Shale Directories Conferences
7th Annual Utica Summit
October 10, 2019
North Canton, OH
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
Underground Storage Facility in SW PA. It appears there have been discussions and meeting between the Appalachian Development Group ( ADG) and the state of PA regarding and underground storage facility in SW PA. From what I know this makes sense. ADG is looking for funding and Governor Wolf’s has petrochemical plants as one of his administration’s top priorities. We’ll have to see if anything comes of this. (RUMOR)
ADG Funding Maybe in Trouble. While we heard the rumor above, this may be a moot point if the funding goes away.
An amendment to a major government appropriations bill (H.R. 2740) could mean trouble for a $1.9 billion Energy Department loan guarantee for the proposed natural gas liquids storage facility planned for Appalachia, Kallanish Energy reports.
Amendment 105, introduced by Reps. Ilhan Omar (Democrat-Minnesota) and Pramila Jayapal (Democrat-Washington), seeks to clarify the Doe loan program in question is intended only for “clean energy projects that avoid, reduce, or sequester air pollutants or human-caused emissions of greenhouse gases,” according to amendment backers.
Last month, a coalition of 143 environmental/ community, health, and public interest groups, wrote a letter to House Appropriations Committee Chairperson Nita Lowey (Democrat-New York State) questioning the legality of the loan guarantee proposal, stating a massive fossil fuel project would actually undermine the intended purpose of the Title XVII loan guarantees.
The massive proposed gas storage hub and its associated infrastructure would pose serious public health and environmental risks to the region, anti-project protestors state.
“Supporting the construction of more fossil fuel-related infrastructure to support plastics manufacturing would be an irresponsible use of taxpayer dollars,” according to opponents.
Proponents for the Appalachian Storage Hub naturally have a different position on the roughly $3.4 billion project.
“Proposed projects mandatorily must meet the necessary requirements of the standard in order to receive an invitation from the Department of Energy’s Loan Program Office to submit a Part II Application,” Steve Hedrick, head of Appalachia Development Group LLC, the entity pushing the Appalachia Storage and Trading Hub project, told Kallanish Energy.
ADG’s Part I application for the federal monies was approved and, in early 2018, the group was encouraged to submit a Part II application for funding, which it did.
ADG has hired engineering giant Parsons Corp. as its engineering, procurement and construction (Epc) partner for the buildout of the Appalachia hub.
The ADG-backed hub is the largest of three announced to be built in the Pennsylvania/Ohio/West Virginia region, and the only one asking for federal funds.
Liquids storage is seen as critical as the Tri-State area attempts to entice ethane crackers to their environs. Shell’s cracker currently is under construction roughly 30 miles northwest of Pittsburgh, in Beaver County, Pennsylvania.
The amendment will be debated on the House floor in the coming days.
America’s Oil Boom Will Break More Records This Year. OPEC Is Stuck in Retreat. The epic American oil boom is just getting started. OPEC, on the other hand, is stuck on the sidelines. US oil production is on track to spike to a record 13.4 million barrels per day by the end of 2019, according to a recent report by energy research firm Rystad Energy. Texas alone is expected to soon top 5 million barrels per day in oil production — more than any OPEC member other than Saudi Arabia. The surge in American barrels — led by the Permian Basin in West Texas — has offset oil blocked by US sanctions on Venezuela and Iran. But all of that US oil is also contributing to a supply glut that last week sent crude into another bear market. OPEC has been forced to scale back its output — a trend that could continue as the cartel tries to prop prices back up. “We continue to see the Permian representing the key driver of global oil supply growth for the next five years,” Goldman Sachs analyst Brian Singer wrote to clients on Monday.
EPA Could Help Pipeline Projects. The Environmental Protection Agency (EPA) issued a guidance Friday that critics say seeks to limit states’ influence over controversial pipeline projects. Federal law through the Clean Water Act essentially gives states veto power over large projects that cut through their rivers and streams if they believe those projects would negatively impact their water quality. Spurred by an April executive order from President Trump, the EPA’s guidance encourages states to more quickly process project applications, even if they don’t have all the information yet. “This seems to be another attempt by the Trump Administration to limit states, and by extension local communities, ability to protect their own waterways and to give pipeline developers or other project proponents an ability to skip over one of the steps in the process that had been there to protect local waterways,” said Nathan Matthews, a senior attorney with the Sierra Club, one of the environmental groups weighing action against the EPA.
Horizontal Wells Dominate U.S. Oil Drilling. Horizontally drilled wells now account for 96 percent of crude oil production and 97 percent of natural gas production in the United States, according to the Energy Information Administration (EIA). The near-total hold on efforts into tight oil and shale gas formations represents a massive leap over 14 years as, in 2004, such operations represented only 15 percent of crude oil production therein. Likewise, U.S. natural gas production in shale formations had only seen horizontal wells represent 14 percent of production in 2004, against their 97 percent hold now. Horizontal drilling has allowed operators greater access to oil and natural gas-bearing rock than its more traditional, vertical forebears. It works through drilling parallel to the geologic layers in tight formations, allowing more hydraulic fracturing.
U.S. Pipeline Prices Fall. U.S. line pipe prices sunk in May, Kallanish Energy’s sister publication, Kallanish, learns from analyst Pipe Logix.
Average U.S. line pipe prices fell by 1.5% from April to May, reaching a combined $1,757/short ton at the distribution level. Domestic prices fell by 1.5%, to $1,930/st, while import prices fell by 1.4%, to $1,584/st.
Pipe Logix said domestic welded line pipe fell by 2.8%, while import welded line pipe dropped by 2.5%.
“This marks the 10th month of consecutive declines in the Pipe Logix Index for a cumulative decline of $256/ton, or 13%, since July 2018,” Pipe Logix said.
“Actual import volumes have averaged 204,000 st over the trailing 12 months, which is up 7% over the previous 12-month period. April import volumes are estimated to have been slightly lower at 186,000 st. The rig count is down -8% from the peak in December. Hot-rolled coil prices have fallen back to 2017 levels.”
More News on Appalachian Storage Hub Conference. The Appalachian Basin, specifically the trio of states including Pennsylvania, Ohio and West Virginia, is approaching a tipping point when determining what is done with the substantial volume of ethane produced here.
There are three scenarios concerning ethane, according to Charles Zelek, a senior economist in the U.S. Department of Energy’s Office of Fossil Energy:
- Development of a petrochemical “cluster” so that much of incremental Appalachian ethane supply is processed locally
- As is the current situation, locally-produced ethane is shipped from the region to the U.S. Gulf Coast
- Incremental processing occurs elsewhere, facilitated by feedstock exports
“There is a bit of urgency for this region (concerning what is done with its ethane),” according to Zelek, who last week addressed more than 100 attendees at the third annual Appalachian Storage Hub Conference.
Zelek implored his audience – the region’s movers, doers and shakers – to move forward in establishing liquids storage in the Tri-State (in various stages of development by three groups), putting together a strong effort to attract the petrochemical industry, including additional crackers, and cracker product users.
More, more, more
That includes more private cracker owners, more private investment, and involvement of the federal government, as decentralizing the country’s petrochemical industry away from the Gulf Coast is important for national security, and for supporting the industry’s resilience and reliability.
The program, produced by Shaledirectories.com and TopLine Analytics was held south of Pittsburgh, in the heart of the wet Marcellus Shale play. Kallanish Energy was in attendance at the one-day conference.
Zelek, himself a local boy, having grown up in southeast Ohio, told his audience the growth in natural gas liquids production is no fluke and is not a mirage.
He pointed out Doe’s statistical arm, the Energy Information Administration, forecasts Ngpls (natural gas plant liquids, or liquids separated at natural gas processing, fractionating, and cycling plants) production jumps by 50% between 2017 and 2050.
Projected ethane production in 2025 is more than 20 times greater than regional production in 2013.
But right now, there is a very limited amount of pipeline capacity to move ethane and other gas liquids out of the area, be it east to Marcus Hook, Pennsylvania, northwest to Sarnia, Ontario, and southwest to the Texas Gulf Coast.
The only answer is rejection
As natural gas production continues to grow in Appalachia, there is only so much pipeline capacity to flow liquids, one ethane cracker is under construction, another is expected to soon be publicly given the greenlight, and liquids storage is non-existent.
The only answer is rejection – leave as much ethane in the natural gas stream as is allowed. “Roughly 750,000 barrels of ethane will be rejected this year,” according to Zelek.
Storage available for natural gas liquids is essential to managing seasonal supply variability, processing facility outages, and holding for transport or export, according to Zelek.
This is the place to be
The Doe senior economist said 13 key petrochemical industries, from plastic and resin manufacturing, to rubber product manufacturing, are within 300 miles of Pittsburgh, and reiterated what locals have been saying for years:
The liquids are here, the processing is here, fractionation is in the region, and crackers are on the way, end users are here – bring on the liquids storage.
And bring on the petrochemical industry as a whole. The latest American Chemistry Council projects billions in capital investment, billions in direct output, over 100,000 jobs, billions in payroll, and billions in tax revenue.
China isn’t waiting
Back to Zelek speaking of “urgency.” The senior economist let his audience in on a little secret. China is primed to take all the ethane the U.S. can send the Red giant. More than 20 ethane crackers are applying for permits to operate in China, he said, based on data he was supplied the evening before his presentation.
Ethane demand for those crackers is pegged at well over 24 million tons per annum (Mtpa).
Another NatGas Power Plant Begins Construction in OH. Construction is under way on a new power plant to be fueled by Utica Shale natural gas in southeast Ohio, Kallanish Energy reports.
The Long Ridge Energy Terminal is being developed by New York-based Fortress Transportation and Infrastructure Investors LLC.
The 485-megawatt plant is located on the Ohio River near Hannibal in Ohio’s Monroe County, a major Utica Shale drilling area.
The nearly $600 million plant is expected to begin operations in November 2021. It is located on 25 acres of the former Ormet aluminum plant that closed in 2013 after 50 years of operation.
The project is expected to create 300 to 350 construction jobs and 20 to 25 permanent jobs.
Fortress announced its final investment decision last February and executed an Epc (Engineering, Procurement and Construction) agreement with Kiewit Power Constructors and an equipment-purchase agreement with the General Electric.
At that time, Fortress CEO Joe Adams said in a statement: “This is the culmination of a lot of hard work by our team and I’m very proud of this accomplishment.”
It is among a dozen gas-fired power plants operating, under construction or being developed in Ohio.
Anti-Fracking Researcher Quietly Admits: Studies Show No Harmful Pollutants Near Oil and Gas Sites. The activist who wrote a 2012 memo encouraging anti-fracking groups to connect health problems and fracking even when no evidence existed to support the claims recently co-authored a report admitting that the vast majority of scientific research shows no harmful air pollutants near oil and natural gas sites. As the report explains, “Air pollution near oil and gas production typically measures in concentrations within healthy air standards…” Activist researcher and executive director of the openly anti-fracking Physicians Scientists & Engineers for Healthy Energy (PSEHE) Seth Shonkoff and his co-authors analyzed 37 peer-reviewed journal articles on hazardous air pollutants from 2012 to 2018, finding: “[M]measurements of hazardous air pollutant concentrations near operational sites have generally failed to capture levels above standard health benchmarks; yet, the majority of studies continue to find poor health outcomes increasing as distance from these operations decreases.”
TX’s O&G Production up in March. Texas crude oil and natural gas production increased in March 2019 from a year earlier, according to information released by the Railroad Commission of Texas. The state agency said the average daily oil production jumped from 2.,79 million barrels (Mmbbl) of crude oil in March 2018, to 3.28 Mmbbl in March 2019, an increase of 17.8%, Kallanish Energy reports. The average daily natural gas production grew by 20.9%, from 18.64 billion cubic feet (Bcf) in March 2018, to 22.54 Bcf in March 2019. The production came from 174,582 oil wells and 89,335 natural gas wells. In March 2019, Texas produced 101.31 Mmbbl of oil, and 698.73 Bcf of natural gas. That is initial production and will be updated as new information is filed with the state agency.
TX Drilling Permits Up in May. The Railroad Commission of Texas issued 1,050 drilling permits in May 2019, Kallanish Energy reports.
That compares to 1,243 permits in May 2018, the state agency said, a 15.5% drop.
The May 2019 total included 931 permits to drill new oil or gas wells, 17 to re-enter plugged well bores and 102 for re-completions of existing well bores.
The 2018 breakdown was 218 oil, 71 gas, 675 oil or gas, 69 injection, five service and 12 “other” permits.
In May 2019, the commission processed 735 oil, 153 gas, 40 injection and one “other” completion. That compares to 739 oil, 134 gas, 57 injection and six “other” completions in May 2018.
Total well completions for 2019 year-to-date are 4,173, down from 4,450 recorded in the same period in 2018. That is a 6.2% drop.
The Midland area was No. 1 for permits to drill oil and gas wells in May 2019, with 546 permits. The San Antonio region was second with 100 permits.
For new oil completions, the Midland area was tops with 354 permits. Second was the San Antonio area with 154 permits.
For new gas completions, the Midland area was first with 81 permits, followed by the San Antonio area with 28 permits.
U.S. Will Maintain Oil Production. The U.S. will maintain its crude oil production, or even increase the volume, despite low energy prices and slowing economic growth, deputy energy secretary Dan Brouillette said Wednesday, Kallanish Energy finds.
Shale producers in the U.S. will continue to produce a record 12 million barrels a day (Mmbpd) through 2020, he said, citing projections from the Energy Information Administration. Production could climb to 13 Mmbpd, he added.
“U.S. production numbers are going to continue for quite some time,” Brouillette told CNBC.
Brouillette rejected fears oil demand would be hit amid slowing economic growth worldwide. “Growth is slowing down slightly … over the course of early 2019. But I suspect that as the economy begins to rev up, we’ll start to see that demand pick up as well. And it’s going to be good news for oil producers,” he told CNBC.
Even though U.S. shale producers face obstacles on growing output, Brouillette said production is not producers’ biggest problem.
“Our biggest challenge in the U.S. is not maintaining production, it’s actually getting the product to market. We are developing infrastructure … at a rapid pace, but we need to do more. We need more pipeline capacity in order to have the oil and the gas reach these export markets,” he said.
In fact, Brouillette said, there will be increased production, not falling output, in the U.S.
Last year, global demand for natural gas grew at the fastest pace in nine years. Most of that needed supply is expected to come from the U.S.
American gas output jumped 11.5% in 2018 — the fastest growth since 1951, according to the International Energy Agency.
But due to the current trade war, Chinese tariffs on U.S. natural gas could put global export growth on hold, as the Asian giant accounting for a large share of global demand and taking the spot as the world’s number 2 importer for LNG.
Brouillette dismissed that idea, pointing to high demand from the rest of Asia. He said sales to South Korea and Japan look “very, very large” relative to China.
Range Has Layoffs. Yesterday the Pittsburgh Business Times broke the news that Range Resources, one of the Marcellus/Utica’s biggest drillers, has laid off 40 employees–roughly 5% of its workforce. The layoffs are split between the company’s Pennsylvania and Texas operations.
More on Rice Brothers and EQT. (Thank you, MDN) This Monday, Toby and Derek Rice (the Rice brothers) sent an open letter to EQT shareholders to “set the record straight on EQT’s misleading comments” about the Rice boys and their plan to take over EQT. In fact, the Rices’ say EQT has made “a number of false claims” and engaged in “personal attacks.” On Tuesday, EQT issued a response to “correct the Toby Rice Group’s false and misleading statements” about what EQT said, and to “highlight significant omissions and errors” in the Rice analysis of EQT’s recent performance. Yesterday, EQT issued yet another letter to shareholders to talk up their own board nominees, and to bash the nominees put forward by the Rice brothers.
TX Pipeline to Mexico Completed. A $2.5 billion natural gas pipeline from Texas to northeastern Mexico is now mechanically complete, Kallanish Energy reports.
That news about the Sur de Texas-Tuxpan Pipeline came Tuesday from Infraestructura Marina del Golfo, a joint venture between TC Energia, a subsidiary of Calgary-based TC Energy Corp. (formerly TransCanada Energy), and Infraestructura Energetica Nova (IEnova), a subsidiary of California-based Sempra Energy.
The pipeline will move up to 2.6 billion cubic feet of natural gas per day (Bcf/d) to fuel Mexican power plants and industrial operations.
It’s part of the biggest gas pipeline system between Mexico and the U.S. and will furnish Mexico with cheap U.S. natural gas. Pipeline shipments to Mexico are expected to be a major source of growth for U.S. natural gas demand in the coming years.
The new pipeline is expected to increase Mexico’s current import capacity of natural gas by 40%, the companies said, in a statement.
“The expansion of its pipeline network and the supply provided by Sur de Texas-Tuxpan will contribute to increasing Mexico’s competitiveness,” said Robert Jones, president of TC Energia, in a statement.
The new pipeline adds to Mexico’s energy security and will be able through connections to reach to central and southern Mexico, he said. It is the highest single source of foreign direct investment in Mexico in 2017.
The 480-mile, 42-inch line runs offshore from the Mexico-U.S. border near Brownsville, Texas, to Altamira near the city of Tempico in the Mexican state of Tamaulipas where it continues toward Tuxpan in the state of Veracruz.
The inland portion of the pipeline will supply Mexico’s natural gas needs through TC Energia’s Tamazunchale and Tula pipelines, as well as feed Mexico’s Sistrangas system.
Offshore Texas, the pipeline connects with Enbridge’s 165-mile Valley Crossing Pipeline that was completed last October. The project included the construction of the largest compressor station in Mexico in Altamira, Tamaulipas.
Reuters reported there were 20 pipelines between Mexico and the U.S. at the end of 2018, with capacity for 11.1 Bcf/d of natural gas, although shipments south were half of that total because of infrastructure delays in Mexico.
S&P Global Platts Analytics Rig Count June 12. US oil and natural gas rigs totaled 1,053 for the week ended June 12, according to data by S&P Global Platts Analytics.
This represents a net increase of four rigs from the prior week’s total of 1,049. It also reverses two weeks of declines, as operators removed 25 rigs over that time.
The prolific Permian Basin saw the biggest rebound, adding eight active rigs to 448. It represents the first time since the week ended May 1 that the basin did not lose any rigs. The sustained lower rig count has allowed well completion activity to start to catch up with drilling in the past few months.
The number of drilled but uncompleted wells in the Permian has remained around 1,600 for the past three months, according Platts Analytics, as the drilling to completion ratio has hovered around one-to-one for most of 2019.
The only other oil-rich play to add rigs this week was the Denver-Julesburg Basin, where the total increased by three to 31. Unlike the Permian, drilling activity has outpaced completion activity for most of 2019.
Producers in the DJ have stockpiled permits for more than a year due in part to the push for stricter drilling regulations in Colorado.
On the gas side, the Marcellus shale shed four rigs to 52, while the Haynesville added two and the Utica added one to 58 and 19, respectively. On a net basis, the total number of rigs targeting gas increased by one to 206.
PA Permits June 6, to June 13, 2019
County Township E&P Companies
- No new permits this past week.
OH Permits for June 8, 2019
County Township E&P Companies
- Belmont Smith Rice
- Belmont Smith Rice
- Belmont Smith Rice
- Belmont Smith Rice
- Belmont Smith Rice
- Belmont Smith Rice
- Guernsey Oxford Ascent
- Guernsey Oxford Ascent
- Guernsey Oxford Ascent