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Expo/Industry events for the next few months

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 

Support Atlantic Sunrise Pipeline.  Now’s the time! The Pennsylvania Department of Environmental Protection will open a public comment period beginning on May 27 and will hold four public hearings for feedback related to Chapter 102 (earth disturbance) and 105 permits (waterway & wetland encroachment).

The hearing details are as follows:

  • Mon., June 12 — Tunkhannock Middle School Auditorium, Tunkhannock Middle School, 200 Franklin Avenue, Tunkhannock PA 18657, 6-9pm
  • Mon., June 12 — Max Smith Auditorium, Lancaster Farm and Home Center, 1383 Arcadia Rd, Lancaster, PA 17601, 6-9pm
  • Tues., June 13 — Bloomsburg High School Auditorium, Bloomsburg High School, 1200 Railroad St, Bloomsburg, PA 17815, 6-9pm
  • Wed., June 14 — Lutz Hall, Lebanon Valley College, 101 College Ave, Annville, PA 17003, 6-9pm

To set the tone for each of these hearings, we are encouraging our supporters to pre-register as soon as possible to provide oral testimony.

For the Lancaster, Lebanon and Bloomsburg hearings, please contact:

Megan Lehman, North-Central Regional Office, (570) 327-3659, 

For the Tunkhannock hearing, please contact:

Colleen Connolly, Northeast Regional Office, (570) 826-2035,                 

Additional information is available by clicking here.

For more than three years, Atlantic Sunrise has undergone an unprecedented amount of regulatory and public review. Pennsylvania regulators now hold the key to putting more than 8,000 people to work during construction and directly injecting $1.6 billion into the state’s economy.

The time to build is now; the time to approve Atlantic Sunrise is now!

Appalachian Basin Needs More Storage.  The Appalachian Basin could house more ethane cracker plants, but the region desperately needs ethane storage, something largely lacking now.

Those conclusions came Wednesday during a panel discussion at the Kallanish North American Oil & Gas 2017 conference in Pittsburgh.

The basin, including the states of Pennsylvania, Ohio and West Virginia, has enough ethane to fuel 5.5 ethane plants, said Tom Gellrich, founder of Topline Analytics.

That estimate of five-plus cracker plants includes one announced Appalachian Basin plant: Royal Dutch Shell's facility at Monaca in Beaver County, Pa., about 30 miles northwest of Pittsburgh.

Another cracker has been proposed by PTT Global at Dilles Bottom in Ohio's Belmont County. The company has said its final investment decision could be made in late 2017.

Plans for another cracker near Parkersburg, W. Va., appear unlikely to progress, speakers said.

Samantha Hartke, product manager (NGLs and olefins) for PetroChemWire, said the Appalachian Basin needs ethane storage.

That is “absolutely vital,” she said.

One company is starting construction on an underground storage basin along the Ohio River between Ohio and West Virginia to store 2 million barrels of ethane.

But the Appalachian Basin needs 75 million to 100 million barrels of ethane storage, she said. “That's a huge gap,” she added.

There is a proposal for a $10 billion storage and pipeline complex that would run 550 miles along the Ohio and Kanawha rivers in Pennsylvania, Ohio, West Virginia and Kentucky.

Shell will use 80,000 to 90,000 barrels per day, said Kristen Holmquist, a business intelligence analyst at Poten & Partners.

The U.S. ethane has a “huge feedstock cost advantage,” she said. U.S. ethane exports that began in 2016 are “really changing the game,” Holmquist added.

Less ethane will remain in natural gas, so there will be ample ethane to meet demand, although it's unclear what the price will be for that ethane, she said.

The U.S. production of ethane has grown from 950,000 barrels per day in 2011, to 1.7 million barrels per day in 2017.

Ontario-based Nova Chemical has recently purchased an ethane cracker and shipping hub in Louisiana. “A big player is getting bigger and will become a bigger global player,” Hartke said.

Prices are rising for buildable land along the Ohio River, said Bryce Custer, a real estate advisor, energy services, NA Spring Commercial Realty in Canton, Ohio.

Prices for large tracts for crackers and for related petrochemical plants have jumped from $10,000 to $15,000 per acre, to $30,000 to $100,000 an acre, he said.

Plan on attending the Appalachian Storage Hub Conference.  It will provide a comprehensive overview of the needs. 

Appalachian Basin, a Major Petrochemical Center.  The Appalachian region potentially could become a major US petrochemical and plastic resin manufacturing center similar to the Gulf Coast, the American Chemistry Council said in a May 18 report. “Proximity to a world-class supply of raw materials from the Marcellus-Utica and Rogersville shale formations and to the manufacturing markets of the Midwest and East Coast has already led several companies to announce investment projects, and there is potential for a great deal more,” ACC Pres. Cal Dooley said.

The report presented a scenario that included the development of a storage hub for natural gas liquids and chemicals such as ethylene and propylene, a 500-mile pipeline distribution network, and associated petrochemical, plastics, and other energy systems and manufacturing in West Virginia, Pennsylvania, Ohio, and Kentucky.

It predicted that by 2025, the four-state region could see 100,000 permanent new jobs, including 25,700 chemical and plastic products manufacturing jobs, 43,000 jobs in supplier industries, and 32,000 “payroll-induced” jobs in communities where workers spend their wages.

The investment also could lead to $2.9 billion/year of federal, state, and local tax revenue, the report said.

“The right policies are critical to realizing this opportunity,” Dooley said at a Capitol Hill release of the report, which also included West Virginia’s two US Senators—Democrat Joe Manchin and Republican Shelley Moore Capito—and US Rep. David McKinley (R-W.Va.).

Dooley cited S. 1075—The Appalachian Ethane Storage Hub Study Act of 2017, which Capito introduced on May 9 and Sens. Rob Portman (R-Ohio) and Manchin cosponsored—as “an important step forward [which] will help inform efforts to maximize America’s domestic energy and manufacturing potential.”

“Uncertainty around financing is a key barrier to the development of energy infrastructure in the Appalachian region,” Dooley said. “Policymakers can help by affirming that NGL storage and distribution projects are eligible for existing private-public financing programs. As Congress and the administration consider infrastructure modernization legislation, the Appalachian Hub should be a priority.”

ACC released the report a day after Manchin and Capito sent a letter to National Economic Council Director Gary D. Cohn outlining benefits of constructing a world-class gas liquids storage and distribution hub in the Appalachian region.

“An abundance of wet natural gas in the Marcellus, Utica, and Rogersville shale formations has recently resulted in significant announcements of new investment in the Appalachian region, particularly by the petrochemical industry. In fact, the region’s supplies of [natural gas liquids are] highly underutilized,” it maintained.

“Stakeholders in the industry and Appalachian communities are increasingly optimistic that the development of a regional storage hub could attract at least six world-scale petrochemical complexes, along with a number of smaller facilities,” the letter said.

To learn more about what this study means to your company register for the Appalachian Storage Hub Conference  

Rover Pipeline Cannot Resume Drilling.  The Federal Energy Regulatory Commission has rejected a request by Energy Transfer Partners' Rover Pipeline unit to resume horizontal drilling at two sites, further pressuring the operator's efforts to meet its July 1 in-service target for the first phase of the 3.25 billion cubic feet per day capacity pipeline.

Following leaks of drilling fluids into Ohio wetlands in April, including one during horizontal directional drilling at the Tuscarawas River, FERC ordered Rover earlier in May not to conduct any more drilling of that type in some areas where it has not started work.

ETP then asked to be allowed to continue the drilling at two sites where the activity was already underway, one in Ohio and the other in West Virginia. It said halting excavation there could cause further environmental problems and expressed concerns about the project being delayed.

FERC said in a letter to Rover on Thursday the agency must complete its review before allowing the horizontal directional drilling activities to resume. It granted permission to remove the drill stem from the borehole at the West Virginia location and install a casing to prevent the hole from collapsing.

“ … field inspections conducted by the Commission’s Compliance Monitors reveal that the sites are currently stable, have appropriate erosion control measures installed, and have drill entry and exit sites adequately set back from the associated waterbody,” wrote Rich McGuire, FERC’s director, Division of Gas – Environment and Engineering in the one-page letter, reviewed by Kallanish Energy.

Company representatives did not immediately respond to a request for comment.

The 500-mile Rover pipeline is part of new pipeline infrastructure, to give producers extra capacity to move production out of the pipeline-constrained Marcellus and Utica Shale plays.

With the possibility of a Rover delay, some producers have been hedging their production and considering alternative pipelines for moving some of their gas until Rover enters service.

Rover's most recent statements have stuck to the July in-service date for the first phase of the project and November for the second phase.

But environmental disputes and historic preservation concerns have dogged the project for months.

Pipeline Construction Continues.  U.S. pipeline construction is escaping its Obama administration-era bottleneck, but significant challenges still exist, Kallanish Energy sister publication Kallanish understands.

Speakers at the Kallanish North America Oil & Gas 2017 conference, held Wednesday in Pittsburgh, pointed to both market and regulatory obstacles to expanding domestic pipeline capacity. (Kallanish Energy was in attendance at the two-day conference.)

Operators in the Northeast’s Marcellus and Utica Shale plays have the ability to rapidly shift their production from product to product and area to area, said Williams commercial development manager Jeremy Zeman.

Pipeline builders, however, have much longer lead times to contend with, which creates a feedback loop that ultimately limits where and how a given shale play can be developed.

“The timeline of their well drilling is very different from our ability to build a pipeline,” he said.

Regulatory opposition to pipelines is linked to public activism, particularly from litigious retired Baby Boomers, said K&L Gates law firm partner Sandra Safro.

Safro stated domestic pipeline construction is often wedded to a variety of hot-button environmental issues, and the overall utility of the project often gets obscured.

“We’re trying to do something good for people,” she says. “We’re trying to give them cheap, dependable gas and power.”

Susquehanna County #1 in PA.  Susquehanna County is the No. 1 County in Pennsylvania for natural gas produced from horizontal wells in the first quarter of 2017, according to a new report.

Susquehanna, with 1,068 producing wells, produced 313 billion cubic feet (Bcf) of natural gas in Q1, said the eight-page report from the Pennsylvania Independent Fiscal Office. That is an increase of 0.9% from a year earlier, Kallanish Energy reports.

It represents 24% of the state’s natural gas production.

No. 2 was Washington County, with 213.0 Bcf of natural gas produced from 1,209 wells. Its production grew by 7.6% from Q1 2016. Its production represents 16.3% of the state’s production.

Third was Bradford County, with 183 Bcf of production, down 0.7% from a year earlier. Its production from 1,024 wells represents 14.1% of the state’s production.

Fourth is Greene County, with 163.7 Bcf of gas produced from 790 active wells. Its Q1 production dropped 6.8% from a year earlier. Its production represents 12.6% of the state’s total.

Fifth is Lycoming County, with 95.8 Bcf of gas produced from 754 active wells. That total is down 17.4% from a year earlier, and represents 7.3% of the state’s total Q`1 production.

The rest of the Top 10 counties for Q1 production were Wyoming, Tioga, Butler, Sullivan and Fayette.

Pennsylvania is the No. 2 gas-producing state, behind only Texas, with most of its wells tapping the Marcellus Shale.

It produced 1.3 trillion cubic feet of natural gas in 1Q 2017 from 7,648 horizontal and vertical wells. Production grew by 1.7% from a year earlier and the number of producing wells grew by 8%.

Drillers Need to Ramp up (Thanks, MDN).  Platts senior energy analyst Luke Jackson yesterday posted a Platts Snapshot titled, “New Northeast US Gas Pipelines Will be Hard to Fill.” Provocative title. It’s a video. Below is a transcript of the video. In it, Jackson says according to their analysis that drillers in southwestern PA and eastern OH and the northern panhandle of WV will struggle, but eventually succeed, in producing enough natural gas to fill new pipelines coming online this year. But they won’t be able to fulfill their obligations until perhaps December 2017. That is, Antero, Range Resources and Ascent Resources will need to rapidly ramp up drilling–or risk paying for pipeline capacity they’re not using. However, it was Jackson’s comment about pipelines coming online in 2018 and 2019 that really caught our attention. He says in the video: “This new capacity will be nearly impossible to fill, barring a massive ramp in drilling activity, which, per our forecast, is not expected to occur.” So Platts says Marcellus/Utica drillers will not be able to produce enough natural gas to fill all of the new pipelines that will be online by 2019. If we assume the price of NatGas goes higher over the next few years (not an unreasonable assumption), what this means that is new drilling is going to ramp up like crazy in the next few years. Buckle up! 

FERC Delays Atlantic Coast Pipeline.  The Federal Energy Regulatory Commission has moved back the scheduled final approval of an environmental assessment for the $5 billion Atlantic Coast Pipeline.

The agency has approved a three-week delay: from June 30 to July 21, Kallanish Energy reports. That means the project could be approved on Oct. 19.

The delay was necessary FERC said in a one-page notice on Friday, because it had sought additional information from Atlantic Coast Pipeline LLC in April and that information had just recently been filed and must be reviewed.

The 600-mile pipeline is being developed to move natural gas from the Marcellus and Utica Shale plays from West Virginia to the Carolinas.

The pipeline is being developed by four U.S. energy companies: Dominion, Duke Energy, Piedmont Natural Gas and Southern Company Gas.

FERC last December released its draft environmental impact statement for the pipeline.

Future NatGas Demand and Supply in Balance.  An uptick in U.S. natural gas supply over the next year or so will be balanced by a corresponding uptick in demand, leading to relative stability in the U.S. drilling sector, Kallanish Energy sister publication Kallanish learns from BTU Analytics managing partner Kathryn Downey Miller.

Speaking at Kallanish Energy’s North American Oil & Gas 2017 Conference Tuesday, Miller told the audience Northeast pipeline bottlenecks and lackluster crude prices are disappearing fast.

That will lead to a rapid increase in Northeast shale production and associated natural gas production from the Permian Basin and Oklahoma.

“Demand growth is finally here,” she said, adding that natural gas prices will remain relatively stable as a result.

Oil country tubular goods (OCTG) buyers have said recently the market is in a holding pattern until a definitive direction emerges.

Eclipse Resources Is Thriving.  Ben Hulburt has seen a number of his small-cap competitor-brethren fade away in a cloud of bottom-hugging natural gas/crude oil/natural gas liquids prices beginning in mid-2014.

Winners during the downturn were independent producers like Hurlburt’s Eclipse Resources, willing to push the proverbial envelope in terms of innovating, trying new production-related ideas.

The result is a company located in one area, eastern Ohio, with 113,500 net acres; primarily in one play, the Utica Shale; which has been able to keep its entire revolving credit facility in the bank – with no intention of touching it.

Hulburt told his State College, Pa.-based company’s story Tuesday during Day One of the two-day Kallanish North America Oil & Gas 2017 conference, held in downtown Pittsburgh. Kallanish Energy was in attendance.

“We’ve brought all the (drilling operation) specialists in-house, we’ve gone to 100% slickwater completions, we’ve been able to decrease the number of drilling days per well, and we’ve increased the use of proppants from 1,200 to 1,400 pounds per lateral-foot three years ago, to 2,500 to 3,000 pounds per lateral-foot today,” Hulburt said.

In the last three years, Eclipse has chopped its drilling and completion cost by more than half, to $746 per well, from $1,533/well in 2014.

One major reason for the sharp drop is the producer’s move to what it calls “super laterals,” laterals 13,000 feet or longer, allowing the spread of expenses over more lateral-feet.

Eclipse has drilled the three longest laterals in the world – each more than 19,000 feet long.

At $3 gas and $55 crude, Eclipse’s internal rate of return ranges from 48%, to 75%, depending on what portion of its acreage the company is drilling.

At $3.50 gas and $60 crude, the internal rates of return jump to between 76%, and 101%, Hulburt said.

Spraberry Much Bigger Than Previous Thought.  The Spraberry Formation of the Midland Basin, in the larger Permian Basin, holds technically recoverable resources totaling 4.2 billion barrels (BBbl) of oil and 3.1 trillion cubic feet (Tcf) of gas, according to the latest assessment by the U.S. Geological Survey (USGS), conducted earlier this month.

The previous assessment of the West Texas Spraberry, published a decade ago, had projected 510 million barrels in the formation. But ten years ago, the assessment was based on historical production from vertical wells, the USGS said in this month’s survey, Kallanish Energy learns.

Advances in fracking technology were the reason why the USGS revised upwards its estimates for technically recoverable resources at Spraberry. Shale drillers now have more sophisticated technology, well data, and experience than they did 10 years ago.

“Technology was a reason to go in and look at an area with a fresh set of eyes,” research geologist Stephanie Gaswirth told the Midland (Texas) Reporter-Telegram newspaper.

“The jump is similar to the situation with the Wolfcamp,” Gaswirth said.

Last November, the USGS published an assessment of crude oil reserves for the Wolfcamp shale in the Midland Basin of the Permian, revealing the largest estimate of continuous oil the agency has ever assessed.

The USGS estimates that the West Texas shale formation could hold an estimated mean of 20 BBbl of crude, 16 Tcf of associated natural gas, and 1.6 BBbl of natural gas liquids.

The USGS is also conducting a continuous assessment of the Delaware sub-Basin, and first results are expected in 2018, Gaswirth told the Reporter-Telegram.

Senators, Please Approve Commissioners Quickly!  The U.S. Senate’s Committee on Energy and Natural Resources has scheduled a confirmation hearing on May 25, for two nominees to the Federal Energy Regulatory Commission.

The nominations of Neil Chatterjee of Kentucky and Robert Powelson of Pennsylvania will be considered, Kallanish Energy reports. The committee will also consider the nomination of Dan Brouillette of Texas to be deputy Secretary of Energy.

The hearing will begin at 10 a.m. in the Dirksen Senate Office Building in Washington, D.C.

Chatterjee is an energy adviser to Republican U.S. Senator Mitch McConnell, and Powelson is a former chairman and current member of the Pennsylvania Public Utility Commission.

Chatterjee's term would expire on June 30, 2021, and Powelson's term would end on June 30, 2020, the White House said.

The appointments, once confirmed, would give FERC a quorum and an ability to again conduct business. The five-member board has had only two members since early February.

Trump is expected to fill the fifth, now-vacant spot very soon.

FERC staff has the ability to deal with the agency’s day-to-day operations, but the lack of a quorum has blocked action on major interstate pipelines and contested electric rate cases.

Keane Buying RockPile Energy Services.  Houston-based well completion services company Keane Group is acquiring fellow completion services firm RockPile Energy Services, of Denver, for $284.5 million in cash and stock.

Once completed, the transaction will increase the size of Keane’s pressure pumping fleet by 26%, with roughly 1.2 million total hydraulic fracturing horsepower, Kallanish Energy finds.

“We have always held RockPile in high regard due to their commitment to quality service in the field, their well-maintained assets and facilities, and the talent they have throughout their organization,” said James Stewart, chairman and CEO of Keane.

“We look forward to joining Keane as our companies share common values and commitment to safety, service, technology and operational excellence,” said Curt Dacar, CEO of RockPile.

Under the terms of the agreement, Keane will acquire all issued and outstanding shares of RockPile in a cash and stock transaction, including $135 million in cash, approximately 8.7 million shares of Keane’s common stock, and roughly $26.5 million for capital expenditures (including $9 million in deposits previously paid by RockPile and to be reimbursed by Keane at closing) for 30,000 previously ordered hydraulic fracturing horsepower.

The new horsepower is expected to be delivered and deployed to the Bakken in the fourth quarter of 2017 under a dedicated agreement with an existing customer.

“We are acquiring for approximately $1,000 per horsepower – in line with newbuild cost – a fully utilized completions platform with customers, talent, facilities and cash flow that is complementary to our existing service offerings,” said Greg Powell, Keane president and chief financial officer.

The deal is expected to be completed by July 31.

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Rig Count 

  • Baker Hughes Rig Count the week of May 26, 2017
  • PA     
    • Marcellus 35 unchanged
  • Ohio 
    • Utica 24 unchanged
  • WV 
    • Marcellus 11 unchanged
  • TX
    • Eagle Ford 86 up 1
  • TX & NM
    • Permian Basin – 362 up 1
  • ND
    • Williston – 45 up 1
  • CO
    • Niobrara – 27 up 4
  • TOTAL U.S. Land Rig Count 881 up 7

PA Permits May 18, to May 25, 2017

       County                 Township            E&P Companies

1.    Lycoming                Jackson                SWN
2.    Washington            Amwell                EQT
3.    Washington            Amwell                EQT
4.    Washington            Amwell                EQT
5.    Washington            Amwell                EQT
6.    Washington            Somerset            Range

OH Permits for week May 20, 2017

       County            Township                E&P Companies

1.    Belmont              Mead                    Gulfport
2.    Belmont              Mead                    Gulfport
3.    Carroll                Washington            Rex
4.    Carroll                Washington            Rex
5.    Guernsey            Millard                   Eclipse

Joe Barone 610.764.1232
Vera Anderson 570.337.7149

Utica Summit 2019