Marcellus & Utica Shale Story Links: Fri, Feb 7, 2014

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


Utica shale play hits milestone with 300 producing wells
Columbus Business First
The Utica shale region now has 300 producing oil and gas wells, another milestone for the young play. The latest update from the Ohio Department of Natural Resources shows 300 active wells out of 707 wells drilled. There are 38 rigs and 1,074 permits issued for horizontal drilling, the report says. The play cleared 1,000 permits in December. Last week there were 14 new permits issued, mostly to Chesapeake Energy Corp. (NYSE: CHK) and in Harrison County, which holds 172 well permits.

Canadian oil companies look to Ohio manufacturers
Kent State WKSU Public Radio
There were a lot of jokes about the weather Wednesday when about 90 Ohio business officials met with representatives of a half dozen Canadian oil companies. The business-to-business forum was organized so that Ohio manufacturers might win some contracts with the companies extracting oil from northern Alberta tar sands. But as WKSU’s Mark Urycki reports, the Canadians also see some political expedience in the collaboration. With all the oil and gas production ramping up in Ohio’s Utica shale, local companies don’t usually think about making pipes or equipment for Alberta. But Alberta envoy David Manning says they are interested in working with Ohio companies. “This is a very sophisticated technology-driven industrial base. The companies here know how to work in adverse climates. You have a grasp of energy issues – the Utica shale is another good example. You have a lot of energy infrastructure.”

Utica shale’s all the rage, but Ohio still pales in comparison to other states
Columbus Business First
There’s been palpable excitement in Ohio since 2011, when oil and gas companies began drilling into the Utica shale formation. Sitting thousands of feet beneath eastern Ohio’s soil, the Utica has been touted by politicians and industry powers for its economic potential in an industrial state battered by the recession. A region lacking jobs would have more than it knew what to do with. Ohio manufacturers could run their factories on inexpensive natural gas, and residents could heat their homes for less. Municipalities, school districts and the state would collect more tax revenue. And Ohio would help the nation get …


Corporate-funded program is training black men for the oil and gas industry
Pittsburgh Post-Gazette
There were eight black men in the North Side classroom learning about the Marcellus Shale boom, but most of them didn’t believe the oil and gas industry was going to let them be a part of it. That was in 2012. At the first class of the Hill District-based Mentors Community Wealth Building Initiative — which was launched with the goal of certifying “urban oil and gas thought leaders” — students were skeptics, according to Pittsburgh City Councilman Daniel Lavelle, who had dropped in to watch. “They literally said, ‘These white boys will never let us make any money,’ ” Mr. Lavelle recalled. As that first six-week course ended and another got underway, he began to get letters from graduates saying they indeed had been hired. And they were making money, or building wealth, as the program’s name says. Graduates returned to speak to newer classes. “One came back and said, ‘They’re actually paying the same [as the other workers],’ ” said Kris Kirk, who founded the nonprofit Mentors program.

Lackawanna College Education Series: The Economy of Shale Recap
Well Said – Cabot Oil & Gas Blog
Lackawanna College continued its education series January 29th with a program titled the Economy of Shale. Partnering with the Greater Scranton Chamber of Commerce and Cabot Oil & Gas Corporation, the college hosted Rayola Dougher, Senior Economic Adviser with the American Petroleum Institute (API), Vince Matteo, President and CEO of the Williamsport/Lycoming Chamber of Commerce, and Patricia Acker, Engineer at Linde Corp. and Chairwoman of the Scranton Lackawanna Industrial Building Corp (SLIPCO). Bob Durkin, President of the Greater Scranton Chamber of Commerce moderated the program. The theme behind the Economy of Shale lecture was: opportunities Scranton and Wilkes-barre still have to be a part of this monumental energy revolution.

West Virginia

GreenHunter Awaits OK of West Virginia Treatment Facility as Appalachian Water Use Rises
NGI’s Shale Daily
GreenHunter Water LLC’s $1.7 million water treatment, recycling and condensate handling logistics terminal in Wheeling, WV, remains in limbo nearly one year after the company announced the project. Announced last March as a “first-of-its-kind” facility to serve producers throughout the Appalachian Basin, GreenHunter is awaiting approval from the U.S. Coast Guard (USCG) to ship bulk water on inland waterways (see Shale Daily, Oct. 31, 2013). It also continues to work with West Virginia authorities on a permitting snag after the state’s Division of Highways (DOH) denied a road-use permit last August. But that’s not stopping the company’s aggressive focus in the basin, said John Jack, vice president in Appalachia. Since it first moved into the region in 2011 with the acquisition of a water service property in West Virginia, the company has grown to become the largest brine water disposal business there.


Northeast’s Record Natural Gas Prices Due to Pipeline Dearth
Bloomberg Businessweek
Temperatures in New York City hit 7F on Jan. 22, a day after the price to deliver natural gas into the city spiked to a record $123 per thousand cubic feet on the spot market. A hundred miles away in Pennsylvania’s Marcellus Shale, the biggest natural gas field in the U.S., the same amount of gas costs 35 times less. A lack of pipelines is depriving consumers of the full benefits of low-cost energy. Although the wells in Pennsylvania are practically in the backyard of the Northeast and mid-Atlantic states, pipeline companies are still working to connect the gas fields to the utility pipes beneath towns and cities. Until they do, a lot of gas will continue to get pumped more than 1,000 miles from the Gulf Coast to the Northeast. The problem is particularly severe in New England, where power plants’ use of natural gas has jumped from 30 percent of electricity produced to 52 percent since 2001, with not a single new pipeline built. As a result, electricity prices are soaring in the region. That’s not unusual for this time of year, but the price spikes are getting sharper and more frequent, says Steven Clarke, assistant secretary for energy in Massachusetts. “They’ve probably grown about tenfold,” he says.

Natural Gas: Will Low Inventory And Low Rig Counts Balance The Market?
Seeking Alpha
Natural gas inventories are very low and going lower. Natural gas rig counts also are near record lows. Near term gas prices are way up, as is the gas ETF (UNG) and some gassy E&P equities are rising somewhat. Let’s look at these two factors and see what they indicate beyond the front month. Since abnormal cold weather began to dominate North America in early November, natural gas inventories have plummeted by a record amount. Price spikes and volatility have increased as cold patterns and severe weather threaten to push inventories to operational minimums by the end of heating season in late March. Using current weather forecasts, and best estimates of supply and demand beyond mid-February, my projection for end-of-season inventory is currently about 1 Trillion Cubic Feet. That’s 700 BCF below last year, and well below the five year range:

How America’s Fracking Boom Helps to Boost Treasuries Demand
Bloomberg Businessweek
America’s shale boom is providing an unintended benefit to U.S. government bonds. With the U.S. economy relying less on oil and gas imports than at any time in two decades, energy expenses for Americans have fallen and cut into inflation more than any other living cost in the past year, according to data compiled by the Labor Department. Economists say consumer prices will rise less than 2 percent for a second straight year in 2014, the first time that’s happened during an expansion in a half-century. Slowing inflation, which increases the purchasing power of fixed-rate payments, would give support to Treasuries after the Federal Reserve’s plan to curtail its unprecedented bond buying ignited their first annual losses since 2009. Ten-year notes yielded 1.76 percent last month after deducting inflation, close to the highest since 2011. Spending fewer dollars on foreign oil also means that any gain in crude prices no longer leads to a weaker greenback, upending a decade-long relationship that may strengthen the value of U.S. assets.

New Coalition Goes to Bat for Natural-Gas Exports
National Journal
Oil and natural gas industry stakeholders and pro-business groups have launched a new coalition to lobby for expanded liquefied-natural-gas exports. The coalition, which has taken the name “Our Energy Moment,” officially debuted on Wednesday and is made up of a number of constituent members, including regional chambers of commerce, and oil and natural-gas boosters such as the Louisiana Oil and Gas Association, Sempra LNG, and the South Texas Energy and Economic Roundtable. Debate over LNG exports has flared up on in the nation’s capital in recent months, with supporters of increased exports saying that an unrestricted flow of natural gas abroad will bolster the domestic economy. Opponents of expanded export argue that a rise in LNG shipments headed for global markets will prompt a surge in natural-gas prices at home. Charles Ebinger, director of the energy-security initiative at the Brookings Institution, lauded the coalition.

Low Natural Gas Storage Levels Spiral Still Lower
A series of winter storms and prolonged periods of extreme cold across large parts of the United States has resulted in record high natural gas demand and close to record low storage supplies. Last week, natural gas in storage fell by 262 billion cubic feet (Bcf) from the previous week to a total of 1,923 Bcf as of last Friday, according to estimates released today by the U.S. Energy Information Administration. Storage supplies were 778 Bcf below last year’s level and 556 Bcf below the 5-year average of 2,479 Bcf. At 1,923 Bcf, total gas in storage is outside the 5-year historical range altogether. In January, domestic natural-gas demand reached a record high of average 102 billion cubic feet per day (Bcf/d), according to Bentek Energy, an energy-analytic firm owned by McGraw-Hill.


Unleash German shale to halt gas output decline, industry pleads
Germany’s gas industry says it needs shale to halt a sharp decline in domestic output, but behind its pleas lies private acknowledgement that environmental and political opposition is just too strong. Frustration is compounded by Germany’s lead in fracking technology, which it has been quietly using for over 50 years. At stake is the competitiveness of German industry – faced with rising energy costs, the opposite of shale-driven competition in the United States, shale proponents say. “Currently, there is a decline in domestic production…a major share of planned investments in our industry is stymied politically,” said Hartmut Pick, spokesman for the WEG oil and gas industry group that produces domestic gas worth 4 to 5 billion euros ($5.4-6.8) a year. “If this trend is not countered, it will have negative consequences for jobs, mining royalties and the basis of service industries,” he said.

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