Shale Directories Seminars
Upstream PA 2019
April 17, 2019
Penn Stater Conference Center
State College, PA
Appalachian Storage Hub Conference
June 6, 2019
Hilton Garden Inn
Southpointe, Canonsburg, PA
Latest facts and a rumor from the Marcellus, Utica, Permian, Eagle Ford, and Bakken Shale Plays
Marathon Looking at Appalachian Storage Hub. Ohio-based Marathon Petroleum is exploring the possibility of an underground liquids storage facility in eastern Ohio’s Utica Shale, Kallanish Energy reports.
The company is looking at utilizing underground salt caverns for ethane, butane and propane storage, said Jason Stechschulte, commercial development manager for Marathon Pipe Line LLC.
The site would be near the company’s Hopedale fractionation facility in Harrison County.
The company last year conducted core sampling and the site has potential, he said Thursday at the day-long Utica Midstream conference sponsored by the Canton Regional Chamber of Commerce and Shale Directories. The event drew roughly 130 people to Walsh University in North Canton.
Marathon is talking with potential customers, but there are no firm plans, price estimates or timetables, Stechschulte said. Any timetable would be driven by customer interest and permitting, he said.
He described the plan as a “multi-year project.” No applications have been filed for the project, except for the coring work done in 2018.
What the company is envisioning is a storage facility that would provide a solution for the entire industry in the Appalachian Basin, he said. Natural gas liquids would be stored under pressure with the ethane, butane and propane all being segregated in different salt caverns, he said.
The facility would be close to numerous pipelines in the area where Ohio, West Virginia and western Pennsylvania come together.
Storage is needed as Shell Appalachia continues to build its ethane cracker plant at Monaca, Pennsylvania, northwest of Pittsburgh.
Waiting on PTT
PTT Global Chemical is still looking at building a similar cracker at Dilles Bottom in Ohio’s Belmont County. A final investment decision has been expected for some time.
A private company, Colorado-based Mountaineer NGL Storage, hopes to develop a storage facility in salt caverns at Clarington in Ohio’s Monroe County. It would be designed to handle up to 3.5 million barrels of natural gas liquids.
Natural gas liquids are also flowing via pipelines to eastern Pennsylvania for export.
In other news, Marathon Pipeline is completing the finishing touches to expanding its Rio Pipeline to move Utica Shale liquids from Lima, Ohio, to Robinson, Illinois.
That required adding three pumping stations on the 250-mile, eight-inch line. Stechschulte told the audience the pipeline will move roughly 55,000 barrels per day, starting within the next 10 days.
The company is also working to move Utica normal butane and isobutane to refineries and storage in the Midwest, a project that will be completed by mid-2020.
The two projects together will cost Marathon about $150 million, he said.
The company is also looking at a possible arrangement to move Utica liquids from Cadiz and Scio in eastern Ohio, to Bell’s Run on the Ohio River for river transport, he said. That might be an arranged in cooperation with EnLink Midstream.
Dueling Storage Hubs. At our Utica Midstream Conference yesterday, Marathon Pipeline is evaluating a storage hub in Cadiz, Ohio near its other facilities in Harrison County, Ohio.
Many of you know that we have spoken at length about the Appalachian Storage Hub and we have our third annual conference Appalachian Storage Hub Conference on June 6, 2019 at the Hilton Garden Inn in Southpointe, Canonsburg, Pennsylvania.
The Appalachian Development Group (ADG) has been considered the leader in developing the underground storage facility. It has let a contract for engineering work to determine the best site for the storage facility. I’ve heard from different sources that the facility is going to be in the Charleston, West Virginia area and ADG is currently looking for funding for the storage hub.
The move by Marathon is a bold one, and strategically a very solid one. A storage hub in Harrison County, Ohio makes the facility very close to the PTTGC cracker plant as well as Shell’s cracker plant. And most importantly, the storage hub leverages MarkWest’s facilities there.
We will follow the development of both storage hubs and keep you informed. It’s going to be very interesting to see how dueling evolves.
Williams – CPPIB JV Will Impact Ohio Utica. Williams has entered an agreement with the Canada Pension Plan Investment Board (CPPIB) to form a $3.8bn joint venture (JV) in the western Marcellus and Utica basins in the US.
The transaction will enable Williams to optimize its midstream operations in the two basins.
The proposed JV will include Williams’ Ohio Valley Midstream (OVM) and Utica East Ohio Midstream (UEO) systems.
According to the agreement, CPPIB will invest $1.34bn to acquire a 35% interest in the JV.
Williams will assume operator-ship of the combined entity with a 65% ownership stake.
Concurrent with the agreement with CPPIB, Williams acquired the remaining 38% interest in UEO from Momentum Midstream.
Williams president and CEO Alan Armstrong said: “Acquiring the remaining interest in UEO and forming a partnership with CPPIB continues to advance our already strong position in the north-east.
“The joint venture complements our recent investment in Encino Acquisition Partners, an anchor customer on UEO and other Williams gathering assets.”
“These transactions create a platform for continued optimization and growth, provide deleveraging, reduce capital spending on processing and fractionation capacity for OVM, and unlock further synergies through combined operatorship of the systems.”
Based in eastern Ohio, UEO gathers, processes and fractionates natural gas and natural gas liquids in the Utica Shale play.
According to the energy firm, the deal is expected to deliver synergies through common ownership by ‘combining UEO and OVM to create a more efficient platform for capital spending in the region’.
The venture is also expected to help drive down operating and maintenance expenses.
CPPIB managing director and Energy and Resources head Avik Dey said: “This JV will provide CPPIB additional exposure to the attractive North American natural gas market, aligning with our growing focus on energy transition.
“The joint venture complements our recent investment in Encino Acquisition Partners, an anchor customer on UEO and other Williams gathering assets.
“Through these unique operations in highly attractive basins, we will further our strategy to establish US midstream exposure alongside highly regarded and experienced operating partners such as Williams.”
Williams plans to use a portion of the proceeds from the transaction to offset the purchase price of the UEO acquisition.
The remaining proceeds will be used to fund Williams’ regional growth capital and reduce debt.
Subject to customary closing conditions and the receipt of regulatory approvals, the deal is expected to close in the second or third quarter of this year.
Last year, Encino Acquisition Partners, a company backed by CPPIB and Encino Energy, agreed to purchase Chesapeake Energy’s Utica Shale oil and gas assets in Ohio for around $2bn.
Rice Brothers EQT Board Nominees. Toby Z. and Derek A. Rice have delivered on a months-ago promise to EQT Corp.’s board and management to run their own people to man the independent producer’s board.
Thursday morning, the nine men and women who would be EQT’s new board if elected, were introduced, Kallanish Energy reports.
Four members of the slate – including, ironically, former Rice Energy CEO and current EQT director Daniel J. Rice IV – are former members of the Rice Energy board.
EQT acquired Rice in late 2017 for $8.2 billion, making Pittsburgh-based EQT the U.S.’s largest dry natural gas producer.
The current plan is to run the nine nominees against the EQT-backed slate with shareholders voting on July 10, at the company’s annual meeting.
The ‘right stewards’
“We believe our directors are the right stewards to oversee the implementation of the Rice plan to lower well costs to levels previously achieved by the Rice team on EQT’s assets, which we believe will generate $500 million of annual incremental free cash flow above EQT’s current guidance,” said Toby Rice.
The Rice team also said EQT is attempting to create an uneven playing field by taking the “highly unusual step” of requiring, as a condition to the submission of nominations that the Rice team’s nominees consent to being named in EQT’s proxy materials.
The Rice team believes EQT should either follow the common practice that the Rice nominees need only consent to being named in the Rice team’s proxy materials, or EQT’s slate of directors provide the same consent to appear on the Rice team proxy card so as to create a “universal proxy card.”
EQT has met with Rices
In its response to the Rice Brother’s announced board nominees, EQT stressed it has met with the brothers over the last few months, has carefully considered their recommendations to get the most out of EQT’s assets.
But bottom line: EQT has a plan in place and intends to follow it. “Over the last several months, EQT has successfully implemented a cultural and strategic shift to focus on development optimization and efficiencies. Following the company’s transformation in 2018 into a premier pure-play upstream company with a world-class asset base, EQT is now reducing costs and generating substantial free cash flow,” the EQT statement highlights.
The independent producer reiterates under the continued leadership of the board and management, EQT expects to generate roughly $300 to $400 million of adjusted free cash flow in 2019, and $2.9 billion of adjusted free cash flow over the next five years.
Cost savings actions implemented
EQT has already implemented cost saving actions that reduced annual cash costs by roughly $150 million. And the company plans to reduce capital costs by an additional 10% in 2020, and beyond, providing incremental upside to its plan.
The nine board nominees put forth by the Rice Brothers include four women and five men. The nominees include:
* Lydia I. Beebe, 66, who currently serves as principal of LIBB Advisors, a corporate governance consulting firm. Beebe previously held a number of senior roles at Chevron Corp., including corporate secretary and chief governance officer, from 1995 to April 2015.
* Lee M. Canaan, 62, founder and portfolio manager of private investment management firm Braeburn Capital Partners.
* Kathryn J. Jackson, 61, has served as the director of Energy and Technology Consulting for KeySource Inc., a company that provides strategic business consulting, since October 2015. Jackson also was chief technology officer and senior vice president of Research and Technology at Westinghouse Electric.
* Hallie A. Vanderhider, 61, has served as managing director of SFC Management since January 2016. Previously, Vanderhider served as managing partner of Catalyst Partners from August 2013, to May 2016. Prior to that, Vanderhider served in a number of positions at Black Stone Minerals Co., including president and chief operating officer.
* Jay C. Graham, 48, currently serves as chairman and CEO of Spur Energy Partners. Graham served as CEO and chairman of WildHorse Resources Development from September 2016, until it was acquired by Chesapeake Energy in February 2019. Previously, Graham served as CEO of Memorial Resource Development Corp. from January 2016 until it was acquired by Range Resources in September 2016. Prior to that, Graham served as Co-CEO of WildHorse from June 2013 to January 2016, and president of WildHorse Resources Management from its formation in October 2012, to January 2016.
* D. Mark Leland, 57, has served in numerous roles with El Paso Corp. and its various business units, including president of El Paso Midstream Group and executive vice president and chief financial officer of El Paso.
* John McCartney, 66, served as a member of the board of Rice Energy from March 2015, until its acquisition by EQT in November 2017.
* Daniel J. Rice IV, 38, has served as a partner at Rice Investment Group since May 2018. Prior to that, Rice served in a number of positions with Rice Energy, joining the company as vice president and chief financial officer in 2008, becoming chief operating officer in October 2012, and CEO from October 2013, until its acquisition by EQT. Rice also served as CEO and board member of Rice Midstream Management, the general partner of Rice Midstream Partners from January 2014 to November 2017.
* Toby Z. Rice, 37, has served as a partner at Rice Investment Group, investing in all verticals of the oil and gas sector, since May 2018. Prior to that, Rice served as president, chief operating officer and a board member of Rice Energy from October 2013 until its acquisition by EQT.
Anti’s Fighting Williams NY Pipeline. Because pipelines can run through — or under — environmentally sensitive areas, they are perennial targets of environmental groups. Sentiment against a proposed $1 billion underwater pipeline that will bring fracked natural gas from Pennsylvania into New York City is gathering steam. Energy company Williams Cos.’ 37-mile Northeast Supply Enhancement project would expand the 10,000-mile Transcontinental Pipeline into Queens via New Jersey, with 23 miles set to run under New York Bay. Proponents of the project, which is expected to be complete in 2020, said the new pipeline will help meet growing demand and that the natural gas it supplies could displace 900,000 barrels of oil a year. The Federal Energy Regulatory Commission issued Williams a favorable final Environmental Impact Statement on Jan. 25, but still must approve a Certificate of Public Convenience and Necessity before construction can begin.
Let’s hope our support of this pipeline will make a difference as the final decision approaches.
Rover Pipeline Lawsuit Tossed. A judge has tossed out a lawsuit Ohio filed against the developers of a $4.2 billion natural gas pipeline that stretches from West Virginia to Michigan. The lawsuit sought to force the builders of the Rover Pipeline to pay fines for what Ohio regulators said were numerous water pollution violations during the pipeline’s construction. A county judge in Canton ruled earlier this week that the Ohio Environmental Protection Agency had waived its right to regulate construction under the Clean Water Act. Dallas-based Energy Transfer Partners argued it was up to the Federal Energy Regulatory Commission to enforce environmental laws during construction. A spokesman for the Ohio attorney general’s office tells The Repository in Canton the state is reviewing the decision and is considering its next step.
LNG Industry Going after Flared NatGas in the Permian. The liquefied natural gas industry wants to become an outlet for the record amount of methane being produced in the Permian Basin, where much of it is being burned off due a lack of pipelines to move it out of the West Texas shale play. Methane is the main component of natural gas. During a discussion of Permian Basin pipelines at CERAWeek by IHS Markit, Matt Schatzman, CEO of the Houston LNG terminal developer NextDecade, said flaring is not a long-term option for handling the natural gas produced as byproduct oil. LNG export terminals proposed along the Gulf Coast, he said, could become an outlet for much of the volume. “LNG is going to be a major part of helping to resolve this gas issue so producers can attain flow assurances so they can produce the much more valuable oil, which is driving the economics of the entire development in the Permian,” Schatzman said.
Bakken Sets NatGas Record in January. In another sign that the Bakken Shale’s best oil producing areas continue to be gassier than other shale plays, North Dakota officials saw natural gas production set an all-time record in January, averaging more than 2.7 Bcf/d for the month. “Again, we’re seeing the situation where gas is increasing much faster than crude oil,” said regulator Lynn Helms, who directs the Department of Mineral Resources. The production increases make it more important than ever to build additional natural gas gathering and processing infrastructure, he said. “We’re off to a good strong start for the year,” with oil production in a “photo finish” with record December 2018 totals, though just slightly lower, he said. In January, natural gas production reached 2.72 Bcf/d, compared to 2.65 Bcf/d in December. Oil production in January was essentially flat compared with the previous month at 1.4 million b/d. Helms offered mostly positive indicators, with oil prices up sharply, producing wells hitting an all-time high and production from the Fort Berthold Reservation (FBR) showing signs of stabilizing. Rig counts and natural gas capture rates stayed fairly steady, too. The only negative, which Helms said could stick around for a while, was a continuing uptick in the number of uncompleted wells. “It really has been month-to-month uncertainty with changes in rig counts on the reservation swinging back and forth by four or five rigs, mostly on the trust lands,” where more than two-thirds of FBR production originates. “Production has been up and down, but I think that is going to stabilize as we move forward,” Helms said. FBR has nearly 300,000 b/d of production, including 192,000 b/d on trust land, with more than 2,000 active wells and another 4,400 potential new wells. Except on the reservation, gas capture improved overall, decreasing month-over-month by 9 MMcf/d to 507 MMcf/d, and statewide Bakken capture hitting 82%. Without FBR, which had 71% capture, the statewide rate would have totaled 84%.
Eagle Ford Looks Promising. During 2018, the Eagle Ford Shale in South Texas play re-emerged as one of the lucrative destinations for oil and gas companies, according to data and analytics firm GlobalData.
In its latest market analysis, released last week, GlobalData states the Eagle Ford has reversed a production decline, and leading operators continue to increase the scale of their operations, Kallanish Energy reports.
“There are still some sections within the Eagle Ford shale play which are underdeveloped, especially in the northern part comprising the Burleson and Brazos counties, and some companies are also assessing the overlying Austin Chalk formation,” GlobalData wrote.
The major counties for prolific crude oil and condensate production in the Eagle Ford play include Karnes, De Witt, La Salle, Dimmit, and Gonzales.
The Eagle Ford play also constitutes largely of condensates and dry gas resources. The major producing counties for natural gas include Webb, Karnes, De Witt, Dimmit, and La Salle.
“Eagle Ford definitely remains a sound investment for oil and gas operators,” according to Adrian Lara, senior Oil & Gas analyst with GlobalData.
“During the last few years the play has made a slow but sure comeback, but this performance is at times not as noticeable because it neighbors the super attractive Permian Basin. Still, the well economics of the play are robust with current commodity prices, and operators are starting to assess areas outside the core zone of the play, moving out from the so-called Karnes Trough.”
Lara said some operators are re-assessing the production upside of targeting several benches in the Eagle Ford, such as the overlying Austin Chalk formation. Recent merger and acquisition activity also confirms how operators try to increase their operations in the Eagle Ford.
“This was, in fact, a main driver in Chesapeake Energy’s acquisition of WildHorse Resource Development, according to Lara. Eagle Ford won’t become the engine of Lower 48 U.S. states’ unconventional production, but it still has growth potential.
The location of the play allows for better oil and natural gas pricing in comparison to Permian output with proximity to major hydrocarbon processing facilities and export terminals on the U.S. Gulf Coast.
This, along with sufficiently developed midstream infrastructure, is an important aspect in the enduring attractiveness of Eagle Ford for oil and gas companies, according to GlobalData.
Federal Court Halts PennEast Pipeline. A federal appeals court has granted New Jersey a stay, halting construction of the PennEast natural gas pipeline while it resolves issues surrounding the company’s attempt to take property in which the state has an interest. The Third U.S. Circuit Court of Appeals issued the order Tuesday in an appeal by several New Jersey state agencies that challenged the federal court’s jurisdiction to hear eminent domain actions by a private company. The agencies argued that such matters must be heard in state court. While the order bars physical construction of the pipeline, it does permit PennEast Pipeline Co. to continue surveying and testing for the 110-mile pipeline, which is planned to carry natural gas from the Marcellus Shale region of Central Pennsylvania, through Northampton County and to southern New Jersey. There are about 535 landowners along the entire route.
Bullish NatGas Outlook for the Appalachian Basin. Natural gas production from the Marcellus and Utica Shale plays in Ohio, Pennsylvania and West Virginia will supply 45% of U.S. natural gas by 2040, up nine percentage points from 2019, according to a new IHS Markit study.
The study found by 2020, cost advantages for the production of various natural gas liquids in the Midwest vs. the U.S. Gulf Coast are expected to range from 6% to 26%, Kallanish Energy found.
Production of natural gas liquids ethane, propane and butane is expected to nearly double between 2019 and 2040, accounting for 19% of the nation’s total by 2040, up from 14% in 2018, the study projects.
The study, “Estimated Logistics Benefits of the Shale Crescent USA Region Versus the U.S. Gulf Coast for Natural Gas and LPG” was released Tuesday at the World Petrochemical Conference in San Antonio, Texas.
“Research continues to drive home the myriad economic advantages for manufacturers in the Shale Crescent region when compared to other, more traditionally accepted energy and chemical hubs,” said Wally Kandel, spokesperson for Shale Crescent USA, an organization founded to tout the benefits to businesses of the Tri-State Region.
The IHS Markit study was commissioned by Shale Crescent USA and JobsOhio, a private, nonprofit corporation founded to drive job creation and new capital investment in Ohio.
Its backers state the new study quantifies for the first time the anticipated development and production growth emerging from the region.
The 2019 study says the region “will play a key role in satisfying America’s increasing reliance on natural gas, as well as keeping energy costs moderate. Favorable production economics place the Marcellus and Utica shale plays amongst the most cost competitive in the nation.”
“The abundance of natural gas and natural gas liquids has impacted our project pipeline,” said Dana Saucier Jr., JobsOhio vice president & head of Economic Development. “The IHS Markit study quantifies the economic advantages of investing in the Marcellus and Utica formations.”
DUC’s Still High. The number of drilled, but uncompleted crude oil and natural gas wells, aka, Ducs, rose 1.1% from January to February in the U.S.’s seven most productive basins/plays, the Energy Information Administration reports.
In its just-released Drilling Productivity Report (Dpr), EIA found 93 new Ducs were added to the portfolio, rising to 8,576 at Feb. 28, from 8,483 at Jan. 31.
Five of the seven regions reported an increase in drilled, but uncompleted wells from January to February, Kallanish Energy finds.
The biggest month-to-month increase – more than five times the number of new Ducs in the second-most drilled, but uncompleted wells, was the Permian.
The basin, located in West Texas and southeast New Mexico, saw another 88 Ducs added to its portfolio, ending February at 4,004, up from 3,916 Ducs in January.
The Eagle Ford had the second-most Ducs added from January to February, up 16, to 1,543, from 1,527 Ducs in January, Dpr reported.
The Niobrara, Haynesville and Bakken plays saw a combined 13-Duc increase from January to February, finished last month with 527, 211, and 723 drilled, but uncompleted wells, respectively.
The Anadarko and Appalachia (the Marcellus and Utica Shale plays combined), each saw a January-to-February drop in Ducs, down 18 and six, respectively, to 1,053 and 515, respectively.
NETL Finds Ways to Reduce the Environmental Impact of Drilling. Research at the Marcellus Shale Energy Environmental Laboratory (Mseel) at West Virginia University could help cut production emissions, experts from the National Energy Technology Laboratory (Netl) report.
“Oil and gas operators need specific data to help them reduce emissions and fugitive releases of gas,” Natalie Pekney, a member of Netl’s Geo-Analysis and Geo-Analysis & Monitoring Team, told Daily Energy Insider.
“But, because emissions have discernible differences according to specific activities, we needed an assessment of emission trends that can be used as a tool to guide oil and gas operational performances.”
The researchers examined emissions and dispersion rates of various compounds at WVU, which have grown due to technological innovations in horizontal drilling and hydraulic fracturing, Kallanish Energy understands. But environmentalists have long charged fracking with serious geologic and environmental issues.
Netl’s research found the point of greatest methane and volatile organic compound (Voc) impact is during flowback from fracking, due to activity on the well pad rather than other off-site sources.
Emissions, on the other hand, were found to be highest during drilling and production, though emissions vary. Nitrogen oxides are released by access-road traffic, while well pad activities affect local ammonia concentration via large onsite diesel engines.
PA Permits March 14, to March 21, 2019
County Township E&P Companies
- Bradford Springfield Repsol
- Elk Fox Seneca
- Greene Center Rice
- Susquehanna Auburn Chesapeake
- Susquehanna Auburn Chesapeake
- Susquehanna Bridgewater Cabot
- Susquehanna Bridgewater Cabot
- Susquehanna Bridgewater Cabot
OH Permits for week of March 16, 2019
County Township E&P Companies
- Harrison Monroe Chesapeake
- Harrison Monroe Chesapeake
- Harrison Monroe Chesapeake
- Harrison Athens Ascent
- Harrison Athens Ascent
- Harrison Athens Ascent