PA RINO Wants to Slow Marcellus Drilling with $2M Bond per Well

Tom Murt - RINO

Tom Murt – RINO

Pennsylvania State Rep. Thomas Murt, a RINO (Republican In Name Only) from the Philadelphia area, has introduced House Bill (HB) 2277 that would require drillers in the state to post a $2 million bond for each shale well they drill. The current bond is between $4,000-$10,000. This is yet another attempt by the same cast of anti-drilling characters to slow down or stop Marcellus drilling altogether in the Keystone State, by erecting regulatory hurdles to hassle drillers under the pretense of protecting PA’s environment. Adopting such a law would actually indicate that PA has turned aggressively against the drilling industry–sending the clear signal the Keystone State prefers drillers to operate elsewhere, in other states. Fortunately, with Republicans in control of both the House and Senate, this “misguided proposal,” as the Marcellus Shale Coalition calls it, is DOA…
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Repair Work on Exploded Texas Eastern Pipeline in PA 25% Done

Spectra blazeAn update on Spectra Energy’s Texas Eastern Transmission’s (TETCO) “Delmont Line 27” which exploded in Westmoreland County, PA on April 29 (see Texas Eastern Pipeline Explodes near Pittsburgh, Antis Celebrate). We previously told you that not only was Line 27 out of commission, so too were three other pipelines running through the same corridor, meaning 1 billion cubic feet of natural gas per day is not reaching certain mid-Atlantic markets (see Update on Spectra Pipeline Explosion Near Pittsburgh). The early evidence points to corrosion along welded seams, although the jury is still out and the exact cause may not be known for months (see Preliminary Guess on TETCO Pipeline Explosion Cause: Corrosion). One of the four lines that was offline (Line 19) was examined and certified by the Pipeline and Hazardous Materials Safety Administration (PHMSA) in early May to go back online (see TETCO Pipeline Up & Running Post-Explosion; Antis Exploit Accident). However, the other three lines have remained idle pending further investigation (see TETCO PA Pipeline Explosion Still Limiting NatGas Flow Month Later). In June Spectra said they expect to have the full system operating again by November 1st (see Ruptured TETCO Pipeline in PA Offline Until November). How is the effort going? Spectra has completed the initial analysis and is now digging up pipelines in various locations…
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FERC OKs 6 Dominion Compressor Station Upgrades in PA, MD, VA

Dominion Leidy South

Dominion Leidy South – click for larger version

It’s not often we miss reporting on a pipeline upgrade project in the Marcellus/Utica. This is one of those rare cases. Over a year ago Dominion Transmission, Inc. (DTI) filed an application with the Federal Energy Regulatory Commission (FERC) to upgrade six compressor stations along the DTI pipeline system in Pennsylvania, Maryland and Virginia. The upgraded compressors would allow DTI to pump an additional 155,000 dekatherms per day of natural gas, providing that gas to new and expanding natgas-fired electric generating plants. The project will cost $210 million. The new news for the project is that FERC approved it this week, granting DTI a certificate to move forward with the upgrades. Below is information about the project, and about FERC’s approval…
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EXCO Resources Turnaround is Working, but Comes at a High Cost

EXCO.jpgEXCO Resources was once a sizable player in the Marcellus. They still have 145,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However, EXCO, as we pointed out in March, has pretty much abandoned the Marcellus at this point (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). In May the company announced it was looking at “restructuring,” which is typically a code word for bankruptcy, and the company’s stock took a nosedive (see EXCO Resources Board Looks at “Restructuring” – Stock Nosedives). Not long after, EXCO announced it was firing some board members, hiring new ones, and aggressively hammering midstream companies to lower pipeline costs (see EXCO Restructuring Plan: New Board Members, Hammer Midstreamers). It looks like the plan is working. The bleeding slowed in 2Q16 (see EXCO Still Hammering Midstreamers re Contracts, Bleeding Slowed). So far the company has stayed out of bankruptcy. How did they do it, where some others in similar circumstances have failed? According to EXCO’s chairman (and major investor) Wilbur Ross, Jr., the turnaround is due to turnaround expert C. John Wilder that the company hired last year…
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Senior Management Change at Marathon’s MarkWest Subsidiary

riding into sunsetIn December of last year, one of the biggest and brightest stars in the midstream firmament for the Marcellus/Utica, MarkWest Energy, sold itself to Marathon Petroleum (see MarkWest Energy Investors/Unitholders Approve Merger with Marathon). As we pointed out at the time, the sale lined the pockets of investors and MarkWest’s top management (see Golden Parachutes Pop Open for MarkWest Top Management/Board). Two of the people in top management who benefited were John Mollenkopf, who was named executive vice president and chief operating officer for the new MarkWest unit (essentially taking over running MarkWest) and Gregory Floerke, who was named executive vice president and chief commercial officer of the new MarkWest unit. Last week Marathon announced that Mollenkopf is now riding off into the sunset (a very rich man), and Floerke will take has place running the MarkWest unit…
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What Happens to Landmen During a Severe Downturn?

landmanLandmen, the people on the front lines interfacing between drillers and landowners, are facing tough times. With the slowdown in drilling has come a slowdown in leasing, or re-leasing. Landmen are the guys and gals who perform that duty–and many of them are now doing other jobs, waiting and hoping for the next upturn in the industry. Here’s the story and perspective of one landman who has been in the business for the last 37 years, through five different up and down cycles. Most recently he worked as a landman for Noble Energy–until he was laid off 1.5 years ago…
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Research Paper: Shale Wells Lead to Long-Term Low Prices

RFF-DP-16-32-coverIs unconventional (i.e. shale) natural gas supply more responsive to price changes than conventional gas? A new research paper suggests that the answer is yes–specifically, almost three times as responsive, because shale gas wells are far more productive (2.7x more) than conventional gas wells. In “Trophy Hunting vs. Manufacturing Energy: The Price-Responsiveness of Shale Gas” (full copy below), researchers from Resources for the Future (RFF), a nonpartisan think tank devoted exclusively to natural resource and environmental issues, takes a look at how the “new way” of drilling multiple wells from a single pad, which is akin to a manufacturing process, is flattening out the supply curve. A flattened supply curve reduces price volatility–the wild up and down swings in the commodity price of natgas. While the focus of the paper is on how shale wells are leading to lower and more stable prices over the long term and does a deep dive into economic models, the paper also contains a good, basic primer on drilling a shale well. We found it a good read and wanted to share it with you…
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Chamber Report Details Why ‘Keep it in the Ground’ a Disaster

off limitsA new report issued by the U.S. Chamber of Commerce addresses the question, “What If…Energy Production was Banned on Federal Lands and Waters?” (full copy below). The short answer to that question is, it would be an unmitigated disaster for this country. There is a movement underway by radical environmentalists with the catch phrase of “Keep It In The Ground”–meaning we should stop extracting oil and natural gas. It is an acutely ignorant position to take. The report says, “Instituting a ban on future federal-lands leasing and stopping the current production of these resources would increase energy prices for consumers by removing low-cost resources from the available supply stream. The impact would be immediate and severe to the U.S. economy, leading to the loss of hundreds of thousands of American jobs, and robbing the federal government and primarily eastern states of potentially billions of dollars in revenues in the form of lost royalties.” Keep It In The Ground boobs don’t own land and sip lattes at Starbucks in large cities with their radical friends. They don’t care about lost jobs and lost royalty revenue–because it doesn’t affect them. Opposing “nasty, dirty fossil fuels” makes them feel good about themselves. They are dangerously stupid. This report (read it below) illustrates just how catastrophic it would be to ban fossil fuel extraction on federal lands. The report finds that the U.S. economy would lose 400,000 jobs and $70 billion in annual GDP if we were to abandon energy development on public lands, as President Obama and presidential hopeful Hillary Clinton and the entire Democrat Party advocate…
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Report Documents Pipeline Safety: 99.999% Liquids Delivered Safely

AOPLTwo week ago the Association of Oil Pipe Lines (AOPL) released a new report documenting liquids pipeline safety performance and outlining industry-wide efforts to improve pipeline safety in 2016 and beyond. “2016 API-AOPL Annual Liquids Pipeline Safety Excellence Performance Report & Strategic Plan” (full copy below) was developed jointly by AOPL and the American Petroleum Institute (API), and it highlights pipeline safety trends over the last five years. In short, pipelines are THE safest form of transportation period. The report finds that 99.999% of crude oil and petroleum products (like gasoline) that are piped reach their final destination safely. Essentially everything makes it to where it’s going safely, contrary to the wild claims by anti-fossil fuel nutters. The Marcellus Shale Coalition (MSC) quotes from the report in a recent press release to support a number of proposed pipeline projects in the Marcellus/Utica…
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Marcellus & Utica Shale Story Links: Wed, Aug 31, 2016

best of the restThe “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Democrat AGs’ campaign against “climate deniers” falls apart; PA already has a natgas tax; oil shortfall ahead, but oil prices low til 2017; Saudis running out of oil money; and more!
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Cabot to Double PA Gas Production by 2019 – Without Constitution

with-or-without-youIt’s no secret that Marcellus and Utica drillers need new pipelines–and they need those pipelines urgently. Especially in Pennsylvania where lack of pipelines is keeping inventories high and prices for natural gas the lowest in the country. However, drillers must deal with reality as it is–today. Pipelines take time to build, and recent efforts to block pipelines are delaying important projects like the Constitution and PennEast pipeline projects. The good news is that some pipeline projects *are* being built in the northeast, some of which are almost done. Drillers like Range Resources are ramping up new drilling now, about six months in advance of when new pipelines are due to go online. That’s about how long it takes to put the pieces in motion. The other good news is that some drillers, like Cabot, are finding new markets that DON’T require new pipelines–like selling a tremendous volume of natgas to new gas-fired electric generating plants situated in close proximity to Cabot’s wells. Here’s an update on which drillers are picking up the pace with the prospect of new pipelines (or new nearby markets), and which drillers are waiting a little longer before they pick up the pace…
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The Secret to CONSOL Energy & Rice Energy’s Record Production

secret to successWhile many drillers across the U.S. have cut their gas drilling programs back to the bare bone, even temporarily halting new drilling, two Marcellus/Utica drillers didn’t get the memo. CONSOL Energy and Rice Energy continued to break new records for natural gas production through the first six months of this year. Even though CONSOL and Rice may spend less and drill less than they previously did, natgas production from both companies continues to increase–due to new strategies, new efficiencies, and smart people. Here’s a peak behind the curtain at what CONSOL and Rice, both currently focused on the Utica Shale, are doing to boost production…
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Williams Appoints 3 New Board Members, Confounds Corp Raider

As the World TurnsIf you’ve read MDN for any length of time, you already know of the ongoing soap opera of corporate raiders attempting to pressure Williams, a huge pipeline company in the northeast (and in the rest of the country) into selling itself to Energy Transfer Equity–a deal that fell apart in June (see Dead as a Doornail: ETE Terminates Merger with Williams). You also know that one of the corporate raiders (Carl Icahn protege) Keith “Mini-Me” Meister tried to force Williams CEO Alan Armstrong to resign, and when that didn’t happen, Meister and five others quit the board of directors in a huff (see Half of Williams Board, Including 2 Corporate Raiders, Quit). The raiders’ sole purpose in forcing Armstrong out is to force a new sale to a different company, Enterprise Products Partners (see Here We Go Again: Enterprise Products Wants to Buy Williams). Williams isn’t having it and announced earlier this month they were on the hunt to replace three of the six losers who quit the board with bona fide/qualified/independent board members (see Williams to Appoint 3 New Board Members, Replace Raiders Who Quit). Last week Mini-Me Meister launched a proxy war to elect himself and nine other of his lackeys to the Williams board (see Corvex Raider Launches Hostile Takeover Attempt of Williams). Good news: Williams has confounded Meister by naming three new board members. Each of them comes with stellar qualifications to help guide the company into the future WITHOUT selling itself to line the pockets of corporate raiders…
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Drill Cuttings Used to Build New Road in Lycoming County, PA

drill cuttingsImagine this: a backhoe sinks its bucket into the ground, scoops out some dirt, and the dirt is used to build a road. No big deal. Now imagine this, a very long drill goes down into the earth and digs out dirt. Because the dirt comes from deep down, some of it may be mixed with minerals not found near the surface, so a company processes the deep down dirt to remove any extra minerals, and the dirt is then essentially the same chemical composition as the dirt from near the surface–and it’s used to build a road. The dirt from deep down is called drill cuttings. Environmental Nazis repeat the magical incantation, “It’s been fracked!” and therefore they begin to hyperventilate that “fracked waste” is being used to build a road. Our example illustrates antis’ intellectual dishonesty about what drill cuttings are. When we spotted a story that a private hunting club in Lycoming County (Williamsport area) in PA will build a new road using processed drill cuttings, and the spin job done by the anti-drilling shills at the taxpayer-funded PBS StateImpact Pennsylvania, we had to laugh…
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Taxation of Oil and Gas Reserves in Ohio Changing in 2016

tax revenueListen up Ohio landowners and drillers: there are important new changes coming in the way oil and gas reserves are taxed, starting THIS YEAR. One such change: tax bills will now only be issued to producers (i.e. drillers) and NOT to royalty interest holders (i.e. landowners). Therefore drillers will be responsible to collecting taxes owed by landowners. The new changes will “significantly change how the ad valorem tax is collected” and because of the changes, it will be “very important” for drillers to accurately report production volumes to the Ohio Dept. of Natural Resources (ODNR). Here’s a rundown of the changes from the legal beagles at top energy law firm Vorys…
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EPA Shale Wastewater Rule Will Crush PA’s Conventional Drillers

regulationIn June MDN reported on yet another new unlegislated law (called a “rule”) issued by the rogue federal Environmental Protection Agency (EPA) that bans the disposal of wastewater from oil and gas drilling via public wastewater/sewage treatment plants (see EPA Bans Disposal of Frack Wastewater at Public Sewer Plants). The rule is meant to ban wastewater coming from unconventional (shale) wells, and not conventionally drilled oil and gas wells, which are shallow wells compared to shale wells. However, conventional drillers in Pennsylvania are raising the alarm that the way the rule is written, it will prevent them from disposing their shallow (and much lower volumes of) wastewater by carting it to the local sewage treatment plant–as many of them do now. The upshot is that the EPA needs to revise its rule…
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