| | | | | | | | |

Low NatGas Price Will Benefit Shell’s Ethane Cracker Plant

The low price of natural gas may not be good for drillers, but it’s great for manufacturing companies who power their plants with it. The fact that manufacturers are increasingly converting to natural gas to power their operations, and relocating to areas with an abundant supply of low priced gas—like Pennsylvania—is a good thing for Shell and their proposed ethane cracker plant in Beaver County, PA. Why?

Continue reading

| | | | | |

Neighbors Not Happy with MarkWest’s Short Line RR

It’s not all peaches and cream when drilling comes to an area. Industrialization does have impacts—more truck traffic, more noise, higher rents, packed restaurants. Add to that list more railroad traffic. That can be good—MDN loves covering the stories of short line railroads on their way out that suddenly are revitalized.

But sometimes the railroad story has a few bumps. MarkWest Energy purchased an old short line railroad right of way that runs 4 1/2 miles in Mount Pleasant Township (Washington County, PA) a couple of years ago and rebuilt the rails. They recently started running a train along those rails to connect their Houston processing plant with a larger railroad to carry natural gas liquids (NGLs) including propane and butane to market.

Neighbors living close to the rail lines have complained of noise and late night runs:

Continue reading

| | | | | | | | | |

Updated Study: Marcellus Drilling Economic Benefits in NE PA

Several colleges in northeast Pennsylvania including Keystone College, King’s College, Luzerne County Community College, Misericordia University, Penn State Wilkes-Barre, University of Scranton and Wilkes University belong to, support and form an organization called the Institute for Public Policy and Economic Development. In 2008 the Institute published a study comparing economic and demographic changes of three shale plays in three specific areas of three shale plays: the Barnett, the Fayettville and the Marcellus.

The purpose of the original study was to show what may lie ahead in northeast PA should it follow a similar track to the then far more mature shale plays in the South and Southwest. The Institute has just released an update to the original study in a new report titled “A Review of Changes in Selected Economic & Demographic Indicators in Particular Counties in the Barnett, Fayetteville and Marcellus Shale Play” (embedded below). Wow, what a difference four years makes! The Marcellus in many ways has eclipsed the Barnett and Fayettville and continues to grow. But has that growth translated into good things in northeast PA? That’s the question asked and answered in this latest update by the Institute.

Continue reading

| | | |

Marcellus Economics: PA Manufacturer Adds 50 Jobs, $2.4M

Pennsylvania manufacturing company K-Fab is expanding with help from the state, providing an additional 50 new manufacturing jobs in Columbia County. The company manufactures equipment for the Marcellus Shale drilling industry. Their plans call for investing $2.4 million in renovations and improvements.

PA Gov. Tom Corbett’s office issued the following announcement about the latest new jobs and economic expansion thanks to the Marcellus Shale:

Continue reading

|

Union Pacific RR Substitutes Shale Biz for Declining Coal

Energy & Capital reports that Union Pacific Corp. has done a neat pivot. Coal shipping on the railroad is down, but UP has picked up the slack shipping equipment, sand, chemicals and other items needed for drilling in the Marcellus and other shale plays around the country. Oh, and on the return trip from those destinations, UP hauls crude oil from shale to places like California, Texas and Louisiana for refining.

Continue reading

| | | | | |

Reuters Says Utica Shale Boom is Really a Secret Bust

The mighty Reuters news agency, no friend of shale gas drilling, is taking aim at the Utica Shale in Ohio. A new article by Reuters attempts to sow the seeds of doubt about the size and potential of the Utica Shale. Their article opens by quoting drilling “bad boy” Aubrey McClendon, CEO of Chesapeake who famously said last year the Utica contains $500 billion worth of hydrocarbons. Reuters’ contention? Don’t believe it.

A key point of the article is that Ohio is only reporting oil and gas production numbers annually, not monthly as other states typically do. That irks Reuters, so they’re spinning it as an industry cover-up to conceal the “real truth” that the Utica is not as productive as McClendon and “the industry” is leading people to believe. It’s the old “it really ain’t all that big, it’s just a Ponzi scheme” meme started by The New York Times last year (see this MDN story).

Continue reading

| | | | |

NYT Now Says There’s Too Much Natural Gas, Drillers to Blame

The New York Times is a bit schizophrenic these days. It’s hard to keep track of which alternate reality they operate in. For the longest time, we’ve heard from the Times how shale drilling is just a Ponzi scheme a la Bernie Madoff—a fraud to get investors to dump billions into energy companies but with only a teeny tiny bit of gas in the ground (“proven reserves”) to get out (see this MDN story). Of course that contention is patently false as proven by the overwhelming production and inventories we now have from shale gas.

Continue reading

| |

EIA Backpedals on Lowball Estimates of Marcellus Reserves

An AP story actually sets the record straight and says, in essence, “Yes, the Marcellus really is ‘that big’ after all.” The AP article quotes research from two recently completed independent reports, one from Standard & Poor’s (see this MDN story) and one from ITG Research (see this MDN story), in “correcting” a lowered Marcellus proven reserves estimate from the Energy Information Administration (EIA).

The article quotes the EIA backpedalling on their lowered estimate from earlier this year and says in part:

Continue reading

|

Why Do Drillers Prefer the Marcellus/Utica? (from S&P Report)

Why is the Marcellus Shale and its first cousin the Utica Shale so darned popular—more popular for drillers than other shale plays in the U.S.? Is it because of the size of the play—the Marcellus and Utica is the largest play in the U.S.? Not really, or maybe we should say not exclusively. The recent report issued by Standard & Poor’s titled “How The Marcellus Shale Is Changing The Dynamics Of The U.S. Energy Industry” (see this MDN story) contains a very interesting section that MDN believes gives the answer to the question of why the Marcellus is so popular for drillers. It won’t come as a surprise to you that economics play a key role.

Continue reading

| | |

Top 20 U.S. Natural Gas Producers

MDN highlighted part one of a new series of articles appearing on the Seeking Alpha website on the topic of rig counts and what they see as a coming natural gas shortage (see this MDN story). The series continues with part two. Of keen interest in the second installment is a slide from a Chesapeake Energy presentation showing the top 20 U.S. natural gas producers (based on production volume) with columns showing how many rigs they’re running and the percentage change in the number of rigs from January of 2010 to September 2012. Most startling is Chesapeake’s own rig count, which has gone from 110 active rigs in 2010 to just 9 at the end of September 2012—a 92% reduction. Wow!

There’s a lot of great detail in this chart. Here it is (click on the chart for a larger view):

Continue reading

| | | |

S&P Report: The Marcellus Shale is a Game-Changer

game changerRatings agency Standard & Poor’s yesterday issued an important new report on the Marcellus Shale and the key role it’s playing in the United States’ natural gas and larger energy picture. Titled “How The Marcellus Shale Is Changing The Dynamics Of The U.S. Energy Industry,” there’s a lot of great information in this report. For example: the report lists the Top 15 Marcellus Shale producers, with estimates of how much shale gas they produce (as of fourth quarter 2011). It also discusses how and why the Marcellus is one of the most cost-effective plays in the U.S. for producers, and why they can make money in the Marcellus at much lower commodity prices for gas than in other plays. It contains a complete list of pending and planned pipeline projects in the Marcellus, including ethane pipelines. And more!

MDN is still reading and digesting the report and will bring you select sections and highlights over the next few days. In the meantime, you can view the entire report below now (highly recommended):

Continue reading

| |

Stone Fox Capital: Rig Count Means NatGas Shortages Coming

Let’s take a deep dive into the “weeds” of the drilling industry, shall we? A few days ago MDN highlighted yet another excellent analysis (on rig counts) by Seeking Alpha blogger Richard Zeits, from Zeits Energy Analytics (see this MDN story). The big news from that story is Zeits’ view about the current and future levels of drilling rigs in dry vs. wet gas areas.

A new, somewhat contrary (to Zeits’) viewpoint has emerged on Seeking Alpha from Stone Fox Capital Advisors expressing concern and alarm over the relatively low level of drilling rigs. They believe the current and forecasted number of drilling rigs for oil means the number of rigs available for natural gas drilling is so low it will mean shortages of natgas rigs, meaning a bottleneck for new drilling and eventually lower supplies and higher prices for natural gas.

Continue reading

| | |

Second Marcellus Gas-Powered Electric Plant Announced for PA

Seems like new natural gas-powered electric generating plants are popping up everywhere in Pennsylvania. Just yesterday MDN told you about the PA DEP approving the state’s first new natural gas electric generating plant to use Marcellus Shale gas, being built in Bradford County in northeastern PA (see this MDN story).

Today brings news that a new Marcellus gas powered electric plant will be built in Livingston County in northwestern PA:

Continue reading

| | |

EIA Report Predicts Short-Term NatGas Prices/Usage

The U.S. Energy Information Administration (EIA) released their Short-Term Energy and Winter Fuels Outlook report yesterday (a copy of full report is embedded below). Even though natural gas inventories are above last year’s levels and the price for natural gas is at historic lows, based on long-range weather forecasts by NOAA, the EIA predicts households will spend more money to heat this winter because it’s going to be a lot colder this winter than it was last.

Here’s the main highlights from the report with respect to natural gas:

Continue reading

| | |

PA DEP Approves 1st New Electric Plant to Use Marcellus Gas

The Pennsylvania Dept. of Environmental Protection (DEP) yesterday issued a permit for the first new electrical power generating plant to be built in the state that uses clean burning Marcellus Shale gas. The new plant will be built in Bradford County over the next 2-3 years. During construction the project will employ up to 500 people.

The details from the DEP:

Continue reading