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NewsLetters

Expo/Industry events for the next few months

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

http://upstreampa.com/  

Utica Upstream 
April 5, 2017
Walsh University
Canton, OH
http://www.uticacapital.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 

FERC’s Frantic Friday!  (Thank you, Kallanish Reports)  In a flurry of activity before the regulator lost its quorum to approve/disapprove projects, the Federal Energy Regulatory Commission late last week approved Energy Transfer Partners’ Rover, Williams’ Atlantic Sunrise, and National Fuel Gas’ Northeast Access pipelines, Kallanish Energy reports.

The five-person FERC already was down two people before Chairman Norman Bay announced two weeks ago he was resigning, effective Feb. 3. Bay’s announcement came after President Trump named FERC commissioner Cheryl LaFleur acted chairman.

With Bay gone, FERC has just two commissioners: LaFleur and Colette Honorable. Industry watchers say it could take Trump as much as two months before his appointees join FERC.

Rover Approved!  The Federal Energy Regulatory Commission (FERC) revealed Friday that one day earlier it had approved Energy Transfer Partner’s (ETP’s) Rover natural gas pipeline, Kallanish Energy reports.

The $4.2 billion, 713-mile line will flow Marcellus and Utica Shale gas to markets in the Great Lakes, Midwest, Gulf Coast and into Canada.

The market benefits of the project “outweigh any adverse effects on existing shippers, other pipelines and their captive customers, and on landowners and surrounding communities,” the commission said in its approval order.

Rover would ship 3.25 billion cubic feet of a day (Bcf/d) of natural gas primarily via dual 42-inch lines as it crosses from southeast to northwest Ohio and into Michigan, with laterals into Pennsylvania, West Virginia and Canada.

FERC’s approval means Rover can use eminent domain to take land for pipeline easements, but the company hasn’t told FERC when it plans to start construction.

According to the Rover project website, the entire pipeline is supposed to be in service by November, assuming FERC had approved construction late last year.

But Rover can’t begin construction until FERC’s staff resolves an incident involving the destruction of a historic property near Dennison, Ohio.

Rover bought and demolished an 1843 building known as the Stoneman House, which was near the site of a proposed pipeline compressor station. Rover tore down the building before notifying FERC, even though the commission’s staff had identified the Stoneman House as a concern.

Because of that action, FERC didn’t give Rover blanket approval of its construction work.

To ensure Rover’s compliance with environmental rules, FERC’s staff will be able to “fully analyze the environmental impacts of Rover’s construction that would otherwise occur pursuant to a blanket certificate, prior to the company’s being authorized to proceed,” according to the order.

Atlantic Sunrise Approved!  Williams Cos. won Federal Energy Regulatory Commission approval last week to build its $3 billion, 1.7 billion cubic feet per day (Bcf/d) capacity Atlantic Sunrise natural gas pipeline expansion, Kallanish Energy reports.

Atlantic Sunrise is an expansion of Williams’ Transco system. It’s designed to move Marcellus Shale gas from Susquehanna County in northeastern Pennsylvania as far south as Alabama and to Dominion’s Cove Point liquefied natural gas export terminal on the Chesapeake Bay in Maryland.

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

Atlantic Sunrise consists of roughly 200 miles of pipe, including about 185 miles of new natural gas pipeline in Pennsylvania, 11 miles of pipeline looping in Pennsylvania, 2.5 miles of pipeline replacements in Virginia and associated equipment and facilities.

Williams said in a statement Friday it was pleased FERC had approved “this much-needed energy infrastructure project.” The company said it plans to start construction on the main portion of the project in mid-2017, establishing a path for more gas to flow to markets along the Eastern Seaboard in time for the 2017-2018 winter heating season.

Construction on another part of the project, the greenfield, new-build portion known as the Central Penn Line, is scheduled to begin in the third quarter, allowing Williams to bring the entire capacity of the expansion into service in mid-2018.

The project’s proposed above-ground facilities include two new compressor stations in Pennsylvania, additional compression and related modifications to three existing compressor stations in Pennsylvania and Maryland; two new meter stations and three new regulator stations in Pennsylvania; and minor modifications at existing above-ground facilities at various locations in Pennsylvania, Virginia, Maryland, North Carolina, and South Carolina to allow for bi-directional flow.

Williams says the Atlantic Sunrise expansion will help alleviate infrastructure bottlenecks in Pennsylvania.

Northern Access Pipeline Approved!  National Fuel Gas Co.’s National Fuel Gas Supply and Empire Pipeline units said Friday the Federal Energy Regulatory Commission has approved construction of the $500 million Northern Access project.

The project is an expansion of the interstate natural gas pipeline systems of National Fuel Gas Supply and Empire, Kallanish Energy learns.

The Northern Access project consists of roughly 97 miles of new 24-inch pipeline to be constructed within McKean County, Pennsylvania, and the New York State counties of Allegany, Cattaraugus and Erie, and approximately two miles of new pipeline to be built in Niagara County, New York.

The project also includes the addition of compression facilities at an existing compressor station in Erie County and construction of a new compressor station and a new dehydration facility, both in Niagara County.

Once completed Northern Access will provide 490 million cubic feet per day (MMcf/d) of incremental transportation capacity on National Fuel Gas Supply. Of the line’s capacity, 140 MMcf/d will be delivered to the Tennessee Gas Pipeline 200 Line, serving New York State and New England markets, with the remaining 350 MMcf/d of capacity will be delivered to Empire’s pipeline system, providing access to New York State, Canadian, Northeast and Midwest U.S. markets.

“We continue to make progress working through the various federal, state and local regulatory processes, and this authorization keeps us on track for our recently announced in-service date during the second quarter of our 2018 fiscal year,” said Ronald Kraemer, president of Empire Pipeline.

Dakota Access online 2nd Qtr. 2017.  Phillips 66 CEO Greg Garland said Friday he expects the Dakota Access Pipeline to come online in the second quarter, despite the project still in legal battles and a U.S. regulatory review.

Midstreamer/refiner Phillips 66 has a 25% stake in the $3.8 billion project. Other owners include Energy Transfer Partners (ETP), Sunoco Logistics Partners, Enbridge, and Marathon Petroleum.

Garland made his comments on a conference call with analysts to discuss quarterly earnings.

The pipeline was originally set to begin flowing Bakken crude in late 2016, but has faced protests and legal challenges from climate activists and Native Americans, led by the Standing Rock Sioux Tribe, whose land in North Dakota runs adjacent to the route.

“Commercial operations are expected to begin in the second quarter of 2017, pending the issuance of an easement from the U.S. Army Corps of Engineers to complete work beneath the Missouri River on DAPL,” Phillips 66 said, in its earnings news release.

Last week, the Corps said it had taken initial steps to “expeditiously review requests for approvals to construct and operate” the pipeline per an order issued by President Trump, but the project’s easement has not yet been approved.

It’s unclear whether the second-quarter timeline will be met unless the easement is granted soon. The comment period ends on Feb. 20, and even if the easement were granted immediately after, ETP has projected a 90-to-120-day drilling period.

The pipeline is expected to carry roughly 470,000 barrels per day (BPD) of crude from North Dakota to Patoka, Illinois, and is more than 95% complete, according to a Phillips 66 filing made Friday.

EQT 4TH Qtr. Update.  EQT reported a fourth-quarter 2016 net loss of $192 million, although its Appalachian Basin production grew by 26% from a year earlier, Kallanish Energy reports.

That Q4 2016 loss compares to a loss of $134.6 million in the year-earlier quarter. 

For the full year, the company lost $453 million, compared to a profit of $85.2 million in 2015.

EQT was impacted by continuing low commodity prices and cutbacks in drilling in 2016, the company said.

It reported sales volume in 2016 of 759 billion cubic feet-equivalent (Bcfe), a 26% increase over 2015. Its gathered volume also grew by 21%.

But the average realized price in 2016 was down 20%, to $2.47 per thousand cubic feet-equivalent (Mcfe), the company said.

EQT says it expects production to grow by 7% to 9% in 2017. The company plans this year to use six to eight rigs to drill 119 wells in the Marcellus Shale, 81 wells in the Upper Devonian and seven wells in the Utica Shale.

The company has increased its capital budget by $500 million, to $1.5 billion in 2017. Most of that amount will be spent to drill and complete new wells.

Other major EQT accomplishments in 2016 include the acquisition of 145,500 net Marcellus acres and 92,300 net Utica acres and putting the Ohio Valley Connector pipeline into service.

In 2016, the company drilled 117 Marcellus wells with an average lateral of 7,300 feet, plus 13 Upper Devonian and four Utica wells.

In an earnings call, company officials said the company spent $130 million last week to acquire 14,000 acres in Marion and Monongalia counties in northern West Virginia, the Marcellus Drilling News reported.

EQT also announced its total proved reserves at the end of 2106 were 13.5 trillion cubic feet-equivalent (Tcfe), a 35% increase over 2015.

MarkWest – Antero JV.  MarkWest Energy Partners, a wholly owned subsidiary of MPLX, has formed a strategic joint venture (JV) with Antero Midstream Partners to develop Antero Resources Corporation's Marcellus Shale acreage in West Virginia.

The JV is equally owned by MarkWest and Antero Midstream and supported by a long-term, fee-based agreement with Antero Resources.

Under the agreement, Antero Midstream will release 195,000 gross acre processing dedication to the JV from Antero Resources. It will increase MarkWest’s Marcellus Shale area dedication from approximately 167,000 gross operated acres to more than 360,000 gross operated acres.

This additional acreage includes Antero Resources' core Marcellus Shale position in Tyler, Wetzel, and Ritchie counties, West Virginia.

MPLX president Don Templin said: “MPLX is excited to continue expanding our midstream operations on behalf of Antero Resources by partnering with Antero Midstream.

“This unique transaction further strengthens our long-term relationship with the largest producer in the Appalachian Basin and provides MPLX with substantial future organic growth opportunities.”

The JV will also expand processing infrastructure at Sherwood Complex in Doddridge County, West Virginia, to support Antero Resources’ production growth.

Three new JV processing facilities are currently being developed at Sherwood Complex, totaling 600 million square feet per day of incremental capacity for Antero Resources.

The first two new facilities are expected to initiate operations from the first quarter and third quarter of this year, while the third facility will commence its operations in the first quarter of 2018.

The JV also intends to develop another eight processing facilities to support Antero Resources, which would be located at both the Sherwood Complex and a new location in West Virginia.

MarkWest will continue to construct and operate all processing facilities. It will also retain full ownership of the first six processing facilities at the Sherwood Complex.
"MPLX is excited to continue expanding our midstream operations on behalf of Antero Resources by partnering with Antero Midstream."

Furthermore, the JV will assist the growth of Antero Resources' natural gas liquids (NGL) production with fractionation infrastructure located at the Hopedale Complex in Harrison County, Ohio.

MarkWest will initially contribute three processing facilities to the JV that are currently under developmental stage with supporting infrastructure necessary for operation of these facilities.

Antero Midstream will initially contribute nearly $155m for its allocated share of processing assets at the Sherwood Complex and ownership of fractionation capacity at the Hopedale Complex.

Both parties are subsequently expected to equally contribute in the JV.

Eclipse to Drill Super Laterals in the Utica.  Pennsylvania-based Eclipse Resources plans to drill 11 what it calls super-lateral wells with horizontal laterals all exceeding 15,000 feet in the Utica Shale, Kallanish Energy reports.

Three of those wells will be in the Utica dry gas area in eastern Ohio and eight will be in the Utica condensate area.

Eclipse Resources said it intends to spend $300 million on its 2017 capital budget.

That calls for drilling 19 net (22 gross) horizontal Utica wells and drilling and completion of 1.9 net (2.0 gross) Marcellus wells.

The wells drilled in 2017 will have an average lateral of 13,300 feet.

The company also reported that year-end 2016 reserves increased by 35%.

The reserves grew to 469 billion cubic feet of equivalent based on Securities and Exchange Commission pricing and by 108& to 1.2 trillion cubic feet of equivalent based on forward strip pricing, the company said.

Net production in the fourth quarter 2016 average 255 million cubic feet of equivalent per day and that was above the high end of the company’s previous guidance.

Production in the Marcellus and Utica shales in the Appalachian Basin were 71% natural gas, 18% natural gas liquids and 11% oil.

Net production for the full-year 2016 averaged 220 million cubic feet of equivalent per day and that was above the midpoint of the company’s guidance.

Full-year production was 73% natural gas, 17% NGLs and 10% oil.

The company also said it has updated its Utica condensate and Utica rich gas type curves. That has increased EURs by 16% and 22%, respectively, the company said.

Thai Company Making Bigger Commitment in the Marcellus.  A Thai company has acquired a stake in a 10,000-acre Marcellus Shale tract in northeast Pennsylvania, Kallanish Energy reports.

It is the second Marcellus acquisition by Banpu Plc., a company that owns and operates coal mines and power plants. The company spent $63 million for the 10.24% share, according to the Bangkok Post.

The company said the assets are estimated by third-party sources to have 133 billion cubic feet of natural gas reserves. The company’s equity-based share of those assets would be about 18 million cubic feet per day (MMcf/d).

The exact location of the tract was not released. Roughly 170 wells are planned on the tract, the newspaper said.

Last spring, Banpu acquired a 29.4% share in the Chaffee Corners Joint Exploration Agreement in Pennsylvania’s Bradford County for $112 million from Range Resources. That project has about 76 wells in production or development.

EQT Wins Acreage in the Marcellus and Utica.  EQT wins a bankruptcy auction to acquire 53.4K core net acres in the Marcellus shale, including drilling rights on 44.1K net acres in the Utica and ~80M cfe/day natural gas production, from Stone Energy for $527M.

EQT says the acquired acres are within its core liquids-rich development areas and complement its adjacent operations, while the assets include 174 Marcellus wells (123 developed), 20 miles of gathering pipeline and 32K acres outside the company's core development area.

Williams Focusing on Marcellus; Western Gas Partners on the Permian. Williams Partners today announced that it has entered into an agreement with Western Gas Partners and certain of its affiliates pursuant to which Williams Partners will increase its ownership stake in two Marcellus Shale natural gas gathering systems already operated by Williams Partners. In exchange, Western Gas and its affiliates will receive Williams Partners’ 50 percent ownership stake in Delaware Basin JV Gathering LLC (“DBJV”) that is operated by Western Gas. Under the terms of the transaction, Williams Partners will receive Western Gas’ 33.75 percent ownership stake in both the Rome and Liberty natural gas gathering systems in northern Pennsylvania, and a cash payment of $155 million.

When closed, the transaction will increase Williams Partners’ ownership interest to 67.5 percent (subject to customary joint venture partners’ rights) in both the Rome and Liberty gathering systems that are operated by Williams Partners and included in its Bradford Supply Hub in the Northeast G&P segment. Current throughput on the Rome and Liberty gathering systems is approximately 1.6 billion cubic feet per day.

In addition, Williams Partners has entered into a separate agreement with Anadarko Petroleum Corporation (NYSE: APC) (“Anadarko”) to sell Williams Partners’ 33.33 percent interest in the Ranch Westex gas processing plant in the Delaware Basin for $45 million in cash.

“This transaction allows Williams Partners to increase its ownership in the Bradford Supply Hub, our largest gathering franchise in the Marcellus, contributing free cash flow today while exiting non-operated partial-ownership positions that were expected to require significant cash contributions,” said Alan Armstrong, chief executive officer of Williams Partners’ general partner. “The Marcellus area hit a record-gathering volume for us in January and furthermore stands to benefit from the increased takeaway capacity from our Atlantic Sunrise Project.”

WV’s 3200 Completed Wells.

There are nearly 3,200 wells currently drilled into the Marcellus Shale formation in West Virginia. Click the link here to view our latest maps, created and uploaded today. 
On the maps, you can click on each tab to find information such as the company the drilled the well, the county the well is located in, the surface owner, mineral owner, and natural gas, oil and natural gas liquids production from each well for 2013-2015.

Artex Offering Almost 15,000 Acres in OH.  An Ohio-based independent producer is offering 14,884 net acres in the Utica Shale in southern Ohio, Kallanish Energy reports.

The Artex Energy Group is offering property in Noble, Guernsey, Washington, Tuscarawas and Stark counties. The holdings include a 2,027-acre joint venture in Noble and Washington counties with Antero Resources, one of the biggest producers in the Utica Shale.

About 87% of the property is held by production, the company said. The offer is being made through Colorado-based Meagher Energy Advisors. Bids are due on March 31.

Artex has about 625 wells in Ohio. It also has wells in West Virginia, Virginia, Mississippi, Texas, New Mexico and Montana.

PA Gov. Still Pushing Severance Without Much Luck.  Gov. Tom Wolf is again trying to raise revenue for the state budget by proposing a tax on shale gas production identical to the one he pitched and eventually dropped from budget negotiations last year.

Republican legislative leaders were quick to reject the idea on Tuesday while the drilling industry, which opposes the tax, answered with its own familiar refrain.

“Here we go again,” said Stephanie Catarino Wissman, executive director of the Associated Petroleum Industries of Pennsylvania.

The Wolf administration said it plans to raise $293.8 million for the state’s general fund in the coming fiscal year by putting a 6.5 percent severance tax on natural gas production, while giving shale gas companies a credit for the impact fees they already pay on their wells.

Marcellus and Utica shale drilling companies are projected to pay $174 million in impact fees for the year, so the industry would pay a combined $468 million in severance taxes and impact fees.

Senate Majority Leader Jake Corman, R-Centre, said Mr. Wolf’s revenue projections for the tax are “wildly overstated” and he indicated his caucus would not support a severance tax regardless.

Parsley Does Permian Deal.  Texas-based Parsley Energy is acquiring additional Permian Basin acreage in West Texas from Double Eagle Energy Permian for $2.8 billion, Kallanish Energy reports.

The deal covers 71,000 net acres in the core of the Permian’s Midland Basin.

That will boost Parsley Energy’s acreage in the Permian Basin to 227,000 net acres. That includes 179,000 net acres in the Midland Basin

“We are pleased to solidify Parsley’s position as a leading Permian operator through our largest acquisition to date,” said chairman and CEO Bryan Sheffield in a statement.

With the new deal, the company said it expects to increase drilling and capital spending in 2017.

That includes adding four additional rigs in 2017, and that will result in 40 additional horizontal wells being spud in 2017, of which 10 are projected to go into production.

Overall, the company plans to increase well completions from 120 to 140 wells in the Midland and Delaware basins that had been announced previously to 130 to 150 wells in 2017.

Its 2017 capital budget will increase from $630 to $750 million as previously announced to $840 million to $960 million, the company said.

The company is predicting that production will grow from 57 to 63 thousand barrels of oil equivalent per day to 62 to 68 thousand barrels of oil equivalent per day in 2017.

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

http://www.shaledirectories.com/blog/

Rig Count 

  • Baker Hughes Rig Count the week of February 10, 2017
     
  • PA     
    • Marcellus 34 up 1
  • Ohio 
    • Utica 19 down 2
  • WV 
    • Marcellus 10 up 2
  • TX
    • Eagle Ford 59 up 
  • TX & NM
    • Permian Basin – 301 up 6
  • ND
    • Williston – 37 unchanged
  • CO
    • Niobrara – 21 unchanged
       
  • TOTAL U.S. Land Rig Count 717 up 12

PA Permits February 2. to February 9 2017

       County             Township          E&P Companies

1.    Armstrong         East Franklin     Snyder Bros.
2.    Armstrong         East Franklin     Snyder Bros.
3.    Greene             Washington        EQT
4.    Greene             Washington        EQT
5.    Susquehanna    Lathrop             Chief
6.    Tioga                Duncan             EQT
7.    Washington       Buffalo              Range

OH Permits for week February 4, 2017

       County        Township        E&P Companies

1.    Belmont        Washington      Gulfport
2.    Belmont        Washington      Gulfport
3.    Belmont        Washington      Gulfport
4.    Jefferson       Mt. Pleasant    Ascent
5.    Jefferson       Mt. Pleasant    Ascent
6.    Monroe          Malaga            Antero
7.    Monroe          Malaga            Antero

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

Utica Summit 2019