23 Drillers Sign Up to Complete Against M-U via TransCanada Pipe

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TransCanada, one of Canada’s leading midstream/pipeline companies, cooked up a deal last year to pipe natural gas from Canada’s West Coast to the East Coast in order to fend off cheap supplies of Marcellus/Utica gas that will flow into Canada when/if the NEXUS and Rover pipelines get built (see TransCanada Pipe Drops Price 42% to Compete with Marcellus/Utica). TransCanada dropped their pipeline price to lure drillers by (theoretically) making it less expensive to get gas from Western Canada, some 2,400 miles away, than from the Marcellus, just 400 miles away. In October, TransCanada launched an open season to lock up customers for the new, lower-priced option. The open season was a bust because TransCanada insists on a 10-year commitment (see TransCanada Plan to Lowball M-U Gas Using Canada Pipeline a Bust). TransCanada rejiggered the terms being offered and reopened the open season. This time it worked (see TransCanada Says Plan to Lowball M-U Gas Worked, Shippers Sign Up). Thanks to a filing TransCanada has made with the Canadian National Energy Board (NEB), we now know who has signed up to use the lowball service from Canada’s West Coast to Ontario. Some 23 Canadian drillers, with some big names in the list, are waiting to use the service. TransCanada is begging/pleading/cajoling the NEB to issue a final approval–so TransCanada and these drillers can preemtively strike a blow at the cheap natgas that will come to the Dawn Hub in Ontario once Rover and NEXUS are built. Below is the list of 23 that plant to go head to head with cheap M-U gas…
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Webinar: Will New Gas-Fired Power Plants Solve the M-U Gas Glut?

MDN is excited to partner with NGI to present a VERY important webinar next Thursday, on May 4th: “Super Power: Will New Gas-Fired Plants Solve the Appalachian Gas Glut?” NGI has assembled an all-star cast of speakers to discuss where natural gas-fired plants fit into the “generation stack,” with specific emphasis on the PJM Interconnection markets in the Marcellus/Utica. PJM is a regional transmission organization (RTO) coordinating the movement of wholesale electricity in all or parts of 13 states and the District of Columbia (including PA, OH and WV). PJM, like other RTOs, faces challenges with ensuring there will always be enough electricity produced to meet demand. Over the past several years coal-fired electric generating plants have been closing. Natural gas, and in a much smaller sense renewables (wind and solar) have taken up the slack. Wind and solar are notoriously unreliable. The wind doesn’t always blow and the sun doesn’t always shine. But natural gas needs pipelines to get it to the plants. So what’s the scoop with natgas electric generation in our neck of the woods? How important are new power plants to the capacity-constrained Marcellus/Utica? Jump on this free 1-hour webinar to find out…
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ENSERVCO Starting Up Water Transfer Service in Marcellus

ENSERVCO is an oilfield services company headquartered in Denver, CO. ENSERVCO’s services include: hot oiling, acidizing, frac water heating, water transfer, bacteria and scaling treatment, water hauling and oilfield support equipment rental. The company says it serves customers in various shale basins across the country, and in states including Colorado, Kansas, Montana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Ohio, Texas, Wyoming and West Virginia. So yeah, they have customers in the Marcellus/Utica. Yesterday ENSERVCO issued an update for first quarter 2017–preliminary financials and an operational update. The thing that caught our eye was this statement: “We’re also moving forward with plans to begin offering water transfer in the Marcellus Shale, where we’re hiring staff and gearing up our marketing plans.” We’re not quite sure what they mean. Yet another trucking outfit with a parade of tankers trundling down the road (like we saw last weekend when visiting Hop Bottom, PA, in Susquehanna County). Or water pipelines? Or both?…
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OH & PA NatGas Production Increased More Than Other States in ’16

Would it surprise you to learn that Pennsylvania and Ohio had the largest increase in natural gas production in 2016–larger than any other natgas-producing states? If you read MDN regularly, perhaps not. Old news. However, it may surprise you to learn that from 2012 to 2016, 85% of the growth in our country’s enormous natural gas output came from the Marcellus/Utica. Yeah, 85%. That’s huge. More old news: Pennsylvania passed Louisiana back in 2013 to become the second highest-producing natgas state in the country. More new news: Last year, in 2016, Ohio passed West Virginia to become the seventh highest producing natgas state in the country. Here’s some more facts about PA & OH from our favorite government agency, the U.S. Energy Information Administration…
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New PA Bill an Overreaction to Court Ruling on Strippers

As previously reported, liberal Pennsylvania House of Representatives Democrat Pam Synder has now introduced a bill (HB 1283, copy below) to “clear up” what the state Public Utility Commission (PUC) is a loophole in the Act 13 law that may allow some drillers to avoid paying impact fees (i.e. drilling taxes) on some Marcellus Shale wells (see PA Lib Dem Introducing Bill to “Fix” Strippers Once and for All). In 2012 Pennsylvania passed the Act 13 law that includes a fee on wells targeting shale layers, including the Marcellus. Snyder Brothers, headquartered in Kittanning, PA, drills mostly conventional (vertical only) wells in southwestern PA. In 2011-2012 they drilled 45 vertical-only wells, targeting the Marcellus–all of the wells fracked. Initially those wells produced more than 90 Mcf/day, but by December of the year they were drilled, they produced less than 90 Mcf/day. The way the 2012 Act 13 law is written, if a well produces less than 90 Mcf/day during “any” month it is considered a stripper well and exempt from paying the impact fee. The state’s Public Utility Commission (PUC) assessed the fee anyway because for 11 months the wells produced more than 90 Mcf/day. Snyder Bros. sued and after an appeal of the case, won their case in March, exempting those wells from paying impact fees (see PA Court Says Snyder Bros Wells are Strippers, No Impact Fees Due). That sent the state Public Utility Commission (PUC) into a tizzy. The PUC and the PA Democrat Party is using the court case to try and accomplish two things they haven’t been able to accomplish heretofore: (1) claim this is a prime example of why a nosebleed high severance tax is needed, in this year’s budget, and (2) fundamentally change the intent of the Act 13 law by passing a “clarification” as introduced by Snyder’s HB 1283 bill. Below we explore this issue in depth and tell you why the Snyder case win is NOT a way for drillers to avoid paying impact fees. In fact, the court’s decision makes it clear that drillers cannot simply reduce production for one month and then claim it’s a stripper well under the 90 Mcf/day definition. Snyder’s bill is an overreaction and does not clear up anything. Instead, it changes everything…
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Seneca Resources Fined $375K by PA DEP for “Multiple Violations”

The Pennsylvania Dept. of Environmental Protection has just fined driller Seneca Resources $325,000 for a series of violations that occurred between 2013 and 2015. It seems in moving dirt around when building drill pads, Seneca caused erosion to occur. They also spilled ~100 barrels of crude oil in one location, and ~500 barrels of wastewater at another location. The violations happened in Forest, McKean, and Elk Counties. Here’s the notice issued by the PA DEP…
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Anti-Govt Radicals Begin 24/7 Tree Sit in PA to Block ME2 Pipe

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A group of radical (we’d call them criminal) environmentalists–some of the same ones who broke the law in North Dakota while “protesting” the Dakota Access Pipeline (DAPL)–are now trying to replicate the DAPL “protest” (i.e. illegal action) against Sunoco Logistics’ Mariner East 2 pipeline in Pennsylvania. The radical group Earth First! recently issued a “call to action”–their version of ringing the dinner bell for hungry dogs to come running from all other the country (even from other countries). The “call to action” invites hippies and hippie wannabes (those who can put down their bongs for five minutes) to come to Huntingdon County, PA–to Camp White Pine–to stretch wires and ropes from tree to tree and sit, suspended, to prevent crews from clearing trees in the path of the pipeline. According to Mob Rule Now! (aka Democracy Now!), the nutters have now “launched ongoing 24-hour tree-sits” to stop Mariner East 2…
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PR Campaign Gets Atlantic Sunrise Pipe to Change Course in PA

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If you’re a landowner and want to dissuade a pipeline, like, say, the Atlantic Sunrise Pipeline, from crossing your property–what can you do? It helps if your property belongs to one of the local dynasties (i.e. BIG money) and if you can hire high-priced lawyers and issue a blizzard of press releases via Business Wire at $500 a pop. Apparently that’s what it takes to convince a pipeline company to change its course. At least, that’s the lesson we take away from Geraldine Nesbitt, landowner of The Nesbitt Parcel in Dallas Township (Luzerne County, near Wilkes-Barre), PA. Nesbitt has been 100% against the Atlantic Sunrise project since learning its proposed route would cross her big-monied estate. Nesbitt’s heir, Abram Nesbitt, once built a hospital in Kingston, PA that reminds of Downton Abbey (see the picture). Atlantic Sunrise is a $3 billion, 198-mile pipeline project running through 10 Pennsylvania counties to connect Marcellus Shale natural gas from northeastern PA with the Williams’ Transco pipeline in southern Lancaster County. In February the Federal Energy Regulatory Commission (FERC) gave its final seal of approval for the project (see Atlantic Sunrise Pipeline Gets Final Approval by FERC). After FERC’s approval, Ms. Nesbitt’s lawyers began an aggressive publicity campaign to try and convince FERC to stop the project. Last week Williams (builder of Atlantic Sunrise) filed a request with FERC to adopt an alternative route around the Nesbitt estate–and all of a sudden Ms. Nesbitt “has never been opposed to natural gas pipelines.” What disgusting hypocrisy. If Joe Farmer wants the pipeline rerouted around his prized hay field–good luck with that. But if an old-line establishment family with BIG MONEY like the Nesbitts wants a reroute, they get it. We don’t like it…
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New 3.5 Mile Pipeline Project to Drill Under the Potomac River

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Columbia Pipeline, now owned by TransCanada, recently (in March) filed an application with the Federal Energy Regulatory Commission (FERC) to build a 3.5 mile, 8-inch pipeline that will carry natural gas from Pennsylvania to connect the Mountaineer Gas system in West Virginia with the Columbia Gas Pipeline in Pennsylvania. The purpose of the Eastern Panhandle Expansion project is to deliver natural gas via local distribution channels to a new industrial facility in Berkeley County, WV (scheduled to open in Fall 2017), and to provide gas to other local businesses and residents in the Tri-State area. Most of the pipeline crosses through a tiny sliver of Washington County, Maryland. The main issue with the project is that the pipeline will be drilled underneath the Potomac River, which serves as the border between WV and MD. That has antis in an uproar. The good news is that FERC has agreed to prepare an environmental assessment (EA) for the project. That is, this is now a real project with a high degree of likelihood it will get built…
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OH Gov. Kasich’s Severance Tax Hike is Dead, Again

As in previous years when Ohio’s RINO Gov. Kasich has proposed a super-high boost to the state’s severance tax, calm-headed Republicans (people from his own party!) have come to the rescue. Ohio House Republicans have removed Kasich’s boost in the severance tax rate from the budget. Meaning, it’s dead…
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NY Landowner Group Asks Pres. Trump for Help Battling Gov. Cuomo

The Joint Landowners Coalition of New York (JLCNY), a group representing over 70,000 landowners with a collective 1 million acres of land that could be leased for oil and gas drilling, only if, has just sent off a letter to President Trump asking for his help. The JLCNY, via the letter, alerts Trump to Gov. Andrew Cuomo’s shenanigans in blocking natural gas pipelines. The letter also asks Trump to support legislation we’ve previously highlighted by Congressman Tom Reed to protect landowners in New York (and other states) from government actions that block oil and gas development (see JLCNY Rally in NY to Support Defense of Property Rights Bill). Here’s what the JLCNY sent along to The Donald…
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Marcellus & Utica Shale Story Links: Wed, Apr 26, 2017

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Golden Pass LNG gets DOE clearance to export; LNG is all the rage in the Trump administration; the era of LNG oversupply; report shows pipelines still safest mode of transport; US Supreme Court won’t hear Chesapeake Energy bond case; frac sand company – reaching crescendo later this year; American tech helps the oil industry; and more!
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Lawyer to PA Drillers: No Royalties? Time to Terminate the Lease

For the past couple of years MDN has covered the issue of low and no royalties for landowners in Pennsylvania and other states because of the low commodity price for natural gas–and because drillers are deducting post-production expenses. The problem, from the landowner’s perspective, is that gas is still getting pumped–and they aren’t getting anything in royalties. Who would sign up for that?! The problem, from the driller’s perspective, is that they’ve spent big bucks to drill the well and even if they have to sell the gas at a loss, at least they’re getting some revenue through the door–hoping to hang on until prices go higher again. It is a conundrum. Last month the Pennsylvania Chapter of the National Association of Royalty Owners (NARO) held their annual meeting and convention in State College, PA. A number of interesting bits of information came out of that meeting. One interesting tidbit: A Houston lawyer told attendees that he is now using the strategy of telling drillers if they keep sending royalty statements with no checks (i.e. statements showing the driller is not making a profit)–they have 30 days to terminate their lease with those landowners. Some leases (not all) state that if a well quits producing profitable quantities of gas, the lease is officially ended. While in some respects the lawyer’s innovative interpretation of o&g contracts may be an empty threat, the strategy does appear to be getting results. Another tidbit: There is a concern that drillers may try to deduct losses today from profits in the future–from a landowner’s royalty check. What can landowners do to guard against it?…
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NFG Sues NY DEC in Fed Court re Northern Access Pipe Rejection

Earlier this month MDN brought you the sad (and angering) news that once again Gov. Andrew Cuomo has caved to political pressure from environmental Nazis and instructed the now-corrupted Dept. of Environmental Conservation (DEC) to deny stream crossing permits for National Fuel Gas Company’s (NFG) Northern Access Pipeline project (see Cuomo’s Corrupt NY DEC Blocks NFG Northern Access Pipeline Permit). A few days later, NFG issued a statement to say their proposed pipeline project would have FAR LESS impact on the environment “than either exploding an entire bridge structure and dropping it into Cattaraugus Creek (Route 219) or developing and continuously operating a massive construction zone in the middle of the Hudson River (Tappan Zee Bridge) for a minimum of five years” (see NFG Calls Cuomo DEC Denial of Northern Access Pipe “Troubling”). Both of those projects were reviewed and approved by Cuomo’s DEC, yet the DEC rejected a benign pipeline project. At the time we said this: “While there is no mention of a lawsuit against the DEC, you can bet your bottom dollar such a suit is coming.” Once again, we were right. Last Friday NFG sued the DEC in federal court, asking the court to review the DEC’s action in rejecting permits for the federally-approved project…
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Mountaineer NGL Storage in Monroe County, OH Caught in Red Tape

In April of 2016, Mountaineer NGL Storage announced an open season for a new underground NGL storage facility in Monroe County, Ohio, near Clarington, along the Ohio River (see New Company Announces Open Season for NGL Storage in Ohio Utica). Natural gas liquids (NGLs), including ethane, would be stored at the facility. It is a key, missing component in a plan to build at least one, and likely more than one ethane cracker plants in the region. A storage facility for both natural gas and NGLs is a critical part of natural gas infrastructure. Mountaineer recognized that the Marcellus/Utica will need such a storage facility. A month after the open season, Mountaineer announced it was successful and that they would move forward with the project (see Mountaineer NGL Storage Open Season Successful, Development Begins). Then in October, Mountaineer completed a test well in the salt formation–testing it for thickness. The test was a success (see Mountaineer NGL Storage Test in OH a Success, Construction in 2017). Plans, at that time, were for Mountaineer to begin construction later this year. Is the project still on track? Here’s an update…
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Antero Midstream Launches IPO – Hopes to Raise $930M

We should have known. Last week MDN brought you the news that former MarkWest chief John Mollenkopf has just joined the board at Antero Midstream (see Former MarkWest Chief John Mollenkopf Joins Board of Antero Midstream). Mollenkopf helped architect the December 2015 Marathon Petroleum buyout of MarkWest. After the buyout, Mollenkopf was named executive vice president and chief operating officer for the new MarkWest unit–the guy running it. In August 2016, Marathon announced that Mollenkopf would ride off into the sunset as a very rich man (i.e. retiring), and that Gregory Floerke would take the reigns (see Senior Management Change at Marathon’s MarkWest Subsidiary). Last week we noted that Mollenkopf had joined the board of Antero Midstream (see Former MarkWest Chief John Mollenkopf Joins Board of Antero Midstream). Which makes sense. In February, Antero formed a joint venture with MarkWest in West Virginia (see Antero Forms JV with MarkWest to Service Combined 360K WV Acres). Mollenkopf has uncanny timing–turning up when there are “significant liquidity events.” So we should have known that Antero Midstream was about to launch an initial public offering. Yesterday, Antero Midstream announced an IPO of 37.2 million shares of stock, hoping to raise more than $900 million…
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