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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/ 

2017 NARO Appalachia Annual Conference
October 30-31
The Greenbrier
White Sulphur Springs, WV
http://www.naro-us.org/event-2633934?CalendarViewType=0&SelectedDate=9/5/2017 

Veolia Water Treatment Seminar
Wednesday, November 8
Hilton Garden Inn Pittsburgh/Southpointe
1000 Corporate Drive
Canonsburg, Pennsylvania
https://events.r20.constantcontact.com/register/eventReg?oeidk=a07eei63an3e2146025&oseq=&c=&ch= 

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 

The 2017 Ramp Up for 2018.  Over the last two weeks, I’ve been to Shale Insight presented by the Marcellus Shale Coalition and the WV Energy Expo.  One of the consistent themes of both events has been everyone is ramping up for 2018.  

As we know rigs drive the industry, I heard that rigs are coming. The E&P companies that are laying down their rigs are keeping in the Appalachian Basin and not sending them south.  

I spoke with a number of vendors who are receiving more RFQ’s with the comments that things will pick up in the fourth quarter, but 2018 is really going to be busy.  Even the hotels are booking for fourth quarter 2017 with ‘intent to buy’ more rooms in 2018.

With the completion of pipelines, NatGas will be moving out of the Appalachian Basin.  I reported a couple of weeks ago that the completion of minor sections of the Rover pipeline had led to increase in NatGas prices.  I think we’ll see more of this in 2018.  

WV Energy Expo.  Kim and Damian along with the folks at The Stick Co. did a wonderful job bring back the WV expo.  In speaking with exhibitors, they were pleased to be at Mylan Park.  I know everyone is hoping Kim and Damian will do it again next year.

What is expo without a rumor or two.  Here they are:

  • It looks like EQT and Noble will be getting together.  Could EQT be making another acquisition.  (RUMOR)

NEXUS Wants to Start October 10th.  Something just now coming to light. Last week NEXUS Pipeline sent a request to the Federal Energy Regulatory Commission (FERC) requesting that it be allowed to begin construction of the pipeline “on or before” Tuesday, October 10th. That’s next Tuesday, folks! NEXUS is a $2 billion, 255-mile interstate pipeline that will run from Ohio through Michigan and eventually to the Dawn Hub in Ontario, Canada. NEXUS received final approval for the project from FERC in August, the first major pipeline to get approved following a newly restored quorum at FERC. Two weeks ago one of the final remaining hurdles came down when the Ohio EPA granted a water permit for the project. The project still faces court challenges however, those challenges are long-shots. Given that all permits have been issued, last Thursday NEXUS sent FERC a request to begin construction.

NatGas Demand All Time High This Winter.  Each year the Natural Gas Supply Association (NGSA) issues an annual Winter Outlook assessment of the wholesale natural gas market. Yesterday the NGSA issued its 17th such report. Among their predictions: demand for natural gas will hit an all-time high this winter, even outstripping the infamous Polar Vortex from two years ago. However, production, Canadian imports and existing natural gas in storage (in record numbers) will be able to meet the demand, therefore prices will remain steady–no huge ups, no huge downs. NGSA’s forecasts are based on weather forecasts. They assume this winter will be an average of 13% colder than last winter. We don’t like the sound of that, since we live in the cold northeast! Bottom line from NGSA: “The picture that emerged for the upcoming winter is of a natural gas market experiencing substantial growth in both demand and supply.”

Senate Panel Considering Support For Appalachian Storage Hub.  West Virginia lawmakers advanced their push to build an ethane storage facility in Appalachia yesterday, as a Senate panel considered a pile of energy legislation. The Senate Energy and Natural Resources Subcommittee on Energy heard from officials from the Department of Energy and the Federal Energy Regulatory Commission on a list of bills, some of which have been awaiting a hearing since the beginning of the year. Among them was West Virginia Democratic Sen. Joe Manchin's "Capitalizing on American Storage Potential Act," S. 1337, which would aim to make the natural gas liquids storage hub eligible for funding through DOE's loan guarantee program. West Virginia Republican Sen. Shelley Moore Capito is co-sponsoring the measure, as both look to push energy development in their distressed region. "West Virginia is a state that is rich in natural resources, and I believe the Appalachian storage hub offers an excellent chance for geographic diversification of our manufacturing sector," Manchin said yesterday.

Shell Submits Paperwork for Pipeline.  Shell Pipeline Co. has submitted paperwork to the Pennsylvania   Department of Environmental Protection regarding the company's Falcon Ethane project, the first step in a long process that will determine whether Shell gets the green light for the project.

DEP spokeswoman Lauren Fraley  confirmed   that the agency received Shell Pipeline permit application in late September.

She said the application consists of three distinct parts, one for each of the counties in Pennsylvania the pipeline  will cross: Beaver,

Allegheny and Washington counties.

Fraley also said the actual technical review of those applications has not started yet because DEP must first conduct  a completeness evaluation to determine if all necessary information has been provided to allow for DEP to conduct a technical review.

She couldn't offer a time­line for when the technical review might begin, but did say "this is moving through the process.''

PTTGC Commits to “Quality of Life.”  Officials with Thailand-based PTT Global Chemical said they will “enhance the well-being and quality of life” for those who live in the Dilles Bottom area if the firm builds its estimated $6 billion ethane cracker there.

Belmont County Commissioner Mark Thomas admits it remains to be seen what this actually means. Still, he sees the announcement as continued progress toward an affirmative final investment decision.

“I do know that it reaffirms the strong partnership between the state of Ohio and PTT Global Chemical America,” he said. “With that said, I cannot but think this remains continued positive news as the two entities continue to work together to one common goal: a positive plant announcement sooner than later.”

According to the company, PTT officials signed a memorandum of understanding with JobsOhio during the weekend. JobsOhio is the private corporation Gov. John Kasich established in 2011 as a replacement for the state-run Department of Development.

“The PTT Global Chemical America team’s perpetual work as well as its investment in time and resources demonstrates the company’s sincere hopes of making this project happen,” JobsOhio spokesman Matt Englehart said. “We look forward to continuing this effort with PTT Global Chemical America, and are hopeful that they can make a positive final investment decision in the coming months.”

Company officials said PTT Global Chemical President and CEO Supattanapong Punmeechaow joined JobsOhio President and Chief Investment Officer John Minor in signing the memorandum, according to the firm.

“Under the memorandum of understanding, the two parties will jointly establish a community infrastructure development plan to enhance the well-being and quality of life for the communities in the area surrounding PTT Global Chemical America’s planned petrochemical complex in Belmont County, Ohio, after the final investment decision,” the document states.

Company officials said they continue evaluating engineering and design plans on which they committed to spend $100 million during a 2015 announcement. The plant would consume ethane drawn from Marcellus and Utica shale natural gas wells, with the goal of ultimately processing the material so that it can become plastic.

If the massive endeavor comes to fruition, it could generate thousands of construction jobs, as well as hundreds of permanent petrochemical jobs once the plant enters operation. Thousands of “spin-off” jobs could also result from the ethane cracker’s presence, officials have said.

“At this stage, an economic evaluation and further engineering work are underway,” the firm’s website states.

Two contractors continue working on plans to build the potential plant: Irving, Texas-based Fluor Corp. and San Francisco-based Bechtel Group Inc. Both companies’ websites feature examples of their work on similar projects involving the petrochemical industry.

PTT spokesman Dan Williamson said he had no further comment on the memorandum of understanding beyond the company’s official statement on its website.

Saudi’s Very Concerned about U.S. Petrochemical Industry.  US shale gas casts a long shadow over petrochemicals.  Middle Eastern petrochemical companies are known for their lavish hospitality, but at a cocktail party organized by a major Saudi company in Berlin recently, the atmosphere was quite somber. A conversation with one of the hosts on the impact of shale gas went some way to explaining this. “We are worried that the Americans will be able to sell their products [polymers] into China at prices cheaper than we can,” he fretted. He was referring to an expected rise in imports of polymers manufactured using shale gas as a feedstock in the US, which, from the end of 2017/early 2018, is expected to hit every market into which Middle Eastern companies sell. The advent of shale has helped US-based petrochemical companies narrow the cost gap to $20/mt of ethylene or even less. “That means, if companies in the US can negotiate their freight well, they can land their products into China at prices cheaper than us,” the Saudi host said.

Drilling Good for 8 OH Counties.  Sales tax revenues in eight core oil and gas producing counties in Ohio’s Utica shale increased 15% higher than the other 80 counties between 2012 and 2016, according to a report compiled by Energy In Depth.

Belmont, Monroe, Guernsey, Harrison, Carroll, Columbiana, Jefferson, and Noble counties together posted a 45% gain during those five years versus the average 30% increase the others experienced, the organization said.

Since 2012, the oil and gas industry has pumped more than $50 billion into Ohio in the form of drilling, midstream development and end users such as manufacturing plants, energy plants and natural gas liquids storage, said Jackie Stewart, senior director, energy & natural resources.

All eight counties have enjoyed a rise in sales tax revenues since oil and gas exploration began in earnest in the Utica shale. Harrison County, for example, averaged sales tax revenues of $1.3 million a year between 2007 and 2011. Between 2012 and 2016, when exploration as well as midstream development materialized, sales tax revenues increased to an average $4.2 million per year, or a boost of 215%

In Monroe County, which boasts some of the most productive dry-gas wells in the Utica, sales tax revenue rose an average 130% during the period. Between 2007 and 2011, the county took in an average of $1.4 million in sales tax revenues a year; between 2012 and 2016, that number jumped to an average of $3.4 million.

Columbiana County has also seen a gradual increase in sales tax revenues, according to the data. In the five years before shale development, sales tax revenues stood at an average of $12.2 million. Between 2012 and 2016, average sales tax revenues increased to $15.9 million a year.

These increases affect the entire state, Stewart said, because the majority of revenues go into Ohio’s general fund.

2 More Ohio Natural Gas Plants Approved for Construction.  Regulators have OK'd the construction of two new natural gas power plants in Ohio. The Ohio Power Siting Board on Thursday approved plans for the two separate projects in Guernsey and Trumbull counties that are targeted to begin operating in 2020. Close to a dozen natural gas power plants are being built or are in the planning stages around the state. They use gas from the Appalachian shale fields and turn it into electricity. The new plant in Guernsey County will be south of Cambridge and produce up to 1,100 megawatts. The plant in Lordstown near Youngstown will be able to produce 940 megawatts.  

Penn Virginia Closes Eagle Ford Deal.  Texas-based Penn Virginia Corp. has closed on the acquisition of Eagle Ford Shale assets in Lavaca County in South Texas for $205 million.

The assets were purchased from Oklahoma-based Devon Energy.

They cover about 19,600 net acres and produce about 3,000 boe per day, of which 64% is oil.

The effective date of the deal was March 1.

In connection with the deal, the company entered into a credit agreement for a new $200 million second lien loan that will mature in 2022.

The company also announced that the borrowing base under its revolving credit facility was increased from $200 million to approximately $238 million in connection with the Devon acquisition and the fall borrowing base redetermination.

“We are excited to have completed the transaction,” said John A. Brooks, Chief Executive Officer of Penn Virginia, in a statement.

“Our operations team knows this area very well as the Devon acreage is contiguous to our existing acreage position and we have identified a significant number of locations for drilling extended reach laterals with superior economics.  Because of the high quality of this asset, the company upsized the second lien term loan by $50 million and we received a significant increase to our borrowing base under our revolving credit facility.  We strongly believe this acquisition is an ideal fit and will play a key role in our long-term growth strategy for Penn Virginia,” he said.

The sale is part of Devon’s $1 billion divestiture program.

Reliance Sells Marcellus Holdings.   Reliance Marcellus II, LLC, a subsidiary of Reliance Holding USA, Inc. and Reliance Industries Limited (“RIL”), announced the signing of agreements to divest all of its interest in certain upstream assets in north-eastern and central Pennsylvania. The assets, which are currently operated by Carrizo Oil & Gas, Inc., were sold to BKV Chelsea, LLC, an affiliate of Kalnin Ventures LLC, for consideration of $126 million, subject to customary closing terms and conditions

Additionally, Reliance could receive contingent payments of up to $11.25 million in aggregate based on natural gas prices exceeding certain thresholds over the next three years. The assets produce mainly gas and are located in Susquehanna, Wyoming and Clearfield Counties of Pennsylvania.

Walter Van de Vijver, President and CEO of Reliance Holding USA, Inc., commented that: “This transaction represents an opportunistic sale of developed upstream Marcellus assets and ends a successful partnership of 7 years with Carrizo in a joint sale. We will continue to actively manage the remainder of our US shale resources.”

The Carrizo operated acreage was one of the three upstream assets in the USA, owned by Reliance. Reliance remains invested in the Marcellus shale play via its non-operated position with Chevron in southwestern Pennsylvania and in the Eagle Ford play via its non-operated position with Pioneer in Texas.

The sale of the assets will be consummated in accordance with the terms of a purchase and sale agreement, dated October 5, 2017, by and between Reliance and the buyer. The transaction is anticipated to close by the end of the third quarter of FY2018, with an April 1, 2017 effective date.

Annual EIA NatGas Report Up in PA.  The U.S. Energy Information Administration, our favorite government agency, released its Natural Gas Annual 2016 report  Weighing in at 214 pages, this report is full of data. It is a data monger’s dream come true. A few highlights: In 2016, U.S. dry gas production actually FELL from the previous year, the first time that has happenreached a new record high–for the seventh year in a row. Imported natural gas went down again–for the ninth year in a row.

Atlantic Coast Pipeline to Expand. ed since 2005. Texas saw the biggest dry gas production decline (10%), while Pennsylvania had the biggest increase in production (10.2%). This is the fourth straight year PA production has gone up–thank you Marcellus Shale! Natural gas consumption across the country  The developers of a disputed natural gas pipeline on the U.S. East Coast are considering a major expansion of the project into South Carolina, according to remarks made by an energy company executive and interviews with others in the industry. Opponents of the Atlantic Coast Pipeline said that raises questions about whether Dominion Energy, the project’s lead developer, has withheld important information from the public and whether the pipeline is even needed as initially proposed. But business leaders say the pipeline would help lower energy costs and boost economic development in South Carolina. Dan Weekley, Dominion Energy’s vice president and general manager of Southern pipeline operations, told attendees at a recent energy conference “everybody knows” the Atlantic Coast Pipeline — currently slated to pass through Virginia, West Virginia and North Carolina — is not going to stop there.

CO2 Emissions Down Due to NatGas.  The latest annual edition of “Trends in Global CO2 Emissions” by PBL Netherlands Environmental Assessment Agency and the European Commission’s Joint Research Centre (JRC) contains good news for the world as a whole, and for the United States in particular. The report is the third this year to find that overall world carbon dioxide (CO2) emissions have remained flat for the third year in a row, and that U.S. CO2 emissions continue to decline as well.

Notably, the report credits “the recent slowdown in growth of CO2” to “fuel switches to gas for power generation and increased renewable power generation.”

The report, which bases its CO2 emissions estimates off International Energy Agency (IEA) and BP data through 2016, found the global CO2 levels essentially remained flat in 2015 and 2016. As BP noted earlier this year, the global trend is “well below the 10-year average growth of 1.6% and a third consecutive year of below average growth” and that “during 2014-16, average emissions growth has been the lowest over any three-year period since 1981-83.”

Out of the five highest greenhouse gas emitting countries and the European Union (EU), only India experienced a significant increase in CO2 emissions (4.7 percent) while the EU’s numbers remained relatively flat. China (-0.3 percent), the United States (-2 percent), Russia (-2 percent), and Japan (-1.3 percent) all saw significant CO2 emission decreases in 2016. This reduction from the world’s largest emitters is particularly important because, as the report explains,

“The five largest emitting countries plus the European Union, which together account for 51% of the world population, accounted for 68% of total global CO2 emissions and about 65% of total global GHG emissions.”

U.S. decreases were by far the largest in actual tons, as explained by BP,

“Among countries with declining emissions, the US recorded the largest decrement to CO2 emissions for a second consecutive year (and the 6th of the past nine years), falling by 94.7 million tons or 2% (compared with the 10-year average decline of 1.1%).” (emphasis added)

To put that into perspective, China saw a drop of 41.4 million tons, Russia’s reduction was 31.8 million tons, and Japan’s was 15.4 million tons. In fact, even the United Kingdom, which reduced emissions by a whopping 6.4 percent, was only 27 million tons.

The report’s acknowledgement that increased natural gas use is a big factor in overall CO2 reductions is also in line with IEA’s analysis of 2016 emissions, as that agency noted that the U.S. emission decline occurred while the U.S. economy grew by 1.6 percent, and,

“The decline was driven by a surge in shale gas supplies and more attractive renewable power that displaced coal. Emissions in the United States last year were at their lowest level since 1992, a period during which the economy grew by 80%.” (emphasis added)

$23 Billion Planned in Pipeline Investment.  The oil and natural gas industry is well represented in the Appalachian Basin this week at the Shale Insights conference in Pittsburgh, Pa. Not surprisingly, one of the major points of discussion has been on pipelines and infrastructure. 

“’We must continue to invest in the necessary infrastructure to transport oil and natural gas to markets more quickly,’ said XTO Energy President Sara Ortwein.”

While there are several pipeline projects in the works in the Appalachian states of Pennsylvania, Ohio and West Virginia, the process is years long and, particularly in the Northeast, projects have been delayed due to protests and litigation brought on by “Keep It In the Ground” activists. As PBT reported, this is having negative impacts not only on companies trying to sell an abundant supply of Marcellus and Utica gas, but also on consumers,

“’The Northeast has been particularly hard hit by pipeline delays, and consumers and businesses are paying high prices for natural gas despite abundant domestic supplies,’ Ortwein said. Residential customers in Northeast states, including Pennsylvania, pay 29 percent more than the U.S. average for natural gas and 44 percent more for electricity, Ortwein said. Industrial users pay twice the national average for natural gas and 62 percent more for electricity, she said.”

Currently there is more than $23 billion in planned investment for more than 3,200 miles of pipelines planned or under development in the tri-state area. When built, these pipelines would move more than 17 billion cubic feet of Marcellus and Utica natural gas and 345,000 barrels of natural gas liquids (NGLs) per day. Further, these projects are projected to collectively create more than 100,000 jobs for residents in the region, particularly those with the skilled trades.

Here are some of the projects currently under construction or planned for the Appalachian Basin:

Permian Could Be the Largest Oil Reserve in the World.  The latest data from energy research firm IHS Markit estimates the Permian Basin holds between 60 and 70 billion barrels of technically recoverable resources. Stretching across West Texas and Southeastern New Mexico, the Permian has seen resurgence in activity thanks to new technologies like hydraulic fracturing and horizontal drilling. It is these same technologies, the IHS study concludes, that will allow oil and gas development to continue in the Permian for years to come.

To determine the size of the remaining resource base, researchers used data from more than 440,000 wells in the region. Analyzing this data with a new technology that took researchers three years to build, IHS was able to “completely reassess” the potential of the Permian Basin using a 3D model. With this model, IHS finds that even though roughly 39 billion barrels of oil has been produced from the basin since production began in the 1920s, there is still a massive amount of resources left to be unlocked.

In fact, IHS estimates that Permian production could soon surpass its peak set in 1973, thanks to advances in shale development. As the press release notes:

“With the onset of horizontal drilling and new completion technology during the past decade, the production decline in the Permian has been reversed and the basin is on track to soon eclipse its previous peak…”

Such a large resource estimate now puts the Permian firmly within striking distance of Saudi Arabia’s Ghawar field, thought to hold around 75 billion barrels of oil, putting the Permian in “super basin” territory. As Prithiraj Chungkham, director of unconventional resources at IHS Markit and co-author of the report states:

“The Permian Basin is America’s super basin in terms of its oil and gas production history, and for operators, it presents a significant variety of stacked targets that are profitable at today’s oil prices.”

This is not the first time the resource base within the Permian has been found to be larger thanks to fracking. In May of this year, the U.S. Geological Survey (USGS) estimated that the Spraberry Formation in West Texas holds roughly 4.2 billion barrels of oil – about 700 percent larger than previously thought. USGS Energy Resource Program Coordinator Walter Guidroz credited “changes in technology and industry practices” as the driver of what resources are technically recoverable in the formation. Moreover, the Wolfcamp Formation in the Permian was estimated to hold 20 billion barrels of recoverable oil in a November USGS assessment, making it the “largest estimate of continuous oil” that the agency has ever assessed United State.

Outside of the Permian, hydraulic fracturing has unlocked recoverable resources across Texas. In 2015, the USGS revised its previous estimate of natural gas resources in North Texas’ Barnett Shale, increasing the estimated resources to 53 trillion cubic feet – over twice the previous assessment of 26.2 trillion cubic feet. Further, earlier this year the agency estimated that the Bossier and Haynesville Formations along the Gulf Coast holds over 304 trillion cubic feet of natural gas, making it the “largest continuous natural gas assessment USGS has yet conducted.”

As shale development continues to improve, massive resource assessments like this latest from IHS could become even more commonplace and further prove the United States as a dominant force in the global energy market.

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PA Permits September 28, to October 5, 2017

             County                                   Township                                          E&P Companies

  1. Allegheny                                     Frazier                                                Range
  2. Beaver                                         Marion                                                PennEnergy
  3. Beaver                                         Marion                                                PennEnergy
  4. Beaver                                         Marion                                                PennEnergy
  5. Greene                                         Richhill                                              Range
  6. Washington                                Amwell                                               Range
  7. Washington                                Amwell                                               Range
  8. Washington                                Amwell                                               Range
  9. Washington                                Smith                                                  Range
  10. Washington                                Smith                                                  Range
  11. Washington                                Smith                                                  Range
  12. Washington                                Smith                                                  Range
  13. Washington                                Smith                                                  Range

OH Permits for week September 30, 2017

            County                                   Township                                          E&P Companies

  1. Belmont                                       Mead                                                  Gulfport
  2. Belmont                                       Mead                                                  Gulfport
  3. Belmont                                       Wheeling                                           Ascent
  4. Belmont                                       Wheeling                                           Ascent
  5. Harrison                                       Archer                                               Chesapeake
  6. Harrison                                       Archer                                               Chesapeake
  7. Harrison                                       Archer                                               Chesapeake
  8. Harrison                                       Athens                                               Hess
  9. Harrison                                       Athens                                               Hess
  10. Harrison                                       Athens                                               Hess

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

Utica Summit