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
West Virginia CEO Still Waiting on $84 Billon Chinese Investment. Shale Directories is tracking this story closely and will keep you updated on the status. (courtesy CNBC)
WASHINGTON BOTTOM, W.V. – Beijing billed President Donald Trump’s 2017 trip as a “state visit-plus” — rolling out the red carpet for an unprecedented private dinner in the Forbidden City, marching a military parade through Tiananmen Square, and hosting a signing ceremony in the colossal Great Hall of the People to unveil business deals totaling more than $250 billion.
One-third of that value was supposed to flow to West Virginia, an energy-rich but high-poverty state whose manufacturing and energy workers handed Trump his widest margin of victory in 2016. He captured more than more than 67% of the vote.
Under the deal, China’s largest state-owned energy giant would spend nearly $84 billion over 20 years to build facilities that extract natural gas and turn it into byproducts that generate power and make consumer goods.
In celebrating the announcement, West Virginia officials said projects would be underway within a year.
“This time next year, you will see construction activity taking place,” the state’s former Commerce secretary, Woody Thrasher, told reporters on Nov. 13, 2017.
A month later, Gov. Jim Justice confirmed that timeline. “It would not surprise me, within my 10-month window of today, to see shovels in the ground,” Justice told a town hall on WSAZ television.
But skepticism about the deal surfaced almost immediately. Officials referenced the general areas where China Energy would invest, but didn’t provide a detailed list of projects or an accompanying timeline. The memorandum of understanding outlining the deal was never made public and remains sealed by judicial order.
CNBC interviewed dozens of local executives, state officials and federal lawmakers about where the deal stands. What emerges is a picture of a proposal hastily assembled for the deadline of Trump’s trip to China without assessments of national security or geopolitical risks – and a cautionary tale as the U.S. tries to hold China to its promises at the federal level.
Eighteen months after the deal was announced with much fanfare, China Energy Investment Corp. has spent no money in West Virginia’s energy projects, Justice tells CNBC. Thrasher – one of three signatories to the deal – points to one reason: “It’s not an enforceable document where we can make them spend their money.”
The wish list
Delegations from China Energy Investment Corp. and Shenhua Group, its parent company, embarked on multiple learning tours in West Virginia to figure out where they would invest. In addition to visiting project sites across West Virginia in 2017, executives took courses at West Virginia University’s Energy Institute and traveled to industry conferences across the Ohio River valley. The trips began to slow as trade tensions heated up between the U.S. and China in early 2018, the governor told CNBC.
Local executives and state lawmakers expected China Energy to assist in building new facilities in three areas: Natural gas-burning power plants, steam crackers that turn gas into ethylene, and an underground reservoir that would store the excess energy until it could be processed or traded.
The goal, according to those involved: Invest in the infrastructure to extract and process the raw materials and send the materials themselves back to China.
But problems arose soon after the deal’s announcement.
China’s involvement in the power plants was blocked by U.S. officials, who raised national security concerns about an adversary obtaining operating knowledge of a state’s power grid.
The source of the opposition with the federal government was not clear, but Thrasher and Rep. David McKinley, R-W.Va., said the plants included in the original proposal had been removed from consideration.
“By law, information filed with CFIUS may not be disclosed by CFIUS to the public. Accordingly, the Department does not comment on information relating to specific CFIUS cases, including whether or not certain parties have filed notices for review,” said a representative for the Treasury Department, which leads the Committee on Foreign Investment in the United States, commonly known as CFIUS.
“We didn’t realize that there may be concerns from CFIUS,” Thrasher said in hindsight. “We thought that would be acceptable. Later on, there were questions about it.”
Energy Solutions Consortium — the U.S.-based company building the power plants in Brooke and Harrison counties — says permits for the plants are in process, and their construction is not predicated on Chinese investment.
A hundred miles away from the power plant sites sits an empty asphalt lot on the banks of the Ohio River that was supposed to host the facility that would “crack” the area’s abundant natural gas into ethylene. A security guard keeps watch 24 hours a day over the area, overgrown with weeds and surrounded by chain-link fencing and barbed wire.
When asked where one would find the cracker — or the beginnings of it — the security guard returned a quizzical stare. “There’s not one,” he told CNBC during a recent reporting trip to the area.
“That’s here,” he said when he was shown a map highlighting the area the Department of Energy had singled out as the investment site. But nothing had ever materialized, he said.
Local executives, who requested anonymity because they are not authorized to discuss the project, say China Energy’s interest was piqued by the waterfront location and neighboring logistics hubs that would allow the company to easily export what it produced back to Beijing.
China’s financial backing would have added momentum to the cracker’s long-stalled production.
Its construction by Brazil’s petrochemical company Braskem, and Braskem’s parent company, Odebrecht SA, had been on hold for years amid a corruption scandal, financial troubles and ownership questions. Odebrecht’s chief executive in 2016 was sentenced to 19 years in prison for his role in a kickback scheme that lined the pockets of politicians in more than a dozen countries. The same year, Odebrecht and Braskem pleaded guilty and agreed to pay $3.5 billion to U.S. authorities for running afoul of domestic anti-bribery laws. After a deal to sell Braskem to conglomerate to LyondellBasell fell through earlier this month, Odebrecht filed for bankruptcy.
The Department of Energy says the cracker would produce a million annual tons of ethylene, a petrochemical product used to make zip-close bags and clothing fibers. But the earliest date it could come online under current ownership is 2022, according to a DOE report.
Then there’s the Appalachia Storage and Trading Hub, currently in the fundraising and development phase. Steve Hedrick, CEO of the Mid-Atlantic Technology, Research & Innovation Center (MATRIC) and Appalachia Development Group, says he’ll spend the next two years locking in the $3.3 billion he needs to get the project off the ground.
The majority of the funding — $1.9 billion — is expected to come from a Department of Energy loan. The remaining $1.4 billion will come from the private sector, Hedrick says, and so far is not coming from Beijing.
“What we have seen thus far is investment out of the continental United States,” Hedrick told CNBC.
Hedrick maintains that Beijing never made a firm commitment to fund the construction of the hub, despite his joining West Virginia officials in China to announce the $83.7 billion deal. His participation stoked controversy when ProPublica reported that he conducted private business while taxpayers funded his travel. Hedrick repaid his travel costs and told CNBC he provided “chemical industry acumen” during meetings with Chinese officials, at the request of the state.
Lawmakers say the storage hub was always on China Energy’s shortlist.
“We’re talking about 10 to 20 million barrels of ethane storage,” said McKinley. “Our conversation with Shenhua and the China Energy group was, ‘Let’s tap into that.’”
A ‘game-changer’ for the Mountain State
The potential value of the China Energy deal is greater than the value of everything the state of West Virginia produces in a year, which according to the St. Louis Federal Reserve was $77.5 billion in 2018. A third of its 1.8 million people don’t have internet, according to the Federal Communications Commission. And 19% of residents live below the poverty line, the most recent Census data show.
“It would’ve obviously employed tens of thousands of people,” Thrasher said. “It would’ve been way beyond a game-changer. Way beyond the size of the state.”
West Virginia’s current Commerce secretary, Ed Gaunch, told a West Virginia radio show the investment would produce “hundreds of thousands” of jobs in the energy and petrochemical industries. After meeting with China Energy’s chairman and top officials in China in early June, Gaunch told MetroNews Talkline the two parties moved “one step closer” to announcing at least one of the seven projects Gaunch said China has identified. Gaunch declined to elaborate on the commitment – or the projects – and acknowledged the process has been perplexing.
“In this case it was backwards,” Gaunch told the Talkline host Hoppy Kercheval. “We announced the intention to do those projects, and now we’re waiting for those projects to materialize.”
A spokesperson for Gaunch and the West Virginia Department of Commerce declined repeated requests for comment from CNBC over a three-month period.
The proposed size of the investment – and availability of those projects – has lawmakers and longtime West Virginia drillers scratching their head.
“I think we all knew that was a pretty high figure, particularly in a small state such as ours,” Republican Sen. Shelley Moore Capito told CNBC outside Clarksburg during a recent congressional break.
Dennis Xander, president of West Virginia-based Denex Petroleum, said even if China Energy fully paid for every pipeline under construction in the state, it would only be able to spend about $25 billion.
“I don’t think the projects are here right now,” Xander said. Asked whether they could emerge over a 20-year investment horizon, he said: “I doubt it.”
Denex and MATRIC have not encountered any Chinese bidders participating in existing or future projects where their companies are involved, the two executives said.
“If 10% of that were invested in the state of West Virginia, that would be the single-largest investment in the history of the state,” MATRIC’s Hedrick said. “Whether you get to $83.7 billion or you get to $50 [billion] depends on how long we want to sit at the table and work on it,” Hedrick said.
Hedrick, who was briefed on the investment as part of the 2017 trip, said the specificity of the figure indicated it was the amount China truly intended to spend.
“Someone, somewhere decided that they were going to be precise,” Hedrick said. “Someone did the math and added it up. And it ended up at $83.7.”
Thrasher, the former state Commerce secretary, says the math was done quickly in late 2017, with the “back of a napkin” figure worked out “in a couple of hours,” so the deal could be rolled out weeks later during Trump and Xi’s big reveal.
“The temptation was too great not to sort of announce that deal,” Thrasher said.
The White House declined to comment on its role in assembling the deal or President Trump’s discussions about it with Governor Justice. Shortly after CNBC reached out for comment, Justice and the President spoke by phone, tweeting that they discussed West Virginia’s public schools. Gov. Justice said he and Pres. Trump are “bound at the hip,” and that Trump has done “remarkable work that has been tremendously beneficial for WV!”
The U.S. Department of Commerce, which arranged the deals and the delegations, says it is still working on the agreement but acknowledged its outcome is unclear.
“Work on this particular deal continues to this day. The initial announcement for this trade mission showed that it was a Memorandum of Understanding, which can signify that the agreement is early in the process,” a spokesperson for the department tells CNBC.
The deal signed was a “memorandum of understanding” involving China Energy, the state of West Virginia and West Virginia University. It’s not legally binding. And the state’s residents only know as much about the investment as a handful of principals are willing to tell them.
China Energy Investment Corp. is no more forthcoming. It declined to provide any executives to discuss the deal or information about its progress, although it did provide the following statement to CNBC: “CEIC’s project in West Virginia is currently progressing as planned. However, because this stage of work involves business secrets, it is not suitable for media interviews.”
Appalachian Mountain Advocates, a nonprofit public interest law and policy organization, sued West Virginia University after it declined a November 2017 Freedom of Information Act request to release the deal documents, a list of projects under consideration, and any correspondence related to China.
A West Virginia circuit court denied the request, saying the document trove could contain “proprietary trade secrets” and is “protected by the economic development privilege.” Judge Russell M. Clawges Jr. found the request to be “unduly burdensome.”
Appalachian Mountain Advocates declined to comment for this story, citing the ongoing litigation. The case is currently being appealed.
Sen. Joe Manchin, the Democratic former governor and West Virginia’s current senior U.S. senator, has hosted delegations from China Energy but still hasn’t been able to obtain adequate information about the deal.
“To say you’re going to make an investment and not tell us what it is going to be about was absolutely wrong,” Manchin told CNBC outside a hearing in Washington. “I never thought it would come to maturity — I really didn’t — and I never did see anything concrete.”
Holding out hope
Not everyone shares Manchin’s skepticism. Capito, his Republican colleague in the Senate, said West Virginia and China Energy are in a “holding pattern” until the U.S. and China resolve their trade issues. Justice, who switched from Democrat to Republican after being elected governor, said a resolution at the national level could give China Energy a “green light” to move forward — and that other nations, including energy-rich Qatar, have expressed interest in the meantime.
Thrasher, who is running to unseat Justice as governor, believes, perhaps unsurprisingly, a gubernatorial change could breathe new life into the deal.
McKinley says neither the value of the raw materials underneath the state nor China’s need for them has changed.
“I’ve met with them in Beijing. I’ve met them in Shanghai. We’ve had meetings in Morgantown,” McKinley says. “They’re still interested.”
China appears to be keeping its options open. Even as the trade disputes simmered, two dozen CEIC officials traveled to Morgantown in late 2018 for an executive education program at West Virginia University. A spokesperson for the school said “the lectures were given by members of the WVU faculty, and industry experts using open-source materials.” Topics covered in the course included U.S. permitting processes, midstream and downstream gas liquids trading, and transportation.
“Delegations have come and come, so we’re very appreciative of that and everything,” Justice told CNBC. But he says they haven’t been back since late 2018, and the only revenue they’ve brought to the state is from tourism.
The deal’s stagnation is a disappointment for West Virginia. But as a microcosm of the broader deal Trump is trying to negotiate with Chinese President Xi Jinping, it’s a cautionary tale.
The current deal is structured as a series of memoranda of understanding that will cover separate topics, all governed by the negotiated enforcement mechanism. Asked by a reporter in January how long these particular memoranda would be in effect, Trump publicly disagreed with his top trade official to say he hoped the two countries’ eventual deal would be more ironclad.
“I don’t like MOUs because they don’t mean anything,” Trump said at one point during the lengthy back-and-forth with U.S. Trade Representative Robert Lighthizer, one of the leading negotiators with China. “A memorandum of understanding is exactly that: It’s a memorandum of what our understanding is, … how long will it take to put that into a final, binding contract?”
In his State of the State address just months after the West Virginia deal was announced, Justice told constituents the deal would happen because of two “Trump cards”: Trump’s desire to cut the U.S. trade deficit, and his desire to help the state.
“And I’ll promise you — President Trump and I are friends,” Justice told the crowd at the West Virginia state house in Charleston. “And President Trump doesn’t want me calling him, saying, ‘Donald, why isn’t it happening?’”
CNBC’s Stephanie Dhue, Eunice Yoon and Erica Wright contributed reporting.
West Virginia CEO Promotes Own Self Interests in Trade Mission to China. This article was produced in partnership with the Charleston Gazette-Mail, which is a member of the ProPublica Local Reporting Network. Last November, President Donald Trump and Chinese President Xi Jinping looked on in Beijing as officials from the state of West Virginia and a Chinese energy company signed what was hailed as a landmark deal for the state.
Under the deal, China Energy Investment Corporation would invest more than $80 billion over the next 20 years in West Virginia’s natural gas industry.
West Virginia Gov. Jim Justice and other state leaders have been banking on the China deal, predicting it would create tens of thousands of additional jobs in the state. It was also described as a victory for Trump, the largest in a series of Chinese investments in the U.S. that totaled $250 billion.
But on Friday, Justice revealed that an ethical cloud has appeared over the China deal: At least one member of the state’s trade delegation — a gas industry executive — was also working to help his private company on the trip.
Brian Abraham, the governor’s general counsel, said the state was “using someone who probably shouldn’t have been involved in the negotiations” as part of its trade delegation.
“People that were there in China maybe representing their own special interests, we didn’t think was right,” the governor added.
West Virginia officials are eager to see the fruits of the China Energy investment, as a cornerstone to the natural gas industry’s continued growth in the state. But along the way, some lawmakers and watchdogs are questioning whether the state is putting the industry’s interests ahead of public concerns in attempting to broaden the state’s economic base. This year, ProPublica is partnering with The Charleston Gazette-Mail to examine those issues.
During a press conference Friday, neither Justice nor Abraham would name the individual or his company. In an interview, Abraham later confirmed that the individual was Steven B. Hedrick, who is CEO of Appalachia Development Group LLC. and also CEO of the Mid-Atlantic Technology, Research and Innovation Center, or MATRIC, a non-profit that partners with various industries on research and development efforts.
Appalachia Development Group has been seeking a loan guarantee from the U.S. Department of Energy as part of an effort to build a natural gas “storage hub” for various natural gas liquid byproducts that can be used in manufacturing.
Abraham said the state Commerce Department paid for Hedrick’s travel for the China negotiations because it considered him, effectively, an acting state official, part of a special Commerce Department program in which certain executives are “loaned” to the state.
The governor’s office, though, discovered later that Hedrick had not joined the program and when asked to do so after the trip, he declined, Abraham said. Had he joined the program, Hedrick would have been required to sign an agreement to abide by the state ethics law’s prohibition on using public office for private gain.
“Why is this person behind the curtain at Commerce if they’re an individual on the outside?” Abraham said. “That created an ethical dilemma.”
Also, Abraham cited one incident in which state officials were later told Hedrick asked China Energy officials to specifically target some of their investment toward his company’s natural gas storage hub. Abraham said that, during one trip, Hedrick stayed behind an extra day and pitched his project to China Energy after others from the state had left.
Abraham said that Hedrick was asked to repay the state $23,000 in travel expenses, and that the repayment had been made.
A spokeswoman for Hedrick said he was not available for comment, but she issued a short statement via email that said Hedrick was “grateful to respond to the request of the state of West Virginia to support the Commerce Department’s mission to attract business to the state.”
The statement said that MATRIC “promptly paid any expenses invoiced by the state.”
Though officials signed a memorandum of understanding in China, the state has refused to release the text of the agreement and few details have been made public. Both the China deal and the natural gas storage hub are considered by many state officials as key and related economic development projects for West Virginia’s future.
The state’s natural gas industry has already greatly expanded, and backers of the China deal say it will provide huge amounts of capital that could fund processing plants, pipelines and other facilities that will turn natural gas byproducts into crucial ingredients for a wide variety of plastics manufacturers. These kinds of “downstream” developments will allow West Virginia to capture far more jobs and economic growth than just drilling for gas and shipping it out of state.
The revelations about the China deal came just one day after Justice asked for and received the resignation of state Commerce Secretary Woody Thrasher, whose agency bungled the state’s implementation of a federally funded flood-relief program.
Thrasher was the top state official who traveled to China last November as part of the trade delegation.
Justice said Friday that discussions toward realizing the Chinese natural gas investments are ongoing, and repeated his earlier statements that the deal “came into being” because of his personal friendship with Trump.
The Charleston Gazette-Mail and ProPublica want to tell the story of the changing landscape in West Virginia, and how coal and natural gas are impacting it. West Virginians: Tell us how your community is changing. Call or text us at 347-244-2134.
Ken Ward Jr. covers the environment, workplace safety and energy, with a focus on coal and natural gas for the Charleston Gazette-Mail.
US On Track to Become Net Energy Exporter with Crude Oil. U.S. crude oil exports reached a new all-time high of 3.3 million barrels per day (mb/d) in June 2019, a 1.1 mb/d year-over-year increase, according to the latest Monthly Statistical Report released today by the American Petroleum Institute (API). This latest milestone came as the U.S. continued to sustain world-leading crude oil production of 12.2 mb/d, including 5.0 mb/d in West Texas’ Permian Basin. Increasing U.S. crude oil exports are a net positive for American consumers who have benefited from significant declines in energy expenditures since the rise of the shale revolution.
Other highlights from the June 2019 Monthly Statistical Report include:
-U.S. petroleum demand reached its highest level for June since 2005;
-Domestic and international crude oil prices decreased despite geopolitical tensions in the Strait of Hormuz and tropical activity in the Gulf of Mexico;
-Refinery inputs – the 2nd highest on record for June – drove petroleum inventories above the 5-year average; and
-U.S. petroleum net imports fell to 1.3 mb/d in June from 2.9 mb/d in June 2018.
“The U.S. appears to be making substantive progress towards becoming a net energy exporter in 2020, as projected by the EIA, with production continuing to sustain its upward climb despite oil prices having declined 10% between May and June,” said API Chief Economist Dean Foreman. “This trend has been driven in part by increasingly low breakeven prices, strong productivity gains in key production regions, and the incremental additions of new pipeline infrastructure needed to bring these resources to market.”
“American households and businesses are among the first to benefit from rising global demand for U.S. energy, which helps support the creation of good-paying jobs, puts downward pressure on domestic energy prices, and boosts U.S. energy security.”
API is the only national trade association representing all facets of the natural gas and oil industry, which supports 10.3 million U.S. jobs and nearly 8 percent of the U.S. economy. API’s more than 600 members include large integrated companies, as well as exploration and production, refining, marketing, pipeline, marine businesses, and service and supply firms. They provide most of the nation’s energy and are backed by a growing grassroots movement of more than 47 million Americans. API was formed in 1919 as a standards-setting organization. In its first 100 years, API has developed more than 700 standards to enhance operational and environmental safety, efficiency and sustainability.
Braskem Cracker Plant Site Is Definitely For Sale. Last week, I reported the rumor. Well, the rumor has been verified. The interest in the site is very high. I have heard up to seven (7) chemical companies are showing interest. The sites for cracker plants in the U.S. are declining.
Braskem is actively trying to sell the property. Supposedly, the company is reaching to chemicals companies to see if can generate greater interest in the site.
Toby Rice Has Good Start. The U.S.’s largest natural gas producer this morning reported second-quarter net income jumped more than 700% from a year ago, Kallanish Energy reports.
In the first financial release under newly seated CEO Toby Z. Rice – even though he did not take over the independent producer until 10 days past the end of the second quarter – EQT said quarterly profit totaled $125.57 million or 49 cents a diluted share, compared to profit of $17.81 million, or 7 cents a share, in the year-ago quarter.
Revenue jumped to $1.31 billion, from $950.65 million in 2018’s second quarter.
As expected, Rice did not focus on the past – the quarter prior to his seven board nominees and five EQT-nominated/Rice approved board nominees being seated and naming him CEO.
“We’ve spent our first two weeks (since July 10) assessing the entire EQT organization, and I’m extremely pleased to report that the Rice team had accurately diagnosed the issues that have long prevented the company from realizing its full potential,” Rice said.
In the quarter, EQT reported income from continuing operations of $126 million, or 49 cents per diluted share, compared to a year-ago loss of $77 million, or 29 cents per diluted share.
The increase was primarily attributable to a gain on derivatives not designated as hedges in 2019 compared to a loss in the second quarter 2018, partly offset by increased income tax expense, the Pittsburgh-based company said.
Adjusted net income from continuing operations, which excludes impairment charges, non-cash derivatives and other items impacting comparability between periods, was $12 million lower than the same quarter last year.
Compared to the same quarter last year, the average realized price was 8% lower, at $2.59 per thousand cubic feet-equivalent (Mcfe), primarily due to lower liquids sales and Btu uplift as a result of the company’s divestitures of its Permian and Huron assets in 2018, and lower Nymex net of hedging.
Total sales for the quarter were 370.11 billion cubic feet-equivalent, up from 362.54 Bcfe one year ago.
Halliburton Making Cuts. Halliburton rolls out plan adapting to continued hydraulic fracturing slump. Houston oil field services company Halliburton is cutting jobs, storing hydraulic fracturing equipment and focusing on higher margin businesses as it contends with fracking slump that pummeled its earnings in the second quarter.
Good News for FERC. D.C. Circuit won’t revisit FERC climate battle. An appeals court will not reopen a landmark lawsuit involving the Federal Energy Regulatory Commission’s policy on analyzing indirect greenhouse gas emissions from pipelines and related projects. The U.S. Court of Appeals for the District of Columbia Circuit yesterday shot down an environmental group’s plea for a full-court rehearing of their fight against Dominion Energy Transmission Inc.’s New Market Project and their broader challenge of FERC’s change of course on climate analysis under the National Environmental Policy Act.
China to Become Biggest LNG Importer by 2022: WoodMac. ` Japan, which is at present the world’s biggest LNG importer, could lose that spot to China as early as 2022, Wood Mackenzie said in a report July 23. By then, LNG imports in Japan are expected to decline 12% to 72.8mn metric tons/year compared to 2018, while China’s import volume rises 37.5% to 74.1mn mt/yr.
Permian Pipeline Ahead of Schedule. Permian Basin-to-Gulf pipeline ahead of schedule could be operational by September. The $1.75 billion pipeline that will pump up to 2 billion cubic feet of natural gas a day to the Coastal Bend from the energy-rich Permian Basin is running ahead of schedule and could be operational by mid-September, the project developer says. “The pipe is in the ground, there is still commissioning work going on the compressor and meter stations,” Steve Kean, CEO of the Houston pipeline operator Kinder Morgan told investors in a conference call last week. “But our expectation is for a slightly early in-service date. Ken Medlock, director of an energy-studies program at Rice University in Houston, says an assessment Tuesday, Nov. 15, 2016 by the U.S. Geological Survey that the Wolfcamp Shale in the Midland-Odessa region could yield 20 billion barrels of oil is another sign that “the revival of the Permian Basin is going to last a couple of decades.” (Photo: Courtney Sacco, AP) The pipeline, called the Gulf Coast Express, is part of a twin project by Kinder Morgan to send natural gas across vast expanses of Texas to meet growing energy demands from East Texas to Mexico.
Terminals Will Continue to Be a Problem for Permian. Growth in the booming Permian Basin has slowed this year and that trend will continue because of ongoing pipeline and export terminal shortages for the next year or so. Although there’s a race to build both thousands of miles of pipelines from West Texas to the Gulf Coast and massive new export terminals both on and offshore, the temporary shortages will lead to greater stops and starts and more pollution, said Eugene Kim, research director at Wood Mackenzie. A lack of natural gas pipelines, in particular, is slowing oil production growth as well because they all come out of the ground together and need to be monetized. Because gas prices are muted to begin with, the lack of pipelines is leading to more negative pricing situations where producers have to pay to have the gas moved out or they simply burn it off through a process called flaring that increases air pollution.
Long Horizontal Well in the Permian. Drilling of the longest horizontal oil and gas well in the history of the Permian Basin has been completed as booming oil production in the region continues to center around shale in southeast New Mexico and West Texas. The Fort Worth, Texas-based Basic Energy Services recently announced the well was completed in the Wolfcamp, The Carlsbad Current-Argus reports. Wolfcamp is shale of the Delaware Basin, which sits below most of New Mexico’s Eddy County and the southern half of the state’s Lea County. Records show the well also encompasses portions of Culberson, Reeves and Loving counties in Texas. The job was completed for Houston-based Surge Energy, and frac plugs were drilled out to around 3.4 miles (5.4 kilometers).
Second Half of the Year Will Be Challenging. America’s biggest owner of drilling rigs fell the most in seven months after the chief of Helmerich & Payne said he called the bottom too soon. Three months ago, when Helmerich had 220 of its rigs hired out, CEO John Lindsay told investors the second quarter would be the nadir for his fleet. But after the number of Helmerich rigs at work shrank to 214 a few weeks ago, Lindsay says his earlier projection was “premature.” “The full effect of the industry’s emphasis on disciplined capital spending continues to reverberate through the oil field services sector,” he said in a Wednesday statement. “We are reluctant to predict another bottom and see further softening during our fourth fiscal quarter as our guidance would indicate.” The hired hands of the shale patch who drill and frac wells are suffering from a slowdown in North American spending brought on by investor demands for higher returns. The U.S. oil rig count has fallen 11% this year, according to Baker Hughes.
NatGas Groups Support EHS. In a letter sent to Gov. Tom Wolf Tuesday, the Associated Petroleum Industries of Pa., Marcellus Shale Coalition, and Pa. Independent Oil & Gas Association presented science-based evidence that the groups said reflect the oil and natural gas industry’s commitment to preserving the environment, public health, and safety of Pennsylvania communities. “We constantly strive to improve operations, become more efficient, and deploy the latest technology that allows us to continue safely unlocking more of America’s natural gas that is demonstrably improving our environment and the quality of life,” the letter stated. “We have no higher responsibility than the protection and improvement of our environment and the health and safety of all Pennsylvanians.” The organizations laid out several detailed reports and statistics that represent state and federal findings on the safety of Pennsylvania’s natural gas industry.
PA Dominates NY again. Can New York keep the lights on while ignoring gas from the Marcellus Shale? Opinion. Two neighboring northeast states, each with immense amounts of Marcellus Shale natural gas deposits, will provide the test case on how we use energy in the next decade. Pennsylvania, home to the lion’s share of the Marcellus heritage, welcomed the natural gas industry. In less than a decade, Pennsylvania has risen from a non-entity in energy production to the nation’s second largest producer of natural gas. Just by itself, Pennsylvania alone is a world power in energy generation. To its north, New York has chosen the opposite path. While not as blessed as Pennsylvania in its shale bounty, New York still possesses large amounts of shale gas that could be tapped, were the state willing to do so. Most decidedly, it is not.
PA Permits July 18 to July 25, 2019
County Township E&P Companies
- Greene Green Greylock Prod.
OH Permits for July 20, 2019
County Township E&P Companies
- Jefferson Knox EAP Ohio LLC
- Jefferson Knox EAP Ohio LLC
- Jefferson Knox EAP Ohio LLC
Joe Barone moc.s1571516772eirot1571516772cerid1571516772elahs1571516772@enor1571516772abj1571516772 610.764.1232