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NewsLetters

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

NatGas Will Become #1. DNV GL's latest report, 2018 Energy Transition Outlook, predicts that gas will overtake oil as the world's primary energy source in 2026, and will account for 25 percent of the world's energy by 2050. It also predicts that global oil demand will peak in 2023 while gas demand will continue growing until 2034. “Gas will fuel the energy transition in the lead-up to mid- century. It sets a pathway for the increasing uptake of renewable energy, while safeguarding the secure supply of affordable energy that the world will need during the energy transition,” said Liv A. Hovem, CEO, DNV GL, Oil & Gas.

MarkWest Announces New Pipeline to Create NGL’s. (Thanks, MDN) MarkWest Liberty NGL Pipeline, a subsidiary/part of MarkWest Energy, announced it plans to build a new NGL pipeline. MarkWest Liberty launched a binding open season for the new pipeline–a time when drillers can sign on the dotted line to reserve capacity along the new pipeline. The new NGL pipeline is a bit different than other NGL pipelines in the Marcellus/Utica. It will pick up NGLs from several of MarkWest’s gas processing plants in Pennsylvania and West Virginia, and cart the NGLs to fractionation facilities owned by MarkWest in PA and Ohio, where those NGLs will get separated into their discrete hydrocarbon components. Let us explain it this way: Step One is that the gas comes out of the ground. But it’s not all just methane–there’s a number of other hydrocarbons (natural gas liquids, or NGLs) mixed in with it, things like ethane, butane, propane, pentane. The raw mix goes to a cryogenic processing plant where the methane (i.e. natural gas) is separated out and sent on its way to market via pipelines like Rover and Rockies Express and others. Step Two: The NGLs need further separating. That’s what a fractionation plant does. This new pipeline from MarkWest Liberty (the Marcellus unit of MarkWest) will cart the mixed bag of NGLs to fractionation facilities. After being separated into component parts, the components can then be sold. Which fits with MarkWest’s prior statements that in 2018 they would focus on creating new markets for Marcellus/Utica NGLs, butane in particular. So, which processing plants will the pipeline connect to, and which fractionation plants? The announcement does not say, and there is no PDF document available with the details, at least not publicly.

Weather Driving NatGas Prices Down.The U.S. Energy Department's weekly inventory release showed a larger-than-expected increase in natural gas supplies. Bearish weather predictions and strength in the commodity's production also pressured the fuel's price, which lost around 4.8% for the week.

The Weekly Natural Gas Storage Report - brought out by the Energy Information Administration (EIA) every Thursday since 2002 - includes updates on natural gas market prices, the latest storage level estimates, recent weather data and other market activities or events.

The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of natural gas. It is an indicator of current gas prices and volatility that affect businesses of natural gas-weighted companies and related support plays.

Stockpiles held in underground storage in the lower 48 states rose by 63 billion cubic feet (Bcf) for the week ended Aug 31, above the consensus market guidance of 60 Bcf gain. The injection also exceeded last year's build of 60 Bcf though it was below the five-year (2013-2017) average addition of 65 Bcf for the reported week.

Despite past week's larger-than-anticipated supply addition, the current storage remains well below benchmarks. At 2.568 trillion cubic feet (Tcf), current natural gas inventories are 590 Bcf (18.7%) under the five-year average and 643 Bcf (20%) below the year-ago figure.

Fundamentally speaking, total supply of natural gas averaged around 87.9 Bcf per day, essentially unchanged on a weekly basis as the slight increase in production was offset by lower Canadian imports. Meanwhile, daily consumption fell 1.6% to 75.5 Bcf on lower power generation demand.

Following the storage report, prices lost 4.8% last week to settle at $2.776 per MMBtu on Friday. Apart from the headline miss, investors were also spooked by forecasts of moderating weather in the next few weeks that could lead to decrease in the heating fuel's demand. Unabated production from the Marcellus and Utica shale regions played further spoilsport. In fact, dry gas output in the United States averaged 82.8 Bcf per day over the reporting week, up 15.5% from the year-ago level.

The fundamentals of natural gas continue to be favorable for the long run, considering the secular shift to the cleaner burning fuel for power generation globally and in the Asia-Pacific region in particular.

The EIA predicts global demand for the commodity to grow 43% from 2015 to 2040. Countries in Asia and in the Middle East - led by China's transition away from coal - will account for most of this increase.

And as the world's largest gas producer, the United States has emerged as one of the key players - competing with Russia and Australia among others - to meet this soaring demand. With domestic prices struggling to break the $3 per million Btu threshold, American natural gas companies see a big opportunity in selling cheap U.S. production at attractive enough prices to rest of the world. In fact, more than 50% of the domestic volume growth in the near future will be used for export in the form of liquefied natural gas (LNG). As per Paris-based International Energy Agency (IEA), the United States will vie with Australia and Qatar as the top LNG exporter by 2022.

New pipelines to Mexico, together with large-scale liquefied gas export facilities like Cheniere Energy, Inc.'s Sabine Pass terminal and Dominion Energy Inc.'s (D) newly constructed Cove Point export plant, have meant that exports out of the U.S. are set for a quantum leap.

As per the Energy Department, gross liquefied natural gas exports are set to average 3 Bcf per day in 2018, increasing nearly 60% from last year. Apart from surging exports, the replacement of coal-fired power plants and higher consumption from industrial projects will likely ensure strong natural gas demand. Finally, if the upcoming (2018-2019) winter turns out to be colder-than-normal, the surge in expected demand in the face of relative deficit of natural gas inventory could trigger a large rally in the commodity's price.

Pennsylvanians Saved $30 Billion. Thanks to increased production and new technologies, which have decreased the price of natural gas, Pennsylvanians saved more than $30.5 billion between 2006 and 2016, according to a new state report released Thursday by the Consumer Energy Alliance. Residential users alone saved almost $13.3 billion, while commercial and industrial users saved upwards of $17.2 billion, the report, titled "Everyday Energy for Pennsylvania," said. The analysis examined how the shale revolution across the Marcellus region has provided benefits to Pennsylvania's end-use energy consumers by boosting disposable income and economic investment, as well as revitalizing communities.

More Deals Coming. There are two fundamentals in the oil industry: It is, has been, and will be volatile. Its forecasts, predictions and assessments are almost always wrong. The oil business has a longstanding tradition of being thinly financed at the entrepreneurial end of the discovery and production process. “Wildcat” drilling rigs fed entrepreneurs’ dreams of striking oil — tapping into a gusher and the riches that came with it. For the most part, the banks that lent money — usually on the physical equipment as collateral — were not fools waiting to be fleeced but lenders who understood the risks. That tradition continues in the tar sands of the western Permian Basin. The fragility of the fracking-based energy sector seems to be a classic market invitation to consolidation rather than collapse.

U.S. to Set Records in Dry Gas Production in 2018 & 2019. U.S. dry natural gas production will average 81.0 billion cubic feet per day (Bcf/d) in 2018 -- up 7.4 Bcf/d from 2017 and setting a new record production mark – the latest Short- Term Energy Outlook (STEO) forecasts.

The record will last roughly one year, as the September STEO (produced by the Energy Information Administration) projects dry gas production will rise in 2019 to an average 84.7 Bcf/d, Kallanish Energy reports.

U.S. dry natural gas production totaled 82.2 Bcf/d in August, up 0.7 Bcf/d from July.

EPA to Rollback Methane Regulations. The Trump administration on Tuesday unveiled plans to make it easier for oil and gas well drillers to comply with federal rules on monitoring and fixing methane leaks, Kallanish Energy reports.

Under the proposal by the U.S. Environmental Protection Agency, oil and gas companies would be permitted to conduct less frequent inspections for methane leaks at their facilities and would be given more time to make repairs.

The rule rollback by the EPA is expected to save the energy industry about $75 million a year, although the plan would impact air quality and human health, the agency said.

Methane, or natural gas, is a potent greenhouse gas.

The EPA plan calls for making changes to the 2016 New Source Performance Standards adopted by the Obama administration.

TX Permits Flat in August. Texas issued 1,110 original drilling permits in August 2018, compared to 1,125 in August 2017, according to Kallanish Energy.

That August 2018 total included 967 permits to drill new oil or gas wells, 12 to re- enter plugged well bores and 131 for re-completions of existing well bores, said the Railroad Commission of Texas.

The type of wells involved are 262 for oil, 83 for gas, 689, oil or gas, 57 injection, five service and 14 other permits.

In August 2018, the commission processed 601 oil, 123 gas, 56 injection and three other completion permits, compared to 401 oil, 115 gas, 38 injection and three other completions in August 2017.

Well completions processed for 2018 year-to-date total 7,297, up from 4,945 in the same time period in 2017. That is an increase of 47.6%.

The Midland area was No. 1 for permits let to drill oil/gas holes, with 478. Second was the San Antonio area with 154 and third was the Refugio area with 90.

For oil completions, the Midland area was first with 366 permits, followed by the San Antonio area with 62 and the Refugio area with 55.

For gas completions, the San Antonio area was No. 1 with 25 and the Refugio and Midland areas were tied with 23 permits each.

According to Baker Hughes, the Texas rig count as of Sept. 7 was 528, representing about 50% of all active rigs in the U.S.

Columbiana OH Power Plant to Begin Construction Now. (Thanks, MDN) In October 2015, Advanced Power Services announced it would build an 1,100 megawatt Utica-fired electric plant in Columbiana County, OH. The plant, big enough to power 1 million homes (!), was approved by the Ohio Power Siting Board in September 2016 (). At the time of the approval, construction was supposed to begin in January 2017 and take some 550 workers about three years to build. Construction never began. A few things have changed along the way. The plant will now cost $1.3 billion to build and will take 1,000 people to build it. How do we know? Because global engineering firm Bechtel has just announced it has been selected to build the plant–and to start building it NOW, as in “immediately.” Yes, it will still take three years to build. The new target in- service date is second quarter 2021. In addition to the plant itself, a new 20-inch pipeline will be built to feed the plant, connecting to the nearby Dominion Transmission pipeline. Here’s the great news that Ohio’s latest Utica-fired electric plant is now under construction.

FERC Approves Shell’s Falcon Pipeline Rates. (Thanks, MDN) Getting permission to build a new pipeline from the Federal Energy Regulatory Commission (FERC) is one thing. An important thing. But beyond permission to build, you also need permission to charge a particular rate for those using the pipeline. Shell is currently building a $6 billion ethane cracker in Monaca, PA, near Pittsburgh, to chemically “crack” ethane from shale wells into ethylene–the raw building material of plastics. Shell is also building a 97-mile, two-legged pipeline system called the Falcon Ethane Pipeline. Shell ran an “open season” to lock up shippers–drillers who will provide ethane to the plant via the pipeline–in October 2016. The open season worked. Of course it worked! Shell wouldn’t be spending $6 billion to build a plant that can’t get cheap ethane to it!! However, the whole project took another (important) step forward last week when FERC approved the rate structures for using the Falcon Pipeline.

Risberg Pipeline NW PA to NE OH. RH energytrans, which plans to build a 60- mile, $86 million pipeline from Crawford County, PA through Erie County and into Ashtabula County, OH, says they expect to begin digging for the new pipeline soon. RH officials told North Kingsville officials (Ashtabula County) last week that “construction could begin soon.” How soon? Early October, provided they get a final OK from the Federal Energy Regulatory Commission (FERC). Last October MDN brought you details about the proposed Risberg Line pipeline project. The project will use approximately 32 miles of existing pipeline in an established Right of Way originating in the Meadville, PA area. Approximately 16 miles of new pipeline will be built in Pennsylvania and approximately 12 miles of new pipeline will be built in Ohio–meaning 28 miles of brand new “greenfield” pipeline needs to get built. In late June, FERC issued a favorable environmental assessment for the project. A favorable EA approval is the penultimate step before FERC gives a final OK. That final OK is due no later than Sept. 27. Clearly RH believes they will get a final OK within the next two weeks, and they’re communicating with communities, alerting them construction is about to begin.

PA Permits August 2, to August 9, 2018

County Township E&P Companies
Butler Allegheny EM Energy
Potter Allegany JKLM
Potter Sweden JKLM
Wyoming Meshoppen Chesapeake
Wyoming Meshoppen Chesapeake
Wyoming Meshoppen Chesapeake

OH Permits for weeks ending August 25 & September 1, 2018

County Township E&P Companies
No Permits This Week.    


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

Northeast Supply Enhancement