BusinessCreator, Inc.

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

FERC Has a Quorum and New Chairman.  The Federal Energy Regulatory Commission has a new chairman, at least temporarily, Kallanish Energy learns.

On Thursday, President Trump named Neil Chatterjee to chair the agency that oversees interstate pipelines, liquefied natural gas export terminals and the electric grid.

That action came after Pennsylvania’s Robert Powelson was sworn in on Thursday morning. He joins Cheryl LaFleur and Chatterjee, a former aide to U.S. Sen. Mitch McConnell, R-Kentucky, who was sworn in Tuesday.

That gave the agency its first quorum since early February.

"I want to thank Chairman (Cheryl) LaFleur for the tremendous work she's done in guiding the agency,” Chatterjee said in a statement. “The absence of a quorum was unprecedented, yet she rose to the challenge and created stability through her unwavering leadership.

“I am honored that President Trump has designated me as chairman of the commission until Kevin McIntyre is confirmed, and I am eager to take on this responsibility,” Chatterjee said.

He added, “I look forward to working with Commissioner LaFleur and Commissioner Powelson on behalf of the American people. And I hope that we will have all five commissioners here soon with the confirmation of Kevin McIntyre and Rich Glick."

Those two nominations must be confirmed by the U.S. Senate.

Good News from Rover.  Energy Transfer Partners said it expects to complete Phase 1 of its troubled Rover Pipeline by next week, Kallanish Energy understands.

The company intends to immediately ask the Federal Energy Regulatory Commission to begin service, CEO Kelcy Warren told analysts and the media in an earnings call Wednesday.

Phase 1 runs from Cadiz in eastern Ohio to Defiance in northwest Ohio and connecting pipelines. That section is “substantially complete,” he said. Phase 1B from Seneca to Cadiz in eastern Ohio could be done within 40 days, Warren said.

A horizontal bore must be drilled to carry the pipeline under Captina Creek in Ohio’s Belmont County and that requires approval from FERC because horizontal direction drilling problems the company has encountered in Ohio, he said.

Once that work is done, ETP will again immediately seek FERC approval for full operations, Warren revealed.

Phase 2 from Defiance north into Michigan and Ontario will not be fully constructed until late November or early December, and the company expects full commercial operations to begin in January, Warren said.

The Rover Pipeline’s horizontal directional drilling problems have come to the attention of FERC and the Ohio Environmental Protection Agency.

Problems have been reported in seven spots in Ohio. Some drilling muds were found to be contaminated with toxic diesel fuel. A wetland was damaged, two quarries were contaminated and drinking water supplies were threatened, Ohio said.

The 711-mile pipeline will carry natural gas from the Marcellus and Utica shales to the Midwest, Canada and the Gulf Coast. The $4.2 billion pipeline includes two, 42-inch lines that would move up to 3.25 billion cubic feet per day.

More Good News for Rover.  West Virginia environmental regulators lifted their order halting Rover Pipeline construction on two segments where it found permit violations damaging streams in northern West Virginia.

Inspectors in April, May, June and July found erosion-control failures that left sediment deposits in creeks and streams, Kallanish Energy understands.

The state Department of Environmental Protection ordered Rover Pipeline LLC on July 17 to stop construction. The DEP said inspections this week showed permit violations were corrected.

One segment extends 36 miles from the Ohio border through Tyler and Wetzel counties to a compressor station at Sherwood in Doddridge County. Another runs for six miles through Doddridge County.

Construction wasn't halted on two other West Virginia segments.

The 700-mile Rover line will carry Marcellus and Utica Shale natural gas from West Virginia and Pennsylvania across Ohio and into Michigan.

Nexus Wins One in OH.  A federal magistrate ruled against 60 property owners seeking to block the Nexus natural gas pipeline across northern Ohio, Kallanish Energy reports.

U.S. Magistrate Kathleen Burke in Akron, Ohio, said in a document filed earlier this week the federal court lacks jurisdiction to consider a lawsuit filed last May.

She said the landowners can object to the Federal Energy Regulatory Commission and then to a U.S. Appeals Court, if FERC approves the 250-mile pipeline.

Her recommendation goes to U.S. District Court Judge John Adams. If Adams dismisses the lawsuit, opponents said they will appeal to the U.S. Sixth Circuit Court of Appeals in Cincinnati.

A Nexus spokesman told Ohio media the company was pleased with Burke’s decision and is eagerly awaiting FERC approval, after the agency finally has a quorum after six months.

The $2 billion pipeline is designed to carry natural gas from the Utica and Marcellus Shale plays to the Midwest, Ontario and the Gulf Coast.

It is being developed by Detroit-based DTE Energy and Calgary-headquartered Enbridge.

Cabot Targets Anti and his lawyers.   Hurrah for Cabot!  A gas driller that was targeted with allegations that it polluted residential water wells in Pennsylvania has filed a $5 million lawsuit against a Pennsylvania resident and his lawyers, asserting they tried to extort the company through a frivolous lawsuit.

Cabot Oil & Gas Corp. said Dimock resident Ray Kemble and his lawyers sought to harass and extort the Houston-based driller, attract media attention and "poison" the community by recycling "stale, settled claims" against the company.

"Cabot will protect its rights and pursue justice against those who irresponsibly and maliciously abuse the legal system," George Stark, the Houston-based driller's director of external affairs, said in a statement Tuesday.

Cabot's suit, filed Monday in Susquehanna County Court, takes issue with a federal lawsuit that Kemble and his lawyers filed in April but withdrew two months later. That suit accused Cabot of continuing to pollute Kemble's water supply.

The company said the claims in Kemble's suit were the subject of a 2012 settlement between Cabot and dozens of Dimock residents — including Kemble — and were barred by the statute of limitations. Cabot's suit also alleged Kemble had breached the 2012 settlement by publicly talking about the company.

Kemble, who's long been one of Pennsylvania's most visible and outspoken anti-drilling activists, did not immediately return a phone message Tuesday. Nor did the attorneys named as defendants in the suit, Charles Speer of the Speer Law Firm in Kansas City, Missouri, and Edward Ciarimboli and Clancy Boylan of Fellerman & Ciarimboli, which has offices in Philadelphia and northeastern Pennsylvania.

Cabot's suit is the latest sign of a rekindling battle in Dimock, the small village that became ground zero in the national debate over drilling and fracking after residents accused Cabot of polluting the water nearly a decade ago. The community was featured in the Emmy-winning 2010 documentary "Gasland," which showed residents lighting their tap water on fire. Cabot said the methane in their water was naturally occurring prior to any drilling or fracking.

As recently as last week, Kemble told The Associated Press that his water "burns the back of your throat, makes you gag, makes you want to puke," and said it got worse after Cabot fracked three wells near his house. Fracking is a method that uses huge amounts of pressurized water, along with sand and chemicals, to extract oil and natural gas from rock formations deep underground.

Scientists from the Agency for Toxic Substances and Disease Registry, a federal public health agency, were at Kemble's house and two dozen other houses last week to test the water.

Cabot, one of the largest and most successful drillers in Pennsylvania, the nation's No. 2 gas-producing state, says there's no threat to human health or the environment in Dimock.

Williams Asks White House for Help with Constitution Pipeline.  Williams CEO Alan Armstrong responded to a question on second quarter financial analyst conference about the long-stalled Constitution Pipeline. He said Williams is working with The White House to get the Constitution project back on track.

Reading between the lines, Williams is asking The White House to ask FERC to overrule the NY DEC and grant the stream crossing permits for the project. Armstrong now says he believes it will get built, and will be up and running, sometime in the second quarter of 2019.

Seneca to Focus Drilling in the Utica. (Thank You, MDN) Last week National Fuel Gas Company, headquartered in Western New York State with drilling subsidiary Seneca Resources and pipeline subsidiary Empire Pipeline, issued its third quarter (everyone else’s second quarter) 2017 update. NFG produced 567 million cubic feet per day (MMcf/d) of natural gas last quarter, a 6% increase over the same quarter a year ago. NFG realized an average price of $2.94 per thousand cubic feet (Mcf), up $0.08 per Mcf from the prior year. Compare that with Antero’s hedged average of $3.41/Mcf. NFG CEO Ronald Tanski had some interesting remarks with respect to the company’s stalled Northern Access Pipeline project. As you may recall, the Andrew Cuomo New York Dept. of Environmental Conservation (DEC) is blocking Northern Access, like they blocked the Constitution Pipeline and a tiny spur project for the Millennium.

Because NFG’s Northern Access project is stalled, they are shifting their budget and drilling further west, to do Utica drilling in locations where there is already pipeline infrastructure. So this is yet another case of the NY screwing up Marcellus drilling in PA that would otherwise be happening. Landowners in PA can thank NY Gov. Cuomo for screwing them over. Tanski also mentioned the court case for Northern Access, and that FERC may step in and overrule the NY DEC, as is now being considered in the Constitution Pipeline case.

Eclipse Resources 2nd Qtr. Update.  (Thank You, MDN)  Last week Eclipse Resources, a Marcellus/Utica pure play driller headquartered in State College, PA that drills mostly in Ohio, released their second quarter 2017 update. Eclipse has been on a roll, drilling a series of longest-ever onshore lateral wells–in the world. It began last year when Eclipse drilled what they call their first “super lateral” Utica well in Guernsey County, OH–the Purple Hayes, at 18,500 feet long.  Since that time, the Purple Hayes well has consistently been the #1 oil producing well in the state. In May of this year, Eclipse drilled a new longest-ever well, also in Guernsey County, the Great Scott 3H well at 19,300 feet long (see Great Scott! Eclipse Drills New Longest Lateral in World – in Utica). Barley a month later, in June, Eclipse drilled yet another record-breaker in Guernsey County–the Outlaw C 11H, a Utica well that is an incredible 19,500 feet long horizontally, some 3.7 miles long (see Eclipse Breaks Record Again – New Longest Shale Well in World!). Eclipse wants to keep on drillin’, but they need money to do so. Given the volatile nature of the commodity price of gas (and oil), and given the volatile nature of funding from Wall Street, Eclipse decided to form a $325 million joint venture (jv) with Sequel Energy Group LLC, an affiliate of GSO Capital Partners. That was last week’s really big news coming from Eclipse. They expect to close the JV deal in September and keep the drill bits turning on new super laterals. Meanwhile, Eclipse is partly done with completing (i.e. fracking) both the Great Scott and Outlaw wells. During the conference call, Eclipse CEO Ben Hulburt hinted that they may try super laterals in the Marcellus, given their success in the Utica. Hulburt also indicated the company is still in the market to lease new acreage–IF they can get it for $3,000-$5,000 per acre.

Chesapeake 2nd Qtr. Update.  Chesapeake Energy reported second quarter 2017 results last week. As is typical, the company hosted a conference call with analysts to discuss those results. However, Chesapeake CEO Doug “the ax” Lawler had some rather exciting news about the Marcellus to report–late breaking news. In recent weeks Chesapeake has brought online an experimental well drilled in Wyoming County, PA (northeastern part of the state) with an initial production of 61 million cubic feet equivalent per day (MMcfe/d). This is a MONSTER Marcellus well! The most productive onshore shale well we know of is EQT’s Utica well in Greene County, PA, with a 72.9 MMcfe/d IP rate, and drilled in July 2015.

The Chesapeake McGavin well in Wyoming County, with a 10,500 foot lateral, has the highest IP of any Marcellus well we’ve heard of. How did Chessy do it? They unleashed “32 million pounds of Hell on Earth” (meaning frac sand) to frack the well. Workers called it “the Rambo frac” because they needed to attack the formation like Rambo would a POW camp. The well cost is estimated to be $8.5 million–a tad more expensive that others they’ve drilled in the area, but a bargain with those kinds of flow rates.

Rover Problems Accident or Anti Sabotage. (Thank You, MDN)  Rover Pipeline is Energy Transfer’s $3.7 billion, 711-mile Marcellus/Utica natural gas pipeline that will run from PA, WV and eastern OH through OH into Michigan and eventually into Canada. On April 13, Rover workers experienced an “inadvertent return” of “horizontal directional drilling fluid”. That is, they sprung a leak and spilled nearly 2 million gallons of drilling mud (see Rover Pipeline Accident Spills ~2M Gal. Drilling Mud in OH Swamp). The leak did not spill into the Tuscarawas River (thankfully), but into a wetland next to the river. As we pointed out at the time, “Fortunately the primary component of said drilling fluid is nontoxic bentonite–the same ingredient used to make shampoo, deodorant, toothpaste and kitty litter.” The Ohio Environmental Protection Agency (OEPA) investigated the spill, following an “anonymous tip” and found the presence of diesel fuel in the spilled mud. Diesel fuel IS toxic–and its presence is not a good thing. OEPA’s testing found “very very low levels” of diesel fuel, whatever that means. Even very very low amounts are not good–and in fact are illegal. Since that time Energy Transfer has tried to figure out why there is diesel in the drilling mud–because they sure didn’t order it, and they firmly believe their drilling contractor did not add it to the mud. So how did it get there? On Friday Energy Transfer offered two theories–either an accident spilled diesel into the mud, or it was intentionally placed there by antis, as an act of sabotage. We do find it interesting that OEPA Director Craig Butler, who has been combative against Energy Transfer and the Rover project, claims an anonymous source tipped him to the presence of the mud. Was the anonymous source a whistle blower who worked for the contractor and claimed this is a routine practice? Did OEPA find diesel in unused drilling mud? Have they found the presence of diesel at ANY other locations where HDD is being used? We certainly had the thought fly through our brains, for only a moment, “What if an anti deliberately put diesel in the mud?” when this story first broke several months ago. But we immediately dismissed the idea. Not even antis would stoop so low as to poison Mother Earth to advance their cause. Or would they? 

Nexus Applies for FERC Approval.  One day after the U.S. Senate confirmed two new nominees to the Federal Energy Regulatory Commission, the energy company is proposing a $2 billion natural gas pipeline through Medina County OH filed a new request to begin construction.

NEXUS Gas Transmission said Friday that it “respectfully requests immediate issuance of the certificate authority” previously sought.

The two-page document was addressed to FERC’s acting Chairwoman Cheryl LaFleur and new commissioners Neil Chatterjee and Robert F. Powelson. The five-member board had been operating with only LaFleur since June 30 and, without a quorum, was unable to make rulings and transactions. A Final Environmental Impact Statement had been sent to the commission Nov. 30 recommending approval of the pipeline, but the resignations of Norman Bay and Colette Honorable left the board unable to act.

NEXUS disclosed in Friday’s document, signed by company President William Yardley that it “has secured voluntary easements covering over 93 percent of the project route.”

An easement is an agreement in which a landowner is compensated by another party to cross an area of land or use it for some purpose.

NEXUS, a business consortium of Enbridge Inc. of Canada, DTE Energy of Detroit, and Spectra Energy of Houston, first proposed the pipeline in August 2014.

The route would originate in Columbiana County and end at an energy hub in Canada for export sales of gas.

FERC spokeswoman Mary O’Driscoll told The Gazette on Friday that “the commission will act when the commission acts. We don’t project or estimate a time.”

NEXUS spokesman Adam Parker told The Gazette via email: “We recently announced a revised 2018 in-service date and plan to provide a more specific in-service date once FERC issues a certificate.”

New Player in the Appalachian Basin.  It’s not often these days we get to announce a new driller in the Marcellus/Utica. Today is one of those days. Actually, this company has been around since early 2015, but we’re only now becoming aware of them. Pin Oak Energy Partners, headquartered in Akron, OH, is an exploration and production company engaged in both conventional and unconventional oil and natural gas wells and the operation of associated assets (like pipelines).

Pin Oak currently operates 363 wells producing nearly 5.7 MMcfe/d (32% liquids) across more than 32,000 acres in the Marcellus/Utica region. The company is also involved in midstream, field services and operations through its affiliate companies. Pin Oak is an aggressive acquisition binge of shale AND midstream assets, as well as leasing new acreage.

Who is Pin Oak? According to CEO Chris Halvorson, Pin Oak is comprised of folks who were formerly with AB Resources. You may recall that AB Resources built a position in the southwestern “core” of the Marcellus and sold out to Chevron several years ago. Pin Oak is “what’s next” for the former AB folks. Their target: the Appalachian basin. In July, Pin Oak bought 9,300 acres of leases and 8 Utica wells from EQT in Guernsey, Muskingum, and Columbiana counties (Ohio). Earlier this week Pin Oak announced they’ve purchased another 7,700 acres of leases and 10 Utica wells from an undisclosed seller in Trumbull, Tuscarawas and Mahoning counties (in Ohio) and Mercer, Crawford and Venango counties (in Pennsylvania).  Pin Oak can be summed up in one word: aggressive. Keep a close eye on this company in the coming months and years.

EQT – Rice Deal Being Challenged.  In June EQT and Rice Energy announced that EQT will buy out and merge in Rice Energy, to create (in EQT) the largest natural gas-producing company in the United States. You may see headlines from time to time that say EQT is paying $6.7 billion for Rice. However, EQT is also assuming $1.5 billion worth of Rice Energy debt as part of the deal–so in our book, the total price paid is $8.2 billion, not $6.7 billion.

A few weeks after the announced merger, so-called “activist investor” (i.e. corporate raider) Jana Partners, in league with the Cohen family (Atlas Energy) started a proxy fight to block EQT’s takeover/merger with Rice Energy (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Instead of buying Rice, Jana is demanding that EQT split itself into two companies–upstream (drilling) and midstream (pipelines). Experts don’t give Jana much of a chance. However, we now have opposition on the other side of the isle–from a disgruntled investor in Rice Energy.

Rice Energy investor Patrick Gordon filed a lawsuit in Delaware federal court alleging that Rice, as part of the agreed merger, submitted incomplete paperwork (called an S-4) that “failed to include necessary financial information that would allow shareholders to make an informed decision when voting on the proposed sale to EQT.” Gordon says Rice’s sale price isn’t high enough. Gordon wants the court to stop a shareholder vote on the deal until an amended S-4 is filed; giving what Gordon says is the full financial picture.

U.S. Net Export of NatGas.  The U.S. will export more natural gas than it imports for all of 2017, having been a net exporter for three of the past four months, according to the Energy Information Administration.

The country is projected to continue to export more natural gas than it imports through 2018 and beyond because of growing U.S. natural gas exports to Mexico, declining pipeline imports from Canada, and increasing exports of liquefied natural gas.

The U.S. is currently the world’s largest natural gas producer, having passed Russia eight years ago. Natural gas production in the U.S. increased from 55 billion cubic feet per day (Bcf/d) in 2008, to 72.5 Bcf/d in 2016. Most of this natural gas — about 96% in 2016 — is consumed domestically. Abundant natural gas resources and large production increases have created opportunities for U.S. natural gas exports.

With a near doubling of U.S. export pipeline capacity to Mexico by 2019, EIA expects U.S. natural gas exports to increase, though they should remain well below the available pipeline capacity.

BP to Sell Rex NatGas.  Pennsylvania-based Rex Energy has signed an agreement with BP Energy to market Rex's natural gas liquids in western Pennsylvania and eastern Ohio, Kallanish Energy reports.

BP Energy, a subsidiary of BP Plc, will purchase most of Rex’s natural gas liquids from the Marcellus and Utica Shale plays for an extended term, beginning Jan. 1, 2018.

The pricing structure compares favorably to actual 2016 and projected 2017 prices, the company said.

The pricing structure will help to mitigate the historical fluctuations between summer and winter pricing and stabilize the company’s quarterly cash flows, Rex said, in a statement.

The agreement allows Rex to reduce outstanding letters of credit by $14.1 million, boosting company liquidity, it said.

In other deals, Rex sold a water line in eastern Ohio to Keystone Clearwater Services for $8 million. The companies have signed a contract to have Keystone provide water to Rex for future drilling in Ohio’s Carroll County.

Rex Energy also signed an agreement with Marathon Petroleum to boost prices paid for its condensate in eastern Ohio, starting Sept. 1.

The company reported a second quarter 2017 net loss of $10.2 million on revenue of $47.5 million. That compares to net income of $15.9 million in the year-ago quarter.

In Q2 2017, Rex produced 177.1 million cubic feet-equivalent per day (MMcfe/d). That is a drop of 11% from 199.1 MMcfe/d in the year-ago quarter.

Production was hurt by unplanned downtime in midstream services in the quarter, the company said.

Natural gas liquids, including ethane and condensate, produced 39% of quarterly net production.

ETP 2nd Qtr. Update.  Energy Transfer Partners (ETP) reported net income of $292 million in the second quarter of 2017, down substantially from net income of $472 million one year ago, Kallanish Energy reports.

The profit drop is due to a non-cash loss recorded on the partnership’s investment in Sunoco related to Sunoco’s anticipated sale of its retail business, as well as a one-time deferred tax impact resulting from the merger of ETP and Sunoco Logistics Partners.

The two companies completed their merger in April 2017. ETP officially became Energy Transfer LP and Sunoco Logistics became Energy Transfer Partners.

The company reported quarterly EBITDA (earnings before interest, taxes, depreciation and amortization) of $1.60 billion, an increase of $229 million compared to Q2 2016.

The increase is due largely to higher results from midstream and crude oil transportation and services segments, the company said.

Stay connected and current on the oil & gas industry.  Receive Facts & Rumors directly to your email.  
Sign up now at http://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 August 11, 2017
              
  • PA      
    • Marcellus 34 unchanged
  • Ohio
    • Utica 28 up 1
  • WV
    • Marcellus 14 unchanged
  • TX
    • Eagle Ford 75 down 2
  • TX
    • Permian Basin – 377 down 2
  • ND
    • Williston – 53 unchanged
  • CO
    • Niobrara – 30 unchanged
       
  • TOTAL U.S. Land Rig Count 928 down 6

PA Permits August 3, to August 10 2017

 

             County                                   Township                                          E&P Companies

  1. Allegheny                                     Forward                                             EQT
  2. Washington                                Somerset                                           Range

OH Permits for week August 5, 2017

           County                                   Township                                          E&P Companies

  1. Belmont                                       Forward                                             XTO
  2. Jefferson                                     Smithfield                                          Ascent
  3. Jefferson                                     Smithfield                                          Ascent

Joe Barone jbarone@shaledirectories.com 610.764.1232
Vera Anderson vera@shaledirectories.com 570.337.71

Northeast Supply Enhancement