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NewsLetters

Expo/Industry events for the next few months

Shale Insight
September 27-28, 2017
David Lawrence Center
Pittsburgh, PA
http://shaleinsight.com/ 

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 

PTTGC Buys Land for Cracker in Belmont County, OH. The Thai company is considering building a massive petrochemical facility in eastern Ohio has bought property that used to house a FirstEnergy Corp. power plant.

PTT Global Chemical Public Company Ltd., whose subsidiary may build a multibillion-dollar ethane cracker complex in Belmont County along the Ohio River, bought 168 acres for $13.8 million.

The Akron electric utility no longer owns property at the site of the former R.E. Burger coal-fired power plant, said spokesman Jennifer Young. Hundreds of acres that would hold the plant and are not owned by FirstEnergy (NYSE:FE) were not involved in the transaction.

The sale comes after JobsOhio gave FirstEnergy $14 million to clean up the site and demolish the power plant. JobsOhio, the state's private economic development firm, called the clean-up a "critical step" for the project, which would bring a complex that uses natural gas collected from shale deposits in Ohio and elsewhere to convert and “crack” it for use in a variety of everyday products.

PTT had hoped to make a final decision on whether it'll build the complex in Ohio by this spring, but in February said it would delay a decision until the end of the year.

Dan Williamson, a spokesman for PTT, said in an email that "the company determined this property is so essential to the proposed project, it would be prudent to exercise the purchase option."

PTTGC Cracker Decision Delayed.  I have heard that PTTGC’s final decision will be delayed until the first quarter of 2018.  It is supposed to select either Bechtel or Fluor this summer to be the general contractor.  The purchase of the land is a good sign that the plant will proceed.  (RUMOR)

Oil and gas exploration in the northern section of the Utica shale is starting to accelerate once again, led by Houston-based Hilcorp Energy Co.

Range Back in Northern PA.  Range Resources could be getting active again in Northern PA.  (RUMOR)

Threat to EQT – Rice Deal.  Activist investor Jana Partners disclosed a 5.8%, $590 million, stake in natural gas producer EQT on Monday and urged the company to abandon its $6.7 billion buyout of rival Rice Energy.

The move threatens to squash EQT's plans to become the largest U.S. natural gas producer. Jana began buying shares in April, before the Rice deal was announced in June — a deal that caught Jana by surprise, a source familiar with the matter told Reuters. Since amassing its stake, Jana has become EQT's fourth-largest shareholder.

Jana said in Securities and Exchange Commission filings that instead of buying Rice, the company should move all of its pipeline operations into a publicly traded company and change its board structure, Kallanish Energy learns.

Jana believes EQT would thrive if it focused solely on exploration and production, and believes the Rice deal's delay and tax structure pose problems, according to the source.

The hedge fund has lined up two potential nominees for EQT's board and could nominate them and others, according to regulatory filings. The potential nominees are Daniel Herz and Edward Cohen, president and CEO, respectively, of natural gas producer/investor Atlas Energy Group.

Edward Cohen, his son, Jonathan Cohen, who heads a private investment firm down the block from Jana’s offices in Manhattan; and Herz have spent nearly $7 million of their own money to buy EQT shares in the past several weeks.

The trio has “significant operational and financial expertise, including experience creating significant shareholder value in a company with a comparable structure, set of assets, and geography to the (EQT),” Jana’s SEC filing states.

That’s likely a reference to Atlas’s sale of its Marcellus Shale assets to Chevron in 2011 for $4.3 billion. In 2015, Atlas sold its midstream assets to Targa Resources for $7.7 billion.

EQT acknowledged Monday its parts could be worth more if the company were broken apart and said its managers would study options and create a plan by the end of 2018.

"EQT seeks to maintain an open dialogue with investors and respects their opinions and perspectives," EQT spokeswoman Natalie Cox said, in a statement.

Drilling Definitely Picking Up in the Marcellus.  There were 397 wells drilled in the Marcellus so far in 2017 which is twice the number of wells drilled in 2016 during the same time period.  The presence of 20 additional rigs is drilling this increase.  We’ll have look at this number at the end of the year.  

Drilling Surge Coming to the Appalachian Basin.  While all eyes have been on Energy Transfer’s Rover pipeline project as it is slated to startup sometime this month adding material new takeaway capacity, Northeast production has already begun to surge even prior to its startup. New highs have recently been reached in Appalachia, with dry production exceeding 23.6 Bcf/d based on the pipeline flow sample, an increase of about 1 Bcf/d from the end of May. Is this just the beginning of a flood of new gas from Appalachia to hit the US market as critical new pipeline projects finally come to fruition over the next six months?

The recent increase has come entirely from Western Appalachia including Western Pennsylvania, West Virginia and Ohio, while Eastern Appalachia has remained fairly flat year-to-date, as seen in the figure below.

Eastern Appalachia still remains bottlenecked until new pipeline takeaway capacity comes online. However in Western Appalachia, about 1.2 Bcf/d of incremental pipeline takeaway capacity came online in the fourth quarter of 2016, including the first phase of the TETCO Gulf Markets project, Dominion’s Lebanon West II and the REX Zone 3 Expansion project. Although this capacity came online at the end of last year, total production in the region did not immediately increase to fill this incremental capacity, and in fact has just recently grown enough to backfill the additional capacity. This has been reflected in the recent weakness in Dominion South Basis, which fell an average of $0.57 from May to June, as seen in the following figure.

So why the recent increase in production when much of the year has been fairly flat? It may in part be due to the decrease in excess backlog in the region coupled with the need for increased drilling activity. We estimate excess backlog was essentially depleted at the beginning of this year, requiring new wells to be drilled to grow production, as seen below.

Further, the average spud-to-sales time in Western Appalachia has decreased in 2016, averaging now about six months, as seen in the following figure. Though new pipeline capacity was available at the beginning of this year, an average spud-to-sales time of six months would put it at the June time-frame for incremental molecules from increased drilling activity to hit the pipe.

The increase in production may also be a reflection of the anticipation of the startup of Rover as producers begin to ramp production to meet transportation commitments. In the near term, Rover is set to bring online from 1.5-2 Bcf/d in Phase 1. Beyond the first phase of Rover, 4.7 Bcf/d of additional capacity is slated to come online at the end of the year with the remainder of Rover, TETCO expansion projects, TCO Leach/CGT Rayne Xpress and Nexus. Despite the recent basis weakness, as drilling activity continues to increase, production is poised to grow tremendously when this additional capacity opens up. With the startup of meaningful new Northeast infrastructure finally upon us, questions remain on how quickly production will respond to fill the new capacity, as well as how this potential flood in production will impact and compete with other producing regions in the US. For our outlook the ever-evolving dynamics in the Northeast and the US gas market as a whole, check out the Northeast Gas Outlook and Henry Hub Outlook.

Hilcorp Back in NE OH.  Over the past 12 months, Hilcorp has solidified its base in the northern Utica – especially Columbiana County – through new lease acquisitions, amendments to and renewals of existing leases, and the construction of new well pads, records show.

“They appear to be pretty aggressive in their drilling,” says Jeff Dick, professor of geology at Youngstown State University. Recently, the company completed three wells near where Dick lives in Columbiana County.

Since November, Hilcorp has secured 16 new permits for horizontal wells in Fairfield and Elk Run townships – most recently for the Elkrun-Scheel well pad, according to the Ohio Department of Natural Resources.

The Scheel well pad is under construction just off state Route 517 in Elk Run Township, Dick says, one of the largest footprints for a well pad he’s seen in the Utica. “They’re doing some pretty impressive stuff,” he says, “and it looks like they’re going longer laterals.”

Hilcorp is targeting the area known as the Brinker Storage Field – about 35,000 acres Chesapeake Energy Corp. secured during the early rush for land in the Utica. Chesapeake has since disengaged from new drilling in the region, but so far has held on to its producing wells in Columbiana County. About two years ago, Chesapeake assigned to Hilcorp its leases in the Brinker.

Dick makes an educated guess that most of the gas drilled in this section of the Utica is in the dry gas window, but that’s hard to discern because the state of Ohio does not require energy companies to report how much of a well’s natural gas production is wet gas or dry gas.

According to ODNR data, Columbiana County is home to 60 operating wells that collectively produced 6.572 billion cubic feet of natural gas during the first quarter of 2017, but little if any oil. Chesapeake owns all but 10 of those wells.

Hilcorp owns three in production during the first quarter, while Atlas Noble LLC operates seven producing wells in Unity and Fairfield townships.

The most productive well in the county is Chesapeake’s Paige 5H well in Franklin Township, which yielded 514.1 million cubic feet of gas. The most productive Hilcorp well, according to the latest ODNR data, is the Fairfield-Nolker 7H well in Fairfield Township. It yielded 281.6 million cubic feet of gas during the period.

Hilcorp also operates seven producing wells at the Carbon Limestone well pad in Poland Township and is part of Pennant Midstream LLC’s Hickory Bend pipeline and processing network that runs from western Pennsylvania to a processing plant in Springfield Township in Mahoning County.

As such, Hilcorp is the most aggressive in moving forward in this section of the Utica.

According to data provided through the Columbiana County recorder’s office, over the last 12 months Hilcorp has secured or amended 171 leases – most of them in Fairfield and Elk Run townships.

Permian Rig Count Impact on Midstream Companies.  US drilling activity has stayed strong amid the recent volatility in commodity prices. The Permian Basin, one of most prolific shale plays in the US, is leading other regions in terms of rig count growth.

According to the recent rigs report published by Baker Hughes (BHI), the rig count in the Permian Basin grew to 370 at the end of June 2017, compared with 319 by the end of May, representing a month-over-month rise of 51.

Energy Transfer Partners (ETP), Western Gas Partners (WES), Plains All American Pipeline (PAA), and DCP Midstream (DCP) all expect to benefit from a strong presence in the Permian.

Behind the Permian are the Cana Woodford Shale and the Eagle Ford Shale, which each saw an increase of 11 rigs during the same period. EnLink Midstream Partners (ENLK) and DCP Midstream both have exposure to these two regions.

Judge Grants Injunction to Remove Eco-terrorist from Mariner East 2.  MDN has extensively covered the story of a family in Huntingdon County, PA radicalized by the Big Green movement into opposing the Mariner East 2 pipeline across their property. The Gerhart family, with the assistance of what Sunoco Logistics Partners calls “eco-terrorists,” have pledged to illegally block construction of the pipeline. So a few weeks ago Sunoco asked a Huntingdon County judge to grant an injunction against the Gerharts AND the interloping eco-terrorists–to have them forcibly removed if they attempt to stop construction which is about to begin (see Sunoco Seeks Injunction Against Radicalized ME2 Pipe Protesters). The good news is that late last week the judge granted the injunction. The Gerharts and their eco-terrorist friends will sit their butts in jail if they scarper or scamper?? up a tree to sit, or stand in the way when the bulldozers rev their engines…

Mohican Sun Casino Powered by NatGas.  (Thank you, MDN) The Mohegan Sun Pocono casino, located near Wilkes-Barre, PA, is now powered by Marcellus Shale gas. On June 20 casino officials along with utility giant UGI and local/state politicians gathered to unveil an all-new co-generation energy plant at the casino. The plant uses Marcellus Shale gas to create electricity. The resulting heat is also trapped and used, to heat water, etc. (the “co” in co-generation). The plant cost $3 million to build. Roughly $1 million from a grant from the Commonwealth Financing Authority. The new plant reduces the Mohegan Sun Pocono casino’s so-called carbon footprint by 3,900 metric tons annually–it’s like taking 820 cars off the road. Here’s the story of how a fossil fuel–Marcellus Shale gas–is helping to clean up the environment, and make it cheaper to run the slot machines, at the same time…

GE – Baker Hughes Deal Is Done.  U.S. industrial conglomerate General Electric (GE) and Baker Hughes have completed the combination of what is now the world’s first full stream oil and gas company, bringing together industry-leading equipment, services and digital solutions to the industry.

The new firm, BHGE, will help customers to acquire, transport and refine hydrocarbons with a smaller environmental footprint and at lower cost per barrel, Kallanish Energy learns Monday from the companies.

BHGE’s CEO, Lorenzo Simonelli said “disruptive change is the oil and gas industry’s new normal. We created BHGE because oil and gas customers need to withstand volatility, work smarter and bring energy to more people.”

With estimated combined revenue of $32 billion, BHGE is only behind oilfield services firm No.1 Schlumberger. The company employs roughly 70,000 people, with operations in over 120 countries and dual headquarters in Houston and London. It owns four product companies: Oilfield services, Oilfield equipment, Turbomachinery and process solutions and Digital Solutions.

BHGE aims to drive productivity, lower costs and global innovation to the oil and gas industry by combining physical and digital solutions, which will also increase reliability and uptime. “Applying digital and advanced technologies to oil and gas could bring roughly 5% in productivity improvements across the entire industry,” it said.

Analysts and investors generally praised the deal as demand for data analytics and other high-technology solutions grow. "The GE-Baker deal will likely move the sector towards embracing Big Data in production optimization," said Jonathan Garrett of UK consultancy firm Wood Mackenzie.

HG Energy Buys Noble Energy’s Appalachian Assets.  Noble Energy has closed on a $1.125 billion deal divesting its upstream assets in the Marcellus and Utica shales in northern West Virginia and southwest Pennsylvania, Kallanish Energy reports.

The buyer is HG Energy II Appalachia of Parkersburg, W. Va., a portfolio company of Quantum Energy Partners. HG Energy was not identified when the sale was announced in May.

The sale covers 385,000 net acres plus wells that are producing 415 million cubic feet-equivalent per day (MMcfe/d).

Total production from the assets averaged about 70,000 barrels of oil-equivalent per day (BOE/d) in 2017, Noble Energy said.

The purchase price includes upfront cash of $1.125 billion and an additional contingent amount of $100 million in three equal payments of $33.3 million each.

The contingent price will kick in should the average annual price realization at Dominion South exceed $3.30 per million Btu (MMBtu) in the individual years from 2018 through 2020.

Total proved reserves at year-end 2016 were 1.5 trillion cubic feet-equivalent.

Proceeds from the sale will be used by Noble to pay down all the debt borrowing resulting from the $2.7 billion Clayton Williams Energy buy which expanded Noble’s holdings in the Permian Shale in West Texas and New Mexico.

A separate Appalachian midstream transaction involving the sale of portions of CONE Gathering and CONE Midstream Partners to a portfolio company of Quantum is expected to close by Oct. 1.

Qatar Not a Threat to American LNG Exporters.  America’s gas exporters are, at least for now, pooh-poohing Qatar’s bid for a bigger share of the global market.

Qatar’s plan to boost output by 30%  signaled to rivals including Australia and the U.S. the race is on to find buyers and lock them into long-term contracts. American LNG exporters have already spent years pursuing such agreements.

Meg Gentle, CEO of U.S. LNG exporter Tellurian told Bloomberg: The world needs more LNG capacity to meet growing demand, and “we welcome all potential supply sources.”

The impact of Qatar’s gas plans will hinge largely on whether the world’s biggest liquefied natural gas supplier can secure more long-term supply agreements with buyers in Europe and Asia. These contracts, typically lasting 15 to 20 years, have been crucial to keeping LNG projects around the globe moving forward. Without them, proposals have fallen apart amid a worldwide supply glut.

“Qatar will need to find off-take agreements to increase their supply that significantly,”  Charlie Riedl, executive director of the Center for Liquefied Natural Gas, a Washington-based industry group, told Bloomberg.

U.S. projects, meanwhile, remain “well-positioned to respond to increasing demand” for LNG going into the next decade, he said.

U.S. exporters already have contracts to supply more than 80 million metric tons of LNG annually, according to estimates compiled by Bloomberg New Energy Finance. Developers are vying for more in an effort to secure financing to build terminals over the next decade, Kallanish Energy finds.

Since the first cargo of shale gas set sail last year, America’s gas has reached about two dozen countries, reshaping how LNG is traded and setting the U.S. on a course to becoming a net-exporter of the fuel for the first time in decades.

Qatar Petroleum plans to boost gas output to 100 million metric tons a year within seven years through a new project in the country’s North Field, the state-owned producer said.

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Rig Count 

  • Baker Hughes Rig Count the week of July 7, 2017
     
  • PA
    • Marcellus 34 unchanged
  • Ohio 
    • Utica 27 unchanged
  • WV 
    • Marcellus 13 unchanged
  • TX
    • Eagle Ford 84 unchanged
  • TX
    • Permian Basin – 369 down 1
  • ND
    • Williston – 52 unchanged
  • CO
    • Niobrara – 27 unchanged
      ‚Äč
  • TOTAL U.S. Land Rig Count 927 up 12
 
PA Permits June 29, to July 6, 2017

            County                                       Township                                          E&P Companies

  1. Armstrong                                    Plumcreek                                         EQT
  2. Armstrong                                    Rayburn                                            Exco
  3. Bradford                                       Leroy                                                  Chief
  4. Bradford                                       Leroy                                                  Chief
  5. Bradford                                       Overton                                              Chief
  6. Bradford                                       Overton                                              Chief
  7. Bradford                                       Overton                                              Chief
  8. Bradford                                       Overton                                              Chief
  9. Bradford                                       Overton                                              Chief
  10. Bradford                                       Overton                                              Chief
  11. Bradford                                       Overton                                              Chief
  12. Bradford                                       Overton                                              Chief
  13. Bradford                                       Overton                                              Chief
  14. Bradford                                       Overton                                              Chief
  15. Butler                                           Jefferson                                           PennEnergy
  16. Butler                                           Jefferson                                           PennEnergy
  17. Elk                                                Jones                                                 Hunt Marcellus
  18. Greene                                         Richhill                                              Consol
  19. Sullivan                                       Elkland                                              Chief
  20. Sullivan                                       Elkland                                              Chief
  21. Sullivan                                       Elkland                                              Chief
  22. Sullivan                                       Forks                                                  Chief
  23. Sullivan                                       Forks                                                  Chief
  24. Sullivan                                       Great Bend                                        SWN
  25. Sullivan                                       Great Bend                                        SWN
  26. Susquehanna                            Lathrop                                              Cabot
  27. Susquehanna                            Lathrop                                              Cabot
  28. Susquehanna                            Lathrop                                              Cabot
  29. Washington                                Blaine                                                Range
  30. Washington                                Blaine                                                Range
  31. Washington                                Blaine                                                Range
  32. Washington                                Blaine                                                Range
  33. Washington                                Deemston Boro                                EQT
  34. Washington                                Finley                                                 Consol
  35. Washington                                Robinson                                          Range
  36. Washington                                Robinson                                          Range
  37. Washington                                Robinson                                          Range
  38. Washington                                West Bethlehem                              EQT
  39. Westmoreland                            Derry                                                  WPX

OH Permits for week June 24, 2017

            County                                   Township                                          E&P Companies

  1. Monroe                                        Ohio                                                   Triad Hunter
  2. Monroe                                        Ohio                                                   Triad Hunter
  3. Monroe                                        Ohio                                                   Triad Hunter
  4. Monroe                                        Perry                                                   EM Energy OH
  5. Monroe                                        Perry                                                   EM Energy OH
  6. Monroe                                        Ohio                                                   Triad Hunter

WV Permits for week June 19, 2017 

(Thank you, Keith Mauck, site publisher of GoMarcellesShale.com)

  1. Doddridge                                                                                               Antero
  2. Doddridge                                                                                               Antero
  3. Doddridge                                                                                               Antero
  4. Doddridge                                                                                               Antero
  5. Doddridge                                                                                               Antero
  6. Doddridge                                                                                               Antero
  7. Doddridge                                                                                               Antero
  8. Doddridge                                                                                               Antero
  9. Doddridge                                                                                               Antero
  10. Pleasants                                                                                                Jay-Bee O&G
  11. Tyler                                                                                                         Antero
  12. Tyler                                                                                                         Antero
  13. Tyler                                                                                                         Antero
  14. Tyler                                                                                                         Antero
  15. Tyler                                                                                                         Antero
  16. Tyler                                                                                                         Antero
  17. Tyler                                                                                                         Antero
 
Joe Barone jbarone@shaledirectories.com 610.764.1232
Vera Anderson vera@shaledirectories.com 570.3379
Northeast Supply Enhancement