Last week energy analyst Richard Zeits posted a terrific piece on Cabot Oil & Gas on the Seeking Alpha website (see Cabot’s Drilling in Susquehanna County Moves Needle on U.S. Supplies). Zeits turns in a “part 2” on the Cabot story yesterday—and if anything, it’s even better. In his latest post, Zeits talks about the uber-productive wells Cabot has drilled in Susquehanna County, PA. Cabot had 30 wells in the fourth quarter of last year that turned in initial 24-hour flow rates of 20 million cubic feet of natural gas, settling back to a 30-day average rate of 16.6 Mmcf/d.
Even more astonishing? One well they drilled—with 35 frack stages—had a 24-hour initial rate of 41.4 Mmcf/d and settled back to a 30-day average of 35.9 Mmcf/d. Superlatives are not enough to express how big this news is. These are the highest numbers we’ve ever seen—higher than the Gulfport wells in the Ohio Utica Shale (although this is dry gas only, so it’s not a true apples to apples comparison). This is big news not only for Cabot and Pennsylvania…these wells are relatively close to the border of New York State. Hello Gov. Ditherer!
Wednesday was the conclusion of the two-day 2nd Utica Shale Development & Growth Forum in Columbus, Ohio. MDN Editor Jim Willis moderated a panel of shale industry media reporters. It was fun! (See my presentation slides below.) We also heard speakers from MarkWest, Penn State’s Marcellus Center, and from Cabot Oil & Gas. Jim’s conference notes from Day 2, including a slip about new numbers coming Gulfport in the Utica…
One of the arguments launched by anti-drillers is that “shale gas supplies won’t last”—supplies will run out quite quickly, in less than ten years (OMG!). This particular meme started with a pair of articles in the New York Times in June 2011 (see New York Times: Nightmare on Shale Gas Street). The Times articles call shale drilling a Ponzi scheme with very little actual gas (or “proved reserves”) in the ground. It’s just a head fake by energy companies to get investors to part with big money. Then we found out the main anonymous government source quoted in the Times articles was a lowly intern with ties to the anti-drilling Natural Resources Defense Council (see Unnamed Source in New York Times Anti-Gas Articles was…an Intern?!).
Leaving behind the fiction we so often find in the pages of the NYT, there’s at least two books being published this year by supposed industry insiders who pick up on the same meme (see Energy Industry Expert Says Shale Gas Will Last <10 Years). Let’s inject a little science into this discussion, shall we? The University of Texas is about to publicly release a new study on shale supplies in the Barnett Shale. The Barnett was the first shale play to be commercially developed in this country. The study’s conclusion? The Barnett will still be producing natural gas until 2050—and beyond. Although production will decline over time, the Barnett is a powerhouse—the country’s second-most productive formation. But you wouldn’t know that by reading stories about the new UT study from Bloomberg…
Columbia Gas Transmission, a subsidiary of Nisource, filed plans with the Federal Energy Regulatory Commission (FERC) on Monday to expand their pipeline network in the Philadelphia area to bring more Marcellus Shale gas to the eastern side of the state.
Although anti-drillers are sure protest this latest proposal (as they do all such proposals), in what will no doubt be a relief to property owners, no “virgins” will be sacrificed. Let us explain…
The following guest post is from MDN subscriber and friend, Chris Acker. Every day Chris sends MDN editor Jim Willis a list of items he notices in the news that may be of interest to MDN readers, and Jim includes many of them. The MDN service is made better because of readers like Chris—and we publicly thank him.
Chris owns property in Susquehanna County, PA, which is leased with Cabot Oil & Gas. He looks forward to the day when his property is drilled by Cabot. In the meantime, Chris watches Cabot (and other drillers) and keeps tabs on their operational and financial health. Chris points out in his post below that for the first time in many years, Cabot Oil & Gas’ market capitalization has exceeded that of Chesapeake Energy. Chesapeake is the country’s second largest natural gas driller with revenues many times that of Cabot—so this is a true milestone.
Another group of well-meaning but energy-ignorant New York town board members have voted to ban fracking—this time in the town of Warwick, NY (Orange County—Hudson Valley area). Although there’s no Marcellus or Utica Shale under the town, town council members wanted to make a statement—loud and clear—that they hate fracking and want to strip away the property rights of landowners in the town. Message received.
Just a thought: As MDN readers know, all natural gas comes from well bores that have been fracked. Fracking is used in both horizontal (unconventional) and vertical (conventional) wells. Even conventional natural gas wells in New York are fracked—you did know that, right? If Warwick council members want to make a more meaningful and impactful statement about fracking, we propose the town simply ban the use of natural gas inside town boundaries—by everyone. What’s that? Warwick Town Supervisor Mike Sweeton himself burns natural gas? Say it ain’t so!…
In a complex deal submitted to regulators last year, Marcellus driller and midstream company EQT Corp. and gas utility company Peoples Natural Gas want to do a swap. EQT proposes to trade/sell its natural gas utility division, called Equitable Gas, to Peoples, and in return EQT would get not only $720 million but also gas pipelines and storage facilities—called the Allegheny Valley Connector—from Peoples.
Once (if!) the deal is done, EQT will be totally focused on drilling and midstream and out of the utility market. EQT is currently shopping around prospective future capacity on the Allegheny Valley Connector to other drillers, to see what kind of interest they can generate:
Crestwood Midstream Partners reported their 2012 results earlier this week. In 2012, Crestwood spent $560 million on new assets: gathering pipelines, processing plants and compressor stations—most of it in the Marcellus Shale region. Crestwood’s “wet gas” gathering volumes were 62% of their total gathering volumes in 4Q12. Wet gas was just 26% in 4Q11, meaning the company has put a premium on expanding in areas where wet gas is found (western PA, northern WV and eastern OH).
On Wednesday, MarkWest Energy Partners, the largest midstream (pipeline/processing plant) company in the Marcellus and now in the Utica Shale, released an update for 2012 along with comments about where they are headed in 2013. A few highlights: MarkWest made $528 million in profit for 2012, up slightly from the $515 million they made in 2011. Overall processing volumes went up by 23% in 2012. Processing volumes at their Liberty (Marcellus) operation were up an eye-popping 86% in 4Q12 over 4Q11. They now have their eye on the Utica Shale in multiple joint ventures including a deal with EMG to build two new processing facilities in the Utica.
Select portions of the MarkWest update relevant to the Marcellus and Utica:
Western Gas Partners, a master limited partnership created by Anadarko to “own, operate, acquire and develop midstream energy assets” has until now built and expanded pipeline and processing plants in the southwest, west and mid-continent region. They are now players in the Marcellus Shale as well by paying $623.5 million for a one-third ownership of two natural gas pipeline gathering systems in north-central Pennsylvania. Together, the two systems have a combined throughput of 1.2 billion cubic feet of natural gas per day.
The company’s announcement about the two deals and how they will finance them:
Last Friday Noble Energy discovered a valve left open on a brine wastewater storage pond was allowing brine water to pour out—some 2,264 barrels (95,000 gallons) in Marshall County, WV. Brine “wastewater” is not fracking wastewater and does not contain fracking chemicals. It’s naturally-occurring water from deep below the surface that seeps out of drilled holes long after initial drilling is done. Brine contains a lot of minerals, and sometimes low amounts of radium—hence the anti-drillers mantra “it’s radioactive!”
When an accident like this happens, and when the water reaches a local tributary as it did with this incident by getting into the Big Wheeling Creek, it’s not nothing. It’s also not an ecological disaster. Fortunately, the spill was largely contained in sediment traps designed to do just what they did—stop most of the water from spreading. Here’s what we know so far about the accident:
Frack sand company Unimin Corporation announced yesterday they have opened a new proppant (or frack sand) distribution terminal in Navarre (Stark County), Ohio—near Canton. Unimin will provide frack sand to Utica Shale drillers from the facility. This is the company’s seventh terminal in the Marcellus and Utica region (see the complete list below).
New York State unions are blasting Yoko Ono, Sean Lennon, Mark Ruffalo and other celebrities (elitist 1 percenters) for killing jobs for hard-working union members (99 percenters) with their activist opposition to shale gas drilling and fracking in New York.
Greg Lancette, political director of the New York State Pipetrades Association—14 local unions with 25,000 members—penned the following op-ed that appears in today’s New York Post: