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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/ 

WV Energy Expo 2018
October 3, 2018
Hazel and J.W. Ruby Community Center
Morgantown, West Virginia
http://wvenergyexpo.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

McNamee Likely Candidate to Replace Powelson at FERC.  One person has emerged as the most likely candidate to be nominated by President Trump to serve on the Federal Energy Regulatory Commission.

Bernard McNamee of the Department of Energy was mentioned last week in several media reports as being the most likely candidate to succeed Robert Powelson of Pennsylvania, who stepped down from FERC last Friday, Kallanish Energy reported.

Powelson left to become president of the National Association of Water Companies.

Moving quickly to fill Powelson’s seat would reduce the likelihood of 2-2 FERC tie votes between Republicans and Democrats that could threaten gas pipeline projects.

McNamee, executive director of Doe’s Office of Policy, is a strong supporter of Doe’s efforts to help keep coal and nuclear power floats afloat, a plan supported by the Trump administration.

He also has worked at the Texas Public Policy Foundation that has opposed wind power projects. McNamee also has served as Doe’s deputy general counsel, worked for the McGuireWoods law firm, served as a policy advisor for Senator Ted Cruz of Texas and been chief of staff for the Texas attorney general.

His strong support for fossil fuels and the DOE grid resilience plan could provoke a heated confirmation process. Citizen Action and the Sierra Club both expressed concerns about McNamee’s potential nomination.

A Senate confirmation hearing will be dependent on Senate Majority Leader Mitch McConnell’s willingness to conduct hearings in advance of the November mid-term elections.

Shale Boom Kills NatGas Volatility.  When US natural gas futures passed a milestone this month, they did so quietly: volatility fell to the lowest levels since the market’s debut nearly 30 years ago. The event seemed improbable. Volatility usually fades when commodity stocks are ample. Yet US gas stocks are 19.5 per cent below average. When the winter starts they are set to be at their lowest in more than a decade. This situation is the latest example of how the world’s largest gas market has been transformed by shale drilling. While demand for gas is galloping, it has been met by waves of supply that show no sign of abating. Conditions that put traders on edge a decade ago get shrugs. Like much of the northern hemisphere, the US this year is experiencing extremely hot weather. Cooling degree days — a measure of air-conditioning demand — are expected to top 1,000 by the end of the season, ranking the summer of 2018 among the top five for heat, according to Commodity Weather Group. That has required more generation from electric power plants that increasingly run on gas. Natural gas “power burn” surged to a record 37.7bn cubic feet per day during July, according to S&P Global Platts.

Diamondback Buys Energen.  U.S. oil and gas producer Diamondback Energy Inc on Tuesday agreed to buy shale rival Energen Corp in an all-stock deal valued at $9.2 billion, giving it an expanded footprint in the country’s largest and fastest growing oil field. Energen had been under pressure from activist investor Corvex Management for more than a year to sell itself to address weak returns. The proposed acquisition is Diamondback’s second in the Permian in a week, after striking a deal to pay $1.2 billion for Ajax Resources LLC. West Texas shale producers also are facing pressure to expand scale and efficiency in the Permian basin as higher costs for services, and the need to secure limited pipeline transport out of the region, weigh on smaller and midsize companies. For independent oil producers like Diamondback, adding new drilling prospects represents the best way to compete for services with larger rivals that have moved into the Permian this year despite pressure by investors to focus on shareholder returns. Shale producers including Apache Corp, ConocoPhillips, Parsley Energy and Pioneer Natural Resources recently have increased their 2018 capital budgets as oil prices have held above $65 a barrel.

ExxonMobil Big Supporter Kinder’s Permian Pipeline.  Exxon Mobil is signing on as a major customer on Kinder Morgan's planned, $2 billion Permian Highway Pipeline to carry natural gas from West Texas to the Houston region. Irving-based Exxon Mobil is looking for more outlets to transport its natural gas from its rapidly increasing Permian Basin production. While crude oil is the main focus of production, there's a lot of still-valuable associated gas that comes out of the Permian wells too. Houston-based pipeline giant Kinder Morgan proposed the Permian Highway Pipeline project in June in a partnership with Midland-based EagleClaw Midstream. Note: Natural Gas Intelligence also reports.

TX Permits up in July.  Texas issued a total of 1,153 original drilling permits in July, compared to 1,011 in July 2017, according to the Railroad Commission of Texas.

That is a 14% increase, Kallanish Energy reports.

The July 2018 total included 990 permits to drill new oil or gas wells, 23 to re-enter plugged well bores and 140 for re-completions of existing well bores.

The breakdown of those well types for those permits are oil 324, 73 gas, 680 oil or gas, 67 injection, zero service and nine "other" permits.

In July, the state commission also processed 753 oil, 157 gas, 29 injection and one "other" completion permit.

That compares to 437 oil, 50 gas, 27 injection and two other completions in July 2017.

Well completions processed for 2018 to date are 6,514, up from 4,388 recorded in the same period in 2017. That is an increase of 48.5%.

According to Baker Hughes, the Texas rig count on Aug. 10 was 520, representing about 50% of the rigs in the U.S.

The top five areas for permits to drill oil/gas holes are the Midland area with 577, the San Antonio area, the Refugio area, the San Angelo area and the Lubbock area.

The top area for oil completions are the Midland area with 369, the San Antonio area, the Refugio area, the San Angelo area and North Texas.

The top areas for gas completions are the San Antonio area with 41, followed by East Texas, the Midland area, the Refugio area and Deep South Texas.

Cabot, Seneca & Chief Ramp Up for Atlantic Sunrise Pipeline.  According to a report from BTU Analytics, the top three shippers who will soon flow natural gas along Williams’ Atlantic Sunrise Pipeline (ASP)–Cabot Oil & Gas, Seneca Resources and Chief Oil & Gas–have “nearly doubled” their rig counts over the past few months leading up to the imminent startup of ASP. The pipeline is due to go online any day now–by the end of August (see Genscape Confirms Atlantic Sunrise Pipe Ready to Flow in August). Cabot has reserved 1 billion cubic feet per day (Bcf/d) of the 1.7 Bcf/d capacity of the new ASP. One third of Cabot’s 1 Bcf/d (350 million cubic feet per day, MMcf/d) will flow to Dominion’s Cove Point LNG export plant in Maryland–heading for Japan. Another 500 MMcf/d of Cabot’s gas will go to Washington Gas via ASP–meaning northeast PA Marcellus molecules will help heat, cool and power D.C. swamp dwellers. Joy. Here’s the great news that a single pipeline is stirring up a lot more drilling in northeastern PA…

Marcellus Drillers Resisting Fee Increase.  Marcellus Shale companies are resisting a proposal by Pennsylvania regulators to more than double the price of drilling permit applications.

The state Department of Environmental Protection says it needs to raise permit fees from $5,000 to $12,500 per shale well to keep the state’s oil and gas oversight program from running out of money by next summer.

In response, shale companies and trade groups that have backed past fee increases now argue in public comments that the department has not sufficiently justified the need for this one.

Other funding sources — including the impact fee on shale companies and the department’s share of the taxpayer-supported general fund — should be tapped first, they say.

Pennsylvania would impose the highest well permit fee in the nation if the proposal is adopted, the Robinson-based Marcellus Shale Coalition said.

DEP’s oil and gas program reviews permit applications, inspects well sites and develops policies to improve oversight of the industry.

The month long public comment period on the proposal closed Monday. Common industry complaints in the comments included that past fee hikes did not lead to faster permit reviews, which dragged on well past mandated deadlines last year amid a shortage of reviewers, and that there is no guarantee the new proposal will have a different outcome.

Also, shale companies say they are being asked to subsidize oversight of the state’s conventional, storage and legacy wells, which take up about 40 percent of the agency’s workload.

While none of the industry commenters recommend raising fees on conventional drillers — and the department is not proposing any changes in conventional well fees — “it is readily apparent that PADEP is looking at the unconventional industry as a ‘cash cow,’” the Wexford-based Pennsylvania Independent Oil & Gas Association said.

A statewide environmental group, the Pennsylvania Environmental Council, said it is clear that state regulators and lawmakers need to identify other options to “provide more stable funding for the agency while maintaining protections and balancing costs for the regulated community.”

Department officials acknowledge that one-time shale well permit fees are not a sustainable funding source for a broad program of oil and gas oversight, and they have pledged to advocate for a more balanced funding mix.

One goal would be to pursue funding “that doesn’t require someone else” — meaning, other DEP programs or state agencies — “to get shortchanged for our benefit,” Scott Perry, the deputy secretary for the department’s office of oil and gas management, said at an advisory board meeting last week.

“I welcome everyone’s good ideas on how to do that,” he said.

It generally takes more than a year for a DEP regulation to take effect after it is first proposed. The review process includes scrutiny by committees in the Republican-led General Assembly, which also determines the agency’s annual general fund appropriation in conjunction with the governor.

Thirty-two Republican state representatives wrote to criticize the permit fee proposal and questioned whether the department has the authority “to propose such a disproportionate share of funding responsibility upon one segment of industry.”

Instead, they suggested DEP use part of its general fund appropriation to support the oil and gas program.

Green Groups Are Really Russian “Pawns. “American environmental groups’ threats to halt energy projects and defense operations, long a problem, have grown recently, thanks in part to Russian support. They are now more dangerous to energy security than ever. While the media remain obsessed with “Russia collusion” in the 2016 elections, they ignore a more serious problem: Russian efforts to shrink American energy production. Russian-backed cyberattacks on the U.S. energy sector amount to what U.S. Energy Secretary Rick Perry calls “an act of war.” But while worrisome, those probably are less effective in the long run than another strategy. It’s not mere collusion but open and direct cooperation between Russia and American environmental organizations to thwart the growth of the U.S. energy industry. That industry is on the rise, thanks to the discovery and, by applying the combined technologies of horizontal drilling and hydraulic fracturing, use of huge natural gas reserves across large basins covering multiple states.

New Leader at EQT Midstream.  EQT Corporation today announced that Thomas F. Karam has been appointed as Senior Vice President and President, Midstream, of EQT, effectively immediately. Karam also assumed the roles of President and Chief Executive Officer of the general partners of EQT Midstream Partners, LP and EQT GP Holdings, LP (NYSE: EQGP) and joined each of the companies’ respective Board of Directors.

Upon completion of the Company’s upstream and midstream business separation, it is expected that Karam will become President and Chief Executive Officer of Equitrans Midstream Corporation, the anticipated new, publicly traded midstream company; and become a member of its Board of Directors.

Also in conjunction with the separation, David L. Porges will step down from the EQT Board of Directors and become Chairman of the Board for Equitrans Midstream Corporation. Additionally, Karam is expected to resign as a member of the EQT Board of Directors post-separation.

“Tom is a seasoned industry executive who has made valuable contributions as a member of the EQT Board of Directors since his appointment in November 2017 when we closed the acquisition of Rice Energy. He is well-suited to guide the midstream business, and Equitrans Midstream Corporation, to take advantage of the opportunities that will be available to it as an independent, public company,” said Dave Porges, EQT Chairman.

n a gas market where every piece of natural gas demand matters, the good news is U.S. L48 power burn is up summer-to-date (as measured April 1 to August 6) 2018 vs. 2017 by 3.0 Bcf/d at 21.9 Bcf/d.  And as shown below, new natural gas plants (as measured by new meters to power plants since June 2014) are contributing an incremental 1.1 Bcf/d summer-to-date 2018 vs 2017 and averaging over 4.0 Bcf/d of burn this summer.  In the Energy Market Commentary, BTU looked at power burn earlier this year and questioned the impact of new, low-heat-rate combined-cycle plants  creating gas-on-gas competition thereby lowering burn from older, higher-heat rate gas plants. Now for the bad news, in Appalachia, where new gas plant burn is the highest, Appalachian gas-on-gas competition between new gas plants and existing gas power plants is resulting in lower burns at existing gas power plants 2018 summer-to-date.

Crude Production to Rise.  Crude oil production from the Lower 48 U.S. states seven major unconventional plays/basins will increase by 93,000 barrels per day from August to September, the Energy Information Administration reports.

In EIA’s latest Drilling Productivity Report, total production from the seven plays/basins will increase to 7.52 million barrels per day (Mmbpd) next month, from 7.43 Mmbpd in the current month.

Six of the seven drilling areas will see a month-to-month increase in crude production, with only the Haynesville Shale seeing no change, maintaining production at 43,000 Bpd, Kallanish Energy reports.

The biggest August-to-September production jump is expected in the Permian Basin, the DPR reveals. The increase is pegged at 34,000 Bpd, to 3.42 Mmbpd, from 3.39 Mmbpd.

The Eagle Ford Shale play is projected to see a 24,000 Bpd increase in crude production from August to September, climbing to 1.45 Mmbpd, from 1.42 Mmbpd.

The third drilling areas expected to see a double-digit increase in crude production is the Bakken. A production jump of 17,000 Bpd is expected, to 1.31 Mmbpd in September, from 1.30 Mmbpd in August, the latest DPR reveals.

In the Anadarko, Niobrara and Appalachia (including the Marcellus and Utica Shale plays) basins/plays, crude production is projected to increase by a total 18,000 Bpd, with September’s production totaling 558,000, 615,000 and 123,000 Bpd, respectively.

Lower NatGas Burn Rates.  In a gas market where every piece of natural gas demand matters, the good news is U.S. L48 power burn is up summer-to-date (as measured April 1 to August 6) 2018 vs. 2017 by 3.0 Bcf/d at 21.9 Bcf/d.  And as shown below, new natural gas plants (as measured by new meters to power plants since June 2014) are contributing an incremental 1.1 Bcf/d summer-to-date 2018 vs 2017 and averaging over 4.0 Bcf/d of burn this summer.  In the Energy Market Commentary, BTU looked at power burn earlier this year and questioned the impact of new, low-heat-rate combined-cycle plants  creating gas-on-gas competition thereby lowering burn from older, higher-heat rate gas plants. Now for the bad news, in Appalachia, where new gas plant burn is the highest, Appalachian gas-on-gas competition between new gas plants and existing gas power plants is resulting in lower burns at existing gas power plants 2018 summer-to-date.

DUC’s Still Growing.  The number of DUCs, drilled by uncompleted wells, in the Lower 48 U.S. states seven most prolific plays/basins rose by 165 from June to July, the Energy Information Administration reported.

With the added 165 DUCs, a total of 8,033 drilled, but uncompleted wells were on the books as of July 31, up from 7,868 in June.

Of the seven regions, four added to their total, two actually took some DUCs off the books, and one play saw no June-to-July change.

The Permian Basin by far added the most DUCs from June to July, 167, more than five times the number added by the Eagle Ford Shale play, which added the second-most DUCs.

The Permian’s total DUC count rose to 3,470 in July, from 3,303 in June, Kallanish Energy reports.

The Eagle Ford added 32 DUCS from June to July, bring its total to 1,512, from 1,480, EIA reported.

The Anadarko and Bakken were the other two plays/basins that added DUCS, seven and four, respectively, bringing their total DUC count to 923 and 760, respectively.

The Niobrara saw the most DUCs converted to producing wells, as 40 wells were turned, bringing its DUC count to 432, from 472.

Appalachia, which includes the Marcellus and Utica Shale plays, turned five DUCs to production; bring down its total remaining DUC number to 754.

Appalachian Basin LNG Going All Over the World.  The world of LNG (liquefied natural gas) is a strange world for us. We’re still learning about it. LNG is important for the Marcellus/Utica region as our molecules increasingly get shipped to other countries. Our molecules get shipped directly from the Dominion Cove Point LNG export facility in Lusby, Maryland, and by Cheniere’s Sabine Pass LNG export facility in Louisiana. Yes, some of our gas makes it to Louisiana and is liquefied and shipped out.

However, the Cove Point facility is the focus of this post. Since early 2013, all of the LNG export capacity from Cove Point has been spoken for, by India and Japan, signing 20-year contracts. You would think if they contracted for the LNG, they’d ship it to their respective countries and use it. But you would be wrong. Once a company or a country owns a shipload of LNG and the ship sets sail and is on the open seas, the owner can sell it, trade it, and swap it–do anything they want with it. Both Japan and India are and have been doing just that. The U.S. Department of Energy (DOE) recently released data on U.S. LNG exports covering year to date through June 2018. In looking over the shipment data for Cove Point, the shipments not only went to India and Japan, they also went to Jordan, Kuwait, Argentina, Dominican Republic, Mexico, Pakistan, Panama, and the United Kingdom! Marcellus/Utica molecules are literally being used around the world. The best part? Our drillers get higher prices for the gas than they can get here at home. Prices for the gas coming from Cove Point fetched anywhere from $5.27 per thousand cubic feet (Mcf) to $8.16/Mcf…

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PA Permits August 9, to August 16, 2018

County                                   Township                                          E&P Companies

  1. No New Permits

OH Permits for weeks ending August 11, 2018

County                                   Township                                          E&P Companies

  1. Belmont                                       Pease                                                 Gulfport
  2. Belmont                                       Pease                                                 Gulfport
  3. Belmont                                       Pease                                                 Gulfport
  4. Jefferson                                     Smithfield                                          Ascent
  5. Jefferson                                     Mt. Pleasant                                      Ascent
  6. Jefferson                                     Mt. Pleasant                                      Ascent
  7. Monroe                                        Ohio                                                   Eclipse
  8. Monroe                                        Ohio                                                   Eclipse
  9. Monroe                                        Ohio                                                   Eclipse

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

Utica Summit 2019