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NewsLetters

Expo/Industry events for the next few months

Marcellus-Utica Midstream
January 30 – February 1, 2018
David L. Lawrence Convention Center
Pittsburgh, PA
https://www.hartenergyconferences.com/marcellus-utica-midstream 

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 

China Energy to Invest $83.7B in West Virginia.  China Energy Investment Corporation plans to invest up to $83.7 billion in West Virginia to develop shale gas and chemical manufacturing projects, Kallanish Energy learns from the West Virginia Department of Commerce on Thursday.

The mega-investment plans were formalized with a Memorandum of Understanding (MoU) signed during U.S.’s President Donald Trump visit to his Chinese counterpart President Xi Jinping in Beijing. The document, inked in the presence of both state heads, represents the largest of a series of investments China plans to make in the U.S., estimated at a total of $250 billion.

Planning for the projects is underway and will progress in phases over the course of 20 years. They will focus on power generation, chemical manufacturing, and underground storage of natural gas liquids and derivatives. The plans cover the value chain approach, integrated from raw materials through the production of chemicals.

“We welcome China Energy and the mutual benefits our energy collaboration will bring,” said West Virginia Commerce Secretary Thrasher. “The massive size of this energy undertaking and level of collaboration between our two countries is unprecedented.”

China Energy was created from the merger between China’s state-owned coal mining company Shenhua Group and energy producers Guodian Group (China Guodian Corporation is one of the five largest power producers in the People's Republic of China, administrated by SASAC for the State Council of the People's Republic of China- WikiLeaks) . The firm is now the largest power company in the world.

“Expanding Appalachia’s energy infrastructure, including developing a regional storage hub and market for natural gas liquids, will have a transformative effect on our economy, our security, and our future,” said Senator Shelley Capito.

The Senator added the benefits of the new Chinese investment will be “significant and long-lasting” for both West Virginia and the country.

According to the WV Dep. Of Commerce, China Energy selected West Virginia for this project because of its position as a key energy-producing state and home to one of the world’s largest shale gas reserves.

Through former Shenhua Group, the Chinese started joint research on direct coal liquefaction technology with West Virginia University in 2012.

Kudos to West Virginia Secretary of Commerce Woody Thrasher.  The benefits to West Virginia, the Appalachian Basin and the total U.S are almost unfathomable.  

Shell Buys Stock in SWN.  Shell Asset Management Co. bought a new stake in Southwestern Energy Company (NYSE:SWN) during the third quarter, according to the company in its most recent disclosure with the Securities and Exchange Commission. The firm bought 53,804 shares of the energy company’s stock, valued at approximately $1,880,000.

We have to wonder what this could be mean.  Is SWN a takeover target?  SWN’s acreage is in Northern/Northeastern PA where Shell is drilling.

Has Shell Reached the Point of “No Return?”  Shell Chemicals has officially started construction on its $6 billion ethane cracker plant, a project that will take several years to complete.

The announcement Wednesday marks the next step in a massive project that dates back to March 2012, when Shell announced that the Potter Township, Beaver County site was one of several it was considering for its new ethane cracker facility.

Shell made it official in June last year when it announced a final investment decision on the plant. Since then, crews have been working around the clock to prepare the site for main construction.

That site preparation was a massive undertaking by the company, which moved 7.2 million cubic yards of dirt and completely transformed the site, which previously held the Horsehead Corp. zinc smelter.

In addition, more than 4,200 steel pilings were installed for foundations across the property while Shell also built new bridges, rail lines and relocated state Route 18 in front of the plant.

Now that the site is fully prepped for construction, another massive transformation to the landscape is set to take place as the actual plant is constructed.  

"Today marks an important step forward for this major growth project," said Graham van Hoff, executive vice president for Shell's global chemicals business. "The preparation phase went well and our focus is now on ensuring first-class construction. Shell's commercial, engineering and manufacturing expertise will help make this project a great success."

The construction will include the building of four gigantic processing units that include one ethane cracker and three polyethylene units. The ethane cracker will be the largest part of the plant with more than 200 major components and 95 miles of pipe.

Atlantic Sunrise Construction Resumes.  Williams Partners said Wednesday evening the U.S. Court of Appeals for the District of Columbia denied an emergency motion to stay the Federal Energy Regulatory Commission’s authorization of the company’s Atlantic Sunrise pipeline project, allowing construction to immediately resume.

“We are pleased that the court has lifted the administrative stay of construction activities and denied the emergency motion for stay filed by the project opponents,” said Michael Dunn, Williams Partners’ chief operating officer.

Dunn said Williams will promptly resume construction on the line which he said “help millions of Americans gain access to affordable Pennsylvania-produced, clean-burning natural gas."

Construction on the project began seven months ago after a nearly four-year federal and state regulatory review process, Kallanish Energy reports.

The nearly $3 billion project, which is designed to increase natural gas deliveries by 1.7 billion cubic feet per day, is expected to be placed into full service in mid-2018.

Rayne Express Approved.  The Federal Energy Regulatory Commission has approved the Rayne Xpress Pipeline to begin shipping Marcellus and Utica shale natural gas to the Gulf Coast, Kallanish Energy reports.

The project required adding compressor stations in three Kentucky counties to boost capacity by 1 billion cubic feet per day (Bcf/d).

The pipeline runs from Rayne, La., north to Leach, Ky. FERC approved the service in a decision posted last week. The project was initially developed by Columbia Gas Transmission, now part of TransCanada.

The project will work in conjunction with the not-yet-complete Leach Xpress Pipeline in southeastern Ohio and northern West Virginia.

The Leach Xpress will cost $1.4 billion and includes 160 miles of pipeline to move 1.5 Bcf/d of natural gas.

The two projects together will cost $1.8 billion. Both projects are supported by long-term, fixed-fee, firm transportation agreements.

Cabot to Increase Production in 2018.  Cabot Oil and Gas plans to operate three rigs and two completion crews in the Marcellus Shale in 2018.

The company plans to invest $1.5 billion in capital spending next year, with $750 to $850 million going to the Marcellus Shale. It is projecting growth of 27 to 33 percent in the Marcellus Shale next year.

Cabot’s net income was $17.6 million in the third quarter, compared to a net loss of $10.3 million in the same quarter a year ago.

Mariner East 2 Completion Date.  Sunoco Pipeline’s parent company, Energy Transfer Partners, said Wednesday that its Mariner East 2 pipeline will be put into service in the second quarter of 2018, some 18 months later than originally planned, because of delays caused by Pennsylvania regulators.

Chief Financial Officer Tom Long said during the company’s third-quarter earnings call that the project has been held up in part by the Public Utility Commission’s recent ban on horizontal directional drilling at a location in Chester County’s West Goshen Township until the PUC hears a dispute between the township and Sunoco over the siting of a valve. The hearing is scheduled for April next year.

“We’re evaluating the relocation or elimination of this valve as well other alternatives that we believe will allow us to move forward with this portion of the project in the near future,” Long said in prepared remarks.

The controversial cross-state project has been beset with technical, environmental and regulatory challenges, and faces strong community opposition in some places from landowners and public-safety advocates.

When completed, the more than $2.5 billion pipeline is due to carry natural gas liquids from the Marcellus Shale of southwestern Pennsylvania to an export terminal at Marcus Hook near Philadelphia.

Senate Confirms Final Two FERC Commissioners.  IPAA hails Senate confirmation of two remaining FERC nominees. The U.S. Senate confirmed the last two members of the Federal Energy Regulatory Commission (FERC) last week, earning praise from the Independent Petroleum Association of America (IPAA). The two nominees were Kevin McIntyre and Richard Glick. FERC had been operating at less than quorum until now, leaving only three members to give input and potentially complicating its infrastructure efforts. IPAA had been so invested in the decision because the commission oversees the infrastructure that allows natural gas to come to market. “With a full slate of commissioners, these approvals will be even stronger to withstand opposition from those who fight to keep natural gas in the ground,” IPAA President and CEO Barry Russell said in a statement. “A Commission at full strength also will be needed to handle the   Notice of Proposed Rulemaking advanced by the Department of Energy on Grid Reliability and Resilience 
Pricing.”

EQT – Rice Deal Approved.  EQT Corporation has received consent from majority of its shareholders at the company's special meeting relating to its acquisition of Rice Energy Inc.

Of the total votes cast, about 84% were in favor of the proposal. Having received approval from shareholders, EQT expects the transaction to close by Nov 13, 2017.

On Jun 19, 2017, the upstream energy player decided to acquire rival Rice Energy for a total consideration of $6.7 billion. It was the largest accord signed in the U.S. upstream industry in three years.

Terms of the Deal

Per the agreement, stockholders of Rice Energy will get 0.37 EQT shares and $5.30 in cash. Additionally, EQT will refinance Rice Energy's long-term debt worth $1.5 billion. In the combined entity, the shareholders of EQT will hold around 65%.

Benefits

EQT and Rice Energy are among the leading producers of natural gas in the Marcellus and Utica shale plays. Hence, with the completion of the deal, the upstream companies will create the largest natural gas producer in the country. Most importantly, the acquisition will significantly raise EQT's core acreage positions in the Marcellus and Utica shale plays.

Higher Foot Print in Marcellus & Utica Shales

According to the company, the acquisition is expected to increase the footprint of Marcellus shale play to 670,000 net acres from 187,000 net acres. Also, total undeveloped locations in the region will jump to 3,700 from the previous count of 980.

In the Pennsylvania & West Virginia Utica resources, the acquisition is anticipated to raise the core presence of EQT from 105,000 net acres to 616,000 net acres. Moreover, undeveloped areas will increase to 3,680 from 630.

Post-acquisition, the average sales volumes of natural gas for EQT will rise to 3.6 billion cubic feet equivalent per day (Bcfe/D) from 1.3 Bcfe/D.  

Cost Synergy

EQT and Rice Energy are among the low-cost producers of natural gas in the U.S. shale resources. The buyout is likely to aid the combined entity lower operating cost and might also realize cost synergy of $2.5 billion.

Rice’s 3rd Qtr. Update and Comments on EQT.  Rice Energy, while not the biggest, is certainly one of the best-operated drillers in the Marcellus/Utica. Rice issued their third quarter 2017 update last week. It will be the last quarterly update for the company as Rice shareholders will vote this week to sell out to larger competitor EQT. Because of the impending vote this Wednesday, Rice elected not to conduct an analyst phone call with the release of their 3Q17 update–we only have written statements to go by. The latest quarterly report shows Rice hit yet another record-high for production for natural gas and equivalents, producing 1.44 billion cubic feet equivalent per day (Bcfe/d). During 3Q17 Rice drilled 25 Marcellus wells and 7 Utica wells (32 total). The company lost $107 million during 3Q17, versus making a profit of $66 million in 3Q16. Rice is and always has been run by young guys (and gals). The Rice boys are Millennials. So in this last quarterly update, they displayed some of their trademark irrev
erent humor by coining a new word: shalennial. Dan Rice, CEO, said this in a quote in the release: “Our success is a testament to the core assets that we have acquired and developed with our shalennial team and I am highly confident that our operational momentum, as evidenced by our record third quarter results, will meaningfully contribute to EQT’s future success. We are excited to combine our core assets with EQT’s to create one of the most complete energy companies in the United States and derive even more long-term value for our shareholders.” A footnote next to the word shalennial defines the term thus: (1) an evolving, tech-driven leader of the shale generation; (2) an employee of Rice Energy.” We’ll sure miss Rice’s humor, and their go-get-em, can-do attitude, around the Marcellus/Utica shale patch.

National Fuel Gas 3rd Qtr. Update.  Last week National Fuel Gas Company, headquartered in Western New York State with drilling subsidiary Seneca Resources and pipeline subsidiary Empire Pipeline, issued its fourth quarter (everyone else’s third quarter) 2017 update. In the accompanying analyst phone call, CEO Ronald Tanski blamed the delay of the Northern Access Pipeline project (delayed by the NY Dept. of Environmental Conservation) for lower earnings than the company would have otherwise realized. You may recall in July NFG filed a lawsuit against the DEC for arbitrarily rejecting the project. On the analyst call, Tanski said the case, filed in the Second Circuit Court of Appeals (in NY), will hold oral arguments on Nov. 16th. Tanski also said it’s “anyone’s guess” when NFG will get an answer about the project–either from the lawsuit or the Federal Energy Regulatory Commission (FERC). 

On the drilling front, Seneca Resources produced 40.4 billion cubic feet equivalent (Bcfe) last quarter, up 1% from the same quarter a year ago. After hedging, Seneca got $2.91 per thousand cubic feet (Mcf) for their gas. 

Apache 3rd Qtr. Update.  Apache Corp. reported net income of $63 million in the third quarter, due to increased drilling in certain locations and higher oil prices, Kallanish Energy reports.

That compares with a loss of $607 million one year ago.

Revenue increased in Q3 from $1.4 billion to $1.6 billion, the company said.

Overall production in Q3 was 354,000 barrels of oil-equivalent per day (BOE/d), excluding Canada and Egypt production. That is down from roughly 371,000 BOE/d in Q2 2017.

Its production in the Permian Basin in West Texas increased by 11%, to 161,000 BOE/d over Q2 2017's production.

Permian oil growth also increased 8% from the second quarter, to 78,000 barrels of oil per day (BOPD).

Apache “delivered strong operational results” in Q3, said president and CEO John J. Christmann IV, in a statement.

The Houston-based company has 17 of its 36 rigs at work in the Permian’s Midland and Delaware basins of West Texas and West Texas/New Mexico.

The company spent $843 million on capital expenditures in Q3, with two thirds spent in the Permian.

“Our portfolio is now increasingly weighted to our Permian assets, including Alpine High,” Christmann said. Development in the Alpine High area is continuing, he said.

Third-quarter production from Alpine High was 13,300 BOE/d.

The company reported several high-rate wells in the wet gas and dry gas portions of the play. The company was also pleased with what it called three parasequence oil tests in the Wolfcamp and Third Bone Springs formations that lend credence to the oil play at Alpine High, it said.

The company has made “great progress” in its continuing portfolio transition, Christmann said. Apache expects strong fourth quarter production growth, he added.

Could the Third Cracker in the Appalachian Basin Happen?  LyondellBasell Industries NV has made a takeover approach to Braskem SA, according to people familiar with the matter, eyeing a deal that could value the Brazilian petrochemical company at well over $10 billion.

The talks are at an early stage, the people said, and there is no guarantee there will be a deal. 

Some report that the talks are stalled.  Odebrecht is having major corruption problems in Brazil.  In fact, the chairman went to prison.  One has to wonder how much independence Braskem has in light of the Odebrecht situation.

The Braskem site in WV is a hot commodity.  Supposedly, a number of Asian chemical companies have spoken with Braskem about partnering to develop the cracker site.  The Asian chemical companies want to be the lead partner in developing the site.  Braskem wants to be the lead partner so nothing happens.  

Does this sound familiar?  The PTTGC situation in Dilles Bottom?

U.S. Oil Production Sets Record.  U.S. crude oil production hit an all-time high last week, according to Energy Information Administration data released Wednesday.

The U.S. produced 9.62 million barrels a day (MMBPD) of oil for the week ended Nov 3, Kallanish Energy reports. That slightly topped the previous high reached in June 2015, just before the oil price crash sparked a more than one-year decline that dropped U.S. output to roughly 8.4 MMBPD.

The latest data adds to signs of consistently high U.S. output and are likely to weigh on markets. Last week, EIA's Petroleum Status Report showed U.S. exports at an all-time high above 2 MMBPD.

U.S. West Texas Intermediate crude prices extended losses on Wednesday after the latest report, which also showed oil sitting in storage in the United States unexpectedly rose last week. Futures recovered slightly but were still trading lower. WTI closed yesterday down 39 cents, to $56.81/Bbl.

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PA Permits November 2, to November 9, 2017

 

              County                                   Township                                          E&P Companies

  1. Butler                                           Oakland                                             Rex
  2. Washington                                Amwell                                               Rice
  3. Washington                                Amwell                                               Rice
  4. Washington                                Amwell                                               Rice
  5. Washington                                Amwell                                               Rice
  6. Washington                                Amwell                                               Rice
  7. Washington                                Amwell                                               Rice
  8. Washington                                East Finley                                        CNX
  9. Washington                                East Finley                                        CNX
  10. Washington                                East Finley                                        CNX
  11. Washington                                East Finley                                        CNX
  12. Washington                                East Finley                                        CNX
  13. Washington                                East Finley                                        CNX

OH Permits for week November 4, 2017

            County                                   Township                                          E&P Companies

  1. Carroll                                          Perry                                                   Chesapeake
  2. Carroll                                          Perry                                                   Chesapeake
  3. Carroll                                          Perry                                                   Chesapeake

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

Northeast Supply Enhancement