BusinessCreator, Inc.

NewsLetters

Expo/Industry events for the next few months

Utica Midstream
June 7, 2017
Walsh University
North Canton, OH
http://www.uticasummit.com/  

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

DUG East
June 20-22
David L. Lawrence Convention Center
Pittsburgh, PA
http://www.dugeast.com/  

For other events visit http://www.shaledirectories.com/site/oil-and-gas-expo-information.html

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

FERC Confirmation Hearings Update.  The Senate Energy and Natural Resources Committee held hearings on the nomination of Neil Chatterjee and Robert Powelson on May 25, 2017.

The hearing did not appear to result in any significant concerns for these nominees.  The following topics were raised:

§  LNG exports;

§  State renewable portfolio standards;

§  Nuclear waste;

§  Competitive pressures that nuclear power projects face;

§  Alaska gas pipeline and LNG project;

§  Grid reliability and baseload generation;

§  Integration of distributed energy into the grid;

§  New transmission capacity;

§  DOE loan guarantee programs;

§  Climate change;

§  Strategic Petroleum Reserve;

§  Public Utilities Regulatory Policies Act; and

§  Proposed DOE budget cuts.

The next step is for the Senate Energy and Natural Resources Committee to hold a business meeting to vote on whether the approve the nominees.  This meeting has been scheduled for June 6, 2017, at 9:30am.

Once the nominees are approved by the Senate Energy and Natural Resources Committee, they can be listed on the Senate executive calendar.  This will enable Senate Majority Leader Mitch McConnell to raise the nominations before the full Senate.

Senator Murkowski, who is Chair of the Senate Energy and Natural Resources Committee, has stressed the importance of restoring a quorum at FERC as soon as possible.  In addition, it appears likely that the Senate Majority Leader will seek to push the nominees through shortly after the Senate Energy and Natural Resources Committee approves their nominations for the same reasons.  

Assuming all goes smoothly, the full Senate may have an opportunity to confirm the nominees by mid-June.  FERC’s website currently notes that the June 15, 2017 monthly Commission Meeting has been cancelled.  Once a quorum is restored, FERC will be able to issue orders on pending applications both through its regularly scheduled meetings (the July meeting is scheduled for July 20, 2017) and through notational votes.  

The FERC Update was provided by Sandra Safro, Partner, and James Sartucci, Government Affairs Counselor at K&L Gates LLP, Washington, DC. Contact information: Safro 202-778-9178 and Sartucci 202-778-9374.

FERC Says, “No,” to Rover Drilling.  It was full speed ahead for Energy Transfer’s Rover Pipeline construction project in Ohio–until a series of drilling mud spills hit, including one that dumped some 2 million gallons of bentonite mud into a wetland near the Tuscarawas River in Stark County, OH (see Rover Pipeline Accident Spills ~2M Gal. Drilling Mud in OH Swamp). Not long after the Federal Energy Regulatory Commission (FERC) slapped Rover with a “stop horizontal drilling” order (see FERC Slaps Rover Pipeline with Stop Drilling Order). Let’s put that into context. Most of the pipeline getting laid for Rover is in trenches–not from underground horizontal drilling. There are some places along the route when you can’t dig a trench–like crossing a creek or river, or major highway. In those cases, you drill horizontally underground, underneath the object. When drilling, bentonite mud is used to keep the drill bit cool. Sometimes the mud pumped underground finds its way back out again via cracks in the rock. It is those accidents that FERC (and the Ohio EPA) find a little too frequent and voluminous for their liking. So FERC told ET to stop any new underground drilling. Less than a week after FERC ordered ET to stop drilling, ET filed a request with FERC to begin drilling in two locations key to finishing the first leg of the pipeline–locations where the equipment is already in place, and the erosion controls already set up: Captina Creek in Belmont County, OH, where Rover wants to complete the Clarington lateral, and Middle Island Creek in Tyler County, WV, where Rover wants to complete the Sherwood lateral (see Rover Gets Serious About Mud Spills, Asks FERC for OK to Drill). FERC responded to ET’s request to drill in those locations last Thursday: NO…

ETP Says “Rover To Be Delayed.”  Energy Transfer Partners (ETP) on Wednesday confirmed its $4.2 billion Rover natural gas pipeline now under construction across northern Ohio is likely to be delayed, Kallanish Energy reports.

The company hopes to complete Phase 1 to Defiance in northwest Ohio by late July or August, company spokeswoman Alexis Daniel told NGI’s Shale Daily.

The original start-up date for that segment had been July 1. Portions of Phase 1 might be completed in early July, she said.

Phase 2 from Defiance to the Dawn (storage) Hub in Ontario is expected to be in operation by Nov. 1, and that date has not changed, she told the publication.

The Texas-based company has run into problems with the Federal Energy Regulatory Commission and the Ohio Environmental Protection Agency over spills from the pipeline’s horizontal directional drilling to go under highways and streams.

FERC has rejected an ETP request to drill two key stream crossings in Ohio and West Virginia for the 713-mile pipeline.

The request had been filed after the federal agency had halted such drilling because of environmental problems at several Ohio locations.

FERC said approval to resume such drilling is dependent on the investigation of independent third-party, Missouri-based GeoEngineers, into what happened at a Rover spill where fluids from horizontal directional drilling (HDD) spilled along the Tuscarawas River in southern Stark County.

The spill was estimated at 1.5 million to 2 million gallons of mud that covered about 6.5 acres of wetlands. It involved drilling mud containing bentonite, plus dirt and rock cuttings. The mud is used to lubricate and cool drilling tools.

The company had asked FERC to allow HDD drilling at Captina Creek in Belmont County in eastern Ohio and at Middle Island Creek in Tyler County, W.Va. Getting those crossings completed are key needed steps, the company had said.

In the latest report to FERC, ETP said it is continuing HDD at 23 locations along the pipeline that were under way when the FERC order was issued. That drilling can continue, but other HDD remains halted.

The company said the pipeline is in “full construction along the majority of the project route.”

It also reported 11,406 workers have been trained for pipeline construction.

Rover will transport natural gas from the Utica and Marcellus Shale plays in Ohio, Pennsylvania and West Virginia to the Midwest, Ontario and the Gulf Coast. It includes two lines that are both 42 inches in diameter to move up to 3.25 billion cubic feet per day.

What Does NatGas from the Permian Mean?  The oil-rich Permian Basin is emerging as a major source of new natural gas, a development that could deepen an existing glut and pressure gas prices for years.

The West Texas region has become the most prolific spot for horizontal oil drilling and fracking. The new oil wells also produce natural gas, making it a nearly free byproduct that energy companies can then sell on top of the more-sought-after crude.

Gas production in the Permian Basin is likely to triple by 2020 from its 2010 levels, analysts say. The region is poised to rival new gas output from the Appalachian Marcellus Shale, the U.S.'s biggest gas-producing region.

Businesses and investment firms are earmarking billions of dollars for new pipeline connections to take away gas so that drillers can keep pumping oil.

Blackstone Group LP last month agreed to pay $2 billion for EagleClaw Midstream Ventures LLC, a gas-focused pipeline company in the region. Kinder Morgan Inc. and at least two others have announced plans to spend billions of dollars on new pipelines.

The rapid growth among oil drillers and the support for pipeline projects both in Texas and from President Donald Trump's administration are helping make those investment decisions easier.

Natural-gas prices are down 16% year to date, with near-record production and modest winter-heating demand leaving storage levels 11% higher than the five-year average. On Tuesday, natural gas for July delivery declined 5%, to $3.1450 a million British thermal units.

Prices fell to a one-month low following predictions of relatively cool weather through the first weeks of June.

During the summer, hot weather that prompts consumers to crank up air conditioners that run on gas-fired power typically drives demand. At the same time, the prospect of rising natural-gas production is also weighing on prices, analysts at FirstEnergy said in a note Monday.

Gas production in the Permian is expected to increase by 5.5 billion cubic feet a day from the end of last year to reach 12.5 billion cubic feet by the end of 2020, according to energy investment bank Tudor Pickering Holt & Co. in Houston.

The Marcellus, which has long been the fastest-expanding gas field, is likely to add 6.1 billion cubic feet during the same period, not much more than the Permian, though its total production will be two times that of Permian by 2020.

All that fresh output could send gas prices back down to historic lows next year, said Brandon Blossman, an analyst at Tudor Pickering. Permian "producers are concerned they can't get rid of it," he said. "They're not really concerned what they're going to get for it."

Six months ago, many analysts and executives thought a slowdown in drilling nationwide and increasing export demand could reverse the oversupply of natural gas. Some producers expected a shortage of pipelines to ship gas out of the oil patch might slow their move into the Permian.

But that picture has changed with the wave of new, cheap gas from the Permian and pipeline companies willing to spend on new connections.

New long-haul pipelines also are slated to unlock Marcellus supply for the Midwest and Southeast. Resurgent Haynesville-shale drilling is likely to boost output from Louisiana. All that potential supply is helping keep prices in the futures market at the lower end of their range from the past two decades.

Oil wells nationwide are expected to generate another 9 billion cubic feet a day of natural gas over the next several years, nearly covering all new demand, according to estimates from Tudor Pickering and Macquarie Group.

Many analysts expect the increasing supply to keep international prices low, too, as the U.S. becomes more of a global supplier. U.S. producers are shipping vast new amounts of gas to Mexico and several export terminals are set to open that will ship gas by sea.

Because Permian drillers are after oil, gas prices could hit historic lows, probably as little as $1.50 a million British thermal units, before it would stop them from drilling, according to energy consulting firm Wood Mackenzie.

From a fifth to a half of what comes up from a Permian oil well is actually natural gas or ethane, propane and other fuels called natural-gas liquids. Producers in the region are starting to concentrate in a part of the Permian called the Delaware, where volumes of everything are higher.

Oil companies want to move gas as quickly as possible so they can produce more oil, said Duane Kokinda, Kinder Morgan president. His firm held talks with customers this year and received bids in excess of the capacity on Kinder's natural-gas pipeline, Mr. Kokinda said. "Based on the demand we got," he said, "we're looking at making it bigger."

New MPLX LP Head.  Michael J. Hennigan, chief executive of Sunoco Logistics Partners before its recent merger with parent company Energy Transfer Partners, is leaving ETP to take a position heading the pipeline operations for Marathon Petroleum Corp. of Findlay, Ohio.

Marathon announced Tuesday that Hennigan, a longtime veteran of Sunoco’s former pipeline subsidiary and a Chester County, PA resident, will become president of MPLX LP, Marathon’s pipeline affiliate. Hennigan will replace Donald C. Templin, who was promoted Tuesday to Marathon’s president.

At MPLX, Hennigan will oversee a network of pipelines and terminals in the Midwest and Gulf Coast that connect Marathon’s network of refineries to crude-oil supplies and to its retail outlets. At Sunoco Logistics, he oversaw the expansion of its network, including construction of the Mariner East pipeline system from the Marcellus Shale fields to a new fuel terminal in Marcus Hook.

“Mike brings a tremendous depth of experience, having led one of the most successful growth-oriented master limited partnerships,” said Gary R. Heminger, Marathon’s chairman and CEO. “Mike has demonstrated outstanding commercial skills as he set the direction, vision, and strategy while serving as chief executive.”

Kelcy Warren, ETP’s president and CEO, said the company had hoped Hennigan would stay with ETP following the merger. “We are happy for Mike and his family that he has been offered a key leadership position which will allow him to remain closer to the Philadelphia area,” Warren said in a statement.

OH Shale Investment.  Total Utica Shale play-related investment In Ohio topped $50.4 billion from 2011 through June 2016, according to a new study by Cleveland State University.

The total includes $38.8 billion in upstream investment by oil and gas operators, $8.1 billion in midstream projects and $3.3 billion in downstream investment during the 66-month timeframe, Kallanish Energy finds.

Five producers, all independents, have each spent more than $1 billion over the life of the study. Chesapeake Exploration ($7.39 billion), Gulfport Energy ($3.20 billion), Antero Resources ($2.31 billion), Ascent Resources Utica ($1.91 billion), and Eclipse Resources ($1.18 billion) combined have spent $16 billion over 66 months.

The totals exclude spending on royalties, lease operating expenses, bonuses for undeveloped acreage and taxes.

Researchers from Cleveland State (CSU) and Youngstown State University (YSU) arrived at their findings using industry interviews and publicly available data.

The study was prepared for JobsOhio, a private, nonprofit corporation that promotes job creation and economic development in Ohio.

The methodology for CSU’s upstream investment estimate focused on one-time land investments, drilling, roads and gathering lines, the cost of storage, processing and disposal of produced water, lease bonuses and royalties paid to mineral rights owners.

Looking at per county investment of more than $1 billion, six counties, including Carroll, Belmont, Harrison, Monroe, Guernsey and Noble combined totaled $18.82 billion.

According to the study, 21 counties have experienced upstream investment over the life of the study, totaling $21.03 billion.

This $21 billion excludes royalties, bonuses for undeveloped acres, lease operating expenses and operator taxes.

Trump Pulls out of Paris Climate Treaty.  President Trump ended the suspense Thursday when he announced his administration will exit the Paris climate agreement.

"So we're getting out," Trump said. "The Paris accord is very unfair at the highest level to the U.S."

Trump’s decision fulfills a campaign promise and satisfies strong Republican opposition to the global climate deal, but also isolates the U.S. and is certain to bring condemnation from world leaders and critics in the scientific community. 

Critics of the Paris agreement argue it hurts the economy, but supporters say it will create jobs down the line, Kallanish Energy reports.

“The Paris accord will undermine our economy,” Trump said, adding that it “puts us at a permanent disadvantage. ”It’s time to exit.”

The Paris Climate Agreement is a pact between nearly 200 nations to voluntarily reduce their greenhouse gas emissions in an effort to fight climate change. The U.S., the world’s second largest emitter of carbon (behind China), would be required to reduce fossil fuel emissions nearly 30% by 2025.

Former President Obama used his power as president to join the Paris Accord without a vote in Congress. Similarly, Trump used his authority to call it quits.

Vermont Sen. Bernie Sanders called Trump’s decision “an abdication of American leadership and an international disgrace.”

Republican National Committee Chairwoman Ronna McDaniel applauded the news and credited Trump with delivering “on his campaign promise to put American workers first.”

“The president is sending a clear message that we will no longer remain beholden to burdensome international deals at the expense of our taxpayers,” she said. “I commend the president for making this decision that will save the U.S. economy from the loss of millions of jobs and trillions in economic output.”

How Much Drilling Is Left in the DJ Niobrara Basin? (Another excellent report form BTU Analytics)  How much longer can any US shale play sustain its rate of drilling, given core acreage is finite? BTU Analytics spends a significant amount of time investigating this question. Even slight changes in assumed drainage for an individual well (the acreage used up by a well, which effectively removes that acreage from the area of land that can be drilled) can lead to meaningful changes in inventory estimates, which then can lead to changes in how long today’s drilling pace can be sustained from a physical inventory perspective.

Consider this: if you were to assume all historical and future horizontal wells have been/are drilled in an optimized way (meaning wells are laid out in the most efficient way possible),  DJ Basin drilling could be sustained for nearly 23 years at the current pace of activity. However, because this is the real world and horizontal drilling has not been/will likely not be optimized, a more accurate estimate of that is considerably different.

The above map shows the location of horizontal wells drilled in the DJ Basin. Some wells run north and south, others east and west. The spacing of historical well bores leaves gaps where no other wells can be filled in, and lateral lengths of wells differ across the region. Adjusting for this reality of where historical wells are, but assuming well locations are optimized in the future, drops the number of remaining years of inventory to 19 years. However, this estimate is still a bit off, since there hasn’t been consideration for the vertical wells that have been drilled in the area.

The above map shows the addition of vertical wells drilled since 2006 to the acreage. Hypothetically it makes sense that vertical wells should reduce the amount of acreage prospective for horizontal development. However, basin producers have downplayed the impact of previous vertical development.  In light of this, BTU Analytics has drawn a line in the sand for the purpose of this article  and included only vertical wells from 2006 forward (this is necessary since assuming legacy vertical wells all had the same drainage would show that there is essentially no DJ inventory left), and using those numbers brings the inventory down further, from 19 years of remaining inventory to 17.5 years. The chart below summarizes the changes in locations based on each set of assumptions.

One thing to keep in mind is that not all of these locations are viable. These locations are based upon acreage delineated by horizontal wells, and we have not differentiated between acreage that is likely to breakeven at $30/WTI from acreage with breakeven at $100+. For more information on BTU Analytics’ location analysis, including our predictive economic grids, check out the E&P Positioning Report.

GE – Baker Hughes on Track.  The proposed acquisition of U.S. oilfield services company Baker Hughes by General Electric will not harm competition in relevant markets, Kallanish Energy learns from the European Union’s competition watchdog Wednesday.

The unconditional clearance from the European Commission is one less hurdle in the way of the multi-billion dollar combination, expected to create the world’s second largest oilfield services business, behind No. 1 Schlumberger. The combination would have more than $32 billion in revenue.

“The companies remain confident in the value that the combined company will deliver to its customers, employees, shareholders and to the oil and gas industry,” GE said, in a statement. “Baker Hughes and GE continue to work constructively with regulators and expect to close the transaction in mid-2017.”

The EC investigated areas in which the companies are active such as onshore and offshore electrical submersible pumps, chemicals used in the refining and petrochemicals industry and sensors used in drilling and wireline applications.

“Both companies are active in the provision of oilfield services to oil & gas exploration and production companies in the European Economic Area (EEA) and worldwide. On a number of specific markets the two companies sell competing products. For other markets, GE is a supplier to Baker Hughes and its competitors,” said EC. “The proposed transaction would not raise any competition concerns.”

EPA Puts Methane Rules On Hold.  The U.S. Environmental Protection Agency on Wednesday stayed portions of new federal rules on fugitive methane emissions from drilling that were set to begin tomorrow, Kallanish Energy reports.

The stay was made while the EPA works through the reconsideration process.

Using its Clean Air Act authority, the agency issued a 90-day stay on the methane leaks, pneumatic pumps and professional engineer certifications from the May 2016 rule adopted by the Obama administration.

Sources do not have to comply with those requirements while the stay is in place.

The EPA said its action is in line with President Trump’s Energy Independence executive order that directed the EPA to review oil and gas rules. The agency says it expects to propose new rules that will allow for public comment.

The EPA had said in April that it was reconsidering the methane rules. The rules have been challenged by industry groups in court where the case is pending.

The methane rule would curtail emissions from new and modified oil and natural gas wells. It also impacts processing plants, pipelines and storage facilities.

The rule was adopted largely to reduce global-warming emissions. The rule does not affect existing wells or facilities.

Earlier, the Trump administration had asked a federal appeals court to delay taking action on the methane rule. It said more time was needed to decide if it wanted to repeal or rework those rules.

Oil Flowing in the Dakota Access Pipeline.  Energy Transfer Partners (ETP) said Thursday crude oil is now flowing on its controversial Dakota Access Pipeline, Kallanish Energy reports.

However, the Dallas-based midstream/transportation company will face scrutiny later this summer on whether it violated North Dakota rules during construction.

The Bakken Pipeline includes Dakota Access and the Energy Transfer Crude Oil Pipeline (ETCO). The combined line is a 1,872-mile, primarily 30-inch pipeline system that transports U.S.-produced crude from the Bakken/Three Forks play in North Dakota, to a storage and terminaling hub outside Patoka, Ill., and/or down to additional terminals in Nederland, Texas.

The $4.78 billion Bakken Pipeline is a joint venture between Energy Transfer Partners, with a 38.25% interest; MarEn Bakken Co., with a 36.75% interest; and Phillips 66 with a 25% interest. MarEn is owned by MPLX and Enbridge Energy Partners.

Halliburton and Universal Wells Are Hiring.  Drilling contributes to lowering unemployment.   Halliburton and Universal Wells are adding about 200+ jobs in the natural gas drilling.  Halliburton is estimating adding 100 jobs; Universal Wells is looking at an estimated 100-150.  And the pipeline industry is contributing as well as Energy Transfer has trained some 11,400 to work on the pipelines.   

ShaleDirectories.com is looking to do our part by supporting the industry and offering job postings on ShaleDirectories.com   For more information contact vera@shaledirectories.com 570-337-7149 or jbarone@shaledirectories.com 

Stay connected and current on the oil & gas industry.  Receive Facts & Rumors directly to your email.  

Sign up now athttp://www.shaledirectories.com/site/newsletter.html.   Be informed, be prepared.

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 June 2, 2017
     
  • PA     
    • Marcellus 33 down 1
  • Ohio 
    • Utica 25 up 1
  • WV 
    • Marcellus 11 unchanged
  • TX
    • Eagle Ford 86 unchanged
  • TX
    • Permian Basin – 364 up 2
  • ND
    • Williston – 46 up 1
  • CO
    • Niobrara – 28 up 1
       
  • TOTAL U.S. Land Rig Count 889 up 8

PA Permits May 25, to June 1, 2017

       County                 Township             E&P Companies

1.    Bradford                Overton                Chief
2.    Bradford                Overton                Chief
3.    Bradford                Overton                Chief
4.    Bradford                Overton                Chief
5.    Bradford                Overton                Chief
6.    Bradford                Overton                Chief
7.    Bradford                Overton                Chief
8.    Bradford                Overton                Chief
9.    Bradford                Overton                Chief
10.  Potter                    Sweden                JKLM
11.  Westmoreland        Derry                    WPX Energy

OH Permits for week May 27, 2017

County            Township                E&P Companies

1.    There were no permits the week leading up to Memorial Day Weekend.

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

Northeast Supply Enhancement