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Expo/Industry events for the next few months

Ohio Valley Regional Oil & Gas Expo
April 24-25, 2018
Belmont County Carnes Center
St. Clairsville, OH
http://ohiovalleyoilgasexpo.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

South Korean Polypropylene Plant Coming.  I have heard a number of stories about South Koreans showing interest in building chemical plants in the Appalachian Basin.  The Daelim JV with PTTGC is a big deal in South Korea.  Look for more news from South Korean companies.  (RUMOR)

$170 Billion in Midstream.  The U.S. natural gas industry must spend $170 billion over the next seven years on pipelines, compressor stations, export terminals and other related infrastructure to keep up with burgeoning production, according to Meg Gentle.

“One threat to the U.S. being able to export LNG and expand its export capability is the overall commitment to invest in infrastructure to move natural gas,” Gentle, CEO of LNG exporter Tellurian, said in an interview with Bloomberg at the Bloomberg New Energy Finance Future of Energy Summit in New York this week.

Natural gas output will grow by 24 billion cubic feet – 32% -- from 2017 to 2025, according to U.S. Energy Information Administration estimates.

Gentle’s projections are a warning that parts of the country will continue to experience a lack of sufficient pipelines, Kallanish Energy understands.

Appalachian Basin producers have been dealing with a lack of lines for the better part of the shale boom of the past decade. Spot prices there slumped to record lows last year and have started to rebound as new capacity comes online.

Now the Permian Basin is facing the real threat of having to slow down the output of crude oil because drillers lack capacity to handle all the associated gas flowing.

For companies building multibillion-dollar plants to chill gas into liquid and export it, the abundance of cheap gas from the Permian in West Texas is an advantage.

Developments there “will happen” because it’s an environment supportive of energy infrastructure, Gentle said. That may not happen fast enough for Appalachia, Bloomberg reported.

FERC Gives Go Ahead to Atlantic Coast Pipeline.  The Federal Regulatory Commission issued a partial notice to proceed with aspects of construction for Dominion Energy’s Atlantic Coast Pipeline Thursday.

The notice gives Dominion permission to commence “full construction” in areas of Upshur County and Halifax County, North Carolina.

The approval will allow the company to begin constructing contractor yards along the areas where the pipeline itself will be constructed, according to Aaron Ruby, a Dominion spokesman.

Saudi Aramco to Make Big Petrochemical Investment in U.S.  Motiva Enterprises is evaluating world scale investments in ethylene and aromatics production, marking state-owned oil company Saudi Aramco’s arrival in US petrochemicals. Initial investment estimates total $8 billion-$10 billion, Aramco says.

“These agreements signal our plans for expansion into petrochemicals,” said Brian Coffman, Motiva president and CEO. Motiva on Saturday signed an agreement to evaluate the use of TechnipFMC’s mixed-feed ethylene production technologies for a US cracker. It signed a separate agreement with Honeywell UOP to examine aromatics extraction and production technologies for benzene and paraxylene for development of a potential complex on the US Gulf Coast.

“Final investment decisions on these projects are not expected to be made until 2019 and are dependent on strong economic, competitive incentives, and regulatory support,” Motiva said. The announcement coincided with a visit to Houston by Saudi Crown Prince Mohammed bin Salman.

We had a rumor a few weeks ago about Shell expanding its Monaca cracker plant.  Possibly, Shell could use these funds for an expansion. 

Potential ExxonMobil – Qatar Deal.  Exxon Mobil Corp. XOM 2.94% is in talks with Qatar over a partnership that could see the Middle Eastern nation owning U.S. gas, people familiar with the matter said.

The potential deal could lead to the state energy giant Qatar Petroleum investing in Exxon’s vast U.S. gas resources, extending from West Texas to North Dakota, according to the people, as both seek to deepen an already lucrative relationship each needs to face off current challenges. It could take the shape of a joint venture in which Qatar partners or invests in future wells with Exxon subsidiary XTO Energy, these people said.

Qatar wants to broaden its investments outside the Middle East and curry favor with Washington amid an economic blockade from Saudi Arabia and its Gulf allies. Qatar’s leader is due to meet U.S. President Donald Trump on Tuesday.

“Fracking” Saves Pittsburgh Airport.  Natural gas development enabled Pittsburgh International Airport to expand flights and plan a $1.1 billion renovation, Allegheny County Executive Rich Fitzgerald, a Pittsburgh Democrat, said during a recent interview with the Pittsburgh Business Times. In 2013, the airport authority partnered with Consol Energy – now CNX Resources – to develop natural gas under the airport’s 9,000 acres with an agreement that included a $46 million upfront payment.

As the Business Times reports, that long-term partnership has already resulted in a positive difference for our region:

Without the Consol deal, which included a $46 million upfront payment with the expectation that an additional $20 million would be generated annually, Pittsburgh International Airport was unlikely to have experienced its recent expansion in new daily flights, which Fitzgerald said have grown from a nadir of around 37 a day a few years ago to more than 70 now as the airport has been able to reduce gate fees to airlines due to the gas revenue.

“If we had not done the gas royalty deal with Consol, we would’ve defaulted on our bonding,” said Fitzgerald of Pittsburgh International Airport. “It’s really made us a much better, more attractive place to do business.”

Now, instead of being in default, Pittsburgh International Airport is pursuing a $1.1 billion repositioning and modernization plan that will completely reconfigure its operation, and the county expects revenue from the Consol deal will help generate the financing to pay for it.

BTU Analytics Summer NatGas Forecast.  Even though it may not feel like it in the Northeast, spring is in full swing and summer is right around the corner. That means the flowers are blooming, my allergies are starting to act up, and the shift from natural gas withdrawals to injections is imminent. Today let’s take a look at what BTU is expecting from natural gas demand this summer. The two things we are watching this summer are: new LNG capacity coming online and power burn reaching record levels.

Let’s start off with LNG. The impact that LNG demand has already had on the US natural gas market, and will continue to have, shouldn’t be understated, even as the global LNG market begins to wane, coming off peak winter demand. Cove Point LNG is loading its second cargo, with a third on its way, and is set to start commercial deliveries shortly, while Sabine Pass continues to run strong, sometimes operating above nameplate capacity.

             

Coming this summer, both the start of Freeport LNG and Elba Island will add more than 1 Bcf/d of incremental LNG export capacity, adding to the strong deliveries off of natural gas pipelines that we are seeing to current facilities. Kinder Morgan’s Elba Island is currently under construction and plans to begin Phase 1 commissioning activities this summer. Meanwhile, the first train of Freeport LNG should begin receiving gas for commissioning activities sometime this summer as well.

Natural gas power burn provides the other source of demand upside this summer. With prices expected to remain weak, especially at regional supply hubs, and about 12 GW of new natural gas fired coal plants expected to begin operations over the next six months, natural gas power burn is poised to reach record levels. The graphic below breaks down how BTU looks at power burn growth over the next year. Newer, more economic plants are expected to make up the bulk of the gains, while gains directly attributed to coal plant retirements will be more muted because retiring coal plants typically run at much lower utilizations than the average plant.

             

While BTU expects to see record power burn levels this summer, if it weren’t for some notable headwinds, it could have been even higher. The two major sources of demand destruction that will continue to chip away at incremental power burn gains are from the build-out of renewables and increasing power plant efficiencies. On a regional level, the renewables build-out will have a larger impact in the Midcontinent and Midwest, where wind power is surging and setting records, while increasing power plant efficiencies will mostly impact regions like the Northeast where new, more efficient power plants are generating the same amount of electricity using less gas.

However, demand is only half the story. What’s happening on the supply side and where will season-ending storage inventories end up? Request a sample of BTU’s Henry Hub Outlook report for US natural gas production, storage inventory, and Henry Hub forecasts.

Cove Point Fully Operational.  The United States now officially has two export facilities for liquefied natural gas.

Virginia-based Dominion Energy on Tuesday reported that its Cove Point liquefaction and export terminal has entered commercial service, Kallanish Energy reports.

Since late March, the facility has been ramping up for full production, the Virginia-based company said.

Cove Point has long-term 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 $4 billion LNG liquefaction and export facility is at Lusby, Md., on Chesapeake Bay.

The first LNG commissioning cargo was shipped from Cove Point in early March.

The facility has a capacity of 5.25 million tons per year of LNG.

The natural gas, about 750 million cubic feet per day, will come from the Marcellus and Utica shales in the Appalachian Basin.

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

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

TX March Drilling Permits Down.  The Railroad Commission of Texas issued 1,220 original drilling permits in March, Kallanish Energy reports.

That total is down 6.8% from 1,310 permits in March 2017, the state agency reported.

The March total included 1,002 permits to drill new oil or gas wells, 14 to re-enter plugged well bores and 204 for re-completions of existing well bores.

The March 2018 permits included 385 oil, 77 gas, 690 oil or gas, 82 injection, two service and 11 "other" permits.

In March 2018, the commission processed 656 oil, 173 gas, 35 injection and three "other" completions.

That compares to 586 oil, 77 gas, 49 injection and zero other completions in March 2017, the agency said.

Total well completions processed in 2018 are 2,712, up from 1,925 recorded in the first three months in 201.

As of April 6, Texas has 498 rigs at work, 49% of the rigs in the U.S., according to well service company Baker Hughes, a GE company.

The Midland area with 618 new permits for oil or gas wells was No. 1, followed by the San Antonio area with 116 permits and the Refugio area with 86 permits.

For oil completions, the Midland area had 363, followed by the Refugio area with 67 and the San Angelo area with 59.

For gas completions, the Midland area was No. 1 with 53 permits, followed by East Texas with 35 and the Refugio area with 21.

Saudi Aramco Considering Petrochemical Plant in the Gulf.  Saudi Arabia’s state-owned Saudi Aramco last Saturday took the initial steps to expand into petrochemicals, in the U.S. – a project which could also double the size of America’s largest refinery.

Aramco’s CEO, Amin Nasser, signed memoranda of understanding (MoUs) worth $8 billion-$10 billion with Honeywell UOP and Technip FMC to study petrochemical production technology for use in a chemical plant the company is considering building at the Port Arthur, Texas, refinery.

Saudi Arabia’s Crown Prince Mohammed bin Salman, who was finishing a two-week visit to the U.S., was present at the signing in Houston, along with Saudi Energy Minister Khalid al-Falih and U.S. Energy Secretary and former Texas Gov. Rick Perry.

“These agreements signal our plans for expansion into petrochemicals,” said Brian Coffman, CEO of Aramco’s U.S. subsidiary, Motiva Enterprises.

Aramco wants to develop its downstream business and use crude oil as a petrochemicals feedstock, Kallanish Energy reports.

Coffman also said Motiva was evaluating increasing the 630,000 barrel-per-day (BPD) Port Arthur refinery’s capacity to 1 million or 1.5 million BPD (MMBPD) – the latter making it the largest refinery in the world.

The aromatics unit for which Honeywell UOP’s technology is being considered under one of the MoUs, would convert benzene and paraxylene, byproducts of gasoline production, into 2 million tons annually of feedstocks for chemicals and plastics.

The other MoU would allow Aramco to use Technip FMC’s mixed-feed ethylene production technologies in the U.S. The technology would produce 2 million tons a year of ethylene, a building block for most plastics.

The final investment decision for building a petrochemical plant at Port Arthur is not expected until 2019, and is “dependent on strong economics, competitive incentives, and regulatory support,” Aramco said, in a statement.

Coffman did not provide a timeline for the possible expansion of the Port Arthur refinery.

The 1.2 MMBPD Reliance Industries refinery in Jamnagar, India, currently is the world’s largest.

Aramco said last year that it would invest $18 billion in Motiva to expand the refinery and move into petrochemical production.

MVP Southgate Open Season.  Joint venture Mountain Valley Pipeline, LLC Wednesday announced MVP Southgate, a proposed interstate natural gas pipeline anchored by a firm capacity commitment from Scana Corp. unit PSNC Energy.

Mountain Valley also announced the beginning of a binding open season for MVP Southgate. EQT Midstream Partners, which will be the operator of Mountain Valley Pipeline when completed, also will be the operator of MVP Southgate. The new line has a targeted in-service date of the fourth quarter of 2020, Kallanish Energy reports.

MVP Southgate, as currently designed, will receive gas from the Mountain Valley Pipeline mainline in Pittsylvania County, Va., and extend roughly 70 miles south to new delivery points in North Carolina counties of Rockingham and Alamance counties.

MVP Southgate would provide natural gas produced in the Marcellus and Utica Shale plays to PSNC Energy customers, as well as existing and new end-user markets in southern Virginia and central North Carolina.

"Today's announcement of the MVP Southgate project underscores the need for improved access to a low-cost, reliable supply of natural gas from the Appalachian Basin that will support the increasing demand for energy by consumers and industrial markets in the southeast U.S.," said Jerry Ashcroft, president and CEO, EQT Midstream Partners.

The binding open season for MVP Southgate began yesterday and is scheduled to end on May 11.

Mountain Valley Pipeline (MVP) is a 303-mile, 42-inch natural gas pipeline system that will run from northwestern West Virginia to southern Virginia, flowing 2 billion cubic feet per day (Bcf/d).

MVP, currently under construction, is owned by joint-venture partners EQT Midstream Partners, NextEra US Gas Assets, Con Edison Transmission, WGL Midstream, and RGC Midstream. The line is projected to be in service by the end of 2018.

Texas More Oil with Less Rigs.  Texas is producing more oil now than at any point in 2014 when oil was last priced above $100 a barrel, and the industry is doing it with far fewer workers and rigs, according to an index that tracks activity in the state’s oil and gas sector. Oil companies extracted 110.5 million barrels of oil in Texas in February, exceeding the 109.5 million barrels produced in December 2014, the best month of the peak year of the last oil boom, according to the Texas Petro Index, a service of the Texas Alliance of Energy Producers, a trade group.

Drillers achieved the milestone employing half the rigs and 25 percent fewer people than in 2014. "The implications are striking: record crude oil and natural gas production at significantly lower prices, rig counts, and number of industry workers," said Karr Ingham, the economist who created and calculates the index. "It means that fewer employees are needed to produce more crude oil in Texas and the U.S. than has ever been produced." The surge in production has been driven by increased efficiency, which allows companies to make money at lower prices, and the steady climb in oil prices.

WV Pipelines Getting Very Active.  Two major natural gas pipelines originating in West Virginia are moving forward with construction activities after focusing on cutting trees through the winter months. Mountain Valley Pipeline will extend 42-inch diameter natural gas pipeline over 303 miles to transport West Virginia natural gas into southern Virginia. The pipeline developer says the $3.5 billion project is on pace for completion this year after felling trees in areas considered to be sensitive habitats for bats and migratory birds. Atlantic Coast Pipeline would run 600 miles from West Virginia through Virginia and into southeastern North Carolina, delivering up to 1.5 billion cubic feet of Marcellus shale gas. That $5.1 billion project is on track for completion in 2019, developers say. Each project is meant to move West Virginia natural gas to eastern markets, potentially generating higher prices. Mountain Valley Pipeline says it remains on target for completion late this year, with Atlantic Coast Pipeline developers aiming for a 2019 completion.

Bakken Getting Busy.  As the oil patch rebounds the state will face renewed challenges. While better positioned to handle the oil activity with the infrastructure buildup during the boom, there still are areas of concern. There are housing issues that need to be resolved. In Williston the first quarter of 2018 has been very successful. They sold more homes in that quarter than any other quarter, even during the boom years of 2012 and 2014. Despite that, Realtors and developers know they are facing a single-family housing crunch in the coming months. With an influx of workers there will be an increasing demand for housing. Apartments and hotels in Williston are at 90 to 95 percent occupancy at the moment so they can’t absorb too many workers. The expectations are those units will be occupied shortly. The city is facing a single-family housing shortage as early as this summer. While homebuilders are aware of the needs, it takes time to put up a home. A group of stakeholders recently gathered to formulate a plan of action in Williston.

 

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PA Permits April 5, to April 12, 2018

              County                                   Township                                          E&P Companies

  1. Greene                                         Whitely                                               Rice
  2. Lycoming                                     Upper Fairfield                                 Inflection Energy

OH Permits for week ending March 31, 2018

County                                   Township                                          E&P Companies

  1. No Permits Issued this week

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

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