Marcellus & Utica Shale Story Links: Mon, Jun 6, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: FERC prepares EIS for Gulf XPress pipeline; BlackRock takes big stake in Rex Energy; NY blocks two more pipelines; Lordstown Energy Center breaks ground today; Greenlight Capital reduces stock in CONSOL; another budget train wreck on the way in PA; New England blowhards blowing hot air re pipelines; and more!

MARCELLUS/UTICA REGION

FERC staff to prepare EIS for Columbia’s Gulf XPress
NGI’s Daily Gas Price Index
FERC Staff will prepare an environmental impact statement (EIS) for Columbia Pipeline Group’s (CPGX) Gulf XPress (GXP) pipeline project, which would provide additional takeaway capacity from the Appalachian Basin. Federal Energy Regulatory Commission notice of intent to prepare an EIS comes just over a month after CPGX filed applications to construct and operate GXP and the Mountaineer XPress (MXP) pipeline projects (see Daily GPI, May 16). CPGX has said the projects would enter service in 4Q2018 (see Daily GPI, June 24, 2015).

BlackRock Fund Advisors has $2,412,000 stake in Rex Energy Co.
Mideast Times
BlackRock Fund Advisors boosted its position in Rex Energy Co. (NASDAQ:REXX) by 0.5% during the first quarter, Holdings Channel reports. The firm owned 3,139,902 shares of the oil and gas exploration company’s stock after buying an additional 17,001 shares during the period. BlackRock Fund Advisors owned approximately 5.91% of Rex Energy worth $2,412,000 as of its most recent SEC filing. Separately, BNP Paribas Arbitrage SA raised its position in Rex Energy by 246.1% in the fourth quarter. BNP Paribas Arbitrage SA now owns 1,044,670 shares of the oil and gas exploration company’s stock worth $1,097,000 after buying an additional 742,853 shares during the period.

New York

NY agencies target 2 Spectra pipe projects connected to New England
SNL Financial
New York environmental agencies have found two more natural gas pipeline project proposals to dislike, both of which are linked to Spectra Energy Corp. The New York State Department of Environmental Conservation has jumped into the regulatory process for Spectra’s Atlantic Bridge project, while New York City’s Department of Environmental Protection recently registered concerns with the company’s Access Northeast project. Combined, the two projects would bring more than 1 Bcf/d of natural gas to New England, and both include construction in New York. On Atlantic Bridge, the state DEC recently told Spectra Energy Partners LP’s Algonquin Gas Transmission LLC that its application for a state pollutant discharge permit for the project was incomplete.

Ohio

Groundbreaking Monday at Lordstown Energy Center
Youngstown (OH) The Business Journal
Executives from Siemens Financial Services and Macquarie Infrastructure Partners III will be on hand Monday when ground is broken for the $890 million Lordstown Energy Center. The press event will take place at 1 p.m. near the plant’s site on the Henn Parkway where hardhats are already at work preparing the site. Siemens and Macquarie are equity investors in the natural gas fueled electricity power plant that’s being developed by Clean Energy Future LLC of Boston. Siemens is also a major lender as is Bank of America, London-based Investec, Credit Agricole of Paris, and ICBC, based in China, Siderewicz said. This consortium will provide the $445 million term debt to fund construction.

Pennsylvania

David Einhorn’s Greenlight Capital shrinks stake in CONSOL
Bloomberg
Greenlight Capital Inc., the hedge fund run by David Einhorn, sold 7 million shares of Consol Energy Inc., shrinking its position in the coal and natural gas producer even as the company’s stock has rallied. Greenlight sold the shares at $15.01 apiece on Wednesday, a filing with the Securities and Exchange Commission on Friday shows. The hedge fund owned 29.4 million shares of Consol as of May 12, making it the company’s third-largest shareholder, according to data compiled by Bloomberg. Consol has spent recent years shifting its focus away from coal and toward natural gas. The Canonsburg, Pennsylvania-based company capitalized on the surging production of the heating and power-plant fuel in the surrounding Marcellus and Utica shale regions. The driller was one of Greenlight’s most profitable positions in the first quarter. Just a month ago, the hedge fund wrote in a letter that it had taken a bet that the price of natural gas will rise as energy drilling subsides. Jonathan Gasthalter, a spokesman for Greenlight, declined to comment. Brian Aiello, a spokesman for Consol, also declined to comment.

It’s back! Deadline looms for new state budget – Wolf still unreasonable
Pittsburgh (PA) Post-Gazette
As the Republican-dominated Legislature prepares to return to Harrisburg this week, many of the same issues that led to last year’s tumultuous and protracted impasse with Mr. Wolf remain. Despite this stubborn political reality, the Democratic governor and GOP leaders have met only a handful of times in recent months. “Conversations from our perspective have been few and far between,” Senate Minority Leader Jay Costa, D-Allegheny, said last week. “ … We really have not delved into the serious fiscal problem we have in Pennsylvania. We have a long way to go before we get to a budget agreement.” Other legislative leaders and top Wolf administration officials suggest that the situation is not so dire. They say staffers have been meeting regularly since Mr. Wolf allowed the GOP-crafted spending plan to lapse into law in March without his signature. And the tone of negotiations has improved from last year, when the two sides could barely contain their disdain for each other’s positions.

OTHER U.S. REGIONS

New England

Natural gas pipeline foes blowing hot air
Boston (MA) Herald
What’s this “No Pipeline Tax” campaign about? Our airwaves have been flooded with commercials sponsored by Consumers for Sensible Energy. They are advocating against the natural gas pipeline because there would be a “tax” and there is no need to increase natural gas capacity. On the surface it seems like something the public should be against, but these commercials are misleading at best. The coalition is comprised of the Environmental League of Massachusetts, the Mass Energy Consumers Alliance, Clean Water Action, Sierra Club and Conservation Law Foundation, to name a few. These are not exactly pro-taxpayer organizations. When have any of these groups ever advocated for lower taxes? In 2014, ELM’s president was a cheerleader for automatic gas tax hikes and CLF was part of the coalition for higher gas taxes. What about their assertion that we don’t need natural gas?

Southeast

Some fear that a pipeline submerged under the Etowah River may cause irreparable damage
Cartersville (GA) The Daily Tribune News
Fears of environmental testing by Houston-based Transcontinental Gas Pipe Line Co. (TRANSCO) has some Bartow land owners concerned that a planned natural gas pipeline submerged under the Etowah River may cause irreparable damage to an already fragile ecosystem. TRANSCO, a subsidiary of Williams Partners LP and Atlanta-based Dogwood Enterprise Holdings Inc., entered into an agreement in 2014 to build the Dalton Expansion project, a 112-mile pipeline to transport Marcellus shale gas to the southeastern United States for electric power generation and natural gas distribution. The proposed pipeline is configured to cross the river between Hardin Bridge and Macedonia roads via an underground 8-foot trench to be dug across the river and a temporary bridge built to give heavy equipment access to the riverbed. The pipeline would then be dropped in the trench in one piece and covered up. But landowners say that is a different story than the one TRANSCO used in its first environmental impact report to the Environmental Protection Agency.

NATIONAL

Never too early to prep for restructuring deals, lawyer says
NGI’s Shale Daily
With recent strengthening of oil prices, the outlook for the next wave of exploration and production company restructurings has improved somewhat, an attorney in the Baker Botts LLP financial restructuring practice told NGI’s Shale Daily. If the improvement sticks, it will be none too soon for many. For now, though, a painful reckoning continues. “…[A] lot of people held out last year hoping the market would come back quicker than it has at this point in time. And so the onslaught [of bankruptcies/restructurings] you’re seeing this year is the result of a couple of things,” said Baker Botts Partner Manny Grillo.

No turnaround yet for natural gas marketers, NGI survey finds
NGI’s Daily Gas Price Index
With continuing weak demand and low prices, the downward trend on sales by natural gas marketers extended into its third year as 2016 began, according to NGI’s 1Q2016 Top North American Gas Marketers Ranking, but there may be light at the end of the tunnel. The snapshot of leading gas marketers reported combined sales transactions of 116.44 Bcf/d in 1Q2016, a 7% decline compared with 1Q2015. The full year 2015 was 2% below 2014. However, there are two developments that may contribute to more U.S. natural gas production in the months ahead, which in turn would likely increase marketed gas volumes, according to Patrick Rau, NGI director of strategy and research.

Rising investment requirements show oil’s irreplaceability
Forbes/Jude Clemente
When Wood Mackenzie reported in the Fall that $1.5 trillion in potential global oil projects were uneconomic oil cost $51 a barrel, about what it costs now. The industry is making big cuts in CAPEX and upstream investments, and more than $200 billion in oil and gas investments evaporated in 2015. There’s still about 1.3 million b/d of surplus oil on the global market, and just the other day “OPEC Fails to Reach Agreement on Oil Production Ceiling.” Future global oil production is now at stake. Some are projecting that non-OPEC supply will contract this year for the first time since 2008. As for the world’s most important incremental producer in recent years, production in the U.S. may drop by 725,000 b/d this year, indicating a monthly reduction of 85,000 barrels a day for the rest of the year. Active crude oil rigs in the U.S. are now just 325, versus 860 in March 2015. Considering that oil is the world’s most important source of energy, this lack of investment is a global concern. The oil industry is cyclical one, and eventually not developing new supply will catch up with us. Falling oil prices today are setting up an eventual spike up.

Will Baker Hughes squander its $3.5 billion gift?
Seeking Alpha/Shock Exchange
Baker Hughes received a $3.5B gift from Halliburton after its proposed merger failed. The cash hoard will help BHI survive the oil patch if oil prices stay lower for longer. Management has intimated it would engage in share repurchases. I would hate to see BHI squander its capital like National Oilwell Varco.

A national energy plan: Should we have one? Do we have one? If so, is it working?
JDSupra/Scott Rotruck
Before ultimately answering the questions posed in the title above on a National Energy Plan, in full disclosure it should be noted that I have been employed by and/or have been an investor in oil, natural gas, coal and solar. The same applies for two railroads, CSX and NS, which hauled a lot of the aforementioned products or their supply chain components to market. Therefore, with this background significantly informing my decisions on energy matters, I fully believe in and have worked and invested in an “All of the Above Energy Strategy.” This is a strategy to which I typically add the phrasing “and All of the Below Energy Strategy” to underscore my strong admonition against prematurely ruling out energy sources. Innovation, often quick to the rescue, along with the cumulative significance of continuous improvement, savvy capital and unleashed entrepreneurism, can make the old energy sources renewed and the new energy sources truly revolutionary. The natural gas industry’s Shale Revolution, changing our current energy paradigm from scarcity to abundance, is such an example.

GTI: celebrating 75 years of innovative energy solutions
Gas Technology Institute
Today, Gas Technology Institute (GTI) celebrates an important milestone—our 75th anniversary. As a leading research, development, and training organization addressing global energy and environmental challenges, GTI has spent the last seven+ decades developing high-impact technologies and providing technical insight to unlock the potential of natural gas and other energy resources—making them economically and environmentally sustainable while reducing energy costs for consumers. The organization has achieved many successes over our prolific history, focusing on initiatives aligned with important national priorities. GTI has provided innovative solutions to critical challenges along the entire gas value chain, and improved the ways of producing, transporting, and using energy to benefit the general public.

Fracking advocates weigh suing EPA over climate regs
Washington (DC) Examiner
The latest piece in President Obama’s climate agenda soon could become the next target for major legal action, said a senior official with a trade group representing oil and gas producers in the West. The Western Energy Alliance is “exploring litigation” over the Environmental Protection Agency’s methane reduction rules for new oil and gas fracking wells, said Kathleen Sgemma, vice president for federal affairs and communications for the group. The alliance has been involved in litigation on a number of regulations that western oil and gas producers say would hobble the industry. Sgemma said the alliance was successful in suing against the first round of fracking regulations that the Bureau of Land Management tried to impose, winning a federal court injunction to stay the rules until a decision on the merits is made.

INTERNATIONAL

OPEC states fail to reach deal on production
Associated Press
OPEC countries failed Thursday to agree on measures to influence crude supplies and prices, in a missed opportunity to show the resolve that for decades let them set how much consumers and industries worldwide would pay for gasoline, heating and related necessities. At the same time, OPEC officials argued the cartel was alive and well, scoffing at suggestions that its authority was eroding to the point where it will soon be negligible. “Don’t take that (to mean) that OPEC is dead,” said Secretary General Abdulla al-Badri. “OPEC will be powerful, will be strong. OPEC is alive.” As they ended their meeting, the ministers suggested they were satisfied that prices had recovered from a 13-year nadir earlier this year. They “confirmed their commitment to a stable and balanced oil market, with prices at levels that are suitable for both producers and consumers,” said their closing statement. Still, that upward trend in the oil price is fragile, and the decision to essentially let OPEC members continue producing as much as they want or can had immediate effect. Expectations of at least an attempt by the Organization of the Petroleum Exporting Countries to show unified muscle had seen the U.S. benchmark oil trade near $50 a barrel earlier in the day. Shortly after the meeting ended, it was down 88 cents at $48.14 a barrel.

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