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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

PTTGC FID Coming in September.  I have heard from a reliable good source that the PTTGC is going to make the Final Investment Decision (FID) in September.  Everyone has been expecting the decision this year.

The vibe from the chemical industry is that the FID is a done deal.  Ohio River Corridor’s Bryce Custer, the leading site selector/real estate agent in the Appalachian Basin, is seeing significant interest by chemical companies outside the region and the country.  Many of these companies feel they have to commit now in order to get prime locations.

Maybe September is the time.  (RUMOR)

Downstream Activity Is Happening.  I have stated at a number of our seminars that the downstream development will be much larger and longer lasting than what has been happening in upstream and midstream.  To demonstrate this point, the American Chemistry Council has created a map that shows new plastics projects in 2018. 

In looking at the map below, you can see the majority of the announced projects are within a one-day drive of the Shell, PTTGC and possibly LyondellBasell cracker plants along the Ohio River.

As you can see, Ohio, Indiana and Michigan are the states that are seeing the largest number of announced plastics projects. 

Bakken June Production Dips.  North Dakota’s crude oil and natural gas production in June dipped slightly from May’s total, according to just-released data from the North Dakota Department of Mineral Resources.

In June, 1.23 million barrels of oil a day (Mmbpd) and 2.30 billion cubic feet a day (Bcf/d) of natural gas, Kallanish Energy learns. .

One month earlier, the state produced 1.25 Mmbpd of crude and 2.32 Bcf/d of natural gas.

Lynn Helms, director of the state Department of Mineral Resources, announced a new, preliminary all-time high of 14,778 producing wells in June, the Minot (North Dakota) Daily News newspaper reported. In May, the state had 14,763 producing wells.

On Thursday, 58 rigs were actively drilling in North Dakota, according to the state Oil and Gas Division, a division of the Mineral Resources Department. Helms said current operator plans are to add one to five more rigs in the third and fourth quarters this year depending on workforce and infrastructure constraints.

“Oil price downside risk has diminished. OPEC approved a plan to increase production through the second half of 2018 to offset Venezuela’s export collapse and U.S. sanctions on Iran. Crude oil futures markets appear to anticipate supply and demand remaining in balance. U.S. crude oil inventories remain approximately equal to the long-term average,” Helms said, the News reported.

Helms said competition with the Permian and Anadarko shale oil plays for capital and workforce continue to limit drilling rig count in North Dakota.

FERC Gives Rover Approvals.  Bringing to a close months of delays stemming from restoration issues, FERC on Thursday authorized Rover Pipeline LLC to place its Burgettstown and Majorsville laterals into service.

The Federal Energy Regulatory Commission’s Rich McGuire, director of environment and engineering for the Division of Gas, told Rover Thursday that the authorizations are based on third-party inspections showing “that rehabilitation and restoration of the affected areas are now generally proceeding satisfactorily, and Rover’s commitment to promptly finalize restoration of these facilities.”

Work Proceeds on Mountain Valley and Atlantic Coast Pipeline.   A Virginia regulatory agency has voted to allow work to proceed on the Mountain Valley and Atlantic Coast natural gas pipelines.

The Virginia Water Control Board decision allows the pipelines to proceed with what critics call current inadequate water permits.

Other issues must still be resolved before construction can resume on the two under-construction pipelines, Kallanish Energy reports.

More than 150 people attended the Tuesday meeting in Richmond, Virginia. The state agency took no action on water permitting, allowing the previous certification from the U.S. Army Corps of Engineers’ Nationwide Permit 12 blanket permit to stand.

Critics said the Nationwide Permit 12 requires fewer protections for Virginia waterways than state water quality standards could under Section 401 of the federal Clean Water Act.

Under that law, Virginia has the authority to require compliance with stricter water standards.

Virginia said the federal permitting echoes the state system and that’s why it followed the federal permitting.

The state agency pledged to provide stricter enforcement on the two pipelines and to share pipeline concerns with federal regulators.

Critics called on Gov. Ralph Northam and the Virginia Department of Environmental Quality to analyze the pipelines' impacts on every stream crossing individually.

Virginia had approved the erosion and sediment control permits for the $3.5 billion Mountain Valley Pipeline that runs 300 miles from West Virginia to southwest Virginia. It later agreed to re-visit the issue.

Virginia regulators have not yet approved the final erosion and sediment control permits for the 600-mile, $6.5 billion Atlantic Coast Pipeline that will run from West Virginia through Virginia and into North Carolina.

Federal appeals judges have ruled federal agencies granted several permits without full review. Work on both pipelines has been stopped until those issues are resolved.

LyondellBasell -- A. Schulman Deal Done.  LyondellBasell is now the world’s largest producer of polyethylene and polypropylene compounds, Kallanish Energy reports.

That occurred after the Dutch company completed its takeover of Ohio-based A. Schulman, a leading global supplier of high-performance plastic compounds, composites and powders.

The acquisition more than doubles LyondellBasell’s existing compounding business and broadens the company’s reach into growing, high-margin end markets such as automobiles, construction materials, electronic goods and packaging, the company said.

“This acquisition builds upon our complementary strengths, creating a substantial value proposition for our customers and positioning the company for future growth in this space,” said Bob Patel, CEO of LyondellBasell, in a statement.

“Moving forward, our team is focused on a seamless integration that captures opportunity and creates exceptional value for our shareholders,” he said.

Patel said the deal will create a broader market reach that is able to provide faster solutions.

The combined business will operate as a stand-alone Advanced Polymer Solutions reporting segment. The segment will include LyondellBasell’s existing polypropylene compounding and the A. Schulman assets, plus catalloy thermoplastic resins and polybutene-1 resins. Assets from A Schulman include engineered composites, powders and master batches.

The deal was first announced last February.

 

LyondellBasell has its headquarters in London with operational headquarters in Houston and Rotterdam, Netherlands. It is one of the largest plastics, chemicals and refining companies in the world.

This deal seems more important than ever now that LyondellBasell is looking to purchase Braskem which could bring another cracker to the Appalachian Basin sooner rather than later.

Second-Half Surge:  Will Appalachia Production Outpace Infrastructure? (Thanks, BTU Analytics)  Second quarter earnings season is drifting into the rearview mirror, and we have been busy sifting through earnings calls, presentations, and press releases looking for critical tidbits of information (every quarter, we compile a cliff-notes style earnings summary for about 30 US E&Ps and publish that as part of our US Upstream Outlook).  An interesting takeaway from those notes were the planned ramp in wells-to-sales in Q3 for EQT and Antero, with Antero explicitly stating that they plan to turn 65-75 wells online in the third quarter alone. By comparison, Antero turned 51 wells-to-sale in the first two quarters combined.  Will an aggressive third quarter Appalachia production surge overwhelm Southwest Appalachia infrastructure?

Rig counts in Southwest Appalachia have slumped over the last several months from the peak in April, declining from 73 to 64.  As seen in the chart below, West Virginia rig counts have remained relatively flat while Ohio and Southwest PA rig counts have declined from the peak reached in April.

BTU Analytics’ forecast takes into account many real-world factors including infrastructure constraints and hedging, but we also run production scenarios where these constraints are absent.  This can be helpful to understand whether activity can be expected to accelerate or decelerate when real-world factors are brought back into the conversation.  In a production scenario where today’s current rig count is carried forward along with an increase in wells-to-sales more in line with EQT’s and Antero’s outlooks, production growth could be 1.5 Bcf/d throughout the remainder of 2018.

In June, we published an analysis looking at how Southwest Appalachia production has grown into new capacity and the corresponding impact on prices.  The chart below is an update from that publication with the addition of future capacity from Nexus (1.5 Bcf/d), TGP’s Broad Run Expansion (0.2 Bcf/d), and Gulf XPress (0.9 Bcf/d, paired Mountaineer XPress), which are all expected to come online in 2018.

While the chart above seems to confirm that takeaway won’t be a challenge as the gap between incremental production and incremental capacity is nearly 3 Bcf/d for 2H18, those pesky real-world factors can change how reality plays out.  As we discussed in the analysis published last week, Antero’s wells have been materially more productive than the average producer in West Virginia, and so actual production growth could have additional upside.  On the infrastructure side, the possibility of unexpected delays is always present, most recently seen with complete halts to both Atlantic Coast Pipeline (ACP) and Mountain Valley Pipeline (MVP).  Rover also continues to face regulatory setbacks – Rover submitted requests in February and May to bring the remaining two laterals online, which would unleash the remaining 0.85 Bcf/d of effective mainline takeaway, but approval has not been granted.  Beyond production and infrastructure, demand, pricing, and other factors can lead to different conclusions.

For the latest integrated view on how Southwest Appalachia production and pricing will play out, request more information on BTU’s Northeast Outlook.  This month’s publication coming out on August 31 will dive into the implications of ACP and MVP halts, Atlantic Sunrise’s startup, production growth, corridor flows, and more.

Halliburton Using Bots.  Rack up one more thing robots can be used for: Fracking for oil. Bots already are used to vacuum floors, build cars and do heart surgery. Now, Halliburton Co. wants to add fracking to the to-do list. The world’s biggest provider of the technique that unlocks oil and natural gas from shale rock has a vision of push-button fracking that’s still years in the making. But for now, the Houston-based contractor unveiled a new service that will help move in that direction. Tested in fields globally including the Permian Basin of West Texas and New Mexico, Halliburton’s Prodigi AB service uses data and computer coding to automatically crank up the pumps to the necessary level in order to blast water, sand and chemicals underground to released trapped hydrocarbons. “This is new territory for the industry,” Scott Gale, who oversees the new fracking service at Halliburton, said in an interview on the sidelines of Halliburton’s annual technology conference in Houston. “We recognize that digital technologies are descending on our industry, so expectations are high.” NOTE: Rigzone, WorldOil, North American Shale and Energy Voice also report.

Texas Exporting More Oil Than It’s Importing.  The Texas Gulf Coast oil terminals sent abroad more crude than they received in April, the Energy Information Administration said this week. During that month, crude oil exports from the Houston-Galveston port district exceeded imports by 15,000 bpd. Over the next month, the advantage of exports over imports welled further, to an impressive 470,000 bpd. Total U.S. oil exports in may hit a record of 2 million bpd, with Houston-Galveston’s share of the total at a record-breaking 70 percent, from an average of about 50 percent since the middle of 2017, the EIA said. The bulk of crude oil exports from the Houston-Galveston area went to China, Canada, Italy, and the UK, with exports to China averaging 300,000 bpd in both June and July. This month, however, not a single crude oil cargo has been loaded for China, according to media reports, amid growing trade tensions between Washington and Beijing. Meanwhile, however, Texas is on track to become the biggest oil producer after Russia and Saudi Arabia, according to production estimates by HSBC, quoted by CNN. If the estimates turn out to be correct, the Lone Star State will be pumping almost 6 million bpd in 2019.

Permian Driving Frac Sand Price Increases.  The booming Permian Basin is driving huge demand for sand used in hydraulic fracturing, with no end in sight, according to a report released Wednesday by IHS Markit. The market value for frac sand exceeds $4 billion in 2018 and will reach nearly $6 billion by 2023. It was $1.3 billion in 2016, the report said. "Sand proppant demand is at record highs - the growth rate is extreme by any measure," said Brandon Savisky, senior market research analyst at IHS Markit. The Permian accounts for nearly 40 percent of the market demand, but by 2023 will account for almost 50 percent, Savisky said.

More Permian NatGas to Mexico.  The ongoing expansion of the U.S.-Mexico cross-border natural gas pipeline capacity provides an additional outlet for the constrained Permian production in West Texas, but delays in some projects on the Mexican side of the border have resulted in low utilization of cross-border pipeline capacity from West Texas, the EIA said in an analysis on Wednesday. Thanks to the pipeline capacity expansion, U.S. natural gas pipeline exports to Mexico grew to 4.4 billion cubic feet per day (Bcf/d) between January and May 2018. In 2017, U.S. piped natural gas exports averaged 4.2 (Bcf/d), according to the EIA.

Please note: Facts & Rumors will not published next weekend, Labor Day.  Wishing everyone a safe holiday.  Look for Facts & Rumor on Saturday, September 8th.  Thank you for your support

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PA Permits August 16, to August 23, 2018

County                                   Township                                          E&P Companies

  1. Bradford                                       Wilmot                                                Chesapeake
  2. Bradford                                       Wilmot                                                Chesapeake
  3. Bradford                                       Wilmot                                                Chesapeake
  4. Lycoming                                     Gamble                                              Inflection
  5. Lycoming                                     McNett                                                Chief
  6. Lycoming                                     McNett                                                Chief
  7. Lycoming                                     McNett                                                Chief
  8. Susquehanna                            Auburn                                              Chesapeake
  9. Susquehanna                            Auburn                                              Chesapeake
  10. Susquehanna                            Auburn                                              Chesapeake

OH Permits for weeks ending August 18, 2018

County                                   Township                                          E&P Companies

  1. Harrison                                       Nottingham                                       Ascent
  2. Monroe                                        Perry                                                   EM Energy
  3. Monroe                                        Perry                                                   EM Energy

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

Utica Summit 2019