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NewsLetters

Expo/Industry events for the next few months

DUG Eagle Ford

August 29-31, 2017

San Antonio, TX

https://www.hartenergyconferences.com/dug-eagle-ford

 

Shale Insight

September 27-28, 2017

David Lawrence Center

Pittsburgh, PA

http://shaleinsight.com/

 

West Virginia Energy Expo
October 4, 2017
Morgantown, WV

http://www.wvenergyexpo.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

Chevron Rumor Update.  Chevron has received seven (7) permits to drill on each of its mega well sites in Marshall County, WV.  (RUMOR)

EQT Production Outlook.  EQT Corporation’s 2Q17 production is expected to be between 190–195 Bcfe (billion cubic feet equivalent). In 2017, EQT expects its production volumes to be between 835–855 Bcfe. This represents a growth of 11.3% at the midpoint, compared with EQT’s 2016 production volumes.If the EQT-Rice Energy (RICE) deal goes through, EQT expects to add 1.3 Bcfe in current production to its natural gas volumes. According to the company, this would make it the biggest natural gas producer in the US, ahead of Chesapeake Energy (CHK), ExxonMobil (XOM), and Southwestern Energy (SWN).

After closing the deal, EQT expects its natural gas volumes to total ~3 billion cubic feet per day.

However, trouble with the deal could come to fruition. In early July, activist hedge fund Jana Partners revealed its plans to obstruct EQT’s plans to acquire Rice Energy (RICE).         

             EQT’s Marcellus update

After its recent acquisitions, EQT’s Marcellus acres consist of 810,000 acres. EQT’s analyst presentation released in April 2017 noted that between 2016 and 2017, EQT’s acquisitions in the Marcellus increased its core position by 88%.

In 2016, EQT drilled 135 wells and plans to drill 207 wells in the Marcellus region in 2017. EQT’s presentation noted that at a $2.50 local natural gas price, its returns for a five-well pad 5,500 lateral feet in length had an aftermarket IRR (internal rate of return) of 35%. Adding 500 lateral feet would increase these returns to 39%, and adding another 2,000 lateral feet would increase returns to 52%.

With its focus on consolidating its acquisitions, the company aims to drill 10,000-foot laterals and hopes to increase returns at the same natural gas price to 62%.

Other upstream companies that are active in the Marcellus Shale include Cabot Oil & Gas (COG) and Noble Energy (NBL).

Is Appalachian Gas on a Collision Course?  (Thank you, Matthew Hoza, BTU Analytics)  It has been well documented that the growth of Marcellus and Utica gas production has altered flow dynamics on Transco. We have previously cited how Appalachian gas has continued to push farther and farther south (Transco Null Point Rambles South). However, Appalachian gas is impacting Transco in another way – backhaul projects out of Western Pennsylvania, Ohio, and West Virginia are increasingly delivering volumes onto Transco in Louisiana.

Let’s focus on three pipes: ANR, Columbia Gulf (CGT), and Texas Gas (TGT). CGT and TGT both bring supply directly from the Northeast down to the Gulf. ANR on the other hand does not bring supply in directly. Instead, it receives almost all its supply on its Southeast Mainline from Appalachian sources via REX or the Lebanon Hub.

As long awaited backhauls out of the Northeast come to fruition, more Appalachian gas is finally able to make its way down to the Gulf. Of the three pipelines highlighted above, we have seen increasing southbound flows, which has translated into increased deliveries onto Transco in Louisiana. ANR has taken increased volumes from REX as that pipe has had its recent expansions, TGT has had two consecutive backhaul projects with its Ohio-Louisiana Access Project and Northern Supply Access Project, and CGT has begun to backhaul Appalachian gas with more expected to come when its Rayne and Gulf Xpress projects come online this year and next, respectively. All of that activity has caused deliveries from Appalachia to Transco to increase by almost 700 MMcf/d.

So, what does all this mean for Transco’s southern end? The Texas/Louisiana border has essentially become a null point on Transco, where northbound flows have virtually dropped to zero in the last three months, averaging 50 MMcf/d (compared to about 250 MMcf/d the same time last year). Since more Appalachian gas is supplying Transco in Louisiana that means less gas is needed from the Eagle Ford and offshore areas of Texas to move north out of Texas. Hence, flows at the Texas/Louisiana border have dropped to nothing.

And there is more Appalachian gas to come, as more backhaul projects come online. Columbia Gulf alone has approximately another 2 Bcf/d of backhaul on the way. Of course, not all of that gas will hit Transco directly. Instead, incremental deliveries should be tied to new demand coming online, mainly at LNG Export Terminals (Sabine Pass Train 4, Cameron LNG, etc.). A problem emerges, however, if demand does not materialize on time and at the expected capacity. This could leave Appalachian gas stranded in Louisiana looking for a route out to more premium markets, with the most likely route to push eastbound on Transco up the Atlantic Seaboard.

That would set the scene for an ironic and unfortunate situation. After years of waiting for Appalachian infrastructure, gas from both Eastern and Western Appalachia would find themselves vying for the same demand in the Southeast and Atlantic Seaboard markets. For more on how Appalachian gas is changing flow dynamics across the country see out upcoming edition of the Northeast Gas Outlook.

Thailand Coal to Invest Another $293 Million in Marcellus.  From May 2016 to May 2017, Banpu Pcl, Thailand’s largest coal producer, has invested in no less than four deals to grab ownership of Marcellus Shale wells. Another 34 Marcellus Wells in NEPA). So far Banpu’s total investment has been $207 million. The wells they own generate 46 thousand cubic feet (Mcf) of natural gas per day. It seems that Banpu can’t get enough of the Marcellus in northeast PA. In an article running in the Bangkok Post yesterday, Banpu CEO Somrudee Chaimongkol said her company will set aside $293 million to invest in more Marcellus wells from now until 2020, hoping to goose or boost production to 78 Mcf/d (an increase of 70%).

Rover Delaying Start of Operations.  It appears Rover Pipeline problems in northern Ohio will delay the start of operations on the under-construction pipeline until “late summer," Kallanish Energy learns.

Phase 1 of the $4.2 billion pipeline from Cadiz in eastern Ohio to Defiance in northwest Ohio will be delayed due to developer Energy Transfer Partners working out problems with the Federal Energy Regulatory Commission and the Ohio Environmental Protection Agency, spokeswoman Alexis Daniel told NGI’s Shale Daily Monday.

The company had hoped to bring Phase 1 online this month, and Phase 2, which will run from Defiance into Michigan and Ontario, in November.

The problems include numerous spills from horizontal directional drilling (HDD) under streams and highways, plus spills that contained diesel fuel. A wetland was also damaged and drinking water supplies were threatened, Ohio said.

FERC has informed Rover Pipeline that it won’t get federal approval to begin operations until Ohio pipeline problems and spills are remediated. FERC has also suspended HDD drilling at spots along the pipeline route.

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 project includes two, 42-inch lines that combined will move up to 3.25 billion cubic feet per day.

House Votes to Make FERC Stronger.  The U.S. House of Representatives has voted twice to streamline the federal permitting process for oil and natural gas pipelines, Kallanish Energy reports.

The Federal Energy Regulatory Commission would be designated the lead agency for interstate gas pipeline permitting and require other agencies to coordinate with FERC and conduct simultaneous reviews.

That would provide greater certainty, accountability and transparency to the siting process for interstate pipelines, supporters said.

The Promoting Interagency Coordination for Review of Natural Gas Pipelines Act was approved by a 248-179 vote. It was introduced by Rep. Bill Flores (R-Texas),

The House also approved a bill to give FERC authority to permit oil and gas pipelines and electric transmission lines that cross Canadian and Mexican borders. That would include projects like the Keystone XL oil pipeline.

The vote was 254 for and 175 against. It was introduced by Rep. Markwayne Mullin (R-Oklahoma).

The bill would eliminate the need to get approval from the President and would eliminate the State Department’s role in overseeing such projects.

Supporters said the bill would eliminate politics from pipeline decisions.

To Republicans, the bills were about removing barriers to energy production. Democrats objected, saying the bills would worsen climate change by encouraging fossil fuel use.

U.S. Global Leadership in O&G Production Is Coming.  You will find below the IEA’s five-year forecast which is very bullish on U.S. O&G especially NatGas. 

Dr. Fatih Birol was interviewed on CNBC about this report.  In discussing this report, Dr. Birol spent considerable time emphasizing that investment in oil production has decreased in 2015, 2016 and so far in 2017.  He stated that only the U.S. is investing in oil production in its shale plays. 

With the consistently low price of crude, many other oil producing countries like Nigeria and Iraq will eventually experience decreased production in the upcoming years.  Curtailing exploration and maintenance will certainly drive down production. 

What does this mean to the price oil in 2022?

The global natural gas market is undergoing a major transformation driven by new supplies coming from the United States to meet growing demand in developing economies and industry surpasses the power sector as the largest source of gas demand growth, according to the IEA’s latest market analysis and five-year forecast on natural gas.

This evolution of the role of natural gas in the global energy mix has far-reaching consequences on energy trade, air quality and carbon emissions, as well as the security of global energy supplies, according to the new report.

Global gas demand is expected to grow by 1.6% a year for the next five years, with consumption reaching almost 4,000 billion cubic meters (bcm) by 2022, up from 3,630 bcm in 2016. China will account for 40% of this growth. Demand from the industrial sector becomes the main engine of gas consumption growth, replacing power generation, where gas is being squeezed by growing renewables and competition from coal.

The United States – the world’s largest gas consumer and producer – will account for 40% of the world’s extra gas production to 2022 thanks to the remarkable growth in its domestic shale industry. By 2022, US production will be 890 bcm, or more than a fifth of global gas output. Production from the Marcellus, one of the world’s largest fields, will increase by 45% between 2016 and 2022, even at current low price levels, as producers increase efficiency and produce more gas with fewer rigs.

While US domestic demand for gas is growing, thanks to higher consumption from the industrial sector, more than half of the production increase will be used for liquefied natural gas (LNG) for export. By 2022, the IEA estimates that the United States will be on course to challenge Australia and Qatar for global leadership among LNG exporters.

“The US shale revolution shows no sign of running out of steam and its effects are now amplified by a second revolution of rising LNG supplies,” said Dr Fatih Birol, the IEA’s Executive Director. “Also, the rising number of LNG consuming countries, from 15 in 2005 to 39 this year, shows that LNG attracts many new customers, especially in the emerging world. However, whether these countries remain long-term consumers or opportunistic buyers will depend on price competition.”

Dr Birol added, “The environmental advantages of natural gas, particularly when replacing coal, also deserve more attention from policy makers.”

U.S. LNG will be a catalyst for change in the international gas market, diversifying supply, challenging traditional business models and suppliers, and transforming global gas security. A new wave of liquefaction capacity is coming online at a time when the LNG market is already well supplied. This LNG glut is already affecting price formation and traditional business models – and attracting new LNG-consuming countries like Pakistan, Thailand and Jordan.

At the same time, this ample availability of LNG is also creating new competition with pipeline gas supplies, which could benefit consumers. This intense competition is loosening pricing and contractual rigidities that have traditionally characterized long-distance gas trade. The change will be accelerated by the expansion of US exports, which are not tied to any particular destination and will play a major role in increasing the liquidity and flexibility of LNG trade.

Europe could see growing competition between LNG imports and pipeline gas as domestic production declines, creating extra uncertainty on the sources of future supply. The recent standoff involving Qatar, which supplies about a third of the world’s LNG, and neighboring countries has also underscored potential risks to gas supply security. “Even in a well-supplied market, recent events remind us that gas security remains a critical issue.” said Dr Birol.

NatGas Reserves Good for A Century.  The U.S.’s total natural gas supply could handle its annual needs for more than a century, according to the latest biennial assessment of the nation’s total reserves by the nonprofit Potential Gas Committee.

At year-end 2016, the total U.S. technically recoverable reserves hit 2,817 trillion cubic feet (Tcf), up 302 Tcf from the year-end 2014 assessment. The U.S. consumed roughly 27 Tcf of natural gas in 2016, according to the Energy Information Administration.

Another way of representing the 2,817 Tcf is it’s almost 500 trillion barrels of crude oil-equivalent, Kallanish Energy calculates.

Drinkers In OH Support PTTGC Cracker Plant.  Drinkers in Ohio are helping the state support a proposed $5.7 billion ethane cracker plant which has already attracted more than $130 million in investments over the last 28 months, Kallanish Energy reports.

That is how much money has been spent by Thailand-based PTT Global Chemical and the state of Ohio through its private JobsOhio agency on the proposed plant in Belmont County in eastern Ohio, said Jackie Stewart of Energy in Depth-Ohio.

JobsOhio has provided $17 million to clean up the site for the proposed facility at Shadyside on the Ohio River, she wrote.

That money comes from Ohio liquor sales that are funneled to Jobs Ohio, which was created in 2011.

Ohio liquor sales topped $1 billion last year and a portion of sales goes to JobsOhio.

The rest of the $130 million has been invested by the company. It recently spent $13.8 million to buy the 167-acre site, which previously housed a coal-fired power plant.

A final investment decision by PTT Global Chemical is expected by the end of 2017.

The plant would take ethane from drilling in the Utica and Marcellus shale plays and turn it into ethylene for plastics and the petrochemical industry.

Royal Dutch Shell is developing a similar $6 billion facility at Monaca on the Ohio River in Beaver County, Pa., 30 miles northwest of Pittsburgh.

How Will NatGas Get to this NY Power Plant?  Construction is under way on a new, $1.58 billion natural gas-fired power plant in New York state, Kallanish Energy reports.

Crickey Valley Energy Center, a 1,100-megawatt plant, is being built at Dover in Duchess County, between New York City and Albany.

The construction is being directed by Bechtel and is expected to produce 1,100 construction jobs.

A ground-breaking ceremony was held on June 28.

The combined-cycle plant is located near the Iroquois natural gas pipeline.

The plant, first proposed in 2009, is expected to be operational in 2020. It will produce enough electricity to power 1 million homes.

The nearby Indian Point nuclear power plant is scheduled to shut down in 2021.

Crickey Valley is being developed by Swiss-based Advanced Power AG. It has 7,000 megawatts in operation, construction and development in the U.S. and Europe.

It is owned by JERSA Co., TIAA Investments, Advanced Power, BlackRock Financial Management, Development Bank of Japan and NongHyup Financial Group.

Rig Count

 

  • Baker Hughes Rig Count the week of July 21, 2017
             
  • PA      
    • Marcellus 34 unchanged
  • Ohio
    • Utica 27 unchanged
  • WV
    • Marcellus 13 unchanged
  • TX
    • Eagle Ford 78 down 2
  • TX
    • Permian Basin – 374 up 1
  • ND
    • Williston – 54 up 1
  • CO
    • Niobrara – 30 up 1
       
  • TOTAL U.S. Land Rig Count 924 down 4

PA Permits July 13, to July 20, 2017

            County                                   Township                                          E&P Companies

  1. Greene                                         Morgan                                              EQT
  2. Greene                                         Morgan                                              EQT
  3. Greene                                         Morgan                                              EQT
  4. Greene                                         Morgan                                              EQT
  5. Greene                                         Morgan                                              EQT
  6. Washington                                Amwell                                               EQT
  7. Washington                                Amwell                                               Range
  8. Washington                                Amwell                                               Range
  9. Washington                                Amwell                                               Range
  10. Washington                                Amwell                                               Range
  11. Washington                                Amwell                                               Range
  12. Washington                                North Strabene                                 Range
  13. Washington                                North Strabene                                 Range
  14. Washington                                North Strabene                                 Range
  15. Washington                                North Strabene                                 Range
  16. Washington                                North Strabene                                 Range

OH Permits for week July 15, 2017

             County                                   Township                                          E&P Companies

  1. Belmont                                       York                                                    Gulfport
  2. Belmont                                       York                                                    Gulfport
  3. Belmont                                       York                                                    Gulfport
  4. Harrison                                       North                                                  Chesapeake
  5. Harrison                                       North                                                  Chesapeake
  6. Monroe                                        Sunsbury                                          Gulfport
  7. Monroe                                        Sunsbury                                          Gulfport
  8. Monroe                                        Sunsbury                                          Gulfport

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

Midstream PA