Marcellus & Utica Shale Story Links: Tue, Dec 24, 2013

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading:

New York

Driller Demands Rules on N.Y. Fracking
Courthouse News Service
An oil and gas driller blames its bankruptcy on New York’s foot-dragging, and wants the state ordered to complete its long-awaited rules for shale fracking. Norse Energy Corp. USA claims 5½ years have passed and New York still has not posted regulations to govern horizontal drilling and high-volume hydraulic fracturing – “fracking” – of the energy-rich Marcellus Shale formation. The company claims Gov. Andrew Cuomo improperly thrust himself into deliberations on the new rules, known as SGEIS – supplemental generic environmental impact statement – which prolonged the review.


2013 Newsmakers: Hull & Associates CEO Craig Kasper
Columbus Business First
Hull & Associates Inc. is a good example of a Central Ohio business that’s been able to stake a claim in the Utica and Marcellus shale plays, but the engineering firm’s strategy has always extended beyond just oil and natural gas. Led by CEO Craig Kasper, the Dublin-based firm markets all its consulting services – waste management, environmental, brownfield redevelopment, alternative energy and oil and gas – instead of concentrating solely on shale development in eastern Ohio, western Pennsylvania and northern West Virginia. “With all the investment happening in that region,” Kasper said, “just doing oil and gas really didn’t make sense. … What we said was, ‘Let’s try to vertically integrate with the (oil and gas) industry and provide all the services it needs.’”


The Four Biggest Takeaways from the Pennsylvania Supreme Court’s Marcellus Shale Decision
In a huge victory for municipal governments and opponents of unconventional gas drilling, the Pennsylvania Supreme Court struck down portions of the commonwealth’s 2012 Oil and Gas Act (also known as “Act 13”). This Alert reviews the four major takeaways. The Pennsylvania Supreme Court struck down portions of the commonwealth’s 2012 Oil and Gas Act (also known as “Act 13”), an act that had been supported by the General Assembly and the Marcellus Shale gas industry, and, in doing so, gave an enormous victory to municipal governments and opponents of Marcellus drilling. In a 4-2 decision, the Supreme Court largely affirmed the Commonwealth Court in Robinson Township v. Commonwealth of Pennsylvania, 52 A.3d 463 (Pa. Cmwlth. 2012).

Court ruling on Marcellus Shale law resets the clock in Pa
Platts Gas Business Briefing (paid or free trial access required)
Until the dust settles, several questions remain: will municipalities change their zoning regulations? Will the industry leave Pennsylvania for other Marcellus Shale states with more predictable laws? And what will state lawmakers and regulatory agencies do now that the law passed in February 2012 doesn’t stand? Several state agencies said on Friday their lawyers are still reviewing Thursday’s decision and evaluating what to do next. Patrick Henderson, Governor Tom Corbett’s energy executive said the impact of the decision on state agencies will be significant. One question is what to do now that the Supreme Court remanded back to Commonwealth Court parts of the law for the lower court to decide. “One of the major questions is whether the entirety of Act 13 is severable or not,” Henderson said. “If portions are struck down, can other portions survive or will it all be set aside? That’s the biggest question that needs to be answered.”


2013 in Review: The Failure of Anti-Fracking Activism in 9 Charts
Energy in Depth
Love this post, which shows (via charts) the “off the chart” production in eight major shale plays (plus a chart for crude oil production). Yes, there’s a chart in there for the Marcellus!

Big Idea 2014: The Age of Gas
GE/LinkedIn Post
GE Chairman & CEO Jeffrey Immelt ponders the gassy future: Natural gas has been important to human progress since the beginning of the industrial age, but it could never hope to overtake oil and coal given the competitive advantages those fuels possessed. Until now. It is the dawn of the age of gas and 2014 will be a defining year. There are only a few certainties in this world, one of them is we will always need more energy tomorrow than we have today. We have to find it from a greater array of sources than we have in the past. And right now gas is positioned to be the most viable solution to the world’s ever-rising energy demand. We see four catalysts to realizing the full potential of the age of gas.

MarkWest Energy Partners’ Moat And Future Growth
Seeking Alpha
MarkWest Energy is making it difficult for customers to leave. Companies that lock in customers through the cost or inconvenience of leaving have a moat of value. With its expansion facilities, it is holding competitors at bay. One way to build a moat is to put roadblocks up that make it difficult or expensive for competitors to enter your market. A market truth is that capital always seeks earnings and any company that is creating substantial and ongoing wealth. To raise capital does not deter a company’s growth prospects, nor does it deter it from paying its unit holders. MarkWest CEO Frank Semple has stated that growth is based on a kind of moat. The contracts it has are far beyond the minimum volume commitment with the facilities that it has in place. MarkWest Energy management continues to execute existing projects and development projects.

Aqua America: Simple Plan, Consistent Growth, Steady Returns
Seeking Alpha
Aqua America, Inc. is a regulated water and waste water utilities company headquartered in Pennsylvania. Aqua America has had my attention since Q1 of 2013 due to its acquisition growth strategy as well as its on going Marcellus shale operations. Aqua America also operates in a number of different segments, residential, commercial, and waste water being its segments with the largest revenue as displayed below…In terms of location, Aqua America operates in a number of different states, Pennsylvania, Ohio, and Texas being the three largest based on revenue as displayed below…

Kinder Morgan Energy Partners: Undervalued And Ready To Grow
Seeking Alpha
2013 has been an odd year for Kinder Morgan Energy Partners. The stock started the year strong, rising alongside nearly every other high yield stock as investors reached for income. However, this rally had dissipated by the summer as concerns over the Fed’s tapering took center stage. Soon after, Kinder Morgan Energy Partners and its general partner Kinder Morgan Inc. came under a bear attack from a certain independent research firm, further adding volatility to the stock, but doing relatively little damage to its share price. At current prices, Kinder Morgan Energy Partners appears to be attractively priced, especially considering its historic valuation and future distribution growth.

Natural Gas Storage Tanks are Drying Up With Exports on the Horizon
The Motley Fool
The United States becoming a net exporter of natural gas is an idea that seemed virtually impossible just a few years ago. The increase in domestic natural gas production has been dramatic, thanks to technological developments that have made previously untapped resources suddenly viable. Due to new ‘fracking’ technologies, the vast ocean of natural gas the United States is currently sitting on may hold the keys to our national energy independence. Sitting on a ‘100-year’ supply. That’s how Continental Resource, Chairman and Chief Executive Officer Harold Hamm describes the amount of available natural gas in the United States. Not only is the U.S. gifted with a huge amount of gas, but prices are now becoming favorable for the industry. As demand continues to rise, the supply glut that had kept prices down for most of the year is starting to wane. For example, due to severe weather conditions across the United States this winter, natural gas recently hit $4.40, representing a six-month high.

Schlumberger: China & North America Focus For Next Year
Seeking Alpha
Schlumberger continue to focus on the North American markets by focusing on asset utilization and operational efficiency. The following graph shows the company’s operating margin in the North American region compared to its competitors. The rig count in North America is around 2,208 compared to last year’s rig count of 2,217, indicating a reduction in the rig count. However, rig counts showed an upward trends since November this year because of increasing horizontal drilling and hydraulic fracturing activity in the Permian Basin, Texas. In the U.S., the weekly rig count increased by seven, reaching 1,782 for the week ending in December 13 this year. In Canada, the rig count increased to 426, an increase from 418 last year. This shows that there will be a healthy demand for the oil field services across North America. I expect this would create a revenue opportunity for Schlumberger’s oil well drilling services. The following chart shows the ranking of Schlumberger’s services and products from a study done by Spears.

Shale Gas Choice: Halo or Handcuffs?
Natural Gas Now
Shale gas has changed everything in the US and drummed the “peak oil” industry out of business. Fracking in the UK and New York, however, is essentially going to be a battle between whether it wants to be a modern country or state, or not. 2013 has been the year where any doubts about the reality of the US shale revolution have entirely disappeared. This was the year for example where the Peak Oil site The Oil Drum shut, an amazing development for a trend which was at the height of it’s influence only a couple of years ago. Any doubts over shale’s sustainability have been swept aside by volumes of gas that can only be described as phenomenal. The debate, at least in the US, has transformed from shortage to seeking customers for gas.

Cold Winter Could Lead To Massive Natural Gas Futures Price Spike
Seeking Alpha
Baby, so far it’s cold outside and winter only officially started this past weekend. The EIA reported in its weekly natural gas storage report a record withdrawal from storage of 285 Bcf. Storage of natural gas is now 261 Bcf below the 5 year average. While this is significant, there is still plenty of natural gas in storage to handle a normal winter. There is no reason to currently believe natural gas prices will not fluctuate in a normal 10% to 20% range from current NYMEX futures prices. But all of that could change if the winter turns out to be as cold as the last month of the fall. If storage gets tight, or very tight, or starts to run out, then all bets on pricing are off. There are many natural gas hubs around the country with pricing way below or way above the NYMEX futures pricing. The NYMEX futures pricing is based on the pricing at the largest hub in the country known as the Henry Hub. It is located in southern Louisiana. For natural gas prices to experience a super spike based on cold weather it would require the numerous storage facilities in the Producing Region that feed into the Henry Hub to run too low on storage.

Speculators ‘Throwing Money’ at Natural Gas on Icy Blast: Energy
Hedge funds got more bullish on natural gas as a blast of cold air swept across the U.S., pushing prices to the highest level in more than two years. Money managers increased net-long positions, or bets on rising prices, by 33 percent in the week ended Dec. 17, U.S. Commodity Futures Trading Commission data show. Bullish wagers advanced for a fourth week and to a six-month high. Prices rose 21 percent during the four weeks as below-normal temperatures spread across the lower 48 states and a storm dumped as much as 18 inches of snow from the Midwest to the Northeast. U.S. inventories have fallen faster than the five-year norm since early November, government reports show. “Wall Street has been throwing a lot of money at this market,” said Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pennsylvania. “It’s been aided by some very cold December weather. The forecasts are calling for some cold during the remaining winter.”

Clueless Celebs Reveal True Cost of Colorado’s “Ban Fracking” Activism
Energy in Depth
At the ballot box in November, a handful of cities in Northern Colorado voted to impose symbolic and legally dubious bans on oil and gas development. The campaigns to ban hydraulic fracturing – an essential technology for more than 90 percent of oil and gas wells – were orchestrated by national activist groups like Food & Water Watch and Water Defense, which have lobbied for years for statewide bans on oil and gas development in Colorado and other parts of the country, and even a national ban on domestic energy production. But throughout the campaign, the “ban fracking” activists concealed their desire to shut down Colorado’s oil and gas industry – and eventually the nation’s – and denied they were being trained and funded by fringe activist groups out of Washington, D.C. and New York City. Even after the votes were counted in cities with “ban fracking” ballot initiatives, Food & Water Watch’s Mountain West Region Director Sam Schabacker refused to come clean about his group’s ambitions. Rather than admit he was now campaigning for a statewide ban on oil and gas development – and open himself to questions about the economic impacts – Schabacker chose instead to mislead the news media and the public by claiming the activists are considering “all options,” including those short of a ban. Meanwhile, a group created by Food & Water Watch and other out-of-state organizations to run the local ballot initiatives – Frack Free Colorado – deleted whole sections of its website just a few days after the election to conceal the involvement of New York-based Water Defense and two organizers from the Big Apple in what were supposed to be “grassroots” campaigns across the northern Front Range.


Tar Sands, Natural Gas Fracking, Pipelines: The Fossil Fuel Wars in British Columbia and Canada
Global Research
The fossil fuel industry offensive in British Columbia and across Canada is proceeding relentlessly. This is a report from some of the key fronts of the fossil fuel wars. On December 16, Kinder Morgan company made its official application to the National Energy Board for approval to build a $5.4-billion tar sands pipeline from Alberta to Vancouver harbour. The new line will use the path of its existing Trans Mountain Pipeline for part of the route, but it will diverge from that significantly in places, including in the final leg of the line into metropolitan Vancouver. The population of British Columbia has risen four times since the original Trans Mountain pipeline was built in the 1950s. The new line will cross busy urban areas, seven provincial parks and 13 park reserves, including 500 rivers and streams. It will require expanded bulk-oil storage on the Vancouver harbourfront and increased berths for the estimated 35 tankers per month that will transport the line’s diluted bitumen to overseas markets.

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