More Marcellus Airline Capacity Coming to NEPA from Delta

We recently told you the story of why United Airlines was eliminating a daily flight between Cleveland and Oklahoma City, a move that may have an impact on Utica Shale development (see The Reason United Canceled Daily Flights Between Cleveland & OKC). Here’s a story on the other side of the isle: Delta is increasing the capacity of the jet it runs between the Wilkes-Barre/Scranton International Airport and Atlanta’s Hartsfield-Jackson International Airport. They’re going from a small regional 50-seater jet to an Airbus A319 which seats up to 156 passengers.

Some (many?) who work in the gas fields of northeast PA use the Atlanta connection to reach Wilkes-Barre/Scranton, so this good news means there’s more development opportunity for the Marcellus because more people can reach it faster from places like Texas and Oklahoma, where many PA drillers have their headquarters…
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PA’s “Coddling” of the Marcellus Industry & Economic Illiteracy

It’s now clear that liberals and Democrats (usually the same) in PA are hellbent on imposing an extreme severance tax on the Marcellus drilling industry. Whether the seven townships that sued the state to overturn large portions of the Act 13 law (eventually winning) are part of the tax conspiracy–we don’t know. Whether intentional or not, the lawsuit by the towns has led to the current situation that a wise, circumspect and reasonable impact fee (instead of a tax that redistributes wealth to people who didn’t earn it) is now in jeopardy and likely a goner (see Happy Story Ends Badly Because of 7 PA Towns). So Libs and Dems, or LibDems, are now beating the drums: tax, tax, tax, tax. They’re actually happy that towns will lose out on millions of dollars of impact fee revenue because they want use it as a political issue–as an excuse to tax out the wazoo.

The sycophantic and slavish media has picked up the meme and LibDem editors are writing op-eds calling for a nosebleed severance tax–like the editors of the Scranton Times-Tribune. The TR editors say the PA state legislature, by not imposing a nosebleed severance tax, has been “coddling” the drilling industry. What they’ve been doing, sychophantic, slavish LibDem TR editors, is fostering an economic miracle happening in PA all around you–an economic miracle that’s the envy of the world! You’re now about to pee all over it and ruin it. Try boning up on an economics course sometime…
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Biggest Producer of “Fugitive” Methane is… Cows?!

None other than the federal Environmental Protection Agency (EPA) says that in 2012 the single largest producer of so-called fugitive methane (CH4) that escapes into the atmosphere was not from landfills, like it used to be. It also was not from oil and gas drilling, as is falsely claimed by anti-drillers. Nope. The biggest producer of methane that steals away into the nighttime sky like a thief, rising to toast us all into marshmallows, is none other than cow burps. Which will of course send the global warming nutters into a tissy, demanding that farmers afix a breathalyzer over the mouths of cows to monitor and capture all of that fugitive, evil methane. Watch out farmers–the nutters are coming for you!

Here’s the story of those impolite cows and their burping, farting ways…
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Marcellus & Utica Shale Story Links: Fri, Feb 28, 2014

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading:
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NY Attorney General Actively Works Against 70K NY Landowners

chained dogAs hard as it is to believe, New York’s Attorney General continues to work against his own constituents. We’ve known since his election that Democrat Eric Schneiderman is anti-drilling–what we didn’t know was was how much of an activist he would be, using his office to further his own distorted views on oil and gas drilling. He’s misused the power of the subpoena to go after drillers (see NY Attorney General Schneiderman Subpoenas Shale Drillers). He’s abused the power of his office to investigate town board members in towns that voted to “wait and see” (i.e. not ban) shale drilling (see NY Attorney General Investigates Towns Who Won’t Ban Fracking).

Now, unbelievably, he has asked the court (and succeeded) in delaying a lawsuit brought by 70,000 New York residents–the people he’s sworn to protect–against Gov. Andrew Cuomo. It seems that Cuomo is the only person in the state Schneiderman wants to protect. He’s Andy’s personal junk yard guard dog–on a not-so-short leash. The Joint Landowners Coalition of New York (JLCNY) recently sued Cuomo with an Article 78 lawsuit, in essence asking the court to force Cuomo to do the job he won’t do and release new oil and gas drilling regulations (see D-Day: JLCNY Files Lawsuit Today Against Cuomo, Martens, Shah). Schneiderman has gotten the court to delay any action on the lawsuit from March 7 to April 4, to give Schneiderman and his lieutenants, what, more time after 5 1/2 years?…
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Gulfport Production & Profits Jump in 2013 Thanks to Utica Shale

Gulfport Energy is one of the leading drillers in the Utica Shale, so when they issue press releases and updates, as they did yesterday, it’s news for MDN. Gulfport issued their fourth quarter and full year 2013 financial and operational update yesterday. We’re including the full thing below, which contains a fair bit of mind-numbing financial numbers (meaningful to investors and traders, not so much for the rest of us). However, sometimes you spot a few gems in all those numbers and in the narrative that accompanies them. We believe we have in this most recent update…
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Rhino Dumps the Rest of its Utica Assets in Deal with Gulfport

Oil and gas deals are sometimes complicated–more complicated than we can get our brains around. That’s our disclaimer for this bit of news. In 2012 Rhino Resource Partners, a coal company, decided to get in on some of the shale action in the Utica by investing in a joint venture with Gulfport Energy and Wexford Capital (see Rhino Resource Ups Investment in Utica Shale JV). Rhino doesn’t do any of the exploration, drilling or production. It’s just a partnership granting them a piece of the revenue action in return for investing in the operation. Somewhere along the way Rhino either got cold feet, or (more likely) the company hit a rough patch and needed money, because they sold 20% of their royalty interests in the jv (see Rhino Flips 20% of Utica Investment to Undisclosed 3rd Party). Further supporting our theory the company is cash-strapped, in September last year the company tried to sell 1.1 million of “common units” (equivalent of stock) to generate money to pay back loans (see Rhino Resources Issues 1.1M Common Units to Repay Debt).

Yesterday, as part of Gulfport’s update and also in a separate announcement from Rhino, comes word that Rhino has cut a deal with Gulfport to dump the rest of its interest in the Utica jv to Gulfport for $185 million, raising what appears to be much-needed cash for Rhino. Here’s the twin announcements:
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Chesapeake 2013 & Beyond: Lack of Pipelines Still a Big Problem

Yesterday Chesapeake Energy issued their fourth quarter and full year 2013 operational and financial results. Chessy’s CEO, Doug “the ax” Lawler is all proud of himself for having fired over 1,200 employees, saving the company all that money (money that goes into Carl Icahn’s bank account). Whatever. For all of our disgust with what Chesapeake has become because of Icahn and his corporate raiding practices, it’s still a very important driller in the Marcellus and Utica (as well as other plays), and will continue to be so. When they issue an update, we need to pay attention, because as Chessy goes, so goes the Marcellus and Utica, in some senses.

What does yesterday’s update show? Chessy has drilled a lot of wells in the Utica–425 so far, more than half of the 747 Utica wells drilled to date in Ohio. Of those 425, 230 are online and producing, but a huge 195 wells are still waiting to be hooked up to pipelines. Lack of infrastructure is still a big issue in the Utica and in the Marcellus. In the northern Marcellus area (northeast PA) Chesapeake has 112 wells waiting to be connected to pipelines. They’ve scaled back their drilling in NEPA somewhat over the past year. In the southern Marcellus (SWPA and WV) Chesapeake has 47 wells waiting to be connected to pipelines or otherwise completed. Here’s the operations update for both the Utica and Marcellus from Chessy’s announcement yesterday:
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MarkWest’s Banner 2013, Plans for 2014

MarkWest Energy, as we’ve noted many times before, is probably the biggest midstream company in the Marcellus and Utica Shale. It’s always a contest between MarkWest and Williams, but if we’d have to choose one, we’d say MarkWest is has more of a presence in the northeast. Yesterday the company issued their fourth quarter and full year results for 2013 (in the ongoing parade of such announcements). The company notes that with the completion of several important new processing plants they now are processing over 2.8 billion cubic feet per day (Bcf/d) of dry and wet gas throughout the Marcellus and Utica Shale region. In addition to the facilities already built, MarkWest has an eye-popping 19 additional major processing and fractionation facilities under construction in the Northeast. They are pouring billions each year into the Marcellus/Utica.

Here is MarkWest’s look back at an incredible 2013, and a look forward to some of the good things coming in 2014…
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Serious Concerns about Boardwalk Pipeline Partners Continue

Two weeks ago MDN told you about the developing story that Boardwalk Pipeline Partners has hit a serious rough patch and their stock price was plummeting (see Boardwalk’s Stock Drops Like a Rock – Trouble in Midstreamland?). The situation has not improved and their stock price is down nearly 50% from where it was just a short time ago. Why do we care?

Boardwalk is in a joint venture with Williams to build the Bluegrass NGL pipeline from the Marcellus/Utica all the way to the Gulf Coast. The Bluegrass has hit trouble, ironically, in the Bluegrass state of Kentucky with anti-drillers opposing it every step of the way (see the list of MDN’s Bluegrass pipeline trouble stories here). With one of the two Bluegrass pipeline partners in financial straights, what does that mean for the pipeline project? Especially since they have competition and it’s a horse race with a Kinder Morgan/MarkWest joint venture (see “Midstream Knife Fight” – Who Will Have 1st Operational NGL Pipeline to Gulf?). Here’s the latest analysis of how, and why, Boardwalk finds itself in the position they are now in…
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Happy Story Ends Badly Because of 7 PA Towns

Who doesn’t like a county (or state) park, or a newer trend–converting old railroad beds into “rail trails”–resurfacing them for walkers, joggers, bikers and roller skaters? We sure love and use them. This story begins happily, with York County spending $100,000 to improve the Old Northern Central Railroad tracks and a portion of the York County Heritage Rail Trail that runs alongside them. Where did the money come from–taxpayers? Nope. It came from the Marcellus Shale industry, from the impact fee levied as part of the Act 13 law. In fact York County has received, so far, nearly 3/4 of a million dollars from that fund–even though there’s no active shale drilling in the county–thanks to Act 13.

But the story ends badly, because quite likely starting next year, all of that impact fee money will disappear (see PA Supreme Court Won’t Reconsider Act 13, Impact Fee Now in Doubt). There will be no more impact fee money because seven townships in PA got their knickers in a twist, insisting their own layman zoning regulations were better than a set of statewide, uniform regulations designed by geologists and experts. So the seven petulant towns sued to toss out large portions of the Act 13 law, and it now looks like the impact fee will be tossed out too….
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Calfrac Talks About Marcellus & Its Importance for the Company

Across the United States and indeed around the world, when it comes time to do the actual fracking of a shale well (which is a very small part of drilling a well), there are only a handful of companies that get contracted to do the work. One of those companies is Calfrac Well Services. The company’s bigwigs held an analyst phone call yesterday (most public companies do the same) to discuss fourth quarter and fiscal year 2013 results. These calls are typically done to impress and reassure investors that their money is well-invested in the company–and perhaps attract new investment. The quarterly analyst phone call dance is something they all do–a part of capitalism, the best economic system ever devised by man.

MDN sometimes brings you excerpts from these phone calls, as we are today, because we find interesting tidbits. From Calfrac, we bring you the prepared comments portion of the call that happens at the beginning. Why? Because Calfrac’s top management mentions the Marcellus Shale play–and it’s importance to Calfrac–a number of times…
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Mass. Anti-Drillers Finally Wake Up, Begin Opposing TGP Project

About a month ago MDN noted, with some shock, that townships across Massachusetts were reacting to overtures by Kinder Morgan to expand the Tennessee Gas Pipeline across the state (to bring in more abundant, cheap Marcellus Shale gas) with reasonableness and an open mind (see Reaction to TGP’s Planned Pipeline Across Massachusetts). We always thought Massachusetts residents as a whole were slightly left of Vlad Putin. But we were (happily) wrong! We observed it’s funny how a 10x price jump in natural gas had turned New Englanders into a more reasoned, considered bunch.

However, some of the nutty bugs have now come crawling out of the woodwork to oppose the pipeline because it will bring that filthy, nasty “fracked” natural gas into the state. It just took them a little longer to come out of their fugue and get organized, but now they have–at least a small handful of them…
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Marcellus & Utica Shale Story Links: Thu, Feb 27, 2014

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading:
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Aubrey McClendon’s Wandering Eye: Now Loves a Second Shale Play

The PhilandererDoes Aubrey McClendon have a wandering eye? Is he a shale play philanderer? It seems to us that since Aubrey was shown to the door of his own company (Chesapeake Energy) last year by corporate raider Carl Ichan, the only word to come out of Aubrey’s mouth has been “Utica.” It’s been Utica this and Utica that. He’s now raised more than $2.9 billion (!) for Utica Shale land acquisition and drilling (see McClendon Hauls in Another $1.2B, Utica Shopping Spree Continues).

But what’s this? Another shale play–closer to home (in Oklahoma)–seems to have caught Aubrey’s fancy and he’s now engaging in a dalliance back home. He’s already raised a cool $680 million for his new shale mistress…
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Economist Releases Report on WV Cracker Plant’s Economic Impact

West Virginia’s coming ethane cracker plant continues to generate positive economic news. Yesterday the former director of West Virginia University’s Bureau of Business and Economic Research and professor emeritus at WVU, Tom Witt, released a study he conducted on behalf of Braskem America (i.e. Odebrecht, the company building the cracker). The new study details specifics for how many jobs and how much money the proposed cracker and associated petrochemical plants will generate. And it’s truly astonishing.

Here’s an overview of the economic miracle about to hit WV (and beyond)…
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