Marcellus & Utica Shale Story Links: Mon, Jan 27, 2014
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading:
Does Mayor DeBlasio Have A Brain Or Is He Just a Fracking Scarecrow?
Natural Gas Now
New York Mayor Bill de Blasio stepped into the fracking debate with some idiotic remarks that make you wonder whether the guy has a brain or is just a another scarecrow. It’s hard to expect too much from a guy who’s never had a job that didn’t involve living off taxpayers or working for the Sandinistas, took his honeymoon in Cuba and legally changed his name twice, but you’d hope the guy could do more than repeat slogans. Warren Wilhelm, Jr. (a/k/a Bill de Blasio), unfortunately, is as shallow as they come and based on his latest statement regarding fracking, one wonders if he even has a brain or is simply some talking robot or scarecrow. The New York Post reports the new Mayor of New York City said this other day regarding fracking:
Oil and gas tax dollars should stay in our area
The bill would impose a tax rate of 1% for the first five years and then a rate of 2% thereafter. Proceeds from the tax would be used to fund necessary regulatory activities, such as plugging orphaned and idled oil and gas wells, and to provide income tax cuts to all Ohioans, many of whom do not live in oil and gas producing counties. In its current form the legislation does not invest back into the communities that are developing oil and gas. This is of great concern, and it is critical that the final bill contain a mechanism that will reinvest those tax dollars into our region. It is no secret that the economy in eastern Ohio has struggled for many years. We now have a unique opportunity to capitalize on an abundant natural resource that sits right below our feet. We cannot miss this chance to rebuild our economy and leave behind a legacy for future generations. Industry representatives have testified that the new tax they are proposing could generate nearly $2 billion over 10 years. There is so much we can do with the financial resources this tax would generate. A portion of those funds could be used to improve our infrastructure, train our workforce, provide public and safety services, and invest in new technologies that will create local jobs and protect our environment.
State agency fast tracks permits for fracking, raising concerns
The shale-gas company wanted a pollution permit in less than four months. To help it meet that goal, Ohio Environmental Protection Agency officials had to do two things: avoid a public hearing and make sure the feds didn’t get involved. After NiSource officials applied for a permit last February, they told the Ohio EPA that they needed it by June 1 so they could build a shale-gas refinery in Mahoning County by December.?They got the permit on June 5 and completed building their Hickory Bend refinery on Dec. 31. Then-Ohio EPA Director Scott Nally lauded his staff for quickly approving that permit and at least six others last year. “This is brand new for Ohio. This is a game-changer,” Nally said last year while touring a new plant in Columbiana County. “Obviously, everybody wanted it yesterday.” Not everybody.
Shale gas pipelines growing, but oversight is not
Getting Utica shale gas to processing plants and people’s houses has created a growing web of pipelines across eastern Ohio. Placed end to end, these pipelines, called “gathering lines,” would extend more than 470 miles — enough to cross the state at its widest point. Twice. While construction was going on in 2012, Ohio legislators enacted a law that bars state utility officials from overseeing where the natural-gas pipelines can go. Rich Sahli, a Columbus lawyer who has represented Ohio residents in pipeline cases, said the law ensured that the pipelines could be built without any government review of their environmental impact. “One of the great difficulties with pipeline siting is, the company tries to get to the cheapest land possible,” Sahli said. “Oftentimes, that’s the most environmentally important property because it involves wetlands and headland streams.”
3 Companies to Watch in the Marcellus This Year
The Motley Fool
It’s safe to say that natural gas production from Pennsylvania’s Marcellus shale continues to exceed even the most optimistic of forecasts. Despite the bitter cold that has halted much activity across the nation, gas drilling in the Marcellus has seen little impact. According to the US Energy Administration’s monthly drilling productivity report, Marcellus shale output surged by about 261,000 Mcf/d to a record 13.46 Bcf/d in December. That’s a whopping 12% increase over October production levels of 12 Bcf/d and a roughly sevenfold increase since 2009. With new infrastructure projects set to substantially improve takeaway capacity in the region this year, let’s take a closer look at three Marcellus producers worth keeping a close eye on.
Finding right home for oil and gas revenue
Wilkes-Barre Citizens’ Voice
When the revenue collected from oil and gas wells on state park and forest lands amounted to $4 million annually, few paid attention to how the money was spent. This was the case for a good while following creation of the state Oil and Gas Lease Fund in 1955. The money was used to purchase state park land, develop recreational areas, restore wildlife habitat and provide flood control as well as other designated uses. Following the start of the Marcellus Shale gas boom, the oil and gas fund saw a huge spike in rent and royalty payments from gas drillers leasing parcels on state forest land. The fund started the 2013-14 fiscal years with a balance of $87 million. The state Department of Conservation and Natural Resources held three competitive auctions between 2008 and 2010 to lease forest land to Marcellus drillers.
Wildlife notebook: Groups take sides on endangered species bills
Businesses have long complained that state policies protecting at-risk species are too restrictive, redundant with federal protections and interfere with legitimate efforts to develop lands or harvest resources. Bipartisan bills in the state House and Senate would strip the independent Game and Fish and Boat commissions of oversight of threatened and endangered species. Agencies and conservation organizations are lining up on both sides of the debate. Groups opposing the bills include Penn Future, Sierra Club, Trout Unlimited, Audubon Society, Pennsylvania Federation of Sportsmen’s Clubs and the Game and Fish and Boat commissions. Unified Sportsmen of Pennsylvania and the Pennsylvania State Camp Lessee’s Association have sided with the Marcellus Shale Coalition, Associated Petroleum Industries of Pennsylvania and the Pennsylvania Oil and Gas Association in endorsing the bills. In a co-authored position statement, Unified Sportsmen and the State Camp group said they “strongly support” the Endangered Species Coordination Act.
What happened to DCNR’s $6 million Marcellus monitoring report?
After spending more than three years and $6 million to monitor how gas drilling is affecting public forests, the state Department of Conservation and Natural Resources has yet to release the information, and environmental groups are beginning to raise questions. In late 2010, the Rendell administration launched the program– touting it as one of the most aggressive monitoring initiatives by a public agency in the nation. More than three years later, under the Corbett administration, DCNR has so far refused to share its findings with the public. “The Marcellus monitoring report, it’s way long overdue,” says Dick Martin of the Pennsylvania Forest Coalition. “We need that data as a baseline in order to find out the effects.” About a third of Pennsylvania’s 2.2 million acres of state forest land is available for oil and gas drilling.
EQT Midstream: Another 50% Upside This Year With Development Of Upper Devonian
Today, we are updating our model on EQT Midstream (EQM). We are very bullish on EQM again in 2014 after having liked the stock in 2013. Despite increasing 90% over the past year, we still see more upside. The Marcellus Shale continues to become one of the most important natural gas producers in the USA, and we believe a combination of recent acquisitions as well as a better market for natural gas in 2014 will continue to drive upside in shares. In today’s article, we will update our model, talk about two important catalysts for the company’s growth, and discuss how we get to a 2014 $95 price tag for the stock.
California Fracking Battle Not Selling Well in Dimock
Natural Gas Now
Dimock residents respond to a California anti-fracking activist who suggested he represented their views and rhetorically send him packing. Last week we reported on an absurd op-ed published in the Scranton Times regarding Dimock by the tanned and trendy Lance Simmons who once served Gov. Ed Rendell in some capacity and is now involved in the California fracking battle. Simmons used the pages of the times to suggest the residents of Dimock were ravaged by hydraulic fracturing, which was anything but true. His whole piece was similarly out of tune and seemed more like a commercial for Gasland or something. Well, some residents of Dimock must have thought so, too, because they responded with some letters to the editor of the Times that we think are well worth reading to prove our point; the only thing wrong with Dimock is the number of hustlers out there tried to use it to feather their own ideological nests. Here are the two letters:
The Weekly Oil & Gas Follies, Volume 30, January 27, 2014
We’ll start with an offering from our Something Funny Happened on the Way to the Gas Pump file: Fracking Protesters Glue Themselves to Wrong Gas Station – Missed it by that much. That’s how the six gluees have to feel after such a mistake. The group thought they were attaching themselves to pumps at a gas station owned by a company called Total. They were upset after the company announced they would invest millions in shale oil and fracking. But there was a pretty big oops involved. Station manager Reezwan Patel told The Bolton News in Ruston Lane UK, “Total don’t own the station any more. It is owned by Certas Energy, but the signs haven’t changed yet.” (We can’t help wondering if the protesters understood that the glue they used was made from – gasp! – petroleum products.)
EPA Data: Natural Gas Fracking Not Causing Methane Spike
Natural gas fracking is not causing a spike in U.S. methane emissions, the latest U.S. Environmental Protection Agency data show. The data debunk assertions by global warming alarmists that recent declines in U.S. carbon dioxide emissions—caused largely by the increasing use of low-carbon natural gas power—are being offset by rising methane emissions from natural gas fracking.
Cold weather pushes gas prices to 4-year high
Oklahoma natural gas producers say demand for the fuel should remain strong as frigid temperatures grip much of the nation. While some companies have moved away from dry natural gas wells, Oklahoma producers say the fuel still represents a large percentage of their haul. “February should be over $5 for Oklahoma gas, which is something we haven’t seen in a long time,” Tony Say, president of Oklahoma City-based Clearwater Enterprises, told The Oklahoman. “It’s going to help their cash flow and that of the state. It’s very positive for Oklahoma producers.” Unusually high demand has pushed natural gas prices to a four-year high. The futures price for natural gas jumped 45 cents, or 10 percent, on Friday to close at $5.18 per thousand cubic feet. “We’ve seen a fundamental shift in gas pricing,” Say said. “There’s plenty of gas out there, but with these next few weeks of cold weather, we could be depleting storage numbers to dangerously low levels come April 1.”
Analysts See Big Storage Draws Coming, Possible Drop to 1.2 Tcf by April
NGI’s Daily Gas Price Index
U.S. natural gas storage could fall to 1.2 Tcf by the end of withdrawal season, which could boost prices through the first half of the year, energy analysts said Friday. Stephen Smith, who shares storage and pricing insight through Stephen Smith Energy Associates, talked with NGI on Friday about a new storage model he ran earlier in the day. The numbers, like the weather, “keep changing quickly,” he said. “Basically, we thought that this polar vortex business would last through the end of January,” Smith said. The National Weather Service [NWS] “not too long ago was predicting that February would be milder than normal…But other forecasters now say February is looking colder than normal.”
4 Bold Energy Predictions for 2014
The Motley Fool
From American energy independence to pipeline battles, 2013 was an exciting year for the energy industry. But what’s in store for the oil patch in the new year? Here are my top four predictions. (1) Oil prices are heading lower. On the Gulf Coast, America’s refinery hub, oil is in such plentiful supply that most experts in the industry are talking about the coming glut. Thanks to new technologies like hydraulic fracturing and horizontal drilling, billions of barrels of previously unrecoverable oil and gas are now being extracted from shale beds across the country. In North Dakota, Bakken production is nearing 1 million barrels per day. In Texas, Eagle Ford output has already crossed this important milestone. Investors made a bundle in 2013 thanks to big production gains. There’s only one problem: America is running out of capacity to actually refine all of this new production.
Natural gas goes parabolic
Remember when people were talking about the possibility of natural gas in North America going no-bid? Well, it’s safe to say that those days are over. The NYMEX spot price for natural gas went above $5 for the first time since 2010, and if one analyst is right (and he’s been proven right already about it getting to the $5 level in 2014) it could go higher – maybe even much higher – yet. “The fundamentals are largely in place for it to go higher,” Bill Powers told Andy Bell on a segment on BNN this morning. “We’ve seen numerous shale plays already start to decline, and there’s only a couple that are still growing. We’re also seeing a very small pickup in drilling activity. So we’re certainly heading towards further increases in price.” Powers says natural gas prices could hit $7 this year, as storage gets down to 1 TCF and producers scramble to refill it in the summer and fall. “With only the Marcellus showing growth, it’ll be very difficult,” he said. “Much higher prices are going to be needed to stimulate new drilling.”
SBQ Market Recovery Raises the Bar
Metal Center News
The special bar quality (SBQ) market is one of the bright spots for the North American steel industry. Boosted by steadily improving demand from automotive customers, availability of SBQ is actually tight, with mill lead times extending as far as six months for certain grades and sizes. Activity in the energy sector is also contributing to demand for high-quality bar products. “When oil prices reach about $80 a barrel, exploration companies tend to become more bullish,” observes Reliance’s Hoffman. Oil is currently trading around $85 a barrel. SBQ is used in big drill rig collars, thus its demand is tied closely to the North American drill rig count, which is up nearly 45 percent this year, according to Baker Hughes Inc. “One thing pushing the rig count is a deadline for companies to start drilling in the Marcellus natural gas shale play, which if not met could place them at risk of losing their exploration licenses,” Plummer notes. “At just under $4.50 per mcf, the price of natural gas is too low for some companies to go ahead with planned projects.”
World buyers line up to buy U.S. natural gas
Countries across the world have been quietly signing deals in recent months to import natural gas from the United States, revealing a growing appetite for the fuel overseas as domestic output soars. Up to a dozen long-term deals, each worth billions of dollars, have been penned behind closed doors with companies in China, Japan, Taiwan, Spain, France and Chile as global demand spikes, according to company, industry and trade sources. Through the agreements, China in particular has emerged as one of the biggest beneficiaries of cheap American natural gas that in the coming years will be piped to Gulf Coast plants and liquefied for shipment abroad in tankers. The unannounced deals, which amount to about 2 percent of daily U.S. supply, are not the first of their kind, and they depend on U.S. government approval to construct two new liquefied natural gas (LNG) plants. But the number of new buyers, and their global scope, show how the United States is taking steps to becoming a major export hub by stealing ahead of rivals in Australia and East Africa, successfully wooing needy Asian buyers even before projects begin construction. Global competition may squeeze profit margins on some exports of U.S. gas.