Shale Directories Conferences
7th Annual Utica Summit
October 10, 2019
North Canton, OH
Shale Insight Conference
October 22-24, 2019
David Lawrence Convention Center
7th Annual Midstream PA 2019
November 12, 2019
Penn Stater Conference Center
State College, PA
Latest facts and a rumor from the Marcellus, Utica, Permian, Eagle Ford, and Bakken Shale Plays
Shale Slowdown Could Rally Prices. Two weeks ago, Oilprice.com published my notes which supported my belief that U.S. oil production has “hit a wall”. Last week, EIA confirmed my conclusion. The EIA’s 941 report shows that after U.S. crude oil production peaked in April at 12,123,000 barrels of oil per day (“BOPD”) production declined 8,000 BOPD in May and another 33,000 BOPD in June. Preliminary estimates say that when actuals are available for July, they will show an even larger decline. These are not big declines, but with the active drilling rig count continuing to fall, I feel confident in telling you that U.S. oil production over the second half of this year is not going higher.
Italian Company May Buy Rover Pipeline. (Thank you, MDN) In July rumors circulated that Energy Transfer is looking to sell its 33% ownership stake in Rover Pipeline, a project they worked so hard to build. Tongues are wagging once again. The rumor now is that Snam, an Italian natural gas infrastructure company, is interested in buying Rover and is, even as you read this, conducting due diligence to make an offer.
U.S. NatGas Supply 20% Greater. A group of energy industry experts announced today that the amount of producible natural gas in the United States has spiked sharply — up roughly 20% — since its last assessment two years ago. The increase of 557 trillion cubic feet (tcf) reported today by the Potential Gas Committee is the highest assessment in its 54-year history and has ramifications on everything from climate change to President Trump’s energy dominance agenda. The organization puts total recoverable resources at 3,374 tcf — enough to sustain current levels of U.S. natural gas consumption for over a century.
IHS Markit Looks for Lower NatGas Prices: U.S. gas production more than match for rising generation demand. The shale gas revolution in the U.S. should drive prices down to a level not seen in 40 years and open wider the world of energy export possibilities, according to a new report from researchers IHS Markit. Domestic demand has risen by more than 14 billion cubic feet per day (Bcf/d) in only two years, due in large part to new gas-fired power generation replacing coal. The U.S. also is expected to export another 3 billion cubic feet daily of liquefied natural gas (LNG) in 2020. Yet all of that is more than matched by production averaging 90 billion cubic feet per day this year and 2020, according to IHS Markit. “It is simply too much too fast,” said Sam Andrus, executive director, IHS Markit who covers North American gas markets. “Drillers are now able to increase supply faster than domestic or global markets can consume it. Before market forces can correct the imbalance, here comes a fresh surge of supply from somewhere else.”
New Pipelines Give Permian NatGas Prices a Lift. After enduring months of natural gas prices that moved into negative territory in March and largely remained there until August, Permian producers are starting to see higher prices. “Finally, we are seeing improvement on takeaway capacity for both gas and oil, with corresponding improvement in differentials,” Suzie Boyd, founder and president of Caballo Loco Midstream, told the Reporter-Telegram by email. “For gas, the long-awaited Kinder Morgan Gulf Coast Express gas pipeline has begun receiving gas as of early August in advance of its full start up expected in September. Gulf Coast Express is designed to move gas from the supply rich Permian Basin, to the Corpus Christ area where it will ultimately find a market on the gulf coast or through LNG export. This takeaway relief provided by the new pipeline, along with extra hot weather and increased power load, have helped prop up Waha gas prices,” she wrote.
PennEast Gets Bad News. A federal appeals court has blocked PennEast pipeline company from condemning state-owned land for its proposed 116-mile long line that would ship Marcellus Shale gas from northeast Pennsylvania to New Jersey. On Tuesday, a three-judge panel of the Third Circuit Court of Appeals reversed a lower court’s decision, saying that condemning public land violates the 11th Amendment of the Constitution.
EQT Cuts 23%. EQT Corp. said Tuesday it’s cutting its workforce by 23% — 196 positions – and chopping departments to 15 from 58 – all designed to improve operational effectiveness, and create a more efficient, nimbler organization.
The workforce reduction will save roughly $50 million in general and administrative expenses annually, Kallanish Energy reports.
All actions announced yesterday are president and CEO Toby Rice’s latest moves to get the U.S.’s largest dry gas producer on track, a larger version of the former Rice Energy, which was known for its efficient modus operandi.
“Today’s action represents another significant milestone as we transform EQT into a modern, technology-driven and efficient natural gas producer,” Rice said.
“Following the addition of proven leadership and the establishment of our digital work environment, we evaluated the business and determined the appropriate ‘future state’ organizational structure.”
Rice added the so-called future state will challenge, empower and support employees so EQT can achieve its stated goals of reducing costs, improving efficiency and “realizing the full potential of our asset base for the benefit of all stakeholders.”
GE Selling a Portion of Baker Hughes. Baker Hughes, a GE company (Bhge) announced Tuesday General Electric and its GE Oil & Gas US Holdings I, GE Holdings (US), and GE Oil & Gas US Holdings IV units have begun a secondary offering of 105 million shares of Bhge Class A common stock.
The offering’s underwriters will have a 30-day option to purchase up to an additional 15.75 million shares of Class A common from the selling stockholders, Kallanish Energy learns.
Bhge is not offering any shares of Class A common and will not receive any proceeds from the sale of shares in the offering.
Upon completion of the offering, GE and its affiliates will cease to hold more than 50% of the voting power of all classes of BHGE’s voting stock.
Among other things, this will reduce the number of individuals who GE is entitled to designate to Bhge’s board from five to one. GE has informed the company John G. Rice will remain on the Bhge board as its designee, while Jamie S. Miller and James J. Mulva will resign from the board.
Lorenzo Simonelli and W. Geoffrey Beattie are expected to continue to serve on the Bhge board, but not as GE designees.
The oilfield services firm also announced it’s repurchasing from GE and one or more GE affiliates $250 million of Bhge Class B common, together with an equal number of associated membership interests of Baker Hughes, a GE company, LLC.
J.P. Morgan, Citigroup, Goldman Sachs & Co. and Morgan Stanley are acting as joint lead book-running managers for the offering. BofA Merrill Lynch, BNP Paribas and Evercore ISI are serving as joint book-running managers for the offering.
FERC Needs to Explain Nexus Pipeline. A federal appeals court has ordered the Federal Energy Regulatory Commission to issue a new explanation on why the agency allowed the Nexus natural gas pipeline across northern Ohio to use eminent domain along its route, Kallanish Energy reports.
The pipeline will be allowed to continue operations, but Ferc must issue a new legal justification for its earlier action, said the three judges on the U.S. Court of Appeals for the D.C. Circuit. The ruling came from Judges Robert Wilkins, Judith Rogers and Sri Srinivasan.
The decision was hailed by pipeline opponents in northern Ohio, who said the decision could impact the use of eminent domain on future pipeline projects.
The city of Oberlin and local landowners had fought the use of eminent domain by Nexus Gas Transmission. Ferc rejected their complaints and rejected a rehearing request. Those parties then filed with the appeals court.
The appeals court ruled “the commission failed to adequately justify its determination that it is lawful to credit Nexus’ contract with foreign shippers serving foreign customers as evidence for market demand for the interstate pipeline,” Wilkins wrote.
Ferc must determine a substantial market exists for the gas from an interstate pipeline before it can grant taking private property through eminent domain.
The court was sharply critical of Ferc’s arguments its policy of crediting sales by foreign entities justifies granting eminent domain under Section 7 of the Natural Gas Act because the agency offered no reasons other than past practice and agency policy.
The $2.6 billion, 256-mile pipeline began service last fall. It was designed to move 1.5 billion cubic feet per day of Utica and Marcellus Shale natural gas across northern Ohio to the Midwest, the Gulf Coast and Ontario. It was developed by Michigan-based DTE Energy and Enbridge.
NatGas Powered Electricity Rising. The share of U.S. total utility-scale electricity generation from natural gas-fired power plants will rise from 34% in 2018, to 37% in 2019, and 38% in 2020, the Energy Information Administration projects, in its September Short-Term Energy Outlook (Steo).
Permian Pipelines Doubling Corpus Christi Loadings. U.S. crude oil loadings at Corpus Christi, Texas, have nearly doubled with the completion of new pipelines from the Permian Basin of West Texas and New Mexico, Kallanish Energy has learned.
The crude loaded onto vessels at Corpus Christi for export hit an average of 1 million barrels per day, according to Rbn Energy.
That record was nearly double July’s average of 525,000 bpd, Rbn said in a report from Reuters.
Nearly half of the loadings occurred at the Moda Midstream’s export terminal in Ingleside near Corpus Christi, it said.
Two new pipelines, Epic Midstream and Plains All American Pipeline, are together carrying up to 1.07 million bpd, easing the Permian pipeline bottleneck.
Crude inventories in Corpus Christi recently jumped by almost 1 million barrels to 12.7 million barrels in the week ending Aug. 23 with storage utilized to 52%, according to Genscape.
West Texas crude inventories fell by 2 million to 21.3 million barrels at monitored facilities, Genscape said.
U.S. Could Become #1. The International Energy Agency (IEA) expects the U.S. to challenge Saudi Arabia’s position as the world’s leading oil exporter, after briefly overtaking the OPEC kingpin to claim the number one spot earlier this year. “Booming shale production has allowed the U.S. to close in on, and briefly overtake, Saudi Arabia as the world’s top oil exporter,” the IEA said in its closely-watched monthly report on Thursday. “The installation of the necessary pipelines and terminals is continuing apace, which will ensure that the trend continues.” The U.S. momentarily surpassed Saudi Arabia as the leading oil exporter in June, after crude exports surged above 3 million barrels per day (b/d), the IEA said Thursday.
Now the Australians! Australian Oil Company Eyes Pristine Corner of West Texas. In the Permian Basin, the nation’s largest and most active oilfield surrounding the cities of Midland and Odessa in West Texas, pump jacks are as common as pickups and the industry’s presence is built into the fabric of daily life. Helios Energy Limited says it has found signs of oil across a potentially 200,000-acre stretch of rural Presidio County, Texas. The company has drilled four oil wells to date, one of which could enter full production mode in the coming weeks, according to materials compiled for the project’s investors. “Wherever they operate, oil and natural gas companies must adhere to stringent regulations that are working to protect the environment,” Todd Staples, president of the trade group Texas Oil and Gas Association, said in an email when asked about the Helios project. “The industry is constantly inventing new methods to reduce our footprint and carefully restore the land when our work is complete, and we will continue advancing environmental performance through innovative research, technology, and operational practices,” Staples said.
A Legend Is Gone. Legendary oilman T. Boone Pickens, who referred to himself as an “opinionated energy investor, entrepreneur, proponent of American energy resources and philanthropist,” died Wednesday at his home in Dallas at age 91, Kallanish Energy reports.
Born in 1928 in Holdenville, Oklahoma, Pickens, a trained geologist, made his fortune in oil. He began his career with Phillips Petroleum. In 1956, with $2,500 of borrowed money, Pickens and two investors formed an oil and gas firm that eventually became Mesa Petroleum, which he took public in 1964.
Pickens built Mesa into one of America’s largest independent natural gas and oil companies. In 1996, Pickens was pushed out of Mesa in a messy power play after having served nearly four decades at its helm.
Mesa produced more than 3 trillion cubic feet of gas and 150 million barrels of oil from 1964 to 1996.
In 1996, upon leaving Mesa Petroleum, at age 68, Pickens embarked on an even more successful career by forming an energy-focused investment firm, BP Capital, often one of America’s most successful hedge funds primarily focused on oil and gas commodities and energy-dependent equities.
During the 1980s, Pickens became a well-known corporate raider, making a string of losing but highly profitable takeover runs at much larger oil companies, including Gulf Oil, Unocal and Diamond Shamrock.
Pickens championed a new era of corporate accountability and is credited with making corporate managements more responsive to the interests of their shareholders. To further this, in 1986, Pickens founded the non-profit United Shareholders Association to help shareholders and inform them of corporate abuses.
In 2008, Pickens launched his self-funded, $100 million grass-roots campaign aimed at reducing America’s addiction to Opec oil by boosting U.S. adopting wind, solar and especially natural gas.
Temporary Mariner East Shut Downs Affect Range. Range Resources reports the Mariner East pipeline will be shut down at times during September for improvements by Sunoco at its eastern terminus at Marcus Hook, Pennsylvania, Kallanish Energy reports
As a result, Texas-based Range will sell ethane volumes in its residual natural gas stream that would be typically be transported via the Mariner East system across southern Pennsylvania.
Range’s propane volumes previously shipped on Mariner East 1 will be transported on the Mariner East 2 pipeline.
Third-quarter production has not been changed in terms of expected million British thermal units (Mmbtu) produced and the impact to cash flow is expected to be minimal, Range said.
Range, a major player in the Appalachian Basin, is a major shipper on the Mariner East pipelines.
The independent producer said it expects improved natural gas liquids and natural gas differentials and modestly higher natural gas production as a result of selling more ethane in the natural gas stream which, combined, will mostly offset lower reported Ngl production and result in a minimal impact to cash flow.
Range has updated its Q3 production guidance to reflect increased ethane rejection. That results in expected production of roughly 2.22 billion cubic feet-equivalent (Bcfe), to 2.23 Bcfe per day (Bcfe/d) on a reported basis, vs the original guidance of 2.25 to 2.26 Bcfe/d.
Sunoco told Range Mariner East 1 is expected to return to service in early October.
PA DEP Wants Exposed Pipelines at 43 Sites. The Pennsylvania Department of Environmental Protection has ordered Sunoco Pipeline to cover exposed pipelines at 43 sites across the state, Kallanish Energy reports.
Following the discovery of an exposed pipeline last June, the state’s Public Utility Commission requested Sunoco identify any additional exposed pipelines and notify state regulators.
The state agencies reported exposed pipelines include 42 transporting refined petroleum products and one moving natural gas.
The state said it cannot identify the locations with exposed pipelines because of state security laws.
Of the 43 sites, 10 do not require a permit from Dep to remediate the problem. Work is in progress at 10 sites and is set to begin at four additional sites.
Sunoco has submitted permit applications now under Dep review for 10 sites and plans to submit applications for another nine locations.
Such pipelines are a threat and need to be corrected immediately, said Dep secretary Patrick McDonnell, in a statement.
The company, which has been criticized for problems on its Mariner East 2 pipelines, has 30 days to seek all needed state permits, and 60 days to bury all the exposed pipelines and stabilize the sites.
The Comprehensive Explanation on FERC’s Decision on the Constitutional Pipeline. The United States Federal Energy Regulation Commission (FERC) has issued an order holding that the New York Department of Environmental Conservation (DEC) waived its authority under the Clean Water Act to issue or deny a water quality certification for the proposed Constitution Natural Gas Pipeline because DEC failed to act in a timely manner.
Entities proposing to construct interstate natural gas pipelines are subject to a multitude of state and federal permitting regulations and statutes. One such requirement, as scrutinized and decided by FERC in this case, falls under Section 401(a)(1) of the Clean Water Act, stating that an applicant seeking to construct any facilities that could result in discharge into navigable waters, first must obtain a “water quality certification” from the state where the discharge could occur. Critically, if the issuing state agency fails or refuses to act on a request for certification within one year from the date of receipt of the application, the certification requirement is waived. Section 401(a)(1).
Here, in a unanimous decision, FERC emphasized a strict interpretation of the one-year application time frame under Section 401(a)(1), determining that it cannot be extended, even if the application is withdrawn and resubmitted. The FERC stated that “[t]he record […] indicates that [DEC] encouraged Constitution’s withdrawal and resubmission of its application for the purpose of avoiding the waiver period.” (Docket No. CP18-5-000, et al. at pg. 13, ¶ 33). Citing the recent D.C. Circuit Court of Appeals decision in Hoopa Valley v. FERC, the FERC determined that the one-year decision period is a bright-line rule that cannot be extended via bilateral agreement. As such, even when there is a written agreement to delay water quality certification or a withdrawal and resubmission occurs, both such circumstances constitute a failure and refusal to act under Section 401 by a state issuing agency and therefore, in this case, DEC waived its authority.
In fact, the issue of whether a state agency may defer the date of receipt of a water certification application under Section 401 of the Clean Water Act was recently addressed head-on by the Second Circuit Court of Appeals New York State DEC v. FERC. There, the court found that the “withdrawal-and-resubmission scheme” to create an extension was contrary to the plain language of the statute since there is nothing in the Clean Water Act that would justify such a maneuver. Moreover, policy considerations have been mentioned in support of strict interpretation, such as the interest in providing certainty around deadlines for state action.
The proposed Constitution Pipeline is a new 30-inch diameter, approximately 125-mile long, pipeline with a capacity to transport 650,000 dekatherms of natural gas per day (enough natural gas to serve about 3 million homes) from the Marcellus Shale formation in Pennsylvania into various counties in New York. The legal certification process to build and operate the pipeline began in 2014 when FERC issued its Final Impact Statement and Order granting a Certificate of Public Convenience and Necessity. These documents signified approval to build and operate the pipeline, as well as detailed the conditions of approval, the final route, and construction and environmental mitigation measures.
Later, in 2016, DEC denied the pipeline builder’s water quality permit application for failing to meet New York state’s water quality standards. DEC’s 2016 decision indicated that the Constitution Pipeline would infringe on approximately 250 streams and that pipeline builders did not provide a comprehensive analysis of the environmental impact of the pipeline’s burial. That decision halted construction operations while the instant appeal was pending with FERC.
While the instant ruling by FERC brings natural gas one step closer to a reality for residents of New York, the lengthy permitting process for the pipeline is ongoing. Despite FERC’s ruling that DEC waived its right to issue or deny a water quality certificate, one must be obtained from the U.S. Army Corps of Engineers, in addition to approval from the Pennsylvania Fish and Boat Commission, as well as other permits in order to officially begin construction.
TX August Permits. The Railroad Commission of Texas in August 2019 issued a total of 960 original drilling permits, Kallanish Energy reports, compared to 1,110 permits in August 2018, a decline of 12.6%.
The August 2019 total included 865 permits to drill new oil or gas wells, eight to re-enter plugged wellbores, and 87 for re-completions of existing wellbores.
The permits included 229 oil, 49 gas, 605 oil or gas, 50 injection, two service and 15 “other” permits.
In August 2019, the commission staff processed 446 oil, 103 gas, 27 injection and two other completions. That compares to 501 oil, 123 gas, 56 injection and three other completions in August 2018.
Total well completions for 2019 year-to-date are 6,327, down 13.3% from 7,297 in the same time period in 2018.
The Midland area was No.1 for permits to drill oil/gas wells (495), new oil completions (336) and new gas completions (31) in August 2019.
The other top areas for permits to drill oil/gas wells were the San Antonio area (90), the Refugio area (72) and the San Angelo area (71).
Texas is the No. 1 drilling state in the U.S.
PA Permits September 5, to September 12, 2019
County Township E&P Companies
- Lycoming Penn Exco Resources
- Washington North Bethlehem Rice
- Washington North Bethlehem Rice
- Washington North Bethlehem Rice
OH Permits September 7, 2019
County Township E&P Companies
- Belmont Richland Ascent
- Belmont Richland Ascent
- Belmont Richland Ascent
- Jefferson Smithfield Ascent