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Expo/Industry events for the next few months

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/

Shale Insight
October 23-25, 2018
David Lawrence Conference Center
Pittsburgh, PA
http://shaleinsight.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

More NatGas Needed for Appalachian Basin Pipeline.  Platts senior energy analyst Luke Jackson yesterday posted a Platts Snapshot titled, “New Northeast US Gas Pipelines Will be Hard to Fill.” Provocative title. Below are some comments from the video. In it, Jackson says according to their analysis that drillers in southwestern PA and eastern OH and the northern panhandle of WV will struggle, but eventually succeed, in producing enough natural gas to fill new pipelines coming online this year. But they won’t be able to fulfill their obligations until perhaps December 2017. That is, Antero, Range Resources and Ascent Resources will need to rapidly ramp up drilling–or risk paying for pipeline capacity they’re not using. However, it was Jackson’s comment about pipelines coming online in 2018 and 2019 that really caught our attention. He says in the video: “This new capacity will be nearly impossible to fill, barring a massive ramp up in drilling activity, which, per our forecast, is not expected to occur.” So Platts says Marcellus/Utica drillers will not be able to produce enough natural gas to fill all of the new pipelines that will be online by 2019. If we assume the price of NatGas goes higher over the next few years (not an unreasonable assumption), what this means that is new drilling is going to ramp up like crazy in the next few years. Buckle up!

EQT and CNX Selling Assets.  A pair of Pittsburgh-based oil and gas companies announced asset-shedding deals on Friday that further narrows their focus on shale gas in Pennsylvania.

Downtown-based EQT Corp. said it reached an agreement to sell its substantial holdings in the Huron Shale in Kentucky, Virginia and West Virginia for $585 million to Diversified Gas & Oil PLC.

It also said it would “transfer” 250 employees in the deal “work in or support production, pipeline, compression, and measurement operations.” In a public document, Diversified disclosed that for a year after the close of the deal, it has agreed to give those employees comparable compensation to what they currently receive.

Diversified, a company out of Alabama, has been picking up a lot acreage and wells in Appalachia recently, including in Pennsylvania.

The firm is focused on conventional fields — not necessarily the deeper shale gas formations that EQT and Cecil-based CNX Resources Corp. are targeting. But in a shareholder document, Diversified said it may experiment with horizontal wells in those shallower formations in the future if fuel prices warrant.

CNX was the other firm announcing a deal on Friday. It is selling its share of Utica Shale assets in Eastern Ohio for $400 million to Ascent Resources-Utica, another rising player in the area.

Ascent, whose West Virginia-focused Marcellus Shale division went through a quick?? bankruptcy restructuring earlier this year, was founded by Aubrey McClendon after his departure from Chesapeake Energy Corp.

Both deals were foretold by the Pittsburgh firms in previous discussions with analysts.

EQT’s activity in the Huron had gone through stops and starts as gas prices fell and rose over the past several years.

Earlier this year, the company wrote down the value of certain assets including the Huron properties by $2.3 billion.

CNX’s Utica acreage being sold to Ascent was part of a 50-50 joint venture with Hess Corp. CNX said in a statement that it will use the proceeds to repay debt, repurchase shares of its stock, buy more acreage and invest in its operations.

What Does Iran’s Threat Mean to Oil Prices? The commander of the Iranian Revolutionary Guards said Thursday his forces are ready to implement Tehran’s threat to block the Strait of Hormuz if U.S. sanctions halt crude sales from the Persian Gulf country.

Major general Mohammad Ali Jafari said “the enemy can understand the meaning of using the Strait of Hormuz for all or for no one,” Kallanish Energy learns. His statement follows threats endorsed by the country’s President, Hassan Rouhani, on Wednesday, citing the U.S. goal to “zero” Iranian oil exports.

The Strait of Hormuz, between the Persian Gulf and the Gulf of Oman, provides the only sea passage from the Persian Gulf to the open ocean. It’s the world’s most strategically important choke point, with roughly 30% of the global seaborne-traded crude oil and other liquids passing through annually.

Analytics firm Vortexa estimates roughly 17.2 million barrels per day (MMBPD) of seaborne crude and condensate transited the Strait last year, and roughly 17.4 MMBPD in the first half of 2018.

Most of the crude exported from Saudi Arabia, Iran, the UAE, Kuwait and Iraq passes through it. It’s also the route for nearly all the liquefied natural gas (LNG) from the world’s largest exporter, Qatar.

This isn’t the first time Tehran has made such threats. The so-called "oil artery" has been at the heart of regional tensions for decades.

Captain Bill Urban, a spokesman for the U.S. military's central command, said Thursday the U.S. Navy and regional allies “stand ready to ensure the freedom of navigation and the free flow of commerce wherever international law allows.”

Pruitt Is Out.  What’s to Come?  Former Oklahoma Attorney General Scott Pruitt's 16-month tenure as administrator of the Environmental Protection Agency came to a screeching halt Thursday.

President Trump tweeted Thursday he accepted Pruitt's resignation. Trump said the agency's deputy administrator and former coal industry lobbyist, Andrew Wheeler, will become acting head of EPA, Kallanish Energy reports.

The departure follows months of scrutiny that gathered momentum following reports Pruitt had rented a Capitol Hill condominium linked to an energy lobbyist on favorable terms.

The news exacerbated concerns about the high cost of Pruitt's travel and security detail and triggered a flood of allegations Pruitt fostered a culture of workplace retaliation, wasteful spending and self-dealing at EPA.

"It is extremely difficult for me to cease serving you in this role first because I count it as a blessing to be serving you in any capacity, but also because of the transformative work that is occurring," Pruitt said in his resignation letter.

"However, the unrelenting attacks on me personally, my family, are unprecedented and have taken a sizable toll on all of us."

While Pruitt was a key figure in Trump's campaign to roll back environmental regulations, he increasingly became seen as a liability in an administration that has seen two Cabinet members fired over ethical lapses and several more accused of wasting taxpayer dollars.

The EPA administrator also reportedly alienated colleagues by positioning himself to take over as U.S. attorney general if the frequently embattled head of the Justice Department, Jeff Sessions, stepped down or was fired.

Pruitt became a lightning rod from the moment Trump nominated him. The Oklahoman rose to prominence as the state's attorney general, where he developed close ties to the energy industry and sued the EPA more than a dozen times.

As EPA administrator, Pruitt said the agency's primary responsibility is to offer certainty to the energy companies, automakers and other business interests it regulates. He sidelined agency scientists, sought to ease environmental rules and encouraged staff to think of the companies it regulates as its customers.

He stood with the President on issues that divided the administration, like pulling the U.S. out of the Paris climate agreement.

Pruitt came under scrutiny last year for his frequent travel, sometimes in first class, to his home state. The EPA's inspector general opened an investigation into the matter in August.

Pruitt’s travel habits came back into focus earlier this year as reports showed the EPA chief and staffers had spent at least $90,000 on traveling just a few days in January, including for first-class airfare. The EPA defended Pruitt's pricey itineraries, saying his security detail had ordered him to travel first class due to several threats against the administrator and unspecified incidents during previous trips.

Powelson Leaves FERC.  Robert Powelson's decision to exit the Federal Energy Regulatory Commission less than a year into his term could leave natural gas pipeline developers in the lurch and policy critics scrambling for how to approach the commission's coming 2-2 partisan split. The split could influence how the commission handles an ongoing review of its pipeline permitting process, electric reliability issues, power pricing reforms and the White House's push for a federal fix to the decline of coal in electricity generation across the country.

Powelson’s departure is a big deal.  He has always been a knowledgeable, fair regulatory when dealing with oil and gas industry issues from his days in PA as the PUC where served as chairman and his short time at FERC. 

Fracking Is 20.  Hydraulic fracturing has upended global energy markets. The engineer who used it successfully for the first time didn't see it coming. "I had no idea it would cause so much change. I was just trying to keep my job," said Nick Steinsberger, who applied it to a well in Dish, Texas, 20 years ago this month. "It is one of the most extraordinarily important, disruptive, technologically driven changes in the history of energy," said Ed Morse, Citigroup's global head of commodity research. "It was revolutionary for the U.S. economy, and it was revolutionary geopolitically."

Ascent Spending Big in the Utica.  Ascent Resources said Friday its spending $1.5 billion for oil and natural gas assets in Ohio’s Utica Shale Play, deals that will make the independent producer one of the U.S.’s largest privately-held exploration and production companies. “The combination of these accretive bolt-on acquisitions is a milestone for the company and has been made possible by our outstanding operational success in the Utica Shale,” said Jeff Fisher, Ascent’s chairman and CEO. “… after completion of these acquisitions, we will become one of the largest privately held E&P companies in the U.S. in terms of asset size and net production.”

Rover Needs to Complete Restoration before Approval.  The Rover natural gas pipeline across northern Ohio has until July 9 to file a plan with the Federal Energy Regulatory Commission for completing restoration efforts along the 713-mile pipeline route, Kallanish Energy reports.

The federal agency filed its notice to complete required restoration activities in a two-page letter last Thursday.

Failure to comply with restoration deadlines could impact requests by the company to begin service on the pipeline, FERC said.

The company must submit a detailed plan on why it will be unable to meet current deadlines on restoration work on its Market Segment of the line. It must also explain how and when it can complete the necessary work.

FERC wants the company to explain the delay in restoration work to affected landowners.

The notice was filed because FERC did  not believe Rover Pipeline, an Energy Transfer Partners subsidiary, would  be able to meet June 30-  deadlines that had been approved, FERC said.

That includes “final grading, reseeding, resolution of all remaining items on the punch list, such as minor restoration to stream banks, soil erosion and repair of erosion- control devices where revegetation has not yet been achieved, and the restoration of subsidence by reshaping the existing soil and/or bringing in soil of the same or better quality,” it said.

The company noted it would likely take until at least July 30 to finalize restoration along its Market Segment of the line, FERC said.

The federal agency had permitted Rover Pipeline to begin in-service operations along the route with the understanding the restoration work would be completed in a timely fashion, it said.

FERC said it “expects pipelines to follow through on their commitments to restore and rehabilitate land and other resources disturbed by the construction of a certificated pipeline.”

The company has said the problems of slippage and erosion were caused by unusually heavy rains.

Rover Pipeline has been pushing FERC to approve service on two Rover laterals: the Majorsville and Burgettstown laterals. The Majorsville Lateral lies in Ohio and West Virginia. The Burgettstown Lateral is in Ohio, West Virginia and Pennsylvania.

The $4.2 billion twin pipelines had encountered trouble with leaks and spills from horizontal directional drilling in Ohio where drilling had been halted for a time because of concern by state agencies.

Construction was also halted for a time in West Virginia because of erosion and sediment control problems along pipeline laterals.

The pipeline will move up to 3.25 billion cubic feet per day of Utica and Marcellus natural gas to the Gulf Coast, the Midwest and Ontario.

Reductions in NatGas Going into Storage.  The volume of working natural gas added to storage during the week ended June 22 was the lowest total since late April, data from the Energy Information Administration shows.

For the week, just 66 billion cubic feet (Bcf) was added to working-gas storage in the Lower 48 U.S. states, a 3.3% increase from the previous week, but the lowest volume added since the week of April 27, when 62 Bcf was pushed into storage.

More than 2.07 trillion cubic feet (Tcf) of product was in storage at June 22, up from 2.01 Tcf one week earlier. (All numbers are rounded.)The latest total was down 735 Bcf, or 26.2%, from the year-ago total of 2.81 Tcf, and was down 501 Bcf, or 19.5%, from the five-year average of 2.58 Tcf.

All five regions EIA divides the Lower 48 into to track working gas reported a week-to-week increase, led by the East and Midwest regions, each adding 24 Bcf. The east rose to 430 Bcf, from 406 Bcf, while the Midwest’s working-gas volume increased to 425 Bcf, up from 401 Bcf in place during the week of June 15.

The latest East total is down 103 Bcf, or 19.3%, from the year-ago total of 533 Bcf, and was down 113 Bcf, or 20.8%, from the five-year average of 543 Bcf.

The Midwest region’s latest total was down 248 Bcf, or 36.8%, from the year-ago total of 673 Bcf, and was down 161 Bcf, or 27.5%, from the five-year average of 586 Bcf.

Noble Gets Deal to Move on Permian Oil to the Gulf.  Noble Energy on Tuesday announced it signed an additional firm sales agreement to get its crude oil from the Delaware Basin in West Texas to the Gulf Coast, Kallanish Energy reports.

The five-year agreement provides for firm gross sales of at least 10,000 barrels per day of oil beginning this month and increasing to 20,000 BPD in October 2018, for the rest of the agreement.

Crude oil sold under the agreement will initially use the buyer’s existing firm transport to Corpus Christi, Texas.

The buyer was not identified.

Following completion of the EPIC Crude Pipeline, it is anticipated crude oil sales under the agreement will be transported by way of the company’s firm transportation capacity, the Houston-based company said, in a statement.

Last May, Noble secured 100,000 BPD of firm transportation capacity for 10 years on the EPIC Pipeline. It is expected to begin service in the second half of 2019.

The 730-mile pipeline from Orla, Texas, to Corpus Christi, is being developed by San Antonio-based EPIC Midstream with partners Apache and Noble Energy.

Prior to the new agreement, Noble had agreements for the sale of its Delaware crude oil to the Gulf Coast or Cushing, Okla., with 1,000 BPD for the second half of 2018, and 5,000 BPD in 2019.

Eagle Ford Shale Deal.  Affiliates of privately-held independent producer Venado Oil and Gas and international investment giant KKR said Tuesday they’ve closed on the buy of operated assets in the Eagle Ford Shale oil window of South Texas.

The deal is the third between the two companies in fewer than 18 months, Kallanish Energy reports. No seller's name or purchase price was revealed.

The assets acquired by Venado and KKR include current oil production from 22 producing wells and future resource development potential across roughly 23,000 net acres immediately adjacent to existing operated assets held by Venado and KKR in Atascosa and Frio counties.

During the second quarter of 2018, the assets produced roughly 4,500 net barrels of oil-equivalent per day (BOE/d) (74% oil, 11% natural gas, and 15% natural gas liquids).

“These assets are a natural addition to our existing operated assets and considerably increase our future drilling inventory,” said Venado CEO Scott Garrick.

“(This investment is) underlining our commitment to capitalizing on the attractive market opportunity we see in the U.S. oil and gas sector at this point in the cycle,” said David Rockecharlie, member and head of Real Estate Assets for KKR.

As of the closing date, the Venado-KKR partnership manages roughly 136,000 net acres producing approximately 43,000 BOE/d from the Eagle Ford of South Texas.

The partnership is principally funded by KKR’s Energy Income and Growth Fund I. KKR manages a portfolio of oil and gas assets in numerous unconventional and conventional resource areas across the U.S. and has made 13 investments in the Eagle Ford.

Texas April Oil Production Numbers.  Texas production in April totaled 83.16 million barrels (MMBbl) of crude oil and 548.75 billion cubic feet (Bcf) of natural gas, according to the Railroad Commission of Texas.

Those are preliminary figures reported by operators and will grow as updated and late production reports are filed.

Production initially reported to the state agency in April 2017, was 78.39 MMBbl of crude, updated to the current total of 87.22 MMBbl, and 605.38 Bcf of natural gas, updated to the current 648.56 Bcf.

Texas production from May 2017 through April 2018 was 1.104 billion barrels (BBbl) of crude and 7.87 trillion cubic feet (Tcf) of total gas, Kallanish Energy has learned.

The preliminary data shows April 2018 crude oil production averaged 2.77 million barrels day (MMBPD), compared to 2.61 MMBPD in April 2017.

Natural gas production in April 2018 averaged 18.29 Bcf/d, compared to the 20.18 Bcf/d average in April 2017.

April 2018 production came form 180,834 oil wells and 91,197 gas wells.

The Top 5 counties for April 2018 oil production were: Midland, with 9.27 MMBbl; followed by Karnes, Loving, Reeves and Martin.

The Top 5 counties for gas production were Webb with 35.92 Bcf; followed by Tarrant, Reeves, Loving and Midland.

The Top 5 counties for condensate were Reeves with 1.68 MMBbl, followed by Culberson, Loving, Dewitt and Karnes.

Thanks to NatGas Emissions Lowest Since 1985.  At 80 billion cubic feet per day (Bcf/d), the U.S. just hit another record for dry natural gas production, a 46 percent increase since 2008 when the “shale gas revolution” started. The economic and energy security advantages are well known, but what has gotten less attention is how huge the environmental benefits of producing and using more natural gas have been. In particular, mounting domestic supply has increasingly pushed us to more gas use in the electricity sector, which accounts for 35 percent of our total gas usage, especially noticeable the past week with air conditioners ramping up to fight the heat wave. U.S. gas needed for electricity has increased 40 percent over the past decade to ~26 Bcf/d — pushing gas to become our main source of power in 2016.

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PA Permits June 28, to July 5, 2018

 

County                                   Township                                          E&P Companies

  1. Tioga                                            Liberty                                                Rockdale
  2. Tioga                                            Liberty                                                Rockdale
  3. Susquehanna                            Bridgewater                                       Cabot

OH Permits for week ending June 30, 2018

 

County                                   Township                                          E&P Companies

  1. Columbiana                                Elk Run                                             Hilcorp
  2. Columbiana                                Elk Run                                             Hilcorp
  3. Columbiana                                Elk Run                                             Hilcorp

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

Utica Summit