “We’re working through that.” On further questioning Wolf affirmed that the pipeline project could still happen. There’s been no word from DEP on whether the agency has finished reviewing Sunoco’s updated applications and if those updates meet all of DEP’s requirements. Wolf spoke to the southeast Pennsylvania business community as part of an annual event hosted by the Chamber. The Chamber has advocated for the region to become an “energy hub,” where new pipelines full of Marcellus Shale gas could feed new manufacturing.

NatGas Industry and Low Prices Bring Italian Company to WV.  An Italian company’s first manufacturing facility in the U.S., first announced for Weirton, West Virginia, in 2013, is closer to becoming a reality, Kallanish Energy learns.

Representatives of Pietro Fiorentini USA have officially signed to acquire land in Weirton, part of a $9 million project that eventually will manufacture pressure regulators, valves and pressure reducing and meter systems for the natural gas industry.

“Pietro Fiorentini USA is very impressed with the commitment to economic development and job growth demonstrated by the state, Brooke County, the City of Weirton and the Business Development Corporation of the Northern Panhandle,” David Watkins, president of Pietro Fiorentini USA, stated.

The company said it will create an initial 41 jobs in the project’s first phase, with up to 150 positions when fully operational. The facility will be built on 26.4 acres of land in the Three Springs Business Park.

More LNG to Asia.  The premium of Asia over U.S. gas has reached its highest level since January 2015, has created an opportunity for tankers carrying liquefied natural gas, with most departures from Cheniere Energy’s Sabine Pass export terminal in western Louisiana in the last six weeks heading toward Asia, shipping data released Wednesday show.

U.S. gas prices at Henry Hub this week dropped about 20% since hitting a two-year high on Dec. 28, trading around $3.25 per million British thermal units (MMBtu) Wednesday, Reuters reported.

Spot market gas in Asia has jumped more than 30% since early December to a nearly two-year high of $9.75 per MMBtu, Kallanish Energy finds.

“China is experiencing colder-than-normal conditions, demand has kicked higher and prices have followed,” Matt Smith, director of commodity research at energy data provider ClipperData in Louisville, Kentucky, told Reuters.

In addition, China is looking to avoid gas shortages the country has experienced in the past, Smith said.

Of the 17 LNG vessels that left Sabine Pass since the start of December, at least 10 have either delivered their cargoes in East Asia or were moving in that direction across the Pacific Ocean, data from Reuters and ClipperData show. The 10 included the first shipments from Sabine to both Japan and South Korea.

Those 10 ships have the capacity to carry about 33.2 billion cubic feet (Bcf) of gas, worth roughly $120.6 million, based on the Henry Hub average.

Since February, 61 vessels have taken cargos from Sabine, but just three vessels delivered LNG to East Asia between February and the end of November. Another 27 went to either South America or Mexico and five shipped to India; the rest were scattered around the Middle East and Europe.

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Rig Count

  • Baker Hughes Rig Count the week of January 20, 2017
     
  • PA     
    • Marcellus 33 up 1
  • Ohio 
    • Utica 21 up 2
  • WV 
    • Marcellus 9 up 1
  • TX
    • Eagle Ford 49 up 2
  • TX & NM
    • Permian Basin – 281 up 13
  • ND
    • Williston – 35 up 3
  • CO
    • Niobrara – 23 unchanged
       
  • TOTAL U.S. Land Rig Count 670 up 36

PA Permits January 12, to January 19, 2017

      County            Township            E&P Companies

1.    Bradford            Overton              Chief
2.    Butler                Center                Rex
3.    Clarion               Perry                 Laurel Mtn. Prod.

OH Permits for weeks ending January 14, 2017

       County             Township             E&P Companies

1.    Belmont            Colerain                Ascent
2.    Belmont            York                    Gulfport
3.    Belmont            York                    Gulfport
4.    Belmont            York                    Gulfport
5.    Belmont            York                    Gulfport
6.    Carroll               East                    Enervest
7.    Carroll               East                    Enervest
8.    Carroll               East                    Enervest
9.    Noble                Beaver                Eclipse

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

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