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NewsLetters

Expo/Industry events for the next few months

Utica Midstream
April 4, 2018\
Walsh University
North Canton, OH
www.uticasummit.com

The New Upstream PA 2018
May 17, 2018
Penn Stater Conference Center
State College, PA
www.upstreampa.com

Appalachian Storage Hub Conference
June 7, 2018
Hilton Garden Inn, Southpointe
Canonsburg, PA
https://www.appastorage.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

SWN 4TH Qtr. and Full Year Update.  Late last week Southwestern Energy, one of the biggest drillers in the Marcellus (4th largest NatGas producer in the country), issued its fourth quarter and full year 2017 update. Southwestern drills in two plays: The Marcellus (i.e. Appalachia), and the Fayetteville (in Arkansas). The big news coming from last week’s update is that Southwestern signaled it wants to sell some–or all–of its “underperforming” Fayetteville assets, and use the money to pay down debt and drill more in the northeast. Largely on the back of prolific production in the Marcellus, Southwestern had a dramatic financial turnaround last year. In 2016, Southwestern lost $2.75 billion. In 2017, the company made $815 million in profit. That’s a swing of $3.5 billion in a single year!

Chesapeake Drilling Plans for 2018.   In 2017, the company placed 67 Utica wells into commission. This year it plans to operate two drilling rigs in the Utica shale play.

Additionally, Chesapeake has plans for the Marcellus shale. It plans to place 55 wells into production, which is up from the 43 wells it placed into production last year.

Exxon and Pioneer Hype the Permian.  Some of the top producers in West Texas' booming Permian Basin would have you believe the hype cannot be overstated. The massive Permian shale acreage is expected to account for about 30 percent of all U.S. oil production by the end of the year and it's easily the fastest-growing oil region in the world. The Permian, previously considered a mature area, is born again thanks to the shale techniques combining horizontal drilling with hydraulic fracturing, called fracking. "What we're staring at beneath our feet it cannot be replicated anywhere else in the United States. That's a given," said Tim Dove, chief executive of Irving-based Pioneer Natural Resources. "We have a golden goose right before us," Dove said at the CERAWeek by IHS Markit conference in Houston. The Permian surge is "demonstrably different" from Texas' earlier shale developments in East Texas' Barnett shale and South Texas' Eagle Ford because it's 90,000 square miles and the shale rock can easily extend 4,000 feet underground, said Dove and Sara Ortwein, president of Exxon Mobil's shale subsidiary, XTO Energy.

Chevron in the Permian.  In the control room of Chevron Corp.’s Scharbauer SE71 oil well, midway up a 150-foot rig in the heart of the Permian Basin, Operations Manager Scott Nash gives instructions to a contractor guiding a robotic arm screwing lengths of steel drilling pipe together. The procedure may save less than a minute per connection compared with the traditional way Chevron used to join pipe. And as recently as five years ago, the company wouldn’t have considered such a high-tech solution, especially in this arid West Texas landscape, long considered a poor candidate for profitable exploration. But today the Permian is so important to Chevron’s fortunes that saving 10 seconds each time drill pipes are linked can translate into millions of dollars in cost savings across Chevron’s huge operations there. The story of the Scharbauer SE71 well began more than 75 years ago. In 1888, Texas & Pacific Railway Co. went belly-up and bondholders seized some of the lands that the state had granted to the railroad. By the 1920s, drillers were tapping gushers in the region; one of those, Texaco, began snapping up control of former railroad rights-of-way, including, in 1962, the purchase of former railway acreage rights belonging to TXL Oil Corp. When Chevron bought Texaco in 2001, it inherited a treasure trove of untapped Permian riches.

Shell and Anadarko Working Together in the Permian.  Royal Dutch Shell and The Woodlands’ Anadarko Petroleum feuded last year over spending and control of their Permian Basin joint venture in West Texas. Now, they say they’ve avoided a messy divorce and are primed to grow in the booming oil and gas region.

The deal combined one the world’s biggest oil majors with one of Texas’ top independent oil and gas producers, marrying global financial resources with local shale expertise. Shell, new to the Permian, inherited the partnership when it paid about $2 billion in 2012 to acquire a 618,000-acre position in West Texas from Oklahoma’s Chesapeake Energy, which had formed the joint venture with Anadarko five years prior. Shell and Anadarko opted to keep working together after the original joint venture expired in July. At the time, Shell was upset Anadarko ramped up drilling activity, believing that Anadarko was sacrificing quality in order to operate more of the joint acreage. Anadarko admittedly wanted more control, concluding that Shell unevenly benefited from Anadarko’s proven shale experience.

In the U.S. in 2010, Texas energy producers hadn’t yet unleashed the flood of shale oil and natural gas that would transform the industry and spur an explosion of petrochemical construction and expansion along the Gulf Coast. But Ron Corn and his team at Chevron Phillips, intrigued by budding oil and gas production in the Eagle Ford basin south of San Antonio, anticipated a seismic shift in domestic energy output and convinced company executives to build a multi-billion-dollar processing plant in Baytown to produce ethylene, a natural gas-derived feedstock for plastics. “It was quite a radical concept,” said Corn, who now serves as the company’s senior vice president for petrochemicals. “There hadn’t been a whole lot of construction.” Eight years later, that early bet promises to pay off in spades for Chevron Phillips, a joint venture of the oil company Chevron and Houston refiner Phillips 66. The processing plant, known as a cracker, is near completion as petrochemicals emerge as a savior for an oil and gas industry facing a future of electric cars, renewable power and intensifying efforts to wean the global economy from fossil fuels.

Good News for Two Pipelines.  We recently dodged a couple of legal bullets with respect to building pipeline projects. A recent Fourth Circuit Court of Appeals case brought by anti-fossil fuelers against the Mountain Valley Pipeline (MVP) would have gutted the Federal Energy Regulatory Commission’s (FERC) ability to grant eminent domain powers to pipeline companies. Whew, dodged that bullet. In Pennsylvania’s Commonwealth Court, THE Delaware Riverkeeper and other antis tried to upend the centuries-old principle that federal law trumps state law, and state law trumps local law.  The result was federal law does trump state law.

PA NatGas Production Numbers Keep Growing.  Pennsylvania’s natural gas production, number of producing wells and average production per well has climbed annually since 2011 – despite the oil and gas price collapse beginning in mid-2014, and related production slowdown, according to the state’s Independent Fiscal Office, based on state Department of Environmental Protection data.

For 2017, total production volume was 5.35 trillion cubic feet (Tcf), a 5.4% increase from the prior year, Kallanish Energy reports. From 2011 to 2017, production volume increased at an average annual rate of 38.6%, to 5.35 Tcf, from 1.05 Tcf just six years earlier.

The number of producing wells in 2017 was 7,891, 9.9% higher than 2016’s total. From 2011 to 2017, the number of producing wells grew at an average annual rate of 32.4%, to 7,891, from 1,768 in 2011.

Average production per well in 2017 was 1.28 billion cubic feet (Bcf), up 8.5% from 1.18 Bcf in 2016. The cumulative increase of average production per well from 2011 to 2017, was 89.7%, the IFO reported.

Fourth-quarter 2017 production from horizontal wells (dominant producers in the state) totaled 1.4 Tcf, up 9.9% from the year-ago quarter.

The number of producing wells online in the final three months of last year jumped 10% from one year earlier, to 7,775 from 7,069.

Looking at production by individual county, The top four counties were Susquehanna (northeast part of state), Washington (southwest), Bradford (northeast) and Greene (southwest) combined produced 3.62 Tcf in 2017 – 67.7% of the state’s total production.

FERC Approves Cove Point.  The Federal Energy Regulatory Commission has given Cove Point Terminal in Maryland approval to begin full commercial operations, Kallanish Energy reports.

The approval came Monday in a three-page letter from the federal agency.

Last Friday, Dominion Energy had filed a letter seeking FERC approval to begin commercial operations at the $4 billion liquefied natural gas facility on Chesapeake Bay, in Busby, Md.

Earlier this month, the first LNG commissioning cargo was shipped from Cove Point.

The facility has capacity to make 5.25 million tons per year of LNG. Feedstock natural gas, about 750 million cubic feet per day, would come from the Marcellus and Utica shales in the Appalachian Basin.

Cove Point has contracts with ST Cove Point, a joint venture of Sumitomo Corp. and Tokyo Gas, and with GGULL, the U.S. affiliate of GAIL (India) Ltd.

The facility was initially designed and built to handle LNG imports.

It would become the second major LNG terminal in the U.S. after Cheniere Energy’s Sabine Pass facility in Louisiana that began service in February 2016.

LNG Exports Rocking the Market.  As the liquefied natural gas trade continues to grow and importers gleefully note incremental volumes of U.S. cargoes in a market that saw nearly 300 million tons change hands in 2017, the relatively new American exporters at the center of it all are invariably bringing profound changes along with them in a variety of ways. Merely five years ago, importers Japan, South Korea and China collectively made up two-thirds of global LNG demand, and exporters Qatar, Australia and Malaysia collectively met around two-thirds of global demand. In the main, the importers mix hasn’t altered much, except that China has overtaken South Korea as the world’s second-largest LNG importer, and will in all likelihood overtake Japan as well in the not too distant future, according to Royal Dutch Shell. But the exporters' club has been rocked by the abundance of U.S. natural gas, and the next wave of American LNG exporters are rocking the market. For starters, an impact on supply contracts in Asia and Europe is already being felt, according to much of the discourse at IHS CERA Week 2018; one of the industry's premier jamborees in Houston, Texas, U.S.

OH 2017 Production Numbers.  Ohio shale oil production from horizontal wells dropped 9.2% in 2017, while natural gas production grew by 24.3%, according to data released Thursday by the Ohio Department of Natural Resources (ODNR).

Oil production dipped from 18.02 million barrels (MMBbl) in 2016, to 16.35 MMBbl in 2017, Kallanish Energy has learned.

That drop was not unexpected because many Utica Shale drillers are developing wells in the dry gas window where few liquids are produced, said Rick Simmers, chief of the ODNR’s Division of Oil and Gas Resources Management.

Natural gas had a big jump: from 1.39 trillion cubic feet (Tcf) in 2016, to 1.73 Tcf in 2017.

In the fourth quarter of 2017, Ohio’s horizontal wells produced nearly 4.2 MMBbl of oil and 503 billion cubic feet (Bcf) of natural gas. The oil figure is up 16.3% from 3.6 MMBbl in Q4 2016, and natural gas volume is up 38.4% from 363.5 Bcf in Q4 2016.

The ODNR report lists 1,897 horizontal Utica wells, of which 1,869 reported some production of oil or natural gas last year. The typical well produced 2,244 barrels of oil and 269.1 million cubic feet of natural gas in Q4. There were 88 days of production.

Condensate is part of the Ohio oil total and natural gas liquids are part of Ohio’s natural gas total.

More Problems for Mariner East 2.  The Pennsylvania Public Utility Commission on Wednesday ordered the immediate shutdown of Sunoco Pipeline’s Mariner East 1 system after sinkholes exposed the bare pipeline in Chester County, which PUC investigators said “could have catastrophic results” if not repaired.

Gladys M. Brown, the PUC’s chair, granted an emergency order to halt operations on the 8-inch-diameter pipeline, which went into service in 1931 originally to carry motor fuel. It now carries up to 70,000 barrels a day of high-pressure volatile natural gas liquids such as propane from the Marcellus Shale gas region to a Sunoco terminal in Marcus Hook.

Brown issued the order at the request of the PUC’s Bureau of Investigation and Enforcement, which earlier Wednesday said sinkholes developed recently where the pipeline passes less than 50 feet from houses on Lisa Drive in West Whiteland Township, near Exton and near Amtrak’s mainline corridor from Philadelphia to Harrisburg.

Brown said she agreed with investigators that if immediate steps are not taken, it “could have catastrophic results impacting the public.” Though a shutdown will injure the pipeline’s shippers, she said, “the risks to the general public outweigh the risks to the shippers.”

The emergency order will require Sunoco to run an inspection tool through the pipeline to ensure it is undamaged, and to conduct geophysical testing to determine the extent of underground instability. Operations will not be allowed to resume until corrective actions are taken that satisfy the PUC’s investigators.

IEA Projects Possible Oil Problems after 2020.  Crude oil supply growth from the U.S., Brazil, Canada and Norway will more than meet incremental global demand through 2020, but more investment is crucial to boost output after that, the International Energy Agency (IEA) said Monday.

Launching its five-year market report Oil 2018 at CERAWeek, in Houston, the IEA said production gains from the U.S. will cover 80% of the world’s demand growth over the next three years. The other three countries referenced above will cover the remaining demand, Kallanish Energy reports.

Once again, IEA’s executive director Fatih Birol warned about the need for investment commitment for future supply security, noting there was little-to-no increase in investments in 2017-2018, outside the U.S.

“We’ve highlighted repeatedly, the weak global investment picture remains a source of concern,” said Birol. “More investments will be needed to make up for declining oilfields – the world needs to replace 3 MMBPD (million barrels per day) of declines each year, the equivalent of North Sea production – while also meeting robust demand growth.”

According to the report, global oil demand is forecast to grow by 6.9 MMBPD by 2023, to 104.7 MMBPD, while global oil supply capacity will grow by 6.4 MMBPD, to 107 MMBPD. That leaves a surplus of 2.3 MMBPD.

“Unless there is a change to the fundamentals, the effective global spare capacity cushion will fall to 2.2% of demand by 2023, the lowest number since 2007,” the IEA said.

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PA Permits March 1, to March 8, 2018

 

                County                                   Township                                          E&P Companies

  1. Fayette                                         German                                              Chevron
  2. Westmoreland                            Sewickley                                          Chevron
  3. Westmoreland                            Sewickley                                          Chevron
  4. Westmoreland                            Sewickley                                          Chevron
  5. Westmoreland                            Sewickley                                          Chevron
  6. Westmoreland                            Sewickley                                          Chevron
  7. Westmoreland                            Sewickley                                          Chevron
  8. Westmoreland                            Sewickley                                          Chevron
  9. Westmoreland                            Sewickley                                          Chevron
  10. Westmoreland                            Sewickley                                          Chevron

OH Permits for week ending February 24, 2018

 

              County                                   Township                                          E&P Companies

  1. Monroe                                        Adams                                                Eclipse Resources

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

Utica Summit