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Expo/Industry events for the next few months

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

DUG East
June 19-21, 2018
David L. Lawrence Convention Center
Pittsburgh, PA
https://www.hartenergyconferences.com/dug-east

Midstream PA 2018
September 25, 2018
Penn Stater Conference Center
State College, PA
http://midstreampa.com/

Utica Summit
October 10, 2018
Walsh University
North Canton, OH
http://www.uticasummit.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

 

Third Cracker Plant in the Appalachian Basin.  LyondellBasell is a major U.S. chemical company headquartered in Houston.  While it is not mentioned in this article, we think Braskem’s holdings in Parkersburg, West Virginia could have factored into this decision.  LyondellBasell just purchased A. Schulman located in Akron, Ohio.  Obviously, we’ll closely monitor this story. 

For those attending our Appalachian Storage Hub Conference, we give an analysis on LyondellBasell and its likelihood to build a cracker plant in Parkersburg as well as its other intentions in the Appalachian Basin. 

LyondellBasell valued Braskem at real (R) 41.5bn ($11.4bn) in a bid it made to acquire the Brazilian polyolefins producer, according to a news report published on Thursday.

US-listed shares of Braskem rose by 5.20% following the news.

LyondellBasell presented the proposal to Brazilian construction company Odebrecht, which owns a 50.1% voting stake in Braskem, according to the financial newspaper Valor Economico.

The proposal needs to be approved by Brazilian state energy producer Petrobras, the other major shareholder of Braskem, according to Valor.

The offer represents a 12% premium over Braskem's B3 shares on the Brazilian stock exchange, Valor said.

In a statement, Odebrecht said it has not received a proposal to acquire its stake in Braskem. The company continues to work on alternatives to create value for the company and its shareholders.

Odebrecht also reaffirmed its intention to maintain its participation in the petrochemical sector.

LyondellBasell said on Thursday it does not comment about market speculation. Braskem said it will not comment. Petrobras did not immediately respond to a request for comment.

Earlier in October, the Wall Street Journal reported that LyondellBasell had made a takeover approach to Braskem.

At the time, an analyst made the case why such a deal would make sense. Braskem met the acquisition criteria laid out by LyondellBasell during its April 2017 analyst day. That target would need to be a low-cost producer of commodity chemicals with a similar portfolio. In addition, the acquisition would have to be accretive to earnings/share within two years.

The acquisition would extend LyondellBasell's footprint in Brazil and further extend its share in the polypropylene (PP) market in the US and Europe. Braskem is also active in Mexico through its controlling stake in the joint venture Braskem Idesa, which produces polyethylene (PE) at the country's Ethylene XXI complex.

However, it is unclear how the Brazilian government would view the foreign takeover of its national polymers champion. Braskem is the sole producer of PP and PE in the country.

If LyondellBasell does pursue Braskem, it would mark the company's second major acquisition.

The company is expected to close on its $2.25bn purchase of plastics compounder A Schulman later this year.

Three Amazons in PA.  The annual Upstream PA conference, circa 2018, in this home of Penn State University, was possibly the most optimistic in the five years ShaleDirectories.com has produced the day-long program.

“Cautious optimism” is how Marcellus Shale Coalition (MSC) president Dave Spigelmyer characterized the state of the industry from a Pennsylvania perspective.

With 8,215 unconventional wells producing 15 billion cubic feet per day (Bcf/d) of natural gas and with 812 wells spud and 2,020 permits let?? just in 2017, it appears the dark days of 2015-16 definitely are in the past.

Three Amazons

Spigelmyer also had an interesting take on the hubbub online giant Amazon has stirred nationwide and certainly in Pennsylvania, with both Pittsburgh and Philadelphia striving to be the city selected for the company’s Headquarters 2.0, bringing with it an estimated 50,000 jobs.

“(The oil and gas industry) employs the equivalent of three Amazons in Pennsylvania,” the MSC head man told the Upstream PA 2018 audience.

Spigelmyer did admit all is not perfect in the “Keystone State” when it comes to oil and gas, with the time needed to acquire a drilling permit – as many as six months – a big problem. Gov. Tom Wolf’s solution, introduced earlier this year, is to increase the price of a permit by 150%, to $12,500 from $5,000.

Tax potatoes, mushrooms

Wolf, as he has done every year since he first ran for Pennsylvania governor in 2014, is promoting a severance tax on natural gas production – in addition to an impact fee put in place roughly six years ago.

Speaker of the Pennsylvania House, Republican Mike Turzai, told Upstream PA audience while proponents are quick to tell anyone Pennsylvania is the only major oil and/or gas producer that doesn’t levy a severance tax, any severance levy proponent talks about the state having the highest corporate income tax (9.99%) in the U.S.

“No one talks about putting a specific tax on potatoes, or a specific tax on mushrooms, but they talk about a specific tax on oil and gas,” Turzai said.

Impact fee was compromise

When asked by Kallanish Energy after his presentation if he sees a compromise coming between Wolf and the Republican-controlled House and Pennsylvania Senate concerning a severance tax, Turzai did not hesitate.

“Myself and my colleagues are opposed to any form of severance tax – we believe the impact fee of 2012 was the compromise,” Turzai said.

George Stark, director of External Affairs for independent producer Cabot Oil & Gas, said Gov. Wolf and his backers also are incorrect when talking about who owns what when it comes to Pennsylvania’s vast mineral deposits.

“When it’s said ‘what’s under our feet belongs to all of us,” is just wrong,” Stark said at Upstream PA.  2018.  

Try telling that to the Pennsylvanians Turzai said who have collected $10 billion in royalties in roughly the last decade.

Poll Finds Misconceptions in Consumer Attitudes towards NatGas.  More than a decade into the shale revolution in the Appalachian Basin, the population’s mindset when it comes to energy and natural gas specifically, can be jaw-dropping.

After 10 years of educating the public, with community outreach programs, with spending and hiring locally, misconceptions still abound.

West Virginia’s Orion Strategies, an expert at polling the common man, in early April conducted a telephone survey of 600 men and women living in the 19 counties in Pennsylvania, Ohio and West Virginia that are considered part of the Ohio River Valley.

The results of the poll were presented last week at Upstream PA 2018, the annual one-day conference presented by ShaleDirectories.com in this small town dominated by Penn State University. Orion principle Curtis Wilkerson presented the poll’s results. Kallanish Energy was in attendance at the one-day program.

On the plus side, 66% of those surveyed believe the oil and natural gas industry representatives operating in their area is very or somewhat trustworthy.

The potential problem with that positive percentage is evident when you look at individual age groups.  The group including ages 18 to 22, aka, Generation Z, look on O&G as not very or not trustworthy at all at a 37% mark.

The parents of Gen Z, Generation X (38-53), look at O&G through entirely different glasses, with 66% seeing the industry as very or somewhat trustworthy. Education of the industry took hold in the parents, but had not worked or had not been presented to the children.

Here’s another very interesting survey result: Wilkerson’s poll found Ohio River Valley inhabitants believe the oil and gas industry isn’t hiring locally, 45% to 40%, with 15% of those surveyed unsure where labor was coming from.

There’s no question when Range Resources sunk the first Marcellus Shale well more than 10 years ago, the ensuing rush to spud meant most workers eating at local restaurants and staying at local motels were driving vehicles with license plates from Texas, Oklahoma, Colorado and Louisiana.

But local institutions of higher learning and trade schools soon saw the light and began offering classes geared to what O&G companies needed.

Sadly, many residents in the Ohio River Valley don’t believe it.

“When asked if someone close to them work for the oil and natural gas industry, 75% said ‘no,’” Wilkerson told the Upstream PA conference.

But, he added, that striking percentage more than likely isn’t correct because those surveyed did not associate working in O&G with driving a water truck, for example.

Finally, it’s obvious from the Orion poll, Ohio River Valley inhabitants like what they see with oil and gas production.

When asked their opinion for increasing production of oil and gas in their county, Wilkerson said 83% strongly or somewhat support “drill, drill, drill,” while just 15% somewhat or strongly oppose higher production.

Another Delay for Mountain Valley Pipeline.   The U.S. Army Corps of Engineers has temporarily suspended portions of a river crossing permit for the $3.5 billion Mountain Valley Pipeline, Kallanish Energy reports.

Mountain Valley Pipeline LLC, the developer of the under-construction natural gas line, received a streamlined federal review that is not allowed in cases of major stream crossings, pipeline opponents argued in a federal appeals court.

Lawyers for five environmental groups fighting the pipeline urged the 4th U.S. Circuit Court of Appeals in Richmond, Va., to suspend the federal Clean Water Act permit for the entire pipeline until questions about crossings of the Elk, Gauley, Greenbrier and Meadow rivers in West Virginia can be answered.

The Corps, which had approved the permit, agreed on Tuesday to temporarily block construction of those four river crossings, but refused to revoke the entire pipeline permit.

The court gave lawyers for both sides a week to formally respond.

The suspension of the permit could mean the MVP would have to seek individual permits for those four river crossings.

The environmental groups contend that the pipeline will cross more than 1,000 waterways in its 300 miles.

The streamlined review, called Nationwide 12, can only be used for projects in which stream crossings can be completed within 72 hours, West Virginia’s Department of Environmental Protection said.

That condition was added last year by the state to the Corps’ streamlined permitting for pipelines before the state allowed such permit reviews in West Virginia.

Mountain Valley officials said the four West Virginia crossings would take four to six weeks and would require construction of temporary dams, excavation of stream beds and backfilling over the pipeline. That river crossing work is scheduled to start in late August.

Legal arguments on the broader challenge to the Corps’ approval of the pipeline are scheduled for late September.

The eco-groups involved are the Sierra Club, Appalachian Voices, Indian Creek watershed Association, West Virginia Rivers Coalition and Chesapeake Climate Action Network.

The pipeline will run from West Virginia to southern Virginia. It will carry natural gas from the Marcellus and Utica shales from Wetzel County, W. Va., to Pittsylvania County, Va.

Mountain Valley Pipeline is a joint venture of six companies. The pipeline will be operated by EQT Midstream.

China to Buy A Lot More NatGas.  It looks like China will make another bet on US natural gas, building new gas terminals at ports in four provinces. The facilities will accommodate the country’s increasing reliance on foreign gas. The CEO of Kunlun Energy said in its annual shareholders meeting (paywall) that the company is conducting feasibility studies to build import terminals in four provinces. Kunlun is a subsidiary of China’s state-owned oil and gas company China National Petroleum Corporation (CNPC). Earlier this year, CNPC signed a 25-year contract (paywall) with Cheniere Energy, a US-based liquefied natural-gas producer. It was the first ever long-term contract to export liquefied natural gas from the US to China. The US wasn’t selling liquefied natural gas to China in any significant amount before 2016, and just last year China became the third largest export market for US liquefied natural gas, making up about 15% of the total exports, after Mexico and South Korea, according to figures from the US Energy Information Administration.

UGI Make $50 Million Project in the Marcellus.  UGI Energy Services (UGI) announced the further expansion of its Auburn Gathering System with the construction of two additional compressor stations in Susquehanna County and Wyoming County. The expanded system will increase the capacity of the Auburn Gathering System by approximately 150,000 dekatherms per day, bringing the total capacity of the system to 620,000 dekatherms per day. Deliveries will begin in the fall of 2018 with the balance of capacity becoming available in the fall of 2019. The new development project will transport gas from acreage being produced by Cabot Oil & Gas Corporation (CBT). The project is supported by a long-term agreement and will require a total capital investment of $50 million.

Atlantic Coast Pipeline Begins Construction.  Representatives of the oil and gas industry, local leaders and elected officials from around the state celebrated the first major step toward completion of Dominion Energy’s Atlantic Coast Pipeline project Wednesday with a groundbreaking ceremony for the Marts Compressor Station in Jane Lew. The station, which will provide compression to support the transmission of natural gas, marks the beginning of major construction on the Atlantic Coast Pipeline, said Samantha Norris, communications specialist for Dominion. “Dominion Energy is very proud of the Atlantic Coast Pipeline project,” she said. “This is a project that we’ve been working on for almost four years now. We are ready to see that construction begins.”

The Rice Brothers Are Back.   The four Rice brothers, all of whom formerly worked in the family business, Rice Energy, have launched a new venture. You will recall last November EQT consummated a deal to buy and merge in Rice Energy, paying $8.2 billion to do so (see Out with the Old: Rice Energy Sign Comes Down Day of EQT Merger). Not all of that money went into the pockets of Dan, Toby, Derek and Ryan Rice–but you can be sure a good chunk of it did. We’ve been wondering where the Rice boys would land since they have a non-compete clause with EQT. Would they leave the Pittsburgh region and restart somewhere else? Fortunately, no! The four boys plus a fifth partner, a former VP at Rice, have pooled their money and expertise and have just launched Rice Investment Group (RIG), a (so far) $200 million “multi-strategy fund investing in all verticals of the oil and gas sector with a focus on partnering where our operational, technical, and strategic experience add value.” We love everything about the Rice boys. They’re young, irreverent, know how to have a good time, and smart. They come from good stock. Their dad, Dan Rice III, was once the most successful mutual fund manager in the United States, for over a decade, until the company he worked for (BlackRock) booted him for their own bungling and lack of communication with investors (see BlackRock’s Screw-up with Dan Rice & Rice Energy). The boys learned from the best and now they’ve launched an investment firm of their own. When you look at their website homepage, it is classic Rice boys–an animated video of an 800-pound gorilla on the homepage, signaling their intention to be THE big player in funding Marcellus/Utica ventures.

Pipeline Crew Finds Lost Boy in WV.   It’s every parent’s worst nightmare. Last Monday afternoon a three year-old boy wandered into the woods near his home in Jackson County, WV and got lost. The parents could not find him. WV State Police and several local fire departments aided in a search effort, canvasing the woods. TransCanada is building the Mountaineer XPress Pipeline project several miles from where the toddler went missing. Upon hearing of the missing boy, the people in charge of the project flew into action, delivering supplies and port-a-potties to the searchers. They also provided maps of the area made by TransCanada–maps which ended up being instrumental in finding the boy. Some 15 hours after he went missing, on Tuesday morning, he was found–safe and sound. Authorities credit TransCanada as being instrumental in the process. TransCanada’s people didn’t do it for accolades. They did it because it was the right thing to do–even though it delayed the project and cost the company money. This episode paints a far different picture of pipeline companies than you typically hear about, does it not? Pipeline companies are not the heartless, “damn the environment and everyone who lives in the path of the pipeline” meme antis feed to sycophantic “reporters” in mainstream media. Quite the opposite. These are people who care about the work they do, and how it impacts the people where they do it. They care about the communities in which they work–and live.

Rex Energy Selling Assets in the Appalachian Basin.  Financially troubled Rex Energy plans to sell off all its assets in the Appalachian Basin, in western Pennsylvania and eastern Ohio, Kallanish Energy reports.

That is being done to “maximize their long-term value and prospects,” said the State College, Pa.-based independent producer.

The sales are expected to take four to five months to complete, it said. Parties interested in the asset sales should contact Tudor, Pickering, Holt & Co.

Rex last Friday filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Western District of Pennsylvania. It initiated voluntary proceedings with support from 100% of first-lien lenders and roughly 72% of second-lien noteholders, it said.

Rex said its drilling and production programs in the Marcellus and Utica shales are operating as usual. It added it's maintaining the necessary staff and resources to meet its gathering and processing partners.

The company received $100 million from its existing first-lien lenders and also has its normal cash flow to continue operations, the company said.

The company has been in discussions with its lenders and advisors for the last seven months, said CEO Tom Stabley, in a statement.

“We have undoubtedly made progress in addressing the realities of the global commodities market, but require a more fulsome (generous) debt restructuring to overcome the immense pressures our business is facing,” he said.

“Ultimately, we decided that the best possible outcome was to put our remaining assets into the hands of owners with the financial strength necessary to position them for long-term growth and success. Chapter 11 provides an orderly process to achieve these goals in a way that maximizes value for our stakeholders,” he added.

New NatGas Plant in OH.  NTE Energy on May 21 inaugurated the new Middletown Energy Center in Middletown, Ohio, the latest in a series of natural gas-fired power plants the Florida-based company is developing in Ohio, Texas, and North and South Carolina. NTE touts the 525-MW Middletown combined cycle facility as among the most efficient gas-fired power plants in the U.S., in part because heat from the power generation process will be used to create steam to drive an additional steam turbine at the plant.

Cove Point’s First LNG Shipment Arrives in Japan.  Japan’s largest city gas provider, Tokyo Gas, on Monday received the country’s first long-term delivery of liquefied natural gas (LNG) from U.S. shale producers through its 20-year contract with Dominion Energy, Kallanish Energy reports.

The 70,000-ton cargo left Cove Point last month, passed through the Panama Canal, and arrived at Tokyo Gas’ Negishi LNG terminal, at the Yokohama port, on board of the LNG Sakura early on May 21. The volume unloaded is equivalent to the annual gas supply of 220,000 households, Tokyo Gas said, in a statement.

The recently completed Cove Point terminal is a “premier facility” in Maryland, giving customers direct access to the Marcellus and Utica shale plays – two of the most prolific natural gas basins in North America. Through the joint-venture, Cove Point, Tokyo Gas, Sumitomo and Gail, have each contracted for half of the marketed capacity.

The JV has committed to purchasing 2.3 million tons per annum (MTPA) from Cove Point, of which 1.4 MTPA is to be delivered to Tokyo Gas.

Big Projects to Export More LNG.  The developers of an under-construction liquefied natural gas terminal going up in Freeport, Texas, have applied to expand it to export more LNG, while another project expansion announced plans yesterday to move forward. The Freeport LNG project is currently authorized to build three LNG "trains," each of which could liquefy up to 500 million metric tons per year (mtpa) of natural gas and sell them into world markets. In a notice to be published today in the Federal Register, the company seeks authorization from the Department of Energy to export the output of a fourth 500-mtpa train. Another LNG export project announced yesterday that it would also add capacity. Cheniere said it had decided to proceed with a third train of export capacity at its under-construction Corpus Christi plant. That project eventually envisions up to five LNG production trains, but the final investment decisions are being made incrementally. It is reportedly the first new U.S. capacity to get a financial green light since 2015.

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PA Permits May 10, to May 17, 2018

County                                   Township                                          E&P Companies

  1. NO NEW PERMITS THIS PAST WEEK

OH Permits for week ending May 19, 2018

           County                                   Township                                          E&P Companies

  1. Belmont                                       York                                                    XTO

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

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