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Expo/Industry events for the next few months

Utica Summit
October 11, 2017
Walsh University
North Canton, OH
http://www.uticasummit.com/  

Midstream PA 2017
October 19, 2017
Penn Stater Conference Center
State College, PA
http://midstreampa.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 Commissioners’ Vote Slowing Down.  A floor vote on the Republican FERC nominees, Neil Chatterjee and Robert Powelson, has not yet been scheduled and it is currently unclear whether Senate confirmation is possible before the end of June.  We note the following complicating factors:

  • Next week is the last week before the Senate takes its one-week recess for the July 4 holidays.
  • Attempts to repeal and replace the Affordable Care Act are expected to dominate the Senate’s time remaining before that recess.
  • Trade press reported earlier this week that Sen. Maria Cantwell (D-Washington), the Senate Energy and Natural Resources Committee’s ranking member, has said that two Republican nominees would not move without a Democratic nominee. 
    • While Richard Glick’s name has been floated as the Democratic nominee and press reports indicate that the White House is processing his paperwork, there has not yet been a formal announcement of his nomination. 
    • As a practical matter, Senate Democrats would need at least three Republican Senators to vote to oppose nominations in order to stop the Republican majority from approving any Executive Branch nominees – including Chatterjee and Powelson.  However, in order to preserve floor time, Majority Leader McConnell may be willing to negotiate with Democrats to ensure a quick confirmation process.

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.

DUG East Highlights.  Hart Energy delivered another informative conference.  While the attendance was off a little, though slightly higher than last year, everyone with whom I spoke left with a number of good leads.  That’s all you can ask for.

With a big event like this, there are always news items and a few rumors.  We heard the following:

  • The overriding complaint that I heard at DUG East was about PA DEP taking an incredibly long time to approve permits.  At our Appalachian Storage Hub Conference, it was mentioned that the Pittsburgh PA DEP office takes 200 hundred days to approve.  So much work is being delayed because of the slow process for permit approvals.
  • The EQT – Rice deal was the talk of the conference.  One of the main topics of discussion was how many Rice people will move over to EQT.  We heard a broad range.  Obviously, people in the industry will be on the lookout for personal announcements coming out of the merger.
  • ExxonMobil is exploring cracker plant possibilities in the Appalachian Basin.  They were present at the Petrochemical Conference and are more visible in the Basin.  (RUMOR)
  • Laurel Mountain Energy is looking to sell the company. (RUMOR) 
  • The Shell cracker plant will have 6,000 skilled workers on its work site beginning in 2018 and it will last three years.
  • Speaking of skilled workers, welders are making $200 per hour.  Some welders are making $250,000 a year. (RUMOR)
  • North Carolina could be the next big shale play. (RUMOR) 
  • Eclipse stated that they believed there would be more mergers and acquisitions.  AND, in spite of their successful production they are a smaller player
  • Inflections has about 20 wells ready to be drilled in Lycoming County (RUMOR)
  • And the same song ‘the industry needs to band together to get the correct information to the public’.   The antis continue to delay pipeline due to hearing bad, incorrect information pipeline.  Support the industry and show up at DEP hearings!
  • The industry would prefer to keep the gas stateside; however, US producers are well positioned to play globally and successfully due to efficiencies.
  • There were more companies exhibiting from TX than previous years.  
  • Apache has discovered an oil reservoir in west TX and believed to be the biggest in the US.  (RUMOR)
  • The New Realities in Oil and Gas in the U.S.  There are a number of occurrences in the oil and gas market in the U.S. that is going to have a profound impact on the world’s price of oil and NatGas.

The price of oil is hovering around $45.  According Jim Cramer on CNBC, the drillers in the Permian have driven their costs per barrel down anywhere from $33 to $38 a barrel.  
The rig count in the U.S. has increased for 22 straight weeks.  Everyone in the U.S. is shaking their heads wondering WHY.  Because as Cramer stated, the E&P companies have dramatically driven down their costs.  

  • The price of oil will probably stay in a tight trading range.  If there is any movement, it will probably be down.  I do not see anything that will drive it up.
  • E&P companies are drilling a considerable amount of oil in the Permian.  Guess what?  They are producing an incredible amount of NatGas that has to find a home. And it’s incredibly cheap.  Anything the E&P companies get for NatGas is almost found money because their focus has been on oil. 
  • According to an article in Bloomberg this week, there’s going to be a “battle” between the Permian and Marcellus for gas markets in the U.S.  I’m reading about the pipelines being funded to move the gas from West Texas to the Gulf.  Bloomberg comments that there could be stiff competition between the Marcellus and Permian for the Midwest NatGas markets.  Marcellus NatGas going to the Gulf will face challenges from Permian NatGas.
  • NatGas prices will remain at current prices or lower if the Marcellus and Permian competition materializes.  
  • NatGas producers will work even harder to drive their costs down as this battle ensues.
  • Even more U.S. NatGas will be exported.  Cheniere is sending NatGas all over the world, Latin America, Southeast Asia, and Eastern Europe.  It’s even sending NatGas to the Middle East.  Qatar is the major NatGas producer in the Middle East and it supplies the region.  With the current political strife between Qatar and its neighbors, the Middle East NatGas market may opt for U.S. NatGas rather than Qatar NatGas.
  • Ineos is expanding its cracker plants because of inexpensive Marcellus NatGas.  Manufacturing companies will benefit the most from the abundant cheap natural gas in the Appalachian Basin. 
  • Pipeline orders were generally 12” pipe; however, orders are now starting to include more 24” pipe.

Lower U.S. Oil and NatGas Prices Could Curtail Terrorism

As many of us know, everything in life boils down to money.  As the U.S. exerts greater influence and possibly control of the global price of oil and gas, funds going to ISIS and the Taliban could be greatly reduced.  As U.S. E&P companies operate more profitably at lower prices, it will keep global prices depressed which should mean less funds going to the terrorist organizations.

Let’s hope federal, state and local governments don’t hamper the progress the U.S. oil and gas is making. Save taxes and lives.   PLEASE GET OUT OF THE WAY! 

Again, Environmentalist Elitists Screw the Middle and Low Class Pennsylvanians.  A decision by Pennsylvania's highest court on Tuesday was hailed as a victory by environmental advocates on the use of public natural resources and money from oil and gas drilling in state forests.

Brought originally as a challenge to the state government's unfettered use of money from drilling in publicly owned forests, the state Supreme Court went farther in its effort to strengthen the hand that environmental considerations play in government decisions.

John Dernbach, a professor of environmental law and sustainability at the Widener University Commonwealth Law School, called it a "landmark" decision. It the second major high court decision won by environmental advocacy groups in challenges that grew out of the Marcellus Shale natural gas boom in Pennsylvania.

Most of the money generated from drilling in the PA forests went to the PA Fish and Boat Commission.  Most middle and low case Pennsylvanians who hunt and fish in PA, for food as much as a sport, will now pay higher fees for licenses which they cannot afford.  

EQT Buys Rice.  EQT Corp announced that it had acquired Rice Energy for $6.7 billion dollars, making it the biggest natural gas producer in the United States.

EQT will now provide roughly 5% of all the natural gas supply in the U.S., leap-frogging over massive energy powerhouses like ExxonMobil.

Why Rice? Well, Rice Energy controlled approximately 185,000 acres of land in the Marcellus Shale play — which accounts for one-fifth of all the natural gas extracted from beneath U.S. soil.

We’ve talked about the Marcellus quite a bit here at Energy and Capital. The play has an incredible amount of natural gas reserves at hand, with companies pumping out about 19.3 billion cubic feet every single day!

Of course, demand is higher than ever. Last year, the U.S. consumed a total 27.4 trillion cubic feet of natural gas.

And now that U.S. natural gas has finally reached the world stage, we could be seeing more of these huge deals in the future.

After news of the deal broke, Rice Energy’s shares jumped from Friday lows of $19.44 to highs of $25.52.

The People Like NatGas.  Will Their Local Officials Listen?  An overwhelming majority of voters in Connecticut, Massachusetts, New Hampshire and New York State support energy delivery of transportation fuels and the use of natural gas infrastructure – including the approval and construction of more pipelines in the region, according to a new Consumer Energy Alliance poll.

Among the survey’s findings:

* 97% of respondents agree affordable, reliable energy is important for Northeastern families and businesses.
* 92% agree maintaining and delivering adequate supplies of affordable fuels is necessary for consumers and businesses.
* 88% believe having sufficient supplies of natural gas is important in keeping electricity and home heating affordable and reliable.

The polling was done to examine how much support energy infrastructure and pipelines have in the U.S. Northeast, home to several very high-profile public debates and other key energy issues among voters – and what role each or all could play in the 2018 elections, Kallanish Energy learns.

"Northeastern governors, legislators, and regulators should pay close attention to these results. Despite what you are hearing from the loudest anti-energy voices, the vast majority across New England and New York want a rational, balanced debate that protects, maintains, and grows steady supplies of affordable and reliable energy made possible by pipelines, “CEA president David Holt said.

Other findings from the poll include:

* 81% support “ensuring the Northeastern U.S. has enough energy capacity to meet the demand for electricity.”
* 74% agree “a balanced mix of renewables, natural gas, and nuclear is important to keep electricity affordable and reliable.”
* 76% support “generating electricity using natural gas and fuels.”

The poll found 86% of voters in Connecticut, Massachusetts, New Hampshire and New York say energy will be important in how they vote in next year’s election cycle.

"Voters made it loud and clear that if you are a candidate for office, think long and hard before endorsing policies that don’t support the safe, responsible development of energy infrastructure and rational, all-of-the-above policies,” Holt said.

There is one area of concern, according to the alliance. There’s an apparent disconnect or lack of understanding from respondents as to how pipelines and other related energy infrastructure impact fuel and electricity prices. Only 6% of respondents identified a lack of pipeline infrastructure as a key driver in the region’s high electric rates.

Rover Pays Up to Keep the Pipeline Rolling.  Rover Pipeline will pay an additional $1.5 million to an Ohio historic group to mitigate a problem along the under-construction Rover natural gas pipeline, Kallanish Energy reports.

The company, a subsidiary of Energy Transfer Partners, must pay the $1.5 million by July 7 to the Ohio History Connection Foundation, a non-profit group that supports the Ohio History Connection (formerly the Ohio Historical Society), according to the six-page document filed with the Federal Energy Regulatory Commission.

The $1.5 million will be in “full satisfaction of additional mitigation efforts,” the document says. The money will be used for statewide historic preservation education.

That will bring the amount paid by Rover Pipeline to $3.8 million for razing a historic house along the pipeline route in mid-2016 in Carroll County, eastern Ohio without FERC approval.

FERC had conducted a dispute resolution hearing, but Rover and the state office agreed to amend the earlier agreement. The amendment came after a dispute arose as to how much Rover Pipeline would pay to the Ohio State Historic Preservation Office. There were reports the state was seeking $1.5 million a year for five years. Rover rejected that, and FERC interceded.

The original agreement had been filed Feb. 13. It called for $1 million for local historical preservation efforts in 18 Ohio counties where the pipeline will run and $1.3 million to Ohio historical preservation.

The Stoneman House, built in 1843 near Leesville in Carroll County, was purchased by Energy Transfer Partners in May 2015. It was to be used for offices during pipeline construction, but that did not work out.

The company razed the structure that was eligible for inclusion on the National Register of Historic Places. That was done without notifying FERC and that appears to have angered FERC officials.

Rover Pipeline said it was within its rights because the house was not on the National Register and even if it were, it could be demolished as long as no federal funds were used.

It has stated in papers filed with FERC its purchase of the Stoneman House had nothing to do with the pipeline itself and that only pipeline-related activities must be reported to FERC.

FERC then contacted the federal Advisory Council on Historic Preservation, an independent federal agency involved in saving old buildings, to determine what corrective steps should be taken.

The $4.2 billion pipeline is under construction, although horizontal directional drilling to cross under streams and highways has been halted after major spills of drilling mud including some polluted with diesel fuel, according to the Ohio Environmental Protection Agency.

The 711-mile pipeline will carry natural gas from the Marcellus and Utica Shale plays to the Midwest, Canada and the Gulf Coast. The pipeline with two lines that are both 42 inches in diameter would move up to 3.25 billion cubic feet per day.

More DUG East Reporting.  Southwestern Energy is a big supporter of Appalachia rising.

The Texas-based energy company is especially thrilled by the stacked potential of the Appalachian Basin in southwestern Pennsylvania, northern West Virginia and eastern Ohio, vice president and general manager David Dell’Osso told about 320 people Wednesday at Hart Energy’s DUG East Conference & Exhibition in Pittsburgh. Kallanish Energy was in attendance.

That region includes the Marcellus, the Utica and the Upper Devonian Shale plays.

Southwestern has drilled its first Utica well in West Virginia’s Marshall County and is drilling is a second Utica well in Pennsylvania’s Washington County, Kallanish Energy reports.

That part of the Appalachian Basin will be a “long-range growth engine for our company,” Dell’Osso said.

The natural gas production in the Appalachian Basin is huge, and the company “thinks this basin matters to America,” he said. The company expects its year-end 2017 production growth rate to jump by 50%, mostly because of what’s happening in the Appalachian Basin, he said.

He said the company’s reserves top 45 trillion cubic feet-equivalent in the Appalachian Basin.

Southwestern is also active in northeast Pennsylvania in the Marcellus, especially in Susquehanna County, and in the Fayetteville Shale in Arkansas.

There are likely to be more consolidations of upstream and midstream companies in the Appalachian Basin in the next three to five years, in the wake of this week’s deal between EQT and Rice Energy, said Art Krasny, managing director of Acquisitions and Divestitures, Wells Fargo Securities. The deal “makes a lot of sense,” he said.

Pittsburgh-based EQT’s recent acquisition of Rice Energy for $6.7 billion ($8.2 billion when including the midstream division) to create the country’s No. 1 natural gas producer is “a tremendous transaction and creates a lot of synergies,” said Christopher Kalnin, managing director and co-founder of Kalnin Ventures,

In other DUG East news, Tom Petrie, chairman of Petrie Partners, said the U.S. will likely end up as one of the top three countries in the world for liquefied natural gas.

The U.S. will likely end up third, behind Australia and Qatar, he said, while Asia and Europe will likely become big U.S. LNG customers in coming years, he said.

Exports will provide a key market for U.S. natural gas producers, Petrie said.

Takeaway Capacity Coming to the Appalachian Basin.  The long-awaited natural gas takeaway pipelines are on the way to the Appalachian Basin, says Kathryn Downey Miller, a partner and managing director of Analytics and Consulting Services at BTU Analytics.

“Some 4.6 billion cubic feet per day (Bcf/d) of new pipeline capacity will come from the Northeast (U.S.) in the next 12 months,” according to Downey Miller, addressing roughly 350 in attendance Wednesday during Day One of Hart Energy’s DUG East Conference & Exhibition.

Kallanish Energy was in attendance at the program, in Pittsburgh.

Producers in the Northeast/Appalachian Basin/Marcellus and Utica Shale plays have been begging for infrastructure for years, with the basin currently producing more than 20 Bcf/d.

“In 2013, the gas initial production rate per 1,000 feet of lateral was 914 (thousand cubic feet, or Mcf),” Downey Miller said. “In 2016, it was 1,078 (Mcf, or 1.08 million cubic feet).”

While IPs went up, drilling and completion, D&C, costs fell during the same time frame, according to the BTU Analytics executive.

“D&C per lateral foot in 2013 was $1,336, but dropped to $837 in 2016,” Downey Miller said. “Break evens are moving lower, and fewer bad wells are being drilled.”

Hess Sells Permian Assets.  Hess Corp. agreed to sell its interests in enhanced oil recovery (EOR) assets in the Permian Basin to Occidental Petroleum (Oxy) for $600 million, effective June 1, the companies said Monday.

The assets produced an average of 8,200 barrels of oil-equivalent per day (BOE/d) in 2016 net to Hess. They include: the Seminole-San Andres Unit (Hess 34.2% interest) and the Seminole Gas Processing Plant (Hess 46.6% interest) in Texas; the West Bravo Dome C02 field in New Mexico (Hess 100% interest); and a 9.9% non-operated interest in the Bravo Dome unit in New Mexico.

The agreement is subject to regulatory approvals and other customary closing conditions and is expected to close Aug. 1, Kallanish Energy learns.

In a separate statement, Occidental announced a number of purchase and sale transactions in the Permian, which together add roughly 3,500 BOE/d to its production at no net cash outlay. The deals include the divestment of non-strategic acreage in Andrews, Martin and Pecos Counties in Texas, reducing its Permian Resources position by 13,000 net acres.

“These transactions support our pathway to breakeven at $50 after dividend and production growth and our long-term, returns-focused value proposition,” said CEO Vicki Hollub. “By monetizing assets in the tail of the portfolio that were not strategic to us, but are synergistic to other companies, we are creating value for our shareholders.”  

DOE’s $20 Million in Research Funding.  DOE’s Office of Fossil Energy announced the availability of $20 million for cost-shared oil and gas research projects to increase recovery efficiency from unconventional oil and gas wells and prevent offshore spills and leaks. This new funding opportunity seeks projects that will advance DOE’s objective to support a more environmentally responsible, secure and resilient U.S. energy infrastructure, while enhancing economic competitiveness and national security.

The three topic areas for this funding opportunity are as follows:

  • Technology validation using field laboratories—$15 million 60 months;
  • Advancement in subsurface diagnostics—up to $3 million
  • Offshore spill and leak prevention—$2 million

The first two topic areas address critical gaps in the understanding of reservoir behavior and optimal completion, stimulation, and recovery strategies for unconventional oil and gas. The aim of these topic areas is to increase and enable more cost-efficient and environmentally sound recovery from shale gas, tight oil, and tight gas reservoirs. The third topic area focuses on offshore oil and gas spill and leak prevention. The aim of this topic is to develop innovative solutions that predict geologic hazards, and prepare for and prevent offshore incidents through risk reduction and mitigation technologies.  Learn more about this funding opportunity at https://www.fedconnect.net/FedConnect/default.aspx?ReturnUrl=%2ffedconnect%3fdoc%3dDE-FOA-0001722%26agency%3dDOE&doc=DE-FOA-0001722&agency=DOE 

To ensure you always have the latest updates about DOE’s Office of Fossil Energy, visit our website or sign up for news announcements. 

New Lateral Record for Eclipse.  Move over, Purple Hayes 1H and Great Scott 3H wells.

Pennsylvania-based Eclipse Resources has drilled a new record-setting super-lateral in Ohio’s Utica Shale, Kallanish Energy reports.

The Outlaw C 11H well in Guernsey County has a total measured depth of 27,750 feet and a lateral extension of about 19,500 feet, drilled in 17 days.

It's reportedly the longest onshore lateral in the world, as Eclipse Resources continues to develop so-called super-laterals. That well is in the company’s Utica Shale condensate area. In general, longer laterals mean more pay zone for drillers.

The new well topped the 19,300-foot lateral completed last month at the Great Scott 3H well and the 18,544-foot Purple Hayes IH well that was drilled in early 2016. The Purple Hayes well cost about $15.8 million to drill.

All three wells are in Guernsey County in east-central Ohio.

The Great Scott 3H and Outlaw C 11H wells are expected to begin completions in the third quarter 2017, said chairman, president and CEP Benjamin Hulburt, in a statement.

Eclipse has also turned to sales its seven-well Moser pad in Ohio’s Monroe County.

Those wells are located in the Utica’s dry gas window and are producing about 100 million cubic feet of natural gas per day collectively, the company said.

The company also completed its first two Marcellus Shale condensate wells and the company may start developing that area in Q3 2017. Hulburt predicted the company’s production in third quarter 2017, would likely exceed 350 million cubic feet-equivalent per day.
   
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Rig Count 

  • Baker Hughes Rig Count the week of June 23, 2017
     
  • PA    
    • Marcellus 34 unchanged
  • Ohio 
    • Utica 27 unchanged
  • WV 
    • Marcellus 13 unchanged
  • TX
    • Eagle Ford 84 unchanged
  • TX
    • Permian Basin – 369 up 1
  • ND
    • Williston – 52 up 3
  • CO
    • Niobrara – 28 up 1
       
  • TOTAL U.S. Land Rig Count 915 up 7

PA Permits June 15, to June 22, 2017

       County            Township             E&P Companies

1.    Allegheny           Findlay                Range
2.    Allegheny           Findlay                Range
3.    Allegheny           Findlay                Range
4.    Beaver              Independence       Range
5.    Indiana              Center                  XTO
6.    Potter                Sweden               JKLM Energy
7.    Potter                Sweden               JKLM Energy
8.    Susquehanna     Brooklyn              Cabot
9.    Washington        Amwell                Range
10.  Washington        Amwell                Range
11.  Washington        Amwell                Range

OH Permits for week June 17, 2017

       County               Township              E&P Companies

1.    Belmont                Richland               Ascent
2.    Belmont                Richland               Ascent
3.    Belmont                Goshen                Gulfport
4.    Belmont                Goshen                Gulfport
5.    Jefferson               Cross Creek         Ascent

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

DUG Technology