Marcellus & Utica Shale Story Links: Mon, Dec 9, 2013

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading:

New York

Energy firm threatens suit over Cuomo fracking moratorium
New York Post
Maybe the courts will finally force Gov. Cuomo to do something he should have done five years ago: make a decision one way or the other on fracking. It never should have come to this. People elect governors to make decisions, not kick them down the road until elections (or presidential primaries) are safely passed. But the governor continues to dither, and an energy company that has gone bankrupt while waiting says it’s going to sue unless the governor and his agencies release the environmental-impact statement the governor says will guide his decision yea or nay. The company is Norse Energy, which has leased 130,000 acres for gas drilling upstate. Earlier this year, the Norwegian based company pulled the plug on its New York operations, filing for Chapter 7 bankruptcy. The company says it lost $30 million here because its leases became all but worthless once the governor started ­delaying.

Andrew Cuomo facing court battle with energy company over fracking moratorium
Hot Air
New York Governor Andrew Cuomo has been in the news fairly often of late, and not just in his home state. The Democrat has been the frequent subject of some admittedly long-shot speculation over a 2016 presidential run if Hillary passes on the ticket. (Personally, I would find a Cuomo candidacy hilarious, not to mention good news for the GOP, when he tried to explain to the rest of the nation how he signed the NY Safe Act, one of the most restrictive and odious gun control laws in the nation.) When he was elected Governor of New York, he ran on a hazy platform when it came to several controversial issues in the state, none more so than the question of fracking. Vowing to take an “honest look” at the situation, along with the already existing moratorium on the process, he promised that action would be taken one way or the other.


Eclipse Resources donates drill cuttings to Ohio state agency
Akron Beacon Journal
On November 19, 2013, Eclipse Resources of State College, Pennsylvania, donated an extensive collection of well sample cuttings to the ODNR Division of Geological Survey. This collection of samples originally was accumulated by Oxford Oil Company of Zanesville, Ohio, which was recently acquired by Eclipse Resources. The collection features samples from wells dating back more than fifty years. Mr. Jack Greene, from the Eclipse Zanesville office, was instrumental in helping the Survey acquire this well-organized collection. Samples from more than 2,000 wells, located predominantly in eastern Ohio, will be added to the Survey’s current collection of 5,325 cutting suites, making this one of the most sizable acquisitions in the Survey’s 176-year history.

Hess successfully shrinks itself to grow
Fortune Magazine
Hess’ revenues are projected to close this year at less than one third of 2012 levels. At the same time, the company’s stock price has surged, increasing more than 50% as Hess pursues a shrink-to-grow strategy that has seen the company slim down and focus on its oil and gas acreage in North Dakota’s Bakken formation. Pushed by investors who launched a contentious proxy fight early in 2013, Hess has sold upwards of $7 billion in assets (a $1.3 billion sale of oil and gas assets in Indonesia was announced this week) as it reconstitutes itself as a streamlined exploration and production outfit. Morgan Stanley said in a recent research note that Bakken acreage will constitute 40% of Hess’ net asset value once the proposed sale of holdings in Thailand is complete. Hess has also dumped its marketing, refining, and energy trading businesses this year and is trying to unload its more than 1,300 gas stations. For Hess, which also owns acreage in the Utica formation, future earnings are pegged squarely to the domestic shale boom that has reversed decades of declining production and pushed the U.S. ahead of Russia and Saudi Arabia as the world’s top energy producer.

EV Energy Partners, EnerVest Chief Accounting Officer to Retire
EV Energy Partners
EV Energy Partners, L.P., and EnerVest, Ltd. today announced that Frederick Dwyer, Controller of EVEP and Vice President and Chief Accounting Officer of EnerVest, Ltd., will retire on January 31, 2014. Dwyer will continue to serve in his current role until his retirement date and in an advisory role through March 31, 2014. Ryan J. Flory, who currently serves as Controller of EnerVest, will assume the duties of Controller of EVEP upon Dwyer’s retirement. “Fred joined us in 2006 at a pivotal point in our history and provided leadership since EVEP’s initial public offering and in the overall growth of the EnerVest family,” said John B. Walker, Executive Chairman of EVEP and President and CEO of EnerVest. “We wish him well as he pursues his passion for the outdoors and charity work.”

Shale boom has Columbiana County adding rail spur at intermodal yard
Columbus Business First
MS Consultants Inc. has landed a contract to design a rail spur in eastern Ohio that will help move oil, natural gas and drilling materials in the Utica and Marcellus shale plays. The Columbiana County Port Authority recently selected the Columbus-based engineering firm to design the spur at its intermodal facility along the Ohio River in Wellsville, about 5 miles south of East Liverpool. MS Consultants’s fee will be based on the scope of the project, which is still to be determined, said Port Authority CEO Tracy Drake. What is clear, he told me, is the site needs better rail service to keep pace with the traffic it is seeing from activity related to the shale play. Oil and gas companies Hilcorp Energy Co. and Marathon Petroleum have facilities at the Wellsville site as do several companies that provide materials used in drilling in the shale play.


Bill encourages drillers to use abandoned mine drainage to frack by easing liability
StateImpact Pennsylvania
After shrinking away from the spotlight for almost eight months, a bill aimed at encouraging natural gas drillers to use polluted mine drainage water to frack by easing their liability is making its way back into the legislature. Senate Bill 411 got a lot of attention earlier this year when environmentalists pushed back, claiming it would grant immunity to the industry all the way through the fracking process. The bill, introduced by Sen. Richard Kasunic (D) from Somerset and Fayette counties, was tabled in March, but was amended in mid-November and has now been referred to the Senate Appropriations Committee to the surprise of environmental groups closely following the issue.

Students get crash course in shale industry
Philadelphia Inquirer
On their first day working on a drilling rig last month, the eight students looked like the rank novices they were: They wore clean gloves and tidy safety vests, and many didn’t know the difference between a roustabout and a tool pusher. But three weeks later, the students at Penn College of Technology’s course on drill-rig components had accumulated the grease-smudged experience that they hope will be their ticket to a job in the Marcellus Shale natural gas industry. “I’ve got the lingo down now,” said Claire Kerstetter, 22, a Clinton County resident who graduated this year with a communications degree from Clarion University of Pennsylvania but wanted to get some hands-on experience in the shale-gas industry. “I know there’s a huge market for it.”

Shale gas 2013: The year in review
Pennsylvania Business Central
The natural gas boom in Pennsylvania has grown in leaps and bounds since 2008 when gas company representatives known as “lease men” descended upon the Marcellus Shale Region with contracts in hand, promising farmers more money than they expected to make in a lifetime. During the first half of 2013, the commonwealth trumped Louisiana to become the second largest natural gas producer in the nation. Marcellus wells produced 1.4 trillion cubic feet between January and June. Among the 31-gas producing states, only Texas had a greater output during the first six months of the year. Pennsylvania currently has 6,261 Marcellus wells, increasing from 4,312 wells the same time two years ago. Of those wells, less than half — 2,879 — are currently producing gas due to lack of pipeline infrastructure.

Marcellus 2014: The year ahead
Pennsylvania Business Central
Marcellus Business Central spoke with Steve Forde, vice president of policy and communications for the Marcellus Shale Coalition, to ask about the trends MSC’s members expect to see next year and what challenges lie ahead for the industry. MBC: One of the major themes for the industry in 2013 was the “pipeline build-out.” Some rigs were moved out of the state to drill for oil and natural gas liquids, and most companies have stopped drilling new wells in Pennsylvania. Will the build-out still continue next year?

West Virginia

Fracking, cracker not the same
Parkersburg News and Sentinel
Since consideration is being given to building a natural gas cracker plant in West Virginia, it might be well to ask, “just what is a cracker plant?” Many people might associate fracking for fracturing with cracker. They are not the same. Fracking has to do with a process used in the well drilling and cracker has to do with what has been done to the natural gas being produced. A cracker is similar to what is done with produced crude oil. When crude oil has been produced it goes through a refining process where various products such as gasoline, diesel fuel, kerosene and heavy lubricants are produced.

‘Cracker’ plant would need greenhouse gas permit
Charleston Gazette
If West Virginia political leaders want a multibillion-dollar natural gas “cracker” plant to be built in Wood County, they might have to swallow a bitter pill: state restrictions on the amount of greenhouse gases the facility could spew into the air. West Virginia elected officials generally don’t acknowledge the scientific consensus that industrial emissions are making the world warmer, threatening a wide variety of negative impacts. State leaders oppose efforts to curb global warming pollution, and are fighting Obama administration proposals to mandate such reductions.


Oil and gas fatalities spike with boom
Pittsburgh Post-Gazette
About every three days, an oil and gas worker was killed on the job in 2012 — and in 2011 and 2010. In the U.S., fatalities in the booming industry have climbed to the highest level since the U.S. Bureau of Labor and Statistics began keeping score in 1992. Last year, nonfatal accidents jumped as well, from a five-year low of 1,400 in 2011 to a five-year high of 2,600. But even with that spike, the oil and gas industry’s rate of nonfatal injuries is still far below the average for all private industries and has been for years.

Beige Book – December 4, 2013
Federal Reserve Bank
Wet-gas production in the Marcellus and Utica shales rose sharply between the second and third quarters of 2013. Production from the wet-gas regions of the Marcellus and Utica shales has grown significantly in the third quarter of 2013, when compared to the second quarter. Higher production was attributed to the completion of pipeline connections and the startup of gas- processing plants. We heard one report about plans to construct six additional wet-gas processing plants in the state of West Virginia. Well-head prices for natural gas remain at low levels, with some volatility seen in oil prices.

3 Companies Will Win Big From This Current Trend
The Motley Fool
After spending several years at depressed levels, natural gas prices are on the move. Natural gas is now above $4 for the first time since June, representing a six-month high. It appears that rising demand, thanks to increased adoption by utilities and other end users, is finally catching up to the supply glut that resulted from the boom in natural gas production. Rising natural gas prices makes industry giant Chesapeake Energy an obvious winner. Meanwhile, other companies including ExxonMobil and even coal producers like Peabody Energy stand to benefit. Here’s why rising natural gas prices will have a beneficial impact on all three of these companies.

America’s Energy Advantage Is Natural Gas, Not Rent-Seeking
Natural Gas Now
A few rent-seeking companies benefitting by natural gas are also seeking to restrict those benefits to themselves using government to do so, proving stupid friends are more dangerous than enemies. It’s our stupid friends, rather than enemies, that typically do us the most damage. The natural gas industry is dealing with this now, as some of its friends play into the stupid argument of fractivists that liquified natural gas (LGN) exports must be bad for our country. It’s the most cynical strategy imaginable; an exercise in crony capitalism as these companies attempt to use the power of government to limit competition and guarantee them low prices at the expense of others and consumers. It’s also a case of staggering hypocrisy.

Why We Should All Love Hydraulic Fracturing
Natural Gas Now
Our friend Nick Grealy at No Hot Air, who we often republish here, did a blog post on his site the other day called How to Stop Worrying and Love Hydraulic Fracturing. It reported on, among other things, a presentation by Tudor Pickering Holt & Co. by more or less the same name, going at it from the perspective of what it all meant for the United Kingdom, where Nick holds worldwide shale court. I took a close look at the presentation myself (available in Nick’s post, together with additional slides and important disclaimers) and found it contained some good information for us as well. Here are some of the highlights and the implications: