Utica Wells Producing 420% More Today than Just 3 Years Ago

Naysayers and peak oil & gas theorists always ignore the 800 pound gorilla in the room when they make their pessimistic predictions that “any day now” oil and gas production from shale will decline into oblivion. The 800 pound gorilla? Shale drillers keep getting better at what they do. Technology is changing. Techniques change. And drillers get more out of the holes they drill today than they did last year, and the year before that, and the year before that. Across all American shale plays, wells in January 2017 produced an average of three times more gas and oil than they did in January 2014. Let us put that another way: Today’s wells are producing 300% more than wells drilled just three years ago! Here’s another startling fact: the shale play with the most improvement in production is the Utica. Wells in the Utica are producing, on average, 4.2 times (420%) more today than they did three years ago…
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PA Gov Wolf’s 6.5% Severance Tax Proposal a Hot, Stinking Mess

As politicians and analysts begin to dig into one of the centerpieces of Pennsylvania Gov. Tom Wolf’s proposed 2017 budget–a 6.5% severance tax on Marcellus/Utica drilling–new details begin to emerge. Like this: Most lease contracts contain a provision that says any taxes paid, including severance taxes, are a post-production expense and deducted from landowner royalties. So if Wolf’s severance tax were to pass, the people paying it will be landowners. That’s $200 million or so coming out of farmers’ pockets. Wolf & co. knew that situation would not earn them any votes, so they include a provision in the budget disallowing severance taxes to be deducted from royalties. Overturning existing contracts is illegal and sure to be challenged in court, but if somehow that provision gets upheld and the tax passes, it’s easy to predict Marcellus drilling will mostly cease. Wolf’s proposed 6.5% severance tax would put the state at, or near the top of, all states in severance tax rates. Some of the biggest drillers in the state have recently leased acreage in other plays and have no problem with shutting down new drilling in the Marcellus, moving on to other plays where the economics make more sense. Let’s assume the tax passes and drillers sue to remove the clause about severance tax deductions not being allowed, and win. Landowners then fund the severance tax out of their pockets (the drillers are the “bad guys” and Wolf says “don’t look at me”). Now let’s assume the tax passes and drillers sue to remove the clause about severance tax deductions and lose. Drillers simply walk away from PA. Either way, the Wolf severance tax proposal is a hot, stinking mess…
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One Year Later PA Pipeline Task Force Report Gathers Dust on Shelf

This is one of those stories that illustrates so beautifully how liberals always operate: all talk, no action. Form a committee, say lots of things, bluster, argue, look like you’re addressing a really important issue–and then do nothing. In this case that’s a good thing! We’re talking about the pomp and circumstance surrounding then newly-minted Pennsylvania Gov. Tom Wolf and his so-called Pipeline Infrastructure Task Force. In May 2015, Wolf and his underling Dept. of Environmental Protection (DEP) Secretary John Quigley (who has since been fired) created a “Task Force on Pipeline Infrastructure Development” (see Disaster on the Horizon: PA Gov Wolf Creates Pipeline Task Force). The purpose of the group was “to identify best practices for pipeline siting, permitting and safety.” That is, to hamstring the process of building new gathering pipelines to shale wells. We won’t recount all of the twists and turns–of how the Task Force was packed with government employees beholden to Wolf, etc. Along the way antis tried to protest and derail the meetings held by the Task Force (see PA DEP Sec. Quigley Calls Pipeline Protesters “Badly Misinformed”). In February 2016, Quigley released the Task Force’s Final Report, all 658 pages of it with 184 recommendations (see PA Pipeline Task Force Report: 658 Pages, 184 “Recommendations”). Around the same time, MDN noted “Looks like we worried for nothing,” and that a Task Force member predicted nothing would come from the recommendations (see PA Pipeline Task Force Wraps Up – Did We Worry for Nothing?). It’s now a year later–and the libs at StateImpact are calling attention to the fact that precisely nothing has happened–the report sits on a shelf gathering dust…
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Fake Research Study from Duke U on O&G Spills in PA, Elsewhere

For some reason Duke University seems to have a fascination with the Marcellus Shale and seeks to denigrate it with fake research reports. Of course there’s big money in research grants, which is why Duke keeps issuing bogus studies. In fact, last year Duke was exposed for doctoring research data in a scheme to grab $200 million in grant money (see Duke University Exposed for Scientific Grant Fraud). Being exposed as fraudsters hasn’t slowed them down. Yesterday another faux research “study” was published analyzing oil and gas-related spills in four states, one of them Pennsylvania. It’s not until you dig into the report that you find the largest spill recorded, according to the research, is fresh water! Yes, water without chemicals of any kind. Water that you can put in a glass and drink. This sham study jumps up and down and screams to call attention–without pointing out the fact that some of the biggest spills are simple fresh water. And of the spills that happened with water “laced” with chemicals, or flowback, etc., the “vast majority of spills are contained on the well pad and never impact the environment.” Here’s the latest on the waste emanating from Duke University…
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Chesapeake Energy Turns Corner After Wild Ride in 2016

wild ride

Last year was a wild ride for Chesapeake Energy, with respect to the company’s finances. At one point early in the year, betting money said Chessy would have to declare bankruptcy (see Chesapeake Energy: We’re Not Filing for Bankruptcy…Yet). However, as the year wore on, Chesapeake CEO Doug “the ax” Lawler not only continued selling assets here and there as he could, he also figured out how to refinance major portions of the company’s debt–pushing out repayment into the far future, giving the company breathing room. Although Chesapeake doesn’t release it’s fourth quarter and full year 2016 numbers until later this week, one analyst predicts the company is now out of the woods and once again on firm footing. Unfortunately (for the northeast) Chesapeake’s new direction involves less drilling in the Marcellus/Utica and more drilling elsewhere…
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Crestwood Building Rail-to-Truck NGL Terminal in Orange County, NY

Crestwood concept drawing for rail terminal in Orange County, NY – click for larger version

As MDN was reading through the latest quarterly/full year 2016 update for Crestwood Equity Partners (formerly known as Crestwood Midstream), we discovered something fairly innocuous, but in our book, a big deal. Crestwood said the company is “developing a greenfield rail-to-truck NGL terminal in Montgomery, NY that will increase propane supply reliability across the Northeast markets. The terminal, which is expected to be placed into service in the summer of 2017, will be supported by product controlled by Crestwood from multiple producers in the Marcellus and Utica regions.” What?! How did that one slip by? Crestwood is in the process of building, and will open, a terminal to distribute propane–in Orange County, NY (not far from New York City). This is good news indeed–and we wonder how and why the antis haven’t been bleating about this project, the way they have been about Crestwood’s long-delayed propane storage facility along the shoreline of Seneca Lake (near Watkins Glen). No matter–we’ll take our small victories where and when we can get them. Disappointingly Crestwood makes no mention of the Finger Lakes LPG storage facility in their update. But the Marcellus does get a few mentions. Below are what we gleaned from the latest update on Crestwood’s Marcellus operations, along with more background on the forthcoming propane terminal in Orange County…
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DOE’s 2016 LNG Year in Review – Sabine Pass Exports 184 Bcf!

The U.S. Department of Energy’s Office of Fossil Energy has just released a full report of LNG (liquefied natural gas) imports and exports for all of 2016. The history books will look back at 2016 as the year when the world of LNG changed. Although it seemed like it took forever, in February 2016 Cheniere Energy shipped its first LNG export cargo from its Sabine Pass facility in southern Louisiana (see Cheniere Finally Ships First Sabine Pass LNG Export – to Brazil http://marcellusdrilling.com/2016/02/cheniere-finally-ships-first-sabine-pass-lng-export-to-brazil/). From February through the end of December, Sabine Pass, which (we believe) included some Marcellus/Utica gas, exported an astounding 60 cargoes of LNG, moving nearly 184 billion cubic feet (Bcf) of American-made natural gas to other countries. Prices ranged from $3.72 to $6.21 per thousand cubic feet (Mcf). Cheniere (and others) are just getting started! Below is the full report from the DOE Office of Fossil Energy…
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Scott Pruitt Addresses 15K Employees of EPA (Transcript)

Yesterday the Environmental Protection Agency’s new Administrator, Scott Pruitt, addressed the 15,000 employees of the EPA–many of them seething leftists who need to be fired. He was far more gracious in his remarks than we would have been. But then, that’s why he’s there and we’re here. 🙂 Pruitt was introduced by Acting Administrator Catherine McCabe and began his remarks with this: “You don’t know me very well. In fact, you don’t know me hardly at all other than what you’ve read in the newspaper and seen on the news. I look forward to sharing the rest of the story with you as we spend time together. This is a beginning. It’s a beginning for us to spend time and discuss certain principles by which I think this agency should conduct itself.” Reflecting on the time he spent earlier in the day greeting EPA career staff in his office, Pruitt said, “It was an honor and a joy to meet and spend time with the career people at EPA who are clearly very dedicated to their work.” Although Pruitt is a gentleman, he’s no shrinking violet. He put the staffers on notice that he believes federalism and the rule of law matters, and those concepts will guide the policies and decisions coming from the EPA from now on. In other words, the swamp is getting drained on DAY ONE. Below is a transcript of Pruitt’s remarks…
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CO Bill Compensates Landowners, Drillers in Towns with Frack Bans

Over the years MDN chronicled the long, sad battle in New York State over both a statewide moratorium on fracking, and on the issue of whether towns can ban fracking. The statewide moratorium, under Gov. Andrew Cuomo, continues. However, lawsuits filed against townships that enacted bans went all the way to New York’s highest court, the Court of Appeals–and in June 2014 we lost (see Shale Drilling in NY is Over – High Court Upholds Town Bans). There have long been rumors and talks among New York landowners about launching a “takings” lawsuit–in which landowners would get compensation from the state because the state has “taken” their right to lease land and allow drilling. If the state runs a highway over your land, they have to pay you fair market value for it. Same principle. But so far, a takings lawsuit has not materialized in New York. Perhaps we can look to the west–to Colorado–to see how we still might prevail. A Colorado legislator has introduced a bill in Colorado that would allow landowners (and drillers) to sue local towns in the state that pass fracking bans–using the principle of takings. Should we consider such legislation in New York?…
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Marcellus & Utica Shale Story Links: Wed, Feb 22, 2017

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Rover asks FERC for immediate permission to clear more trees; new natgas processing on the way in Marcellus/Utica; Mariner East 2 shows PA open for business; the shale revolution is a made-in-America story; predicting the price of oil based on the price of gold; gas prices get crushed, again; Trump to sign exec orders next week impacting EPA rules; Aramco IPO doubtful; and more!
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Antis Nervous that DRBC is Making Moves to Lift PA Drilling Ban

We now have a bit more of the back story and reason why anti-frackers turned out in large numbers to attend last Thursday’s meeting of the Delaware Basin River Commission (see Anti-Fracking Protesters Turn Out in Force at DRBC Meeting). As we noted, antis carpooled protesters in from New York City and other locations. On the agenda were two items that had them irked: (1) a short, 8-mile pipeline that will cross through a small sliver of DRBC-controlled territory, and (2) adoption of a two-year water resource plan “that instructs staff to carry out the commission’s natural gas regulations.” The antis are concerned the water plan will restart the discussion on regulations to allow fracking. Overactive imaginations? Maybe not. An AP story brings new details to light we had not previously read. THE Delaware Riverkeeper and others have “learned” that “recently” the PA Dept. of Environmental Protection held a meeting with DRBC staffers to discuss “draft regulations for drilling in the Delaware watershed.” THAT’S what had the antis all hot-and-bothered and showing up in large numbers. We’re now going on six years that the DRBC has blocked drilling by shelving regulations they had drafted to allow drilling in the Delaware River Basin–at least in PA. Last year a landowner from Wayne County, PA sued the DRBC, asking the courts to rule the DRBC has no right to block drilling (see Wayne County, PA Landowner Sues DRBC Over Fracking Ban). Here’s the article that sheds new light on the nervous Nellies of the Delaware…
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Mariner East 2 Pipeline Constructions Begins Across PA

Pop the cork on the champagne bottle! Sunoco Logistics Partners has begun construction of the Mariner East 2–a $2.5 billion, 306-mile natural gas liquids (NGL) pipeline that will run from eastern Ohio through the state of Pennsylvania to the Marcus Hook refinery near Philadelphia. Last week the Pennsylvania Dept. of Environmental Protection (DEP) gave its final approval for the project (see Finally! PA DEP Issues Final Permits for Mariner East 2 Pipeline). It didn’t take long for a coordinated attack from the the enviro left–THE Delaware Riverkeeper, the Philadelphia-based Clean Air Council and the Mountain Watershed Association (see Maya & Friends Sue (Once Again) to Stop Mariner East 2 Pipe). However, their efforts have (so far) failed, as we observed yesterday (see Last Minute Attacks Fail to Stop Mariner East 2 Pipeline Progress). Although you can’t discount a liberal judge throwing up roadblocks, the very good news is that construction has begun across PA–in Delaware County in the east, Huntingdon County in central PA, and Washington County in the west…
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Frackenstein Returns – Insights on Microbes in Fracked M-U Wells

For the first time, scientists reconstructed the genetic material from microbes in shale formations (represented here) being drilled for natural gas – click for larger version

Last year MDN shared with you the news that researchers from Ohio State University analyzed the genomes of microorganisms (i.e. bacteria) that live in Utica Shale wells and found little communities of microscopic critters that live in those shale wells, including a brand new critter that lives only in fracked Utica Shale wells (see Frackenstein! Researchers Find New Life Form in Fracked Utica Wells). The hypothesis is that fracking itself created this new mutated life form. The researchers call this new microorganism “Frackibacter” (pronounced frack-uh-back-tor). We call it Frackenstein! Who knew fracking didn’t destroy life, but actually creates it?! Not long after the original announcement, those same researchers, in poring over their data, discovered those tiny critters may actually INCREASE natural gas output from the well (see Frackenstein 2: Gassy Utica Critters May Increase Well Output!). Since that time the same researchers have continued to review their data and now have important insights to add: microbes from the surface get injected deep in the earth during the fracking process. And those microbes do a good job of adapting and surviving, even in an environment with a lot of chemicals and minerals. That adaptation means more methane is produced, but it also means more corrosion of pipes and equipment. The researchers hope scientists will use this information to produce better fracking fluids and equipment used to extract natural gas…
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OH Fight to Re-Regulate Electric Industry – Impacts on Shale

In January we brought to your attention a developing situation–a fight, really–by a few large regulated electric utilities that seek to have Ohio re-regulate the electric industry (see OH Power Cos. Try to Stop Gas-Fired Plants with “Re-Regulation”). We make no bones about the fact we think that’s a very poor idea. It will have the effect of raising electric rates for consumers, and eliminate unregulated shale gas power plants. It is a move by big corporations to eliminate competition–using Ohio’s laws do it. Three of the state’s biggest electric utilities trying to do this: FirstEnergy, American Electric Power, and Dayton Power and Light. Shame on them. One of the most vocal critics of re-regulation is Bill Siderewicz, the owner of Clean Energy Future (based in Boston). Clean Energy is in the process of building two Utica gas-powered electric plants in Lordstown, spending more than a billion dollars to do it. If re-regulation happens, those plants won’t open. Is there a case to be made for re-regulation? Is Siderewicz correct in his assessment that re-regulation is simply re-monopolization under a new name? A recent article in the Youngstown Vindicator does a good job of presenting both sides of this very important issue…
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OH Company Joins Team to Develop Low-Pressure CNG Tank for Cars

A. Schulman, Inc., headquartered in Fairlawn, OH, supplies plastic compounds and resins which are used as raw materials in a variety of markets. Yesterday the company announced that they will join several other companies in a joint effort to develop and produce the world’s first commercially viable low pressure natural gas storage tank for motor vehicles. A year ago MDN brought you news about a breakthrough in CNG (compressed natural gas) tanks for passenger vehicles (see New CNG Tanks on the Way for Passenger Vehicles – Game Changer?). The typical CNG fuel tank is big and bulky and holds compressed gas at a pressure of 3,600 pounds per square inch (psi). United Technologies Corp. innovated a new tank that is much smaller, using “activated carbon adsorbents” technology that will allow CNG to be stored at 1,000 psi. United Technologies licensed their technology to Adsorbed Natural Gas Products, Inc. (ANGP) which will manufacture the new fuel tanks. A. Schulman announced yesterday they are partnering with ANGP to make manufacturing those tanks possible…
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Scott Pruitt Confirmed to Lead EPA – Swamp Draining Begins

New EPA Administrator Scott Pruitt

Last Friday Oklahoma Attorney General Scott Pruitt was confirmed by the U.S. Senate to become the next Administrator of the Environmental Protection Agency. This is seriously great news. In 2014 MDN editor Jim Willis moderated a panel discussion at an industry summit held in Oklahoma City and heard Mr. Pruitt in person. Here’s what Jim said at that time: “Be sure to watch the very first video on the Midcontinent page. It is the keynote delivered by Oklahoma Attorney General Scott Pruitt. Jim just about stood up to cheer when he talked. Wow! We later joked (in the third session) that we’d be happy to trade our AG in NY for Pruitt any day of the week. Pruitt’s talk was outstanding.” (See Oil & Gas Awards Summits, Looking Back & Looking Forward [Video]). Ever since he was nominated we’ve been jazzed. The EPA under Obama has been a rogue, out-of-control agency. A labor union representing more than 9,000 EPA employees actively opposed Pruitt’s confirmation. We personally think those 9,000 employees should be fired. Reagan did it with recalcitrant air traffic controllers when their union went on strike–and air traffic control is a whole lot more important when it comes to the daily safety of Americans than the EPA. If the employees try to block Pruitt from doing his job–out they go. At any rate, when the final Senate vote was tallied, RINO Susan Collins of Maine once again showed she’d rather be a Democrat than a Republican, voting against Pruitt. On the other side, two scared-to-death-they-won’t-win-reelection-next-year Democrats, Joe Manchin of West Virginia and Heidi Heitkamp of North Dakota, voted for Pruitt. Mysteriously, the EPA website now welcomes their new Administrator with open arms (funny how that works). Today will be his first day on the job since yesterday was a holiday. Pruitt has already said that Obama’s Clean Power Plan and horrible Waters of the United States regulations are toast. Let the swamp draining begin!…
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