Marcellus & Utica Shale Story Links: Mon, Jan 13, 2014

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

New York

Cuomo ripped for stalling on fracking
New York Post
One of the nation’s leading energy-industry executives is blasting Gov. Cuomo for denying upstate New Yorkers thousands of jobs with his “shortsighted’’ refusal to permit drilling for natural gas. American Petroleum Institute President Jack Gerard also accused Cuomo of hiding “for far too long’’ behind the “excuse’’ of conducting a health study on the safety of fracking for natural gas when its safety has already been proven in some 30 states across the nation. “I think it’s shortsighted, I think it’s unfortunate because it hurts his state. It hurts economic development in his state,’’ Gerard told The Post. “We need to go back to facts and reality,’’ he continued. “The director of the [Environmental Protection Agency] .?.?. the secretary of energy today, the secretary of the interior today, have all reaffirmed the fact that hydraulic fracturing can be done in a safe and effective way that protects the workforce and protects the environment,’’ continued Gerard, whose institute represents virtually all major gas and oil companies in the nation, including ExxonMobil and Shell, and sets the industry standards for the equipment used in the energy field.


In ‘Fracking’ Counties, Employment Flat, but Sales Taxes Climbing
The Daily Jeffersonian
Shale oil drilling is increasingly focusing on eight counties in eastern Ohio, and those areas are seeing some of the biggest gains in sales tax receipts. But those same counties aren’t seeing substantial increases in their work force levels yet, as the industry awaits further exploration and infrastructure to accommodate oil and gas being produced via horizontal hydraulic fracturing. Those are some of the conclusions reached in the latest “Ohio Utica Shale Gas Monitor,” a new study released today by the Maxine Goodman Levin College of Urban Affairs at Cleveland State University. The report reviewed sales tax receipts, employment statistics, well permits and other data to determine the impact of horizontal hydraulic fracturing in eastern Ohio. “We’re still another year, 18 months out” from bigger economic impacts, said Ned Hill, dean of the college and one of the authors of the report. He added, “The south is clearly entering the production stage. The north, they’re very much in the science stage … Overall, I’m still optimistic, still hopeful, but it’s still building out.”

2 Companies Driving the Surge in Utica Shale Production
The Motley Fool
According to new data released by Ohio’s Department of Natural Resources, energy companies drilling in the state produced more than twice as much oil and gas from the Utica shale in the third quarter of 2013 as they did in the entire year of 2012. In the three months through September 30, 245 wells produced 1.3 million barrels of oil and 33.6 billion cubic feet of natural gas, the Columbus Dispatch reported on Wednesday, with the average Utica well producing 5,439 barrels of oil and 137 million cubic feet of gas. By contrast, 85 wells produced 635,876 barrels of oil and 12.8 billion cubic feet of gas for the full-year 2012. The figures were released as part of a new law that requires companies drilling in Ohio’s Utica shale to release production figures on a quarterly basis, as opposed to annually.

Third tower goes up at Kensington plant
Salem News
Crews were busy Saturday erecting a third 160-foot tall demethanizer tower at the 170-acre UEO (Utica East Ohio) Kensington Plant. Baron John, construction manager for UEO, said over two months of preparation went into Saturday’s effort, and the tower took two hours to build. “We had 20 people, and used smaller cranes with maximizers for extra weights as the tower was raised,” John said. After freezing temperatures kept workers inside Monday and Tuesday, preparation resumed Wednesday. Just as the crew was about to raise the tank, however, the weather forced another change of plans. “We were looking to raise it around 3:30,” John said. “Then we got a little thunderstorm going through, so that pushed us back an hour, but once we got back outside, it was moving very smoothly.” With construction completed, the next step is to commission the tower for operation, which is expected to happen within the next three months.

5 essential facts about Ohio’s shale play
Columbus Business First
I was surprised to read a recent finding that most Americans don’t know all that much about fracking. Those numbers are surely different here in Ohio, with the Utica shale play front-of-mind for many residents, especially those in eastern Ohio. Nonetheless, oil and gas drilling’s prominence in the state is still pretty new, especially compared with our neighbor to the east. And the way we’re getting that oil and gas, through hydraulic fracturing combined with horizontal drilling, is still new. Ohio legislators are in the early stages dealing with the possibilities that lie ahead with the Utica shale play, including debating a new severance tax on horizontal wells. Click the slideshow to see 5 things you need to know about drilling in Ohio…

2013 End of Year Review: Important Pipeline Decisions from FERC
Shale development in Appalachia, including Ohio, is booming. As the land rush draws to a close, companies are turning their attention to the midstream phase of development, which will be essential to the long-term success of the region’s Marcellus and Utica shale development. In addition to new processing and fractionation plants coming online, thousands of miles of pipeline infrastructure are being constructed. According to an article in Columbus Business First, there are at least 133 pipeline projects planned or in progress in Ohio. Of the infrastructure projects planned in Ohio, a number of them fall within the jurisdictional scope of the Federal Energy Regulatory Commission (FERC). Developments in FERC’s regulation of pipelines ultimately impacts the integration of Ohio’s oil and natural gas resources into national markets. As such, a few noteworthy FERC decisions from the past year involving shale development and/or pipeline regulatory issues are highlighted below:


Protecting species must be balanced with job creation, senators say
Pittsburgh Post-Gazette
Bald eagles, river mussels, spadefoot toads and other threatened and endangered species occupy a small but important ecological niche in Pennsylvania, but they’re causing big problems for Marcellus Shale gas developers and other industries, according to many of the state senators at a hearing on proposed legislation that would make it harder to protect those species. Sen. Joe Scarnati, R-Jefferson, who last year introduced Senate Bill 1047, titled the Endangered Species Coordination Act, said the legislation is all about adding “checks and balances” to the existing process of listing species and providing predictable, consistent and timely information to industries. “No one up here,” Mr. Scarnati said, referring to the panel of Senate committee members, “wants to swing the pendulum away from protecting endangered species, yet we need the jobs.”

Workshop discusses Marcellus Shale’s impact on area
Washington (PA) Observer-Reporter
The king held court in the courthouse Thursday evening. “Shale gas is all over the world, but Marcellus is king. It’s the biggest shale play in the United States and world right now,” said Dan Brockett of the Penn State Marcellus Education Team. Penn State Cooperative Extension presented a workshop on natural gas that attracted a rapt audience of nearly 50, many of them Washington County property owners holding gas and oil leases. They had queries about drilling on their land, past and present, and about their leases, pipeline work and related matters. And they got answers, some not as palatable as they would have liked.

Fracking for natural gas still controversial, but bringing windfall of revenue to some rural areas
Even as some cities around the nation have voted to ban fracking for natural gas, other rural areas are quietly embracing the boom by allowing drilling under public parks and land and reaping millions in royalties. In Washington County, just outside Pittsburgh, officials say the unexpected revenue stream is letting them make improvements that otherwise might not have been possible. “Having that funding source has been a tremendous boom to us,” said Lisa Cessna, the executive director of the local planning commission. The county has received about $10 million directly from drilling companies since 2007, and royalty payments are still coming in. That’s helped build fishing piers, playgrounds and walking trails. Cessna said there have been complaints. Some of the drilling leases are for wells that start on adjacent private land and go under parks, but in other cases, the drilling sites have been on county land. That’s led to questions about whether any kind of industrial activity should be allowed on recreational land. “You can make it work. There’s going to be bumps in the road,” Cessna said. “You’re going to upset some people. But the end result is going to outweigh the negatives.”


Report: Energy, Regulatory Work Driving Law Expansion
The Legal Intelligencer
From Western Pennsylvania to Seattle and South Africa to Dubai, the legal community is focusing its expansion on a select few markets for a host of different reasons, according to the 25th annual What’s Hot and What’s Not in the Legal Profession report from consulting firm Robert Denney Associates. Some of the geographic markets Denney identified were to be expected and others have emerged more recently. Asia and Latin America were both cited as hot markets for the increasing demand for legal services spawned by their growing national and regional economies. The push by U.S. firms to get into the energy sector has resulted in Houston, Ohio, West Virginia and Western Pennsylvania becoming sought-after locales for lateral recruiting, mergers and new office openings. Houston also has the added lure of the health care and technology sectors, Denney said. The Utica Shale play is driving the Ohio, West Virginia and Western Pennsylvania growth, Denney said, but the pace of natural gas drilling in Northern Pennsylvania has slowed due to low gas prices.

Tech company interested in purchasing Marcellus properties
SNL Financial
Technology company Worldwide Internet Inc. said it is evaluating opportunities to purchase up to $10 million in natural gas properties in the prolific Marcellus Shale. The company’s interest in the Marcellus may appear to be a bit of a mismatch, but Worldwide Internet President Frank Kristan told SNL Energy that his company has already been quite active in the energy space. “We’ve been investing in energy projects for the last 10 years, and that includes oil, gas, wind and solar,” Kristan said. The company leases property near Bakersfield, Calif., to Aera Energy, a joint venture between Royal Dutch Shell and Exxon Mobil, he said. Worldwide is also working on a project in the Gulf of Mexico that will be leased to Pemex and a project with First Australia Resources, Kristan said. “We look to take a minority position and partner with other companies on a project,” Kristan said of Worldwide’s role in energy acquisitions. A key piece of the reasoning behind Worldwide’s energy investments is a shift in the company’s plans. “We are changing our business model to become a diversified holding company,” Kristan said, adding that the company is looking at further development opportunities in other shale plays. “We see opportunity to generate returns as gas prices increase, even if the industry has matured in the last few years,” Kristan said.

Propane Prices Have Been Rising. Why? Who Benefits? Who Is Hurt?
Seeking Alpha
Propane prices have been rising since mid-June 2013, when they hit $0.81/gallon on June 20, 2013. As of January 10, 2014, they stood at $1.29/gallon. This has led to much better fractionation spreads for the refiners. This roughly 57% increase in the price of propane means more profits for many people in the propane business, especially the refiners as denoted by the chart above. A few of the fractionation companies that are seeing greater profits include: MarkWest Energy Partners LP (MWE), Targa Resources Partners LP (NGLS), DCP Midstream Partners LP (DPM), and Enterprise Products Partners LP (EPD). At least two of these companies have LPG (Liquefied Propane Gas) terminals in Texas from which they are exporting to Europe and other more expensively priced propane areas. The two companies are Targa Resources Partners LP and Enterprise Products Partners LP . Both have been profiting handsomely; and both are likely to continue to do so for many years into the future. More competition is expected to come online in late 2014 and afterwards; but there should be adequate demand for cheaper US propane from higher priced areas to soak up the products available through this extra shipping terminal capacity.

Hess Files Form 10 Registration Statement Related to Spin Off of Retail Business
Hess Corporation
Hess Corporation announced today that Hess Retail Corporation, its wholly owned subsidiary, has filed a Form 10 Registration Statement with the U.S. Securities and Exchange Commission (SEC). The Form 10 contains a preliminary information statement about the potential terms and conditions of a spin-off of Hess Retail Corporation to the stockholders of Hess Corporation. It also includes information about Hess Retail Corporation as a standalone company, including financial, capital structure, business, risk factor and management and governance information. The preliminary information statement is subject to change. The Form 10 is available on the SEC’s website at // and on Hess’ website at Hess Corporation also announced that it has received a Private Letter Ruling from the Internal Revenue Service that will allow Hess Corporation to distribute the business to stockholders in a tax-free spin-off. Simultaneous with pursuing a spin of the retail business, Hess Corporation will also solicit offers to purchase the entire retail business from potential buyers. Following receipt of any such offers, the Hess Corporation Board of Directors will determine which alternative it believes best serves the long term interests of all Hess Corporation stockholders. Hess Corporation is a leading global independent energy company engaged in the exploration and production of crude oil and natural gas. More information on Hess Corporation is available at //

Natural gas export project could hinge on court case
Washington Post
The future of a massive, controversial construction project on the Chesapeake Bay for exporting natural gas could depend on one poorly written sentence. Attorneys for the Sierra Club were in court last week fighting the $3.8 billion proposal by Dominion Resources to renovate its terminal in Calvert County so the facility could send domestic gas overseas. The case — which turns on several words in a contract first signed in 1972 and rewritten over the years — is pending in the Maryland Court of Special Appeals. Labor and business leaders argue that construction would bring a huge influx of capital to a state still recovering from the financial crisis. But environmentalists say that the project would worsen global warming, and residents are concerned about the effects on traffic and property values in the sleepy coastal community of Lusby about 60 miles southeast of the District. “We are all following it really closely,” Kelly Canavan, president of a local community organization, said of the dispute between the Sierra Club and Dominion.

Will Ford’s F-150 Be the Natural Gas Truck of 2014?
As much of America gets gassed debating whether or not an electric car will outsell a hydrogen fuel cell car, truck owners stand by amused. It will be quite some time before any of these new technologies can deliver the power required by a truck. Nevertheless, change is under way in 2014. An American energy boom has driven natural gas prices down and offerings of bi-fuel trucks up. Here’s a look at which compressed natural gas, or CNG, powered trucks are available this year.


Ironic: France’s Total to invest in Britain’s shale gas quest
Total [French company, France has banned all shale fracking] is set to become the first major oil company to invest in Britain’s nascent shale gas industry, boosting the industry’s profile in a country seen as one of Europe’s strongest prospects for unconventional oil and gas development. The French group is set to commit 30 million pounds ($50 million) to drilling for shale gas in Lincolnshire, in central England, sources familiar with the matter told Reuters. A Total spokesman would not confirm any details, but said an announcement would be made on Monday. The investment is tiny in oil industry terms – and especially small in the context of the tens of billions of dollars spent every year by Total, one of the world’s top five investor-controlled oil and gas groups.