Facts & Rumors # 370
February 29, 2020
Shale Directories Conferences
8th Annual Utica Midstream
March 19, 2020
North Canton, OH
8th Annual Upstream PA 2020
April 16, 2020
State College, PA
4th Annual Appalachian Storage Hub Conference
June 4, 2020
Hilton Garden Inn
Southpointe, Canonsburg, PA
8th Annual Utica Downstream
October 15, 2020
North Canton, OH
8th Annual Midstream PA 2020
November 12, 2020
State College, PA
2nd Annual Appalachian Basin Real Estate Conference
December 10, 2020
Latest facts and a rumor from the Marcellus, Utica, and Permian, Eagle Ford Plays
PPTDLM Cracker’s FID Mid-Year. PTT Global Chemical is on track to make a final investment decision for a long-discussed ethane cracker plant in southeastern Ohio by mid-2020, Kallanish Energy reports.
That news came earlier this week in an article in the Nikkei Asian Review, quoting chief executive Kongkrapan Intarajang. The article was posted on the project website by PTT Global Chemical.
“The petrochemical complex in the U.S. will be our second home base,” Kongkapan said. “We chose to invest in the U.S. because we can gain cheap raw material from shale gas near our location while we have a big consumer base there. This is our biggest investment due to happen this year for sustainable business development,” he said.
The company has earmarked $5 billion in capital spending for the Ohio petrochemical complex and acquisitions – with 80% going to the Ohio cracker in Belmont County.
Cracker construction is expected to begin immediately after a final investment decision is announced, he told the media outlet. The complex would be completed by late 2025 with commercial operations beginning in early 2026.
The Asian Review said the company has shareholder approval to issue $500 million of debt and will seek approval in April for an offering of $4.5 billion. It also has $945 million in cash on hand.
The company has a very low debt-to-equity ratio, allowing it to borrow a significant amount of money for the Ohio project, the media outlet reported.
The $6 billion project has languished for months with no final investment decision by PTT and its partner, South Korea-based Daelim Chemical USA.
The cracker would be located on the 500-acre site of an old coal-fired power plant that has been razed. PTT had first proposed the project in 2015.
The plant, if built, annually produce of 1.5 million tons ethylene and other materials from ethane produced by shale drilling. The plant would use six ethane cracking furnaces and manufacture ethylene, high-quality polyethylene and linear low-density polyethylene.
PTT Global Chemical America is a subsidiary of PTT Global Chemical, Thailand’s largest integrated petrochemical company.
Royal Dutch Shell is building a similar ethane cracker in Beaver County, northwest of Pittsburgh, Pennsylvania.
Kallanish Energy’s Coronavirus Report. The coronavirus outbreak seems to be moving towards some sorts of containment in China, but the epidemic is gaining steam worldwide and could be a matter of time before it becomes a pandemic. Although the fatality rate of the virus is smaller than the flu, its unknown nature is driving uncertainty and fear in markets across the globe. And the oil and gas industry aren’t immune to it.
Whether the Covid-19 has and will continue to slash crude oil and gas demand, or whether sentiment is pushing commodities prices to historic lows, you need to be in the know. Here’s our latest coverage:
- Upstream’s biggest coronavirus fear is prices, not project delays. The greatest impact of the outbreak is expected on oil prices, and consequently, companies’ cash flow and dividends. So far, the threat from potential project delays is “a mere scratch on the surface of global supply,” said Wood Mackenzie.
- Crude falls for 5th day on demand concerns. Crude oil prices fell for a fifth straight trading day last Thursday, to their lowest point in 13 months, as a growing number of new coronavirus cases outside China fueled fears of a pandemic, which could slow the global economy and lower crude demand. Brent crude was down $1.47, or 2.8%, at $51.96 per barrel, while WTI fell $1.35, or 2.7%, to trade at $47.38/Bbl.
- Coronavirus outside China obstructs oil market recovery. Signs of worsening outbreaks in South Korea, Italy and Iran are getting in the way of recovery. “These are not small demand markets and, together with China, nearly one in five global demand barrels is located in countries facing public health emergencies,” said IHS Markit.
- Chevron’s London employees continue working from home. The oil major asked staff in Canary Wharf to work remotely to reduce exposure to the virus, after one employee has shown flu-like symptoms and is being tested. Italy’s Saipem has also minimized staff in offices and operations, particularly in northern Italy, where infection is booming.
- Coronavirus will meaningfully impact oil demand growth. Dallas Fed economists believe the coronavirus presents a serious risk to demand growth globally as overall China consumes 14% of total global oil demand. As a consequence, U.S. crude oil output growth is expected to decline to roughly 0.4 Mmbpd in 2020. This is also heavily influenced by dramatic pressure for capital discipline.
- Consumers unlikely to feel benefit of lower oil prices: IEA. Covid-19 is set to affect 435,000 Bpd of crude demand in the first quarter, compared to the same period last year, the IEA forecast. This is the first quarterly contraction in more than a decade. For 2020, the demand loss is estimated at 365,000 Bpd – the lowest since 2011.
- Chinese oil demand to fall by 200,000 Bpd in H1: Opec. The estimated loss will result in a 400,000 Bpd retraction in demand globally, the group said.
- Global LNG markets’ struggles intensify with coronavirus. The outbreak couldn’t have happened at a worse time for the global LNG market, amid a weak demand in a mild winter and a supply glut. Spot prices are at historically low levels roughly at $3.15/MmBtu, while long-term contracted prices are at around $8.33/MmBtu.
- Coronavirus slashes global oil demand growth: Rystad. The estimate is a plunge of 25% to 820,000 Bpd due to the virus and its travel restrictions. In a worst-case scenario, Rystad forecast growth could be slashed to 650,000 Bpd in 2020.
Keep an eye out on how this novel coronavirus may impact your business with our daily coverage. More stories are available Kallanish Energy’s website.
$477 Million NatGas Coming to Clinton County, PA. A natural gas synthesis plant that would produce a range of projects is planned in rural western Clinton County at an estimated cost of $477 million.
The development, which has been in the planning stage for 16 months, is an effort of Frontier Natural Resources and a new company, KeyState Agri, both headquartered in Bellefonte.
Many hurdles have been cleared but there are plenty to go about the environmentally friendly project, Perry Babb, who leads the KeyState development team and serves as acting CEO, said Monday.
A natural gas synthesis plant uses the methane in natural gas as a feedstock to produce a range of products used in agriculture, industry, medicines and transportation, he explained.
The majority of carbon dioxide generated in gas synthesis processes is captured and used in making other products, he said.
More than a dozen similar plants have been built across the United States in the last 15 years, he said.
The plant will have up to a 30-acre footprint and be adjacent to Frontier’s liquefied natural gas plant in West Keating Twp., Babb said. It will sit on top of its own 6,000-acre natural gas supply, he said.
State-of-the-art wells will be drilled once a year for 20 years to provide the gas, he said.
Between 150 and 200 jobs are expected to be created when the plant goes into operation, with 600 to 800 needed during construction that is to begin in 2022, he said. Completion is scheduled for late 2024 or early 2025.
In touting the benefits of the synthesis plant, Babb said the urea fertilizer production will provide Pennsylvania agriculture with its own, stable, lower-cost supply.
The urea fertilizer also will be used in diesel exhaust fluid that the Environmental Protection Agency mandates in all diesel trucks, buses and marine vessels to lower nitrous oxides in emissions, he said.
There is no production of urea fertilizer and diesel exhaust fluid in a 13-state Northeast and Mid-Atlantic region, Babb said.
The economic development impact of the project will be profound and widespread especially on towns in the area that once relied on coal, he predicts.
It is projected two or three trucks an hour and six to eight rail cars a day will transport product from the plant, he said.
Plans call for housing built for construction workers to be converted into units for the low-income and elderly, he said. Workforce development programs will be coordinated with area schools and universities, he said.
KeyState will provide land and funding with the Keystone Country Elk Alliance to enhance the wildlife habit for elk by reclaiming some of the old surface mines, he said. Some believe “elk will be grazing next to our fence,” he said.
Although KeyState is local, a veteran team of consultants, engineers, technology providers, major construction companies and investment bankers has been assembled, he said.
Agreements have been signed with industry partners, all headquartered in Pennsylvania, that will purchase and distribute 100 percent of the plant’s proposed capacity, Babb said.
Frontier is an independent oil and natural gas producer with a primary focus on conventional and unconventional resources across the Appalachian Basin.
NatGas Plant Coming to Tunkhannock, PA. The low cost NatGas has attracted one deal to Clinton County, PA. Elis Energy is working on a similar deal for the Tunkhannock, PA area. (RUMOR)
Supreme Court Gives Atlantic Coast Pipeline Positive Indications. Two of the nation’s largest investor-owned utilities with operations in South Carolina received positive signals from the U.S. Supreme Court this week regarding a disputed natural gas pipeline – a development that could wind up having significant Palmetto State implications.
Justices in Washington, D.C. heard oral arguments in the case of the Atlantic Coast Pipeline, a proposed 600-mile energy artery that would bring 1.5 billion cubic feet of natural gas per day from the Ohio Valley area across the Appalachian mountain range to the southeastern United States.
Plagued by environmental concerns, the pipeline has been subjected to numerous delays in recent years. Its two largest shareholders, Virginia-based Dominion Energy and North Carolina-based Duke Energy, have been forced to change the route once already to accommodate the protests of eco-radicals – and a ruling against them by the high court in the latest case would certainly kill the multi-billion-dollar project.
Fortunately for the two utilities, it doesn’t appear as though that is the direction in which the court is going …
Dominion and Duke received reassurances on Monday from the justices, who aggressively questioned environmental attorneys over their view that the pipeline could not cross under the Appalachian Trail.
Chief justice John Roberts expressed concern that such a position would “erect an impermeable barrier” to future energy arteries.
Such a determination would have “enormous consequences,” associate justice Brett Kavanaugh added.
Even one of the court’s liberal justices, Stephen Breyer, seemed to question the eco-radical argument that pipeline could not be constructed at a depth of 700 feet beneath the trail because the federal government owned the land below the surface all the way to the center of the planet.
“If you’re saying it goes down to the center of the earth, then there are all kinds of things some other Congress might do,” Breyer said.
More than fifty pipelines already cross the trail, incidentally.
A 42-inch natural gas pipeline set to run from Harrison County, West Virginia to Robeson County, North Carolina, the Atlantic Coast Pipeline aims to transport gas from the Marcellus Shale – which according to a 2012 report (.pdf) from the U.S. Energy Information Administration (EIA) contained a staggering 141 trillion cubic feet of recoverable natural gas.
Getting that energy to consumers on the east coast is the primary goal of the pipeline.
Dominion Feeling Confident. Developers of the Atlantic Coast pipeline were feeling optimistic after arguments yesterday in a hotly contested battle over a permit for the project to pass beneath the Appalachian Trail. Although the final determination in Atlantic Coast Pipeline LLC v. Cowpasture River Preservation Association will remain unknown until the Supreme Court issues its opinion in the coming months, legal experts said they largely expect the justices to overturn a lower court’s finding that the Forest Service could not authorize the trail crossing. “We are confident that the law and facts are on our side,” Dominion Energy Inc. spokeswoman Ann Nallo said in an emailed statement. The company is the primary stakeholder in the $8 billion Atlantic Coast pipeline, which is slated to carry natural gas between West Virginia and North Carolina. Dominion has said it expects to resume construction on the project later this year after the Supreme Court issues its ruling on the trail crossing and after the government revisits its review of impacts to vulnerable species along the pipeline route. It anticipates completing construction at the end of 2021.
Fighting Back Against Dem Presidential Candidates. In an open letter to 2020 Democratic presidential candidates printed in New York Times on February 24th, 54 executives from the western oil and natural gas industry forcefully pushed back against months of claims that they are corrupt criminals who should be jailed. The following full-page advertisement placed by Western Energy Alliance responds to statements that have gone unchallenged by Sen. Bernie Sanders, Vice President Joe Biden and Sen. Elizabeth Warren by explaining the environmental and life-sustaining benefits of oil and natural gas. Contrary to the anti-oil and natural gas messages candidates are spreading to voters and the media on the campaign trail, the underlying statement from business leaders is that it “would be criminal not to produce oil and natural gas.” They represent companies that develop oil and natural gas across the West. The full-page ad features a young boy studying by lantern light, one of the billion people worldwide who lack access to affordable, reliable electricity. Exports of American natural gas could help him and others suffering from energy poverty raise their standard of living. According to a recent report by the International Energy Agency, the United States again leads the world in reducing greenhouse gas emissions, largely because of increased natural gas electricity generation. In addition to the environmental benefits, abundant supplies of American natural gas have kept home heating prices so low that 11,000 deaths are averted annually during cold weather.
Two Gas-to-Liquids Plants Coming to Jefferson County, OH. A locally organized industrial development company says it will build two state-of-the-art gas- to-liquids plants on a 500-acre parcel in Saline township. Hammondsville-based Orin Holdings said the property is “adjacent to the Ohio River.” “This parcel of land will be slated for industrial development housing two state-of-the art gas to liquids plants in the Ohio Valley,” the company said in a brief notice posted on its website. Jefferson County Port Authority Incentives Manager Evan Scurti Wednesday stressed the project is still in a “very preliminary” stage, but said there’s “great potential.” Prior to posting that notice, Scurti said Orin Holdings had insisted on confidentiality. Maple said if Orin’s plan comes to fruition, “hopefully, it will mean a good piece of job creation in the northern end of the county.” “They have pretty good projections as far as employee (numbers),” he said. “But from what I understand, it might be a few years before it’s (up and running). It’s newer technology.” Maple said it’s “exciting, it’s nice to see somebody building off of oil and gas.” “It is certainly good news,” Jefferson County Commissioner Thomas Graham said this morning. “The gas and oil industry has been big in Jefferson County and this is a sign that this will continue.”
FERC Gives PennEast 2 More Years. The Federal Energy Regulatory Commission has given PennEast Pipeline another two years to complete its stalled natural gas line in Pennsylvania and New Jersey, Kallanish Energy reports.
The project was to have been completed by Jan. 19, 2020, but now the company has until 2022 to complete the pipeline following last week’s action. The pipeline would move 1.1 billion cubic feet per day of natural gas.
The $1.2 billion project is designed to move Marcellus Shale natural gas from Luzerne County, Pennsylvania, to Mercer County, New Jersey. But the 120-mile project has been delayed by legal challenges and opposition from the state of New Jersey.
A federal appeals court previously ruled the company cannot use eminent domain to acquire 44 state-owned parcels in New Jersey. Last September, the U.S. 3rd Circuit Court of Appeals ruled PennEast lacked the legal authority to seize state lands. The company had sought to condemn the public properties for the pipeline. That decision has been appealed to the Supreme Court.
FERC had earlier granted the company eminent domain that can be used to seize land from uncooperative landowners. New Jersey had argued the state-owned properties were open space and should not be used for natural gas. The state argued the 11th Amendment grants states immunity from eminent domain takings by private entities.
The companies behind the pipeline are Spectra Energy Partners, PSEG Power, New Jersey Natural Gas, Elizabethtown Gas and South Jersey Gas. Construction had been expected to begin in late 2019. It would take seven months to build the pipeline.
Judge Backs FERC on Northern Access Pipeline. National Fuel and its subsidiary got a court win earlier this week in their effort to build a natural gas pipeline across parts of Allegany, Cattaraugus and Erie counties. State Supreme Court Justice Daniel J. Furlong, in Buffalo, ruled Tuesday that the Federal Energy Regulatory Commission — not the New York Department of Environmental Conservation — can make the final determination on the Northern Access pipeline, which would bring fracked shale gas from Pennsylvania for export to Canada. The judge’s ruling was reported Wednesday by the Buffalo News.
Chesapeake 4th Qtr. Update. Chesapeake Energy said it intends to cut its 2020 capital spending by about 30%, while maintaining relatively flat oil production and decreasing natural gas production from 2019 to 2020, Kallanish Energy reports.
Overall, the company said it intends to reduce its 2020 overall production by roughly 10%.
The company said it intends to spend $1.3 billion to $1.6 billion on capital spending in 2020. That compares to $2.25 billion spent in 2019 on capital spending, with about 80% being allocated on higher-margin oil opportunities. It spent $487 million in Q4 2019 capital spending, compared to $476 million in Q4 2018.
Net loss for the quarter
In Q4 2019, the company reported a net loss of $346 million, or 18 cents per share, which compares to net income of $576 million, or 57 cents per share, one year earlier.
Adjusting for items typically excluded, the company reported a Q4 2019 adjusted net loss of $60 million, or 4 cents per share, while adjusted EBITDAX was $665 million. One year ago, adjusted net income was $32 million while adjusted EBITDAX was $561 million.
For full-year 2019, Chesapeake reported a net loss of $416 million, or 25 cents per share, compared to net income of $133 million, or 15 cents per share in full-year 2018.
“We are pleased to highlight our strong 2019 operational performance, delivering fourth quarter oil production of 126,000 barrels of oil per day and increasing our oil mix to 26% of total production, the highest percentage in company history,” said president and CEO Doug Lawler, in a statement.
Free cash flow targeted for 2020
The company, he said, is targeting free cash flow in 2020. It also plans to reduce general and administrative expenses by more than 10% in 2020, and is projecting $300 million to $500 million from expected non-core asset sales in 2020, Lawler said.
Chesapeake reported average daily production in 2019 was about 484,000 barrels oil-equivalent (Boe) and consisted of 118,000 barrels of oil, 2.00 billion cubic feet of natural gas, and 33,000 barrels of natural gas liquids. Average daily production in 2018 was roughly 521,000 Boe and consisted of 90,000 Bbls of oil, 2.28 Bcf of natural gas, and 52,000 Bbls of NGL.
Production in Q4 2019 was 477,000 Boe and consisted of 126,000 Bbls of oil, 1.94 Bcf of natural gas, and 29,000 Bbls of NGL. Average daily production in Q4 2018 averaged 464,000 Boe consisting of 87,000 Bbls of oil, 2.01 Bcf of natural gas, and 42,000 Bbls of NGL.
The increase in oil production of 30% in 2019 was primarily driven by the company’s Wild Horse acquisition in Texas. In Q4 2019, the company operated an average 15 gross and 10 net drilling rigs. Those totals were 18 and 11, respectively, one year ago.
In the latest quarter, Chesapeake spud 75 gross and 50 net wells, completed 78 gross and 60 net wells, and connected 89 gross and 65 net wells.
For full-year 2019, the company spud 333 gross and 233 net wells, completed 370 gross and 273 net wells, and connected 375 gross and 273 net wells.
Equitrans & EQM to Merge. Midstreamers Equitrans Midstream (ETRN) and EQM Midstream Partners LP said Thursday they’ve agreed to a share-for-unit merger, in which each outstanding public common unit of EQM would be exchanged for 2.44 shares of ETRN common stock.
The exchange ratio represents a 3% premium based on the volume weighted average price for EQM and ETRN over the 20 days ending Feb. 26, Kallanish Energy reports.
Equitrans Midstream owns a 53.5% limited partner interest in EQM Midstream Partners on an as-converted basis and the entire non-economic general partner interest in EQM. EQM is a limited partnership formed to own, operate, acquire, and develop midstream assets in the Appalachian Basin.
The companies said EQM will become a wholly owned subsidiary of ETRN upon the closing of the merger, and the simplified C-Corp structure is expected to generate a broader investor base, while the increased float is expected to improve trading liquidity.
“We are simplifying our structure to a single C-Corp, as well as acquiring 25.3 million shares of ETRN from EQT. As a single C-Corp entity, Equitrans will have transparent corporate governance, a larger investor base,” said Thomas F. Karam, ETRN chairman and CEO.
After giving effect to the merger and the purchase of 25.3 million ETRN common shares from EQT Corp. (for $52 million in cash, and remaining consideration, which represents $196 million PV10, to be paid through reduced gathering fees in the two years following Mountain Valley Pipeline’s in-service date.
EQT & EQM Midstream Sign Gathering Agreement. Independent producer EQT Corp. and EQM Midstream Partners LP (EQM) said Wednesday they’ve executed a 15-year gas gathering agreement covering Pennsylvania and West Virginia both sides call a win-win deal.
The minimum volume commitment (MVC) between EQT and EQM rises to 3.0 billion cubic feet per day (Bcf/d) from 2 Bcf/d, and incremental MVC increases begin with the completion of the Mountain Valley Pipeline (MVP), Kallanish Energy reports.
The MVP project is a natural gas line system that spans roughly 303 miles from northwestern West Virginia to southern Virginia, and will flow up to 2 billion cubic feet per day (Bcf/d) Marcellus and Utica Shale play gas to the south.
The MVP will be constructed and owned by Mountain Valley Pipeline, LLC, a joint venture of EQM, NextEra Capital Holdings, Con Edison Transmission, WGL Midstream, and RGC Midstream LLC. EQM will operate the pipeline.
Consolidates gathering contracts
The deal consolidates nearly all of EQT’s existing Pennsylvania and West Virginia gathering contracts with EQM into one new consolidated agreement, the partners said.
The new deal will provide EQT with gathering and compression fee relief, effective upon the MVP’s in-service date, currently expected to be Jan. 1, 2021.
Gathering fee relief is estimated to impact cash flow by roughly $125 million, $140 million, and $35 million, in the three years following MVP’s in-service, respectively.
“I am excited to announce that we have executed a mutually beneficial gas gathering agreement with EQM, which significantly improves our EBITDA and leverage outlook for 2021 and beyond,” said EQT president and CEO Toby Rice.
Optimizes Marcellus development
This agreement will enable EQT to optimize the development of our long-lived core Marcellus asset in the most capital-efficient manner, driving value accretion for EQT and its stakeholders.”
Also part of the new pact, EQT dedicated over 100,000 additional acres in West Virginia to EQM and extended its contractual obligations with EQM to 2035.
EQM has also agreed to defer approximately $250 million in current credit assurance posting requirements.
Present value, using 10% discount rate (PV10), of MVC revenue is roughly $2.1 billion higher under the new 15-year gathering pact than under prior MVCs with EQT.
Lower per-unit costs over time
EQT benefits include the ability to optimize combo development, lower per-unit costs over time, and easing of roughly $250 million of letter-of-credit posting requirements.
EQT’s combo development program emphasizes planning wells years in advance to improve midstream constraints and the costs associated with other services.
“We have executed a ‘blend, broaden, and extend’ contract with EQT, which will strengthen our partnership and position both companies for success over the long-term,” Thomas F. Karam, chairman and CEO of ETRN, Equitrans Midstream Corp.
“By simplifying our relationship, EQT can effectively execute their combo-development strategy, which in turn will lead to improved ETRN capital efficiency through better planning and optimized system designs,” said Diana Charletta, Equitrans president and chief operating officer.
EQM and EQT also have agreed to a five-year water services MVC covering Pennsylvania that’s projected to generate $60 million of annual firm water revenue. The water MVC will commence upon MVP’s in-service.
The annual Pennsylvania water MVC revenue is approximately $20 million per year higher than the previously projected annual Pennsylvania water revenue.
Ecopetrol & Occidental to Drill 90 Wells in the Permian. Colombian state-run oil company Ecopetrol expects its joint venture with Occidental Petroleum to drill 90 wells in the Permian Basin this year, Kallanish Energy reports.
Ecopetrol CEO Felipe Bayon Pardo said in an earnings call with analysts Wednesday the Rodeo JV will give the company some 7,000 to 9,000 barrels of crude production this year, production expected to increase over the course of the next few years.
“We will be seeing some 90 wells, 90 wells drilled in that JV this year, 50 of them online, four rigs running. So that’s going very well,” said Pardo.
Ecopetrol’s $1.5 billion investment in the U.S. JV has already translated into an additional 164 million barrels place in the company’s reserves in 2019. The Rodeo Midland Basin JV is 49% owned by Ecopetrol and 51% by Occidental. The partners plan to develop roughly 97,000 acres in the Permian.
In Colombia, Pardo said Ecopetrol is “quite comfortable” with the proposed development of unconventional resources. He said the discussions around this type of exploration has been ongoing for over 10 years, and a lot of progress has happened.
Colombia’s high court has banned the “full on” development of unconventionals using hydraulic fracturing, but allowed so-called pilot projects to go ahead. Ecopetrol said it will apply for necessary permits in a paced manner.
“I think what we’ve said, and I’ll just reinforce that here, is first, we don’t need to do the unconventional development quickly. We need to do it well,” Pardo told analysts. “And we know how to do it in a way in which we’re transparently interfacing with the communities, with the governments, with the unions, with academia, with everybody else. And so that’s what we’ll do. And we’re committing to do those pilot projects when the regulation and the legislation is ready, and the government is working on that.”
EPIC Flowing Crude from the Permian to Corpus Christi. EPIC Crude Holdings LP said earlier this week it’s now moving crude oil on its 30-inch crude pipeline, which originates in Crane, Texas and the Permian Basin, to Robstown, Texas, just west of Corpus Christi, Kallanish Energy reports.
With the 30-inch line now in service, EPIC has ceased interim service deliveries on its 24-inch EPIC Y-Grade pipeline, and is returning the smaller line to flowing Y-Grade.
Initial capacity on the crude line is roughly 600,000 barrels per day of crude, with full service to begin April 1. The line currently has 2.3 million barrels (Mmbbl) of operational storage, which will increase to 5.4 Mmbbl by April 1.
Remaining construction of the project includes installing an additional 2.1 Mmbbl of operational storage, bringing total storage to 7.5 Mmbbl, as well as completing its East Dock in Corpus Christi, expected to be operational in the second half of 2020. The dock will be able to handle Suezmax-class vessels.
“EPIC’s ability to provide crude oil transport out of the Permian Basin and into the Corpus Christi market highlights the strategic value of our assets,” said Phil Mezey, CEO of EPIC.
In other EPIC news, the company has closed on a $100 million incremental upsizing of its existing Term Loan B, bringing the loan to $1.1 billion, and closed on a new, $75 million Term Loan C.
Proceeds from both loans will fund additional capital expenditures associated with the crude line and EPIC’s terminals and docks.
EPIC Crude is backed by funds managed by the Private Equity Group of Ares Management, as well as additional equity ownership by Noble Midstream Partners, Altus Midstream, and Rattler Midstream.
Chevron Layoffs Start April 6. April 6 is the date oil supermajor Chevron’s Chevron Appalachia unit will begin layoffs at its regional headquarters located west of Pittsburgh, Pennsylvania, Kallanish Energy learns.
Layoffs will total 288 employees, will begin April 6 and continue through Dec. 31, according to a WARN notice filed with the Pennsylvania Department of Labor & Industry.
The Worker Adjustment and Retraining Notification (WARN) Act is federal legislation that mandates employers to provide notice 60 days in advance of a business closing or a mass layoff.
The layoffs are permanent, as the office is being closed, according to the notice. Chevron also has a small office in Fayette County, south of Pittsburgh.
The formal announcement is a result of Chevron’s previously announced exit from the Appalachian Basin and sale of its assets in Western Pennsylvania.
The company announced in December it was divesting its natural gas wells and drilling operations in Pennsylvania, West Virginia and Ohio. In the fourth quarter Chevron took a $6.5 billion noncash charge in writing off the value of assets, due to the continuing decline of natural gas prices.
Lone Star Inks Eagle Ford Shale Deal. Independent producer Lonestar Resources US Inc. said it’s signed a Joint Development Agreement (JDA) in Gonzales County, west of Houston, Texas, with a larger, unnamed producer in the Eagle Ford Shale, Kallanish Energy reports.
The JDA encompasses an Area of Mutual Interest (AMI) totaling roughly 15,000 acres. The agreement calls for Lonestar to operate three or four Eagle Ford Shale wells annually on behalf of the two companies through 2022, which is intended to hold-by-production approximately 6,000 gross acres within the AMI.
The agreement gives Lonestar’s new partner the option to participate in each well with a 50% working interest or to participate via a carried working interest that ranges from roughly 9-17%, depending on location.
The JDA, which requires lower levels of annual gross drilling activity than Lonestar has done on its own since entering Gonzales County in 2016, provides benefits for both parties.
For Lonestar, the agreement expands/consolidates the leasehold footprint associated with its Hawkeye area, Lonestar’s oiliest asset.
Collectively, the JDA allows for the two companies to consolidate their respective positions into a single development plan which should maximize lateral lengths, optimize economic returns, and hold-by-production the combined leasehold with the fewest number of wells.
Further, the JDA will allow Lonestar to increase its inventory of gross drilling locations by roughly 50% in the Hawkeye area while delivering average lateral lengths of over 9,500 feet, with many locations exceeding 12,000 feet.
Encino Energy Partners with Habitat for Humanity East Central Ohio. Encino Energy and Habitat for Humanity East Central Ohio have partnered to help Bryant and Gina Mowry, and their children James (8), Sophia (7), and Bennett (7.5 months) build their family’s future home in Mingo Junction. Encino Energy and Williams Energy financially contributed to this home project while employees from both companies have volunteered their time to work side-by-side with the Mowry family. Encino has also donated two floors of office furniture and equipment from their Louisville, Ohio headquarters to ReStore, Habitat’s nonprofit thrift store. These office items were sold to the public at ReStore, with proceeds helping Habitat for Humanity build homes with additional families. “While Habitat and Encino make continual investments across the same communities, we’re truly grateful to have the opportunity to make a lasting impact by working together,” said Beth Lechner, Executive Director of Habitat for Humanity East Central Ohio. “By doing this good work above ground, Encino Energy helps Habitat build homes, hope, and community, while Bryant and Gina build the foundation for their family’s future.” Sharing the same geographic footprint, Encino Energy and Habitat for Humanity East Central Ohio anticipate additional opportunities to partner together in the future.
Through the Habitat for Humanity homeownership program, the Mowry family will invest hundreds of hours of “sweat equity” by building their home and the homes of other Habitat families. They will also complete courses on financial literacy, home maintenance, and personal development. When the home is complete, they will purchase it through Habitat for Humanity with an affordable 0% interest mortgage. “Community partnership is a major priority for Encino and the relationship with Habitat for Humanity East Central Ohio demonstrates our ongoing commitment to invest our time and financial resources toward meaningful projects, “said Jackie Stewart, Director External Affairs for Encino Energy. “We look forward to continuing to work together to lift up eastern and southeastern Ohio.”
PA Permits February 20, to February 27, 2020
County Township E&P Companies
- No New Permits
OH Permits February 22, 2020
County Township E&P Companies
- Harrison Cadiz EAP OHIO LLC
- Harrison Cadiz EAP OHIO LLC
- Harrison Cadiz EAP OHIO LLC
- Jefferson Salem EAP OHIO LLC
- Jefferson Springfield EAP OHIO LLC
- Jefferson Springfield EAP OHIO LLC
- Jefferson Springfield EAP OHIO LLC
- Jefferson Springfield EAP OHIO LLC