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  • Permit Activity.  
    • PA – 37 permits; Allegheny, Greene, Susquehanna and Washington Counties are receiving all the attention
    • OH –13 permits; Carroll and Harrison Counties are still dominate with Chesapeake and American Energy Utica securing the permits.
  • Expo/Industry events for the next few months:
    • DUG East Conference and Exhibition June 3-5, Pittsburgh, PA
      Visit us at booth 250

    • Midstream Ohio 2014 June 11, Canton, OH – this event will provide a good update of midstream activity in OH with speakers from
      • 'Blue Racer
      • Access Midstream
      • Momentum
      • EnLink Midstream (merger of Crosstex and Devon Midstream)
      • Panel of local midstream companies

        Additionally, Bricker & Eckler’s Chris Schmenk will present the firm’s “Shale Economic Development Overview” which will highlight the midstream projects in OH.
    • Northern Tier Marcellus Shale Expo June 18, Mansfield, PA

Latest facts and a rumor from the Marcellus and Utica Shale

  • McClendon enters into midstream agreement.  The Utica East Ohio (UEO) midstream complex is increasing its nameplate processing capacity to 1 Bcf/d, up from its current capacity of 800 MMcf/d. Utica East Ohio is a joint venture owned 49% by Access Midstream Partners, 30% by M3 Midstream and 21% by EV Energy Partners.The new long-term agreement between UEO and American Energy – Utica, former CHK CEO Aubrey McClendon’s newest company, includes a 145,000-acre area of mutual interest, installation of 50 miles of gathering pipeline and compression services.

    Plans for the UEO expansion include the construction of a second processing train at the Leesville, Ohio, facility and extension of an existing high-pressure pipeline from UEO’s Harrison Hub to Cardinal Gas Services’ Archer Compression Facility in Harrison County.

    Additional services also are planned at Harrison Hub, including downstream liquids interconnects and expanded propane and butane storage.
  • RUMOR HELP!  I have heard conflicting rumors about American Energy Utica and its rigs.  I have heard that there will be 15 rigs in OH by the end of 2014 with 22 rigs by the end of 2015.  The conflicting rumor states the 15 rigs will not be in OH until mid-year 2015 with 22 rigs by the end of 2015.

    If anyone has definitive information about the prospective rigs in OH, please send me an email.
  • Nat Gas leads to power plant in Bradford County, PA.  Glastonbury engineering firm Gemma Power Systems launched the construction of an 829 megawatt Pennsylvania power plant this May.

    The Panda Liberty Generating Station in Towanda, Pa. is the first new station in the Marcellus Shale Gas formation, giving it direct access to cheap natural gas to provide power to more than a million homes.

    Gemma, through a joint venture with The Lane Construction Corp. of Cheshire, is the engineering-procurement-construction contractor for the project.

    The plant will employ up to 500 skilled workers at the peak of construction and is scheduled for completion in early 2016.
  • EQT diverting Utica funds to the Marcellus.  In its quarterly report, EQT states that the Marcellus is expected to remain EQT's esteemed asset and a potential Upper Devonian will likely complement the company’s growth. With EQT planning to suspend further drilling in Utica in 2014, the capex allocated for Utica will be directed toward drilling 8 additional Marcellus wells and 13 Upper Devonian wells in 2014. This is likely to provide ample liquidity to fund growth, Marcellus exploration, drive earnings visibility and keep the capex unchanged for the year.

    EQT’s plans in the Upper Devonian are the most aggressive I’ve seen to date.  The drilling rigs in the Upper Devonian will not be captured on Baker Hughes Rig Count Report.  
  • Cabot looking for opportunities in the Eagle Ford.  Despite prolific Marcellus shale wells detailed in the fourth-quarter earnings review, Cabot Oil & Gas made a recent decision to expand drilling assets in the Eagle Ford. The company continues to face infrastructure and price realization issues in the Marcellus that are impacting short-term investment decisions.

    In six short years, the company has already reached total production in the Marcellus shale of 1 trillion cubic feet on only 290 wells. Even more interesting, the company has 51 wells in various stages of reaching production, including waiting on pipelines and completions. Based on that data and recent Eagle Ford drilling results, maybe investors shouldn't be surprised by the move to add a rig and capital spending to oil production in that area.
  • Cabot and Southwestern moving more Nat Gas.  DTE Energy Company has struck a deal with two oil and gas energy biggies to expand the Bluestone Pipeline in Susquehanna County in northeastern Pennsylvania. Robust Marcellus reserves in Susquehanna County have driven the need for added infrastructure.

    The company through its unit, Gas Storage and Pipeline, has signed an agreement with Marcellus Shale drillers Southwestern Energy Co. (SWN - Analyst Report) and Cabot Oil & Gas Corp. (COG - Analyst Report), to boost the Bluestone Pipeline capacity with minimum term commitments ranging from 10 to 15 years.

    Now the 44.5 mile Bluestone Pipeline and Gathering system can ship up to 600,000 Dth/day. With this expansion, the facilities can transport up to 975,000 Dth/day. This marks a 60% boost in capacity after the gathering system first came online in late 2012. DTE Energy’s Bluestone Gathering System delivers Marcellus Shale gas in Pennsylvania and New York to Millennium Pipeline and Tennessee Pipeline.
  • Moving Nat Gas to North Carolina.  A Texas-based energy company is sending letters to property owners in Bedford County notifying them of plans to build a natural gas pipeline starting above the Mason-Dixon Line and stretching to North Carolina.

    Spectra Energy of Houston is getting the word out about its plans for the proposed $4 billion, 427-mile pipeline that would open Pennsylvania to southern gas markets.
  • New player in WV.  Trans Energy, a pure play Marcellus Shale exploration and production company announced that its subsidiary, American Shale Development, Inc. ("ASD"), closed on a new credit facility with Morgan Stanley Capital Group Inc. ("Morgan Stanley") in the amount of $200 million. The facility closed and an initial amount of $102.5 million was funded on May 21, 2014.

    The Company expects to use the proceeds from this facility and the Republic financing, described below, primarily to refinance debt and to fund ASD's Marcellus Shale growth program. ASD and Republic plan to drill nineteen horizontal wells in 2014, including nine wells in Marion County, four wells in Marshall County and six wells in Wetzel County. These nineteen well locations are expected to enable ASD to prove additional acreage in Marshall, Marion and Wetzel Counties, as well as to hold additional acreage through production. Of the nineteen well locations to be drilled in 2014, fifteen wells are expected to be completed during the year, with completion of the remaining four wells scheduled for early 2015.

    Funds are also expected to be used to hydraulically fracture the previously drilled Jones 2H well in Marion County. The Company expects that by the end of 2014 it will own interests in forty completed horizontal Marcellus wells, of which thirty-six are expected to be online by year end 2014.
  • Chesapeake doing well in the Utica.  The company has drilled 485 Utica wells, of which 274 are producing. It has an additional 5,500 drilling sites.

    The company in that quarter produced 50,000 barrels of oil equivalents per day. That number has grown to 75,000 barrels today and will likely top 100,000 barrels by year-end 2014, Doyle said.

    The company has more than 1 million leased acres in all parts of the Utica shale, he said.

    The typical Utica well cost has dropped from $7.7 million in 2012 to $6.7 million in 2013 with a year-end 2014 target of $5.7 million. The time required to drill such wells has declined from 24 days in 2012 to 20 days in 2013 to 15 days by year-end 2014.

    The company is also drilling longer laterals: the average length is 6,000 feet.

    The company is intent on working in Tuscarawas, Stark and Carroll counties to develop the first successful wells in the Utica shale’s oil window.

    It is getting initial production of 500 barrels per day of oil from a few wells in that area using an old completion method and 1,000 barrels per day using a newer method, he said.

    The company is also very interested in developing wells to the east in the dry-gas window, he said. That effort will include a key well in Wetzel County in northern West Virginia that will be completed later this year, he said.

    Chesapeake has 330,000 acres in that area that is valued at up to $7 billion, he said.

    In a Friday announcement, Chesapeake announced its plans to spin off a drilling-rig business by June 30 to help reduce debt.

    Chesapeake Oilfield Operating LLC employs 5,200 of Chesapeake’s 10,800 employees and owns 114 rigs. It will be spun off to shareholders in a tax-free maneuver and be renamed Seventy Seven Energy Inc.

    Chesapeake, the nation’s No. 2 producer of natural gas, also announced that it intends to sell of 28,000 acres in southwest Pennsylvania and Wyoming as part of several separate asset sales.

    The moves and sales announced on Friday are expected to raise about $3.1 billion for

    We have heard that Chesapeake is selling off all of its business units by June 30 which will become part of Seventy Seven Energy Inc. (Rumor)
  • Odebrecht’s WV cracker moving forward.  The company working on plans to possibly build an ethane cracker facility in Wood County has applied for West Virginia Department of Environmental Protection permits to move forward in the planning process.

    The Appalachian Shale Cracker Enterprise LLC, a subsidiary of Brazilian-based Odebrecht, has submitted two permitting documents to the DEP, company spokeswoman Denise Cruz said.

    These are an air quality permit and an application to evaluate the 363-acre property in Wood County under the state's Voluntary Remediation Program.

Rig Count

  • Baker Hughes Rigs count for the May 17th reporting week.
    • PA Marcellus 58 rigs – up 1
    • PA Utica 2 rigs – up 1    
    • Ohio Utica 39 – up
    • WV Marcellus 25 – down 2

PA Permits for May 15 to May 22 2014

       County                 Township            E&P Company
1.    Allegheny              Fawn                   Range
2.    Allegheny              Findlay                CONSOL
3.    Allegheny              Findlay                CONSOL
4.    Allegheny              Findlay                CONSOL
5.    Allegheny              Findlay                CONSOL
6.    Allegheny              Findlay                CONSOL
7.    Bradford                Albany                 Chesapeake
8.    Bradford                Rome                   Chesapeake
9.    Bradford                Troy                     Chesapeake
10.    Greene                Center                 Vantage
11.    Greene                Center                 Vantage
12.    Greene                Center                 Vantage
13.    Greene                Center                 Vantage
14.    Greene                Center                 Vantage
15.    Greene                Center                 Vantage
16.    Greene                Jackson               Vantage
17.    Susquehanna       Gibson                Cabot
18.    Susquehanna       Gibson                Cabot
19.    Susquehanna       Gibson                Cabot
20.    Susquehanna       Gibson                Cabot
21.    Susquehanna       Gibson                Cabot
22.    Susquehanna       Gibson                Cabot
23.    Susquehanna       Gibson                Cabot
24.    Washington         Buffalo                 Range
25.    Washington         East Finley          CONSOL
26.    Washington         East Finley          CONSOL
27.    Washington         East Finley          CONSOL
28.    Washington         Independence       Chesapeake
29.    Washington         Independence       Chesapeake
30.    Washington         North Strabene     Range
31.    Washington         Robinson              Range
32.    Washington         Robinson              Range
33.    Washington         Robinson              Range
34.    Washington         Robinson              Range
35.    Washington         Smith                   Range
36.    Washington         Somerset              Rice
37.    Washington         Somerset              Rice            

OH Permits – week ending May 17, 2014

       County              Township            E&P Companies

1.    Belmont             Union                   Gulfport
2.    Belmont             Washington          Gulfport
3.    Carroll                East                    Chesapeake
4.    Carroll                East                    Chesapeake
5.    Carroll                East                    Chesapeake
6.    Carroll                East                    Chesapeake
7.    Harrison             Nottingham          Amer. Energy Utica
8.    Harrison             Nottingham          Amer. Energy Utica
9.    Harrison             Nottingham          Amer. Energy Utica
10.    Harrison           Nottingham          Amer. Energy Utica
11.    Harrison           Nottingham          Amer. Energy Utica
12.    Noble               Marion                Antero

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Joe Barone 610.764.1232
Vera Anderson 570.337.7149
Andrea Bagnell 610.256.1898


Northeast Supply Enhancement