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NewsLetters

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/

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

Cabot Goes for Permit #3 in OH.  Cabot Oil & Gas, long-known for the incredible amount of Marcellus natural gas they produce from Susquehanna County in northeastern Pennsylvania, is eyeing north central Ohio as a potential spot for “what’s next” after the Marcellus.  Cabot locked up leases with plans to drill a number of test wells in not only Ashland, but also Holmes, Knox, Richland and Wayne counties in the Buckeye State in April, and last week began to drill a hole on that pad. They also began pushing dirt around on a second well pad site. And now, Cabot has filed for a third permit to drill–in Vermillion Township in Ashland County. Cabot plans to drill into the Knox formation vertically, and if they find anything worthwhile, they will then drill horizontally. 

World Gas Conference NatGas Projections.  Natural gas production from U.S. shale plays can grow by as much as 60% for decades, industry executives and government officials said this week in Washington.

Thus far, liquefied natural gas (LNG) has been spared from retaliatory tariffs in U.S. President Trump’s trade battles with China and other countries, Reuters reported.

“We see a century of natural gas supply in U.S. shale,” Ryan Lance, CEO of ConocoPhillips said this week at the triennial World Gas Conference. “Shale’s abundance is real and it’s not going away.”

The U.S. currently produces roughly 72 billion cubic feet per day (Bcf/d) of natural gas, a figure expected to grow 7 Bcf/d this year, Kallanish Energy finds.

And within two decades, U.S. shale gas output should grow an additional 60%, according to a study from IHS Markit, Reuters reported.

“We’re sharing our energy value with the world,” Rick Perry, U.S. Secretary of Energy, said this week at the conference.

ConocoPhillips and its U.S. peers have sharply ramped up natural gas production in the past decade. The U.S. is also boosting export capacity. LNG facilities from Cheniere Energy Inc, Dominion Energy, Tellurian and others are either operating or planned across the U.S. Gulf and East coasts.

“What the U.S. has done for the world with shale gas is given another form of affordable, competitive energy that can be relied upon,” said Jack Fusco, Cheniere’s CEO, said at the conference.

Cheniere has shipped more than 350 LNG cargos to 28 countries worldwide, including China.

“Gas is much more of a global market than it used to be,” Dan Yergin, an energy economist and IHS Markit vice chairman, said at the conference this week.

The ramp-up in U.S. shale gas production coincides with a demand spike from power producers, with coal-fired generation increasingly anathema across the developing world.

Industry executives have aggressively touted gas as a way to increase access to affordable electricity and limit greenhouse gas emissions.

“This shale gale has boosted the U.S. economy and transformed markets around the world,” Darren Woods, CEO of ExxonMobil, said at the conference.

Rover Pushing FERC for Approvals.  Rover Pipeline is pushing to get Federal Energy Regulatory Commission approval to begin service on two laterals in the Appalachian Basin by July 1.

To date, FERC has not approved that request, which would put more of the 713-mile natural gas pipeline into service and that is troubling to Rover Pipeline, Kallanish Energy reports.

The company, in a strongly worded letter to FERC, said it had expected to begin service next week on its delayed Burgettstown and Majorsville laterals.

“It is not in the public interest for the commission to withhold this supply from market any longer,” the company said.

The company said that “significant volumes of natural gas have been unable to flow on pipeline facilities that have been completed for nearly a month.”

In a June 21 letter to FERC, the company requested approval by June 25. It intended to then notify shippers that service would begin on July 1, it said.

Rover Pipeline said that FERC appears to have changed the rules in requiring additional work from the company after heavy rains caused slippage and erosion problems along the two laterals.

The company said both laterals are now more than 50% restored, but not enough to win FERC approval.

“This change is unwarranted and unreasonable,” the company said.

It said it was “baffled” and “greatly alarmed” by the FERC change that now includes how quickly Rover deals with landowner issues, how Rover is progressing on other pipeline segments and whether Rover is meeting deadline on other efforts across the project.

Previously, FERC only considered work on individual pipeline segments, not the overall project, in granting in-service approvals, the company said.

Rover Pipeline, an Energy Transfer Partners company, also argued the two laterals are needed to restore depleted U.S. supplies of natural gas in storage before winter comes.

“The Burgettstown and Majorsville Laterals are complete and ready to flow gas,” it said.

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 previously 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.

FERC has issued three separate orders allowing Rover Pipeline to begin service on pipeline segments.

Constitution Pipeline May Still Be Alive.  Seems like a week doesn’t go by that MDN isn’t asked (by someone from Pennsylvania), “Is there any hope of building the Constitution Pipeline through New York?” Our standard response is this: The only way it gets built is (a) NY elects a new governor favorable to the industry–about a 1% chance of that happening, (b) President Trump issues an Executive Order overriding Cuomo’s blockade of Constitution (and other pipeline projects)–maybe a 10% chance of that happening, or (c) the Federal Energy Regulatory Commission (FERC) reconsiders a decision to not overrule NY’s move to block the project–maybe a 15% chance.

The U.S. Supreme Court in April refused to consider the Constitution Pipeline case, closing that door. In January of this year, FERC turned down Constitution’s request to overrule NY. But then Constitution (i.e. Williams) asked FERC to reconsider their ruling, to “rehear” the case as it’s called, in February. In March, FERC gave themselves a little more time to think about rehearing the decision, but since that time, the agency has been silent. Yesterday Williams/Constitution filed a request with FERC asking them to urgently, speedily, quick-like-a-bunny, pretty-please with a cherry on top hurry up and reconsider/rehear their earlier decision, this time hopefully overruling NY. Could it happen? Sure, it could. Will it? Doubtful, but hey, hope springs eternal! Williams/Constitution also filed an official request yesterday with FERC to extend the deadline to build the Constitution project–from this year to 2020. If FERC grants the extension, then maybe there is a glimmer of hope that FERC will change its mind, or that FERC somehow sees a way that Constitution can still get built.

China Becomes the World’s Top Import of LNG.  China will become the world’s top importer of natural gas next year, boosted by purchases of LNG as its weans itself off coal-generated power, the International Energy Agency said on Tuesday. In its “Gas 2018” report, the IEA said Chinese demand for natural gas will rise by almost 60 per cent between 2017 and 2023 to 376 billion cubic meters (bcm), including a rise in its liquefied natural gas imports to 93 bcm by 2023 from 51 bcm last year. Imports of LNG, natural gas super-chilled to liquid form so it can be transported around the world on vessels, will rise to 505 bcm by 2023 from 391 bcm last year, including China’s additional purchases. Global LNG exports meanwhile will rise 30 per cent by 2023 with the United States becoming the world’s second-largest supplier, compared to its negligible exports last year, thanks to the shale revolution that has transformed its energy markets. The report from the Paris-based agency highlights the might the two powerhouses have over global energy markets just as US President Donald Trump squares off with Beijing over trade.

New Assessment of Eagle Ford shale.  The Eagle Ford Group of Texas contains estimated means of 8.5 billion barrels of oil, 66 trillion cubic feet of natural gas and 1.9 billion barrels of natural gas liquids, according to a new assessment by the U.S. Geological Survey. This estimate consists of undiscovered, technically recoverable resources in continuous accumulations. “Texas is so well-known for its history of oil and gas production that it’s almost synonymous with petroleum,” said Jim Reilly, USGS director. “Texas continues to remain in the forefront of our nation's energy supply chain with remarkable increases in production and reserves due to the revolutionary unconventional techniques used to release previously unrecoverable resources.” The Eagle Ford Group stretches from the Texas-Mexico border to the west, across portions of southern and eastern Texas to the Texas-Louisiana border to the east. It is one of the most prolific continuous accumulations in the United States, and is comprised of mudstone with varying amounts of carbonate.

New Permian Highway Pipeline Coming.  Kinder Morgan Inc, EagleClaw Midstream Ventures LLC and Apache Corp. plan to develop a proposed Permian Highway Project (PHP) to provide an outlet for increased natural gas production from the Permian Basin, unlocking the basin's "full growth potential," the companies said in a joint statement June 25. Kinder Morgan and EagleClaw, a portfolio company of Blackstone Energy Partners, will be the initial partners with 50% ownership each in the roughly $2 billion project. Apache, which has been jointly developing the proposed project, will have an option to acquire up to 33% equity in the project from the initial partners. Kinder Morgan plans to build and operate the pipeline, which will be designed to transport up to 2 billion cubic feet per day (Bcf/d) of natural gas through about 430 miles of 42-inch pipeline from the Waha, Texas, area to the U.S. Gulf Coast and Mexico markets. Given the level of producer inquiry, Kinder Morgan is also evaluating the economic and hydraulic feasibility of a 48-inch pipeline with increased transportation capacity, according to the press release.

NatGas Power Plant Going into Harrison County, OH.  In September 2016, MDN reported that EmberClear planned to fund and build a new $900 million, 1,000-megawatt electric generating plant in Harrison County, OH. The new plant will be fed by Utica Shale gas. EmberClear was, until July 2016, a Canadian-based company. But it went bankrupt and after emerging from bankruptcy it changed its name to Ember Partners, now based in Houston, TX. Since 2016 we haven’t heard anything about the project. But things were/are happening. Last week the Ohio Power Siting Board (OPSB) authorized construction of the 1,050 megawatt (MW) natural gas-fired, combined-cycle electric generation facility in Cadiz–called the Harrison Power Plant. Which is good news indeed. The plant will generate 500 temporary construction jobs and 30 permanent jobs and use a huge amount of natural gas to power it (good for Utica drillers!). Construction on the plant is due to begin in October of this year and the plant will be done and online in June 2021.

Top 10 States for NGL Usage.  We spotted a blog post from our favorite government agency, the U.S. Energy Information Administration that made us sit up and take notice. The EIA wrote about the consumption rates of what they call hydrocarbon gas liquids (HGLs). We call it natural gas liquids (NGLs). We typically define NGLs–the “other” hydrocarbons that come out of the hole along with oil and gas–as compounds like ethane, butane, propane, isobutene and pentane. All the “-anes.”

EIA goes one step further and includes the “-enes”–ethylene, propylene, butylene and isobutylene. The EIA post talks about what these compounds are used for. The thing that caught our attention was the chart showing “Top ten hydrocarbon gas liquids-consuming states, 2016.” The chart lists which states “consume” or use the most NGLs (HGLs). Put another way, the chart shows where the best markets are for selling NGLs. And frankly, it ain’t around here! Only one M-U state, Pennsylvania, even appears in the list of top 10 states. Both Iowa and Illinois use more NGLs than PA! Why is that? Simple answer: Both of those states, along with Texas, Louisiana, and Kentucky are the only states in the country that possess functioning ethane cracker plants. Cracker plants sop up a LOT of ethane, a lot of NGLs, and it shows in the numbers. PA will no doubt make its up the top 10 list when the Shell cracker goes online. Ohio, should PTT build a cracker there, will begin to appear in the list. And WV, if LyondellBasell buys Braskem and builds a cracker near Parkersburg, will also begin to appear in the list. Until that time, the brutal fact is that there just isn’t much of a market in our region for the abundant volume of NGLs we produce–meaning drillers must export NGLs out of our region, or those NGLs become an expense, costing money to get rid of.

GE Divesting Baker Hughes.  General Electric, in the middle of a massive corporate wide overhaul to restore the luster to an U.S. industry icon recently bounced from the Dow Jones Industrial average, this morning said it will divest its stake in oilfield services firm Baker Hughes.

GE also plans to spin-off its healthcare business, as CEO John Flannery focuses the struggling company on power, aviation and renewable energy, Kallanish Energy reports.

“Today marks an important milestone in GE’s history. We are aggressively driving forward as aviation, power and renewable energy company — three highly complementary businesses poised for future growth. We will continue to improve our operations and balance sheet as we make GE simpler and stronger,” Flannery said, in a release.

“We are confident that positioning GE Healthcare and BHGE outside of GE’s current structure is best not only for GE and its owners, but also for these businesses, which will strengthen their market-leading positions and enhance their ability to invest for the future, while carrying the spirit of GE forward.”

GE also will seek to reduce net debt by roughly $25 billion by 2020, the Boston-based company said, concluding a year-long strategic review.

The 62.5% stake in Baker Hughes will be sold over the next two to three years. GE will sell 20% of the health business and spin off the rest to its shareholders.

The moves continue a radical reshaping of GE, which bears little resemblance to the conglomerate that used to include NBC, home-appliances, plastics and a massive finance unit among its business holdings.

In recent years, former CEO Jeffrey Immelt sold most of GE's banking and consumer operations, while Flannery has already agreed to dump the century-old locomotive operations.

"GE will be a focused high-tech industrial company that will be easier for investors to follow and measure with a significantly improved balance sheet to support its remaining businesses," the company said, in today’s statement.

GE, an American icon, has struggled to rebound from the financial crisis of 2008-2009. The stock has plunged from a peak of $60 in 2000 (it was trading at $12.75 a share this morning as of this writing), and the company cut its dividend in 2009 and 2017.

GE plans to "materially shrink" the balance sheet of its finance arm, GE Capital, aiming to sell $25 billion in energy and industrial finance assets by 2020.

The company also is exploring options to reduce its insurance exposure. GE shocked Wall Street this year with a $15 billion shortfall in insurance reserves.

Oasis Petroleum Makes Big Sale in the Bakken.  Independent producer Oasis Petroleum said Monday it has signed two separate agreements to sell roughly 4.4 million barrels of oil-equivalent per day (MMBOD/d) of net production and approximately 65,000 net acres of non-core assets in the Williston Basin for $283 million.

Purchasers were not disclosed, Kallanish Energy reports.

"We highlighted approximately 200,000 net acres and 8 to 10 MMBOE/d of production that could be divested for an estimated $500 million in proceeds," said Thomas B. Nusz, Oasis' chairman and CEO. "We are pleased to report that Oasis has made significant progress towards that target, selling a fraction of the non-core acreage for over half the estimated proceeds."

The agreements include the Houston-based company's Foreman Butte position, which included inventory characterized as fairway, and certain non-operated acreage.

RBC Richardson Barr and CIBC Griffis & Small acted as financial advisors to Oasis.

Exporting 3 Million Barrels.  U.S. oil exports reached a record 3 million barrels a day last week— a greater amount than is pumped each day by all but three OPEC countries. When combined with fuel products, like diesel and gasoline, U.S. oil and related products exports totaled 8.5 million barrels a day last week, the most ever, according to U.S. Energy Information Administration weekly data. To put U.S. exports in context, the U.S. was able to export more oil per day last week than most OPEC countries drilled.

Read the DOE’s NGL Primer.  (Click on DOE link) Department of Energy.

The U.S. Department of Energy (DOE) published the 2018 Natural Gas Liquids (NGLs) primer that highlights the resource potential of NGLs, with a focus on the Appalachian region. This publication provides an important update of a previous version from 2017, reporting even larger projections for ethane production from the Marcellus and Utica shale plays than previously estimated. The 2018 primer includes new data from the reference case for the U.S. Energy Information Administration’s (EIA) 2018 Annual Energy Outlook as well as forecasts from a recent EIA Short-term Energy Outlook. The new data includes updated information regarding infrastructure developments in the Appalachian region, and a new section identifying research and development opportunities related to natural gas and NGLs production, conversion, and storage.

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PA Permits June 14, to June 21, 2018

             County                                   Township                                          E&P Companies

  1. Butler                                           Winfield                                             PennEnergy
  2. Susquehanna                            Bridgewater                                       Cabot
  3. Susquehanna                            Bridgewater                                       Cabot
  4. Susquehanna                            Bridgewater                                       Cabot
  5. Susquehanna                            Bridgewater                                       Cabot
  6. Susquehanna                            Bridgewater                                       Cabot
  7. Susquehanna                            Bridgewater                                       Cabot
  8. Susquehanna                            Gibson                                               Cabot
  9. Susquehanna                            Gibson                                               Cabot
  10. Susquehanna                            Gibson                                               Cabot
  11. Susquehanna                            Gibson                                               Cabot

OH Permits for week ending June 16, 2018

 

              County                                   Township                                          E&P Companies

  1. Harrison                                       German                                              Chesapeake
  2. Harrison                                       German                                              Chesapeake

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

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