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Expo/Industry events for the next few months

Ohio Valley Oil & Gas Regional Expo
April 25-26, 2017
Belmont County Carnes Center
St. Clairsville, OH 

Utica Midstream
June 7, 2017
Walsh University
North Canton, OH  

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

DUG East
June 20-22
David L. Lawrence Convention Center
Pittsburgh, PA  

For other events visit

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

Multibillion-dollar Permian Pipeline.  NAmerico Partners is proposing a multibillion-dollar pipeline to flow natural gas from the Permian Basin in West Texas, to the Gulf Coast, the company told Reuters Monday.

The pipeline, one of at least three being considered to ease a looming gas glut in the Permian, would link to existing lines, including those that export gas to Mexico, and to a Cheniere Energy liquefied natural gas export facility under construction in Corpus Christi, Texas.

PennEast Gets FERC Green Light.  The Federal Energy Regulatory Commission on Friday issued its final environmental impact statement (FEIS) for the PennEast Pipeline, saying the line would cause some environmental impacts, which could be mitigated by the owner-operator.

"FERC staff concludes that approval of the proposed project, with the mitigation measures … would result in some adverse environmental impacts, but impacts would be reduced to less than significant levels with the implementation of PennEast’s proposed and our recommended mitigation measures," FERC stated.

In a release, PennEast hailed the decision and called it the "last major federal regulatory hurdle." "Federal regulators have once again determined that PennEast can deliver enormous benefits for the region, including lower electric and gas bills, thousands of jobs, enhanced mobility, and direct access to one of the most abundant (gas supplies) … in all of North America — while also doing so with little impact on the environment," wrote Dat Tran, PennEast chairman.

FERC last July released a draft impact statement stating its initial review found the pipeline could be built safely and that "PennEast would minimize impacts on natural and cultural resources during construction and operation of the project."

The proposed 36-inch pipeline would cost $1.2 billion and carry roughly 1 billion cubic feet per day (Bcf/d) Marcellus Shale play natural gas roughly 120 miles, from Luzerne County, Pa., to Mercer County, N.J.

The pipeline is considered by some industry watchers as the most protested pipeline currently in the U.S., Kallanish Energy learns

Opposition groups claim its construction would harm the environment, deprive landowners of enjoyment of their properties, and contribute to climate change through continued reliance on fossil fuels for energy.

PennEast’s backers include AGL Resources, NJR Pipeline, PSEG Power, SJI Midstream, Spectra Energy Partners and UGI Energy Services. PSEG is selling its stake to Spectra Energy Partners, although the deal is not yet finalized.

EQT’s 2017 Drilling Plans.  With a $1.5 billion capital budget, EQT plans to drill 207 wells this year, concentrating on the Marcellus Shale in southwestern Pennsylvania and northern West Virginia. It is also shooting for 81 wells in the Upper Devonian, a formation that sits on top of the Marcellus, and 7 wells in the Utica, which is the deepest of the three.

New York’s Cuomo Is a Joke.  

New York State is spending a considerable amount of money to advertise “New York Is Open for Business.” We know that’s not true based on its blocking the Constitution Pipeline from NE PA to New England and North Access Pipeline from NW PA to the Buffalo, NY area.  

The blocking of these two pipelines is hurting businesses not only in New York, but also New England.  Companies are leaving Massachusetts almost monthly because of the high cost of energy.  MIT recently issued a report that unless New England manufacturers get cheap NatGas from the Marcellus that it will have to leave New England.  Well, it’s happening.  

The New York State Department of Environmental Conservation late Friday issued a statement stating it rejected National Fuel's plans for a 97-mile natural gas pipeline from northwestern Pennsylvania to Erie County, N.Y.

The rejection was literally issued after 11 p.m., with National Fuel’s CEO issuing his company’s statement early Monday morning. Ronald J. Tanski said New York State’s highly touted “open for business” proclamation isn’t true.

The DEC determined there was too great a threat to water quality and wildlife to grant National Fuel the water quality certificate required to construct its $500 million Northern Access Pipeline.

"After an in-depth review of the proposed Northern Access Pipeline project and following three public hearings and the consideration of over 5,700 comments, DEC has denied the permit due to the project's failure to avoid adverse impacts to wetlands, streams and fish and other wildlife habitat," DEC stated.

“While we are still analyzing the NYS DEC’s rationale, the denial is purportedly based upon NYS DEC’s determination that (National Fuel Gas) Supply and Empire (Pipeline’s) construction activities will impermissibly affect the quality of waters in the state, notwithstanding voluminous detailed studies prepared and submitted by the companies and our consultants that show any such effects are temporary and minor," said Tanski.

Environmental groups and residents raised concern about threats the pipeline posed to water quality, including its planned crossing of Cattaraugus Creek, which is the sole source drinking water aquifer for residents in a 325-square-mile area.

In all, the pipeline project would have crossed more than 190 creeks and streams in New York’s Allegany, Cattaraugus, Erie and Niagara counties.

Northern Access is the second large-scale project designed to transport natural gas from Marcellus Shale wells in northern Pennsylvania shot down by DEC NY in a year.

Last April, the DEC denied a water quality permit to the Constitution Pipeline. The pipeline was to run from Northeast Pennsylvania, through the New York counties of Broome, Chenango, Otsego, Delaware and Schoharie. An appeal in the case is pending.

The New York State Department of Environmental Conservation late Friday issued a statement stating it rejected National Fuel's plans for a 97-mile natural gas pipeline from northwestern Pennsylvania to Erie County, N.Y.

Gulfport 1st Qtr. Update.  Gulfport Energy reported first-quarter 2017 net production averaged 849.6 million cubic feet-equivalent per day, Kallanish Energy reports.

That is up 23% from Q1 2016, the company said. The production, mostly from Ohio’s Utica Shale, was 87% natural gas, 9% natural gas liquids and 4% oil.

The company’s realized prices for Q1 2017 were $3.98 per thousand cubic feet (Mcf) of natural gas, $68.75 per barrel (Bbl) of oil and 68 cents per gallon of NGLs. That produced a total equivalent price of $4.36 per thousand cubic feet-equivalent (Mcfe), the company said in an update on production and pricing.

Before the impact of derivatives, those prices, including transportation costs, were $2.68/Mcf of natural gas, $47.52/Bbl of oil, and 63 cents per gallon of NGLs for a total equivalent price of $3.05/Mcfe.

First-quarter production “came in above expectations,” said CEO and president Michael G. Moore, in a statement. He called the production and pricing in Q1 “very encouraging.”

Moore also noted the company closed on its purchase of SCOOP assets in Oklahoma from Vitruvian II Woodford, and is operating four rigs on that acreage.

It has also signed a first transportation agreement from its SCOOP area with Cheniere Energy and its Midship Pipeline Co. That pipeline is slated to be operational in early 2019.

Rover Pipeline Suppliers. BTU Analytics.  Having completed tree felling in Ohio by March 31, Energy Transfer’s Rover pipeline is back on track for partial in-service by July and completion by November. With several additional pipeline projects slated to increase regional takeaway, it looks like Marcellus and Utica producers will get their long-awaited wish of additional pipes out of the region. The question remaining is will they be able to ramp drilling activity fast enough to meet their impending firm commitments with new production and does the end market need the volumes?

The first phase of Rover is slated for completion by July and will connect 2.8 Bcf/d of capacity from Ohio supply laterals to the 3.25 Bcf/d Mainline, which connects with Panhandle and ANR at Defiance, Ohio as shown in the map below. The second phase of the project is set for November and will continue the build out of supply laterals in West Virginia and Southwest Pennsylvania, in addition to the Market segment that will move gas north from Defiance for delivery into the Michigan and Dawn markets via the Vector pipeline.

With the project moving closer to completion, how have the producers who are committed shippers on Rover reacted? The map below takes a closer look at Rover’s Ohio Supply Zone, highlighting wells drilled by five of the primary Rover shippers since January, with the colored ovals indicating approximate operator acreage.

As shown in the above map, Antero Resources (NYSE: AR), Ascent Resources, Eclipse Resources (NYSE: ECR), Gulfport Energy (NASDAQ: GPOR), and Rice Energy (NYSE: RICE), who hold a combined 2.3 Bcf/d of commitments on Rover, have significant acreage holdings around Rover’s supply laterals. These companies also hold 1.3 Bcf/d on other upcoming projects in the area that are expected to enter service in November and allow Marcellus and Utica production greater access to growing Southeast and Gulf Coast markets.

With the backlog of DUCs decreasing, producers will need to significantly increase drilling levels if they are to fill this new capacity. The chart below shows Ohio drilling activity for the same subset of producers. Drilling by these five producers has more than doubled since November, with Ascent and Gulfport accounting for the bulk of this activity while Rice, Antero, and Eclipse have had smaller increases.

Ascent appears to be ramping up drilling activity to meet the company’s upcoming 1.5 Bcf/d of commitments on Rover and TCO’s Leach Xpress project planned for November service.

In the company’s fourth quarter earnings call, Antero stated that they would accelerate Utica completions once they saw ‘spades in the ground’ for Rover and plan to draw their current inventory of 70 DUCs down to 30 by the end of the year. Meanwhile, Gulfport is currently running six rigs in Ohio but has stated that they plan to increase completions in the summer, while Rice had planned for Rover Phase I to be online by November.

While important for individual operators, this potential incremental production will have far reaching consequences on a national market that has seen Mexican exports and LNG exports surge from just a year ago. Although two consecutive warm winters have helped mitigate stress on the market, demand will continue to grow as Cheniere turns on its fourth LNG train at Sabine Pass and Dominion’s Cove Point begins to take fuel gas. With infrastructure constraints lifting, will Marcellus and Utica producers ramp up fast enough to meet the market’s growing demand?

Wells Drilled and Completed Up 35%.  The estimated number of wells drilled and completed in the first quarter of 2017 is up sharply from Q1 2016, according to the American Petroleum Institute.

It reports that the number of estimated wells grew by 35%, Kallanish Energy reports. That, it said, is “a drastic improvement” from 2016 levels that saw a 59% decrease in total wells drilled and completed from the prior year.

The new report “shows evidence that we could be turning a corner when it comes to oil and natural gas drilling,” said Hazem Arafa, director of API’s statistics department.

The exact numbers were not released.

In a separate report, the API said American drilling companies spent $122.8 billion in drilling 28,809 wells in 2015. The data came from API’s 2015 Joint Association Survey on Drilling Costs.

The report said the number of estimated wells drilled dropped by 37.6% from 2014 levels, with an overall decrease in expenditures of 27.2%, while the number of wells drilled remained largely unchanged from 2014 to 2015.

It noted shale well expenditures increased by about $119 million from 2014 to 2015. Shale drilling expenditures represented 47.7% of all money spent on drilling in 2015.

Expenditures on oil represented 64.5% of all drilling costs in 2015, with natural gas expenditures accounting for 24.8% of costs (up from 24.4% in 2014).

Development well expenditures were $109.6 billion in 2015, while exploratory well expenditures were estimated at $5.6 billion.

Both reports are available from API’s primary distributor, IHS, at 800-854-7179 or

Enterprise Pipeline from the Permian to Mont Belvieu, TX.  Enterprise Products Partners on Monday announced construction of a new 571-mile pipeline to transport natural gas liquids from the Permian Basin to Enterprise’s NGL fractionation/storage complex in Mont Belvieu, Texas.

The Shin Oak NGL pipeline will originate at Enterprise’s Hobbs NGL fractionation and storage facility in Gaines County, Texas. The 24-inch line will have an initial design capacity of 250,000 barrels per day (BPD), expandable to 600,000 BPD, Kallanish Energy learns.

In addition to mixed NGL supplies aggregated at the Hobbs facility, the Shin Oak pipeline will provide takeaway capacity for mixed NGLs extracted at natural gas processing plants in the Permian, including two Enterprise facilities that began service in 2016, and the Orla I plant slated to begin operations in the second quarter of 2018.

In tandem with Enterprise’s existing NGL pipelines, this new pipeline will also increase the company’s capacity to transport purity NGL products from Hobbs to Mont Belvieu.

“The Permian Basin is currently the hottest play in North America and is expected to continue its strong growth for years to come,” said A.J. “Jim” Teague, CEO of Houston-based Enterprise’s general partner. “The Shin Oak pipeline project is part of Enterprise’s larger plans in the Permian to leverage our integrated midstream assets to link supplies of cost-advantaged U.S. hydrocarbons to the largest domestic and global NGL markets. This additional pipeline takeaway capacity to Mont Belvieu will provide Permian producers the flow assurance they need to continue the unfettered development of their reserves with confidence.”

Shin Oak is supported by long-term customer commitments and is expected to be in service in the second quarter of 2019.

Permian Pipeline. DCP Midstream, the U.S.’s largest natural gas processor, is partnering with infrastructure giant Kinder Morgan, of Houston, to build a 430-mile intrastate pipeline in Texas.

The 42-inch Gulf Coast Express Pipeline will flow up to 1.7 billion cubic feet per day (Bcf/d) of gas from West Texas’s Permian Basin to Agua Dulche, near Corpus Christi, Texas.

Kinder Morgan in March said the project will carry natural gas to markets on the Gulf of Mexico Coast and in Mexico.

“This opportunity presents a welcome competitive alternative that adds diversity to the market and is complementary to our recently announced Sand Hills expansion,” said Wouter van Kempen, DCP’s chairman, president and CEO.

Van Kempen was referencing DCP’s Sand Hills Pipeline, which flows natural gas liquids (NGLs) from the Permian to the Mont Belvieu natural gas hub in East Texas. That pipeline is being expanded to boost its capacity by 30%, to 365,000 barrels per day (BPD), Kallanish Energy learns.

“We are excited to be partnering with one of the larger natural gas marketers in the Permian Basin area, with DCP Midstream currently marketing approximately 600 million cubic feet per day of natural gas in that region,” said Duane Kokinda, president of Kinder Morgan Natural Gas Midstream.

The Tuesday announcement stated DCP is expected to be a partner and shipper in the project, although the size of DCP’s commitment wasn’t revealed.

DCP currently operates natural gas processing plants capable of handling roughly 1.3 Bcf/d in the area of Texas the new pipeline will serve, the announcement said.

Gulf Coast Express is expected to be in service during the second half of 2019, if sufficient shippers commit.

NatGas Demand Projects Upwards in 2021.  U.S. demand for natural gas is forecast to reach 20 trillion cubic feet (Tcf) in 2021, according to Natural Gas: United States, a report recently released by Freedonia Focus Reports.

Growth in demand for natural gas in the industrial market is projected to outpace that of all other discrete market segments and surpass the electric power market as the largest segment.

Increases in manufacturing, mining, and agricultural activity will drive greater demand for energy in the industrial sector, Kallanish Energy understands.

Growing exports of liquefied natural gas (LNG) will drive expansion as producers convert supplies of natural gas into LNG for shipping.

While liquefaction of natural gas for export will exhibit the fastest rate of growth among industrial applications, chemical feedstocks are expected to account for the largest volume increase over the forecast period.

NatGas Pipeline Capacity Up in 2016. U.S. natural gas pipelines in 2016 added daily capacity of 7.1 billion cubic feet (Bcf), according to the Federal Energy Regulatory Commission, in a recent 24-page report.

FERC said the new capacity initiated in 2016 is among the biggest annual increases in recent U.S. history, Kallanish Energy reports.

The agency said 43% of that added capacity was provided to ship Appalachian Basin natural gas to market in the Northeast and the Midwest. Basin gas involves the Marcellus and Utica Shales plays in Pennsylvania, Ohio and West Virginia.

In all, FERC approved 17.6 Bcf of new pipeline capacity in 2016, although most of that volume is not yet in service. It has also approved seven pipeline projects in 2017 with added capacity of 7 Bcf/d.

Cove Point Getting Ready to Ship LNG.  Dominion Cove Point LNG is seeking federal approval to ship commissioning cargos to other countries from the nearly complete export facility in Maryland, Kallanish Energy learns.

That is a needed step to bring the $3.8 billion Cove Point plant online later this year. The request was filed with the U.S. Department of Energy.

The company wants to ship LNG from locally sourced natural gas and from previously imported LNG, prior to the new export facility that is scheduled to begin full commercial operations late this year, located at Lusby, Md. The facility is located on Chesapeake Bay in Maryland’s Calvert County.

The plant was described recently as being 84% complete.

The company is seeking short-term blanket authorization for commissioning shipments, up to 250 billion cubic feet (Bcf) of natural gas per year, according to the notice in the Federal Register.

The application was filed last Nov. 23 with DOE, with the deadline for public comment on the request May 12.

Cove Point’s marketed capacity is fully subscribed under 20-year service agreements with Japan’s Sumitomo Corp. and India’s GAIL Ltd.

It will liquefy and export natural gas from the Marcellus and Utica shales.

Bakken Production Up in February.  North Dakota crude oil production jumped 5.4% February, to more than 1 million barrels a day (MMBPD), the Department of Mineral Resources said last week. 

Oil activity in the Bakken is projected to be “very aggressive” this summer, but companies are struggling to recruit enough workers for hydraulic fracturing crews and truck driving positions, said department director Lynn Helms.

“We’re probably looking for 1,000 employees in (North Dakota cities) Williston, Dickinson, Minot, Stanley to fill the needs,” said Helms, the state’s top oil regulator.

Helms said he was surprised by the increase of more than 52,000 BPD in February, which pushed production to an average of 1.03 MMBPD, according to preliminary figures, Forum News Service reported.

State oil production peaked in December 2014 at more than 1.2 MMBPD, but declined to as low as 942,000 BPD in recent months due to the ongoing industry slowdown.

Many state operators postponed fracking new wells while oil prices were low, building up a backlog as high as 1,091 drilled, but uncompleted (DUC) wells, Kallanish Energy understands.

Operators have recently put more fracking crews to work, bringing that backlog down to 799 at the end of February, the first time the number of DUCs has been below 800 since December 2014.

Helms attributed the increase in activity in February to mild weather and confidence among operators as the price for West Texas Intermediate oil was above $50 a barrel, Forum News Service reported.

He expects production to be flat or drop slightly in March and April because heavy truck traffic has been restricted due to spring weight limits on soft roads. Activity is projected to pick up once those road restrictions lift, typically in early May.

Natural gas production increased 9.5% in February, to an average of 1.7 billion cubic feet per day (Bcf/d). The percentage of natural gas flared decreased from 12% in January, to 11% in February, the department said.

The state has 51 drilling rigs operating last week, compared to 30 a year ago and 91 two years ago.

Energy Transfer’s Rover Problems.  Add almost 50,000 barrels of drilling fluids released into Ohio wetlands to the issues that have plagued Energy Transfer Partners LP’s $4.2 billion Rover natural gas pipeline.

A regulatory filing disclosed Tuesday shows Energy Transfer’s Rover unit was notified by Ohio’s Environmental Protection Agency of violations after two releases of drilling fluids, both discovered last week. They occurred as part of an operation associated with the pipeline installation, the filing shows.

Japanese Investing in NatGas.  Two Japanese companies are investing in a natural gas-fired power plant under construction in southeast Pennsylvania, Kallanish Energy reports.

Tokyo Gas America (a unit of Tokyo Gas) and Sojitz Corp. have each acquired a 33.3% stake in the 488-megawatt Birdsboro power plant, being developed by Los Angeles-based Ares EIF Management, which retains a 33.3% stake.

Terms of the deals were not announced.

The plant, in Berks County about 50 miles northwest of Philadelphia, is being developed by Birdsboro Power Holdings II.

The acquisition marks Tokyo Gas’ first investment in a new-build U.S. power generation facility and its second investment in the U.S. power generation market, following its acquisition of the gas-fired Empire power plant in New York last October, the company said.

Ares EIF Management closed on the construction investment in late February. Kiewit has been hired as the engineering, procurement and construction contractor.

The Birdsboro plant is slated to begin service in mid-2019.

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Rig Count 

  • Baker Hughes Rig Count the week of April 21, 2017
  • PA     
    • Marcellus 34 Up 1
  • Ohio 
    • Utica 22 up 1
  • WV 
    • Marcellus 12 unchanged
  • TX
    • Eagle Ford 78 up 3
  • TX & NM
    • Permian Basin – 340 up 1
  • ND
    • Williston – 44 unchanged
  • CO
    • Niobrara – 25 unchanged
  • TOTAL U.S. Land Rig Count 834 up 11

PA Permits April 6, to April 15, 2017

      County            Township       E&P Companies

1.    Greene            Center            EQT
2.    Greene            Center            EQT
3.    Greene            Center            EQT
4.    Greene            Center            EQT
5.    Greene            Center            EQT
6.    Greene            Center            EQT
7.    Greene            Center            EQT
8.    Greene            Center            EQT
9.    Greene            Franklin        EQT
10.    Greene            Franklin        EQT
11.    Greene            Franklin        EQT
12.    Greene            Franklin        EQT
13.    Greene            Franklin        EQT
14.    Greene            Franklin        EQT
15.    Greene            Franklin        EQT
16.    Greene            Jefferson        EQT
17.    Greene            Jefferson        EQT
18.    Greene            Jefferson        EQT
19.    Greene            Jefferson        EQT
20.    Greene            Jefferson        EQT
21.    Greene            Jefferson        EQT
22.    Greene            Jefferson        EQT
23.    Greene            Jefferson        EQT
24.    Greene            Jefferson        EQT
25.    Greene            Jefferson        EQT
26.    Greene            Jefferson        EQT
27.    Greene            Jefferson        EQT
28.    Greene            Jefferson        EQT
29.    Greene            Morgan           EQT
30.    Greene            Morris            EQT
31.    Greene            Morris            EQT
32.    Lycoming        Shrewsbury    Inflection
33.    Sullivan        Forks            Chief
34.    Sullivan        Forks            Chief
35.    Sullivan        Forks            Chief 
36.    Sullivan        Forks            Chief
37.    Sullivan        Forks            Chief
38.    Tioga            Deerfield        Shell
39.    Washington        Nottingham        Range

OH Permits for weeks April 8, and 15, 2017

       County            Township        E&P Companies

1.    Belmont            Mead            Rice
2.    Belmont            Mead              Rice
3.    Belmont            Mead            Rice
4.    Belmont            Mead            Rice
5.    Belmont            Goshen          Gulfport
6.    Belmont            Goshen         Gulfport
7.    Belmont            Goshen         Gulfport
8.    Harrison        German             Chesapeake
9.    Jefferson        Island Creek       Chesapeake 
10.    Jefferson      Island Creek        Chesapeake 
11.    Jefferson      Island Creek        Chesapeake 
12.    Jefferson      Island Creek        Chesapeake 
13.    Jefferson      Island Creek        Chesapeake 
14.    Jefferson      Island Creek        Chesapeake 
15.    Jefferson       Island Creek        Chesapeake 
16.    Noble            Wayne                Antero
17.    Noble            Wayne            Antero
18.    Noble            Wayne            Antero
19.    Noble            Wayne            Antero
20.    Noble            Wayne            Antero

Joe Barone 610.764.1232
Vera Anderson 570.337.7149

Northeast Supply Enhancement