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Expo/Industry events for the next few months

PetroChemical Update
June 18-19
Westin Convention Centre
Pittsburgh, PA
http://www.petchem-update.com/northeast/

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

 

Daniel Rice May Run EQT Drilling.  It looks like EQT may be dividing the company into two divisions – drilling and midstream.  There are discussions that would have Daniel Rice leading that division. (RUMOR)

MarkWest Looking at Rex Energy.  I heard a very interesting rumor that MarkWest is exploring the purchase of bankrupt Rex Energy. (RUMOR)

Is the Appalachian Storage Hub at the Tipping Point?  Thanks to the many outstanding speakers at our 2nd Annual Appalachian Storage Hub Conference.  There was a certain “buzz” at the conference that interest in the development of the downstream is about to begin.

LyondellBasell’s offer to buy Braskem has certainly raised the likelihood that the Basin’s cracker plant development will happen sooner rather than later.  LyondellBasell has already evaluated Braskem’s cracker plant location in Parkersburg, West Virginia and has explored ethane storage in the Appalachian Basin.  These moves leads one to believe that if LyondellBasell can buy Braskem it will move quickly to build its cracker plant.  The LyondellBasell’s attempt to buy Braskem certainly legitimizes the Appalachian Basin’s move to become a petrochemical center.

In addition to the LynondellBasell move, different companies told me that they are speaking with companies outside the Appalachian Storage Basin and outside the U.S. that are looking for locations in the Ohio River Valley.  It seems that we are approaching the “land grab” phase.  Companies can no longer wait on the sidelines to see what will happen.  As the saying goes, “You snooze, you lose.” 

The next few years in the Ohio River Valley are certainly going to be rewarding for the first movers.  We’ll be reporting on those first movers.

The Dems Are Out to Kill our Job!. (Thank You, MDN) The Democrat Party has just made it official that they will now openly discriminate against and target natural gas, oil and coal companies–and the people who work for them. The Democratic National Committee (DNC) has voted to adopt a policy of not accepting campaign contributions from evil, vile, nasty fossil fuel companies. Irrational, far-left kooks have taken over the Dem party. It is now the official position of Democrats to assassinate the fossil fuel industry. If you work for/in the fossil fuel industry, know this: the Democrat Party is targeting YOUR industry and YOUR job for extinction…

PA PUC: Mariner East 1 - Yes; Mariner East 2 - No.  The full agency upheld a ruling by a PUC administrative law judge ordering all construction on both Mariner East 2 and Mariner East 2x shut down in West Whiteland.

However the agency gave Sunoco the green light to resume transportation of gases on the older, existing Mariner East 1 pipeline.

The rulings come in response from a request from state Sen. Andy Dinniman, D-19 of West Whiteland, a fierce critic of the pipeline, who sought relief for his constituents from ongoing alleged health and safety threats posed by the pipelines.

Sunoco Logistics, an offshoot of Energy Transfer Partners, is building Mariner East 2 across nearly the full width of Pennsylvania, including 11 miles of western Delaware County and 23 miles across the heart of central Chester County.

When up and running Sunoco plans to ship hundreds of thousands of barrels of volatile gases such as propane, ethane and butane through the pipeline each day from the state’s Marcellus Shale region to a facility in Marcus Hook. From there it will be stored and shipped to mostly overseas markets.

Dinniman sought the shutdown order after persistent problems in construction on Mariner East 2, including sinkholes that exposed the existing Mariner East 1 line in West Whiteland Township.

Thursday’s ruling came on a 3-2 vote by the PUC to uphold an amended order from Administrative Law Judge Elizabeth Barnes that suspended construction on the Mariner East 2 and 2x pipelines. The amended order passed by a 3-2 vote, with Commissioners Brown, Sweet and Place voting in favor and Commissioners Kennard and Coleman voting against.

Judge Barnes had ordered a risk assessment be performed on the pipeline and also ordered Sunoco to report back to her on other safety issues.

Opponents of the pipeline hailed the continued halt to construction, but were dismayed by allowing resumption of materials to move through Mariner East 1.

“Today’s ruling is further evidence that Gov. Wolf needs to act to shut down the Mariner East 2 pipeline once and for all,” said Food & Water Watch Pennsylvania Director Sam Bernhardt. “These pipelines pose an immediate threat to public safety. Communities along the route of the Mariner East 2 have lived with sinkholes, water contamination, and drilling spills throughout construction. Community leaders, including municipal and county governments, strongly advocated for the construction shutdown to be continued. Now, Wolf’s PUC has sided with these communities in affirming that part of Judge Barnes’ order. While we oppose the commission’s move to reinstate operation of the Mariner East 1 pipeline, today’s decision is nonetheless a stark signal to Governor Wolf that Pennsylvanians increasingly oppose Sunoco’s pipelines.”

On the other hand, backers of Sunoco’s plan were happy that Mariner East 1 was put back on line.

“The restart of Mariner East 1 is good news for an energy market that has been constrained by bottlenecks caused by insufficient infrastructure and compounded by this latest shutdown of a major energy thoroughfare through the region,” said Kurt Knaus, spokesman for the Pennsylvania Energy Infrastructure Alliance. “The PUC conducted an exhaustive investigation to demonstrate the safety of Mariner East 1, so we applaud the commission for standing by its original decision and once again approving the line for operation. We remain hopeful that, in the coming weeks, after additional information about the other lines is submitted, work will commence there as well. The continued favorable legal opinions and years of public hearings and intense regulatory review combined to make this one of the most highly scrutinized public works projects in Pennsylvania.”

“Clean Air Council is honored to be part of the incredible grassroots movement that led to today’s decision continuing the suspension of Mariner East 2 construction in West Whiteland Township, and to support the efforts of Senator Dinniman and the communities who stood up to make this possible,” said Joseph Minott, executive director and chief counsel of Clean Air Council. “The threats posed by Sunoco’s Mariner East project do not end at the West Whiteland Township line. Communities should continue bringing their concerns to the Commission.”

Sunoco has indicated Mariner East 2 is more than 95 percent complete and they had hoped to have it online later this summer.

ExxonMobil Entering JV to Build Pipeline in the Permian.  ExxonMobil (XOM) and Plains All American Pipeline intend to create a joint venture to build a new crude oil and condensate pipeline from the Permian Basin of West Texas/New Mexico to the Texas Gulf Coast, Kallanish Energy reports.

The pipeline’s capacity would be in excess of 1 million barrels per day, the companies said, in a joint statement.

It would originate in both Wink and Midland in West Texas with delivery points in Webster, Baytown and Beaumont in East Texas.

The price tag was not disclosed.

The pipeline is also expected to transport crude and condensate from other producers.

The companies said the pipeline would use existing pipeline corridors as much as possible to reduce the impacts on local communities.

ExxonMobil has acquired a crude oil terminal in Wink. Last January, the oil giant said it intends to triple its Permian production to 600,000 barrels of oil-equivalent per day (BOE/d) by 2025, and intends to spend $2 billion on Permian infrastructure.

It currently produces about 165,000 net BOE/d. It says its Permian assets may hold as much as 6 billion BOE.

TX Drilling Permits Have Big Month in May.  The Railroad Commission of Texas issued 1,243 original drilling permits in May, compared to 1,021 in May 2017, a 21.7% increase.

The May 2018 total included 1,118 permits to drill new oil or gas wells, 13 to re-enter plugged well bores and 112 for re-completions of existing well bores, Kallanish Energy reports. Those permits included 278 oil, 77 natural gas, 801 oil or gas, 72 injection, zero service and 15 other permits.

In May 2018, the state agency processed 739 oil, 134 gas, 57 injection and six other well completion permits. That compares to 593 oil, 115 gas, 60 injection and zero other completions in May 2017.

Total well completions processed in 2018 year-to-date are 4,450, up from 3,223 issued in 2017, a 38% increase.

The No. 1 region for permits to drill oil or gas wells was the Midland area, with 597 permits. Second was the Refugio area, with 134 permits and third was the San Antonio area, with 126.

For oil completions, the Midland area was No. 1, with 404 permits. Second was the San Antonio area, with 149 and third was the San Angelo area, with 49.

For natural gas completions, the San Antonio area was first, with 51. Second was North Texas, with 22 and third was the Midland area, with 20.

According to well service company Baker Hughes, a GE company, Texas had 538 drilling rigs at work, as of June 8, 51% of the U.S. total. It is the No. 1 drilling state.

“Truck-Free” Water Storage.  H2O Midstream has completed construction of the first commercial, "truck-free," produced-water storage and disposal hub in Texas.

The Railroad Commission of Texas issued H2O Midstream a commercial permit for one million barrels of storage, just the second such permit issued by the Railroad Commission, and the first for a facility serviced entirely by pipelines, Kallanish Energy learns.

A new 35,000-barrel-per-day deep disposal well is co-located with the storage.

Located in Howard County, in the Permian Basin, the produced water hub consists of two 500,000-barrel ponds connected to a network of 10 disposal wells totaling 220,000 BPD of capacity via a 130-mile pipeline network.

"This is an important step forward for the water midstream industry and demonstrates H2O Midstream's long-term commitment to improving environmental and safety conditions through the use of permanent infrastructure and interconnected water gathering, disposal, reuse and storage facilities," said Jim Summers, company CEO.

The newly built water hub provides multiple benefits to producers in the area, including enhanced reliability, peak flowback management, and centralized storage for produced water reuse, according to H2O Midstream.

Money Available for $10 Billion Storage Hub Buildout.  The $10 billion price tag for a natural gas liquids underground storage facility proposed near the Ohio River in Pennsylvania, West Virginia or Ohio, is mind-boggling to most outsiders.

The storage is seen as a crucial part of the equation needed by the Appalachian Basin to again attract the U.S. petrochemical industry born here, but moved elsewhere decades ago.

But to financial experts – the money men who work with millions, billions of their clients’/partners’ money daily -- there’s no question funding for such a massive project not only is available, the money is looking for good projects for its funds.

But proponents must keep a couple truisms in mind: Competition for funding is not regional or national – it’s global. And when talking about any energy project in the U.S. with private equity players, they must be convinced to consider the Appalachian Basin.

“That giant sucking sound you hear is Texas; every time you talk with private equity players about energy, their eyes look toward Texas,” said an investment banker/equity capital markets expert, who requested anonymity.

His remarks, part of a panel discussion on financing the storage hub, were made to roughly 120 attendees at the Second Annual Appalachian Storage Hub conference, held last week at Southpointe Business Park, south of Pittsburgh. The program was produced by Shaledirectories.com and TopLine Analytics. Kallanish Energy was in attendance.

While $10 billion is a huge number, it’s only a puny 2% of the private equity money looking for investment opportunities, according to Damian Georgino.

“Right now, there is $500 billion in infrastructure funds sitting on the sidelines worldwide,” said Georgino, special counsel with the law firm Evershed Sutherland (U.S.).

“For most infrastructure projects (like the Appalachian storage hub) investors are looking at a project’s risk profile,” Georgino said. “They naturally want stable, predictable returns.”

The panelist who requested anonymity said the amount of capital raised by private equity firms specifically for infrastructure is massive.

"In 2016, $63 billion raised for infrastructure projects, for 2017, $50 billion was raised, and this year, in six months, $40 billion thus far has been raised,” he said.

Stability in natural gas prices is conducive to moving many natural gas-related projects forward, particularly downstream projects.

“In the Appalachian Basin, there should be a focus on downstream projects,” the investment banker/ equity markets expert said.

“Uncertainly definitely is not your friend,” Georgino added.

With the money available for the storage hub, what must occur to move the project forward?  The trio of states must work together to get the hub built, cooperate, not be selfish in attracting the capital and thus the players needed to build the massive project.

“It’s all about the structure of the deal,” the investment banker/equity markets expert said. “The first marker (to make the hub project work) is Shell. Shell was first on the table with its (western Pennsylvania) cracker project.”

Permian Basin Will Soon Be #3.  The Permian basin in Texas and New Mexico is the nation's biggest shale oil producing region. But in just a few years, drillers could be pumping enough Permian crude to outmatch every nation in the world except Russia and Saudi Arabia. Output from the region is forecast to more than double between 2017 and 2023, jumping to 5.4 million barrels a day, according to a new estimate from IHS Markit That would help the United States graduate from an emerging player in export markets to an established power. IHS Markit thinks the United States could be shipping 4 million bpd to foreign customers, up from 1.1 million bpd last year. The Permian is one of the nation's shale regions, where drillers use advanced methods to unlock oil and natural gas from rock formations. They pummel the shale rock with water, sand and chemicals — a process known as hydraulic fracturing — and recover oil and gas through horizontal wells.

U.S NatGas To Set Productions Records in 2018 and 2019.  U.S. dry natural gas production will average 81.2 billion cubic feet per day (Bcf/d) in 2018 – a new record – the Energy Information Administration projects in its just-released Short-Term Energy Outlook (STEO).

STEO/EIA expects natural gas production will rise and set a record again in 2019, to 83.8 Bcf/d, Kallanish Energy reports. By comparison, U.S. dry natural gas production averaged 73.6 Bcf/d in 2017.

“Growing forecast U.S. natural gas production supports increasing forecast liquefied natural gas (LNG) exports,” according to EIA. “LNG exports averaged 1.9 Bcf/d in 2017; EIA forecasts LNG exports to average 3.0 Bcf/d in 2018, and 5.1 Bcf/d in 2019.”

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PA Permits  June 7, to June 14, 2018

County                                   Township                                          E&P Companies

  1. Greene                                         Franklin                                             EQT
  2. Greene                                         Franklin                                             EQT
  3. Greene                                         Franklin                                             EQT

OH Permits for week ending June 9, 2018

County                                   Township                                          E&P Companies

  1. Guernsey                                    Londonderry                                     Ascent
  2. Guernsey                                    Londonderry                                     Ascent

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

Midstream PA