Rumor Mill: PA Ethane Cracker Plant on Shell Chopping Block?

rumor millOn an analyst call yesterday, Shell’s outgoing CEO Peter Voser stoked fears that Shell may be ready to pull the plug on the announced ethane cracker plant planned for Monaca, PA. According to Voser, the company will make “hard choices” over the next few quarters about which projects it will fund and build. Specifically, Voser said the company had previously announced three big projects: the ethane cracker in PA, a gas-to-liquids plant in Louisiana, and an LNG plant in Canada. He said Shell cannot build all three projects. Gulp.

Voser’s comments have led to speculation that the ethane cracker plant in PA will get the ax, especially with two ethane pipelines coming online by the end of this year, and two more mixed NGL pipelines coming online in the next few years (see our companion story today, “Midstream Knife Fight”). Just last week we highlighted a story from the Wall Street Journal and industry analyst Rusty Braziel which also cast doubt on the PA cracker plant (see WSJ Says PA Cracker Plant May Not Happen After All). Are things going south–literally and figuratively–for the Shell cracker? Yesterday’s comments from Voser:
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Latest Laughable NY Anti Tactic – Not Enough Gas, Just Move Along

Jerry Acton - Anti-DrillerA couple of nights ago a group of four retired anti-drilling hippies “smart people” tried the latest tact in the sad tale of frackless (and feckless) New York: Try to convince the unthinking masses with charts and maps and bamboozling bullcrap that recoverable, profitable natural gas stops at the border of Pennsylvania and New York. Yes that’s right folks. “Don’t bother to drill in NY because there just ain’t enough gas in the ground to make it worthwhile.” That’s what passed for smart and insightful, as delivered by Jerry Acton (pictured), Chip Northrup, Lou Allstadt and Brian Brock (anti-drillers all) at the once great Cornell University.

Master of ceremonies? The itinerant stand-up comedian and Cornell professor, Tony Ingraffea, of course…
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PA Anti-Drillers Shove Their Children Before the Microphones

Whether or not drilling under county parks is a good idea or not, we’ll leave for another post. We’re not at all concerned about safety or pollution–it’s safe and it doesn’t pollute. It’s just a PR headache, though, to keep pushing the boulder uphill all the time–fighting rank ignorance and outright lies. At any rate, such proposals do exist including a proposal to drill under some of the parks in Allegheny County, PA (Pittsburgh area). The energy company in question, Huntley & Huntley, has floated a proposal to county officials. They want to drill under, not on, the parks–drill under them from adjacent non-park land.

Well known anti-driller PA State Sen. Jim Ferlo convened a *@#!%-fest to complain about it. Nothing new there. What caught our eye about meeting, however, is the shameless way some anti-drillers use their own children as props–like pushing an 8 year-old in front of the cameras and microphones after filling her head with lies about how drilling will poison precious Mother Earth. It was on full display at yesterday’s Ferlo’s Follies…
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“Midstream Knife Fight” – Who Will Have 1st Operational NGL Pipeline to Gulf?

In the race to be the first pipeline to flow ethane from the Marcellus/Utica region to a cracker plant elsewhere, it looks like Sunoco Logistics may have won. Their Mariner West pipeline to Sarnia, Canada has been in testing since July and due to turn throw the valve wide open in November, according to Range Resources (see Range Resources 3Q13: Nearing 1 Bcf/d, Rev Up 29%, Costs Down 12%). However, not to be outdone, the Appalachia to Texas Express (ATEX) ethane pipeline being built by Enterprise Products Partners now says they will go fully online in December, months ahead of schedule (see ATEX Ethane Pipeline to Begin Pumping Dec 2013, Ahead of Schedule). Both pipelines going online a month apart? We’d call it a photo finish with Mariner West winning by a nose.

Now everyone’s attention is turning to mixed NGL (natural gas liquids) pipelines. There’s another horse race heating up. Williams and Boardwalk Pipeline Partners are building the Bluegrass pipeline to the Gulf Coast (see Bluegrass Pipeline Launches Open Season, on Track for 2015 Launch). And then there is Kinder Morgan and MarkWest Utica who have joined forces to build a mixed NGL pipeline to the Gulf Coast too (see 2 New OH Projects: Cryo Processing Plant & NGL Pipeline to Gulf). Which one will be the first to go operational? Several analysts weigh in with their colorful opinions…
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Williams 3Q13: Income Down 10% Companywide, NE Still Not Profitable

Williams Partners is one of the biggest midstream companies (pipelines and processing plants) in the Marcellus/Utica region. Wednesday they issued their third quarter financial and operational update in the never-ending parade of quarterly updates. And what did it show? The company overall saw a 10% decrease in net income for 3Q13 vs 3Q12, mostly because of lower prices for natural gas liquids and the compounds made from them. The news from Williams’ northeast operations is that they continue to bleed money (in the red) in 3Q13, but not as bad as 3Q12. Revenues are up in the northeast, but spending to build out their infrastructure is up more.

Below are select portions of the Wednesday update. We first provide you with the big picture introductory stuff to the set the stage, and then select out the northeast (Marcellus/Utica) sections:
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PDC Energy 3Q13: “Excited” about Utica in Washington County, OH

PDC Energy, headquartered in Denver, CO, has drilling operations in both the Marcellus and Utica Shale region. In June of this year, PDC sold off “non-core” assets they owned in Colorado and said they would invest that money in drilling the Utica Shale (see PDC Energy Sells CO Assets, Will Use Money for Utica Drilling). In their third quarter update, issued yesterday, PDC is positively effusive about their first Utica Shale well in Washington County, OH. It is the first well they’ve drilled in their “southern Utica” acreage and judging by the results, they plan to drill many more in that area.

In addition to good tidings from the Utica, PDC announced they raised $276 million from floating a new stock offering. They were also listed in the Russell 2000 index. It’s been a busy three months for PDC. Relevant (Utica) portions of their 3Q13 update:
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NiSource 3Q13: Income Doubled, Progress on NE Midstream Projects

NiSource, a huge midstream and utility company in the northeast/Midwest and parent of Columbia Gas, released their third quarter operations and financial update yesterday. They report income nearly doubled from a year ago (up 198%), and is on track to invest a massive $2 billion this year in upgrades and expansion projects. NiSource is a major midstream player in the Marcellus/Utica region through NiSource Midstream, Columbia Gas, Millennium Pipeline and Pennant Midstream–together what they consider their Columbia Pipeline Group (CPG).

Here’s relevant portions from yesterday’s update that concern the NiSource’s midstream operations in the Marcellus/Utica region:
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Deadline Approaching for 2013 Northeast Oil & Gas Awards

Calling all energy-related companies in the Marcellus/Utica Shale. The Oil & Gas Awards invite you to submit (or be submitted) for recognition in one of 25 different categories. Marcellus Drilling News is pleased to partner with the Oil & Gas Awards to promote their annual, regional events. Specifically, we’re currently promoting the 2013 Northeast Oil & Gas Awards (entries due by Nov. 29, 2013).

The Oil & Gas Awards announcement, with details on how to enter:
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