Marcellus & Utica Shale Story Links: Thu, Jan 16, 2014

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


Dominion names two executives to Cove Point LNG team
Akron Beacon Journal
Dominion, one of the nation’s largest energy providers, has named two officers to its Cove Point LNG Terminal team as it awaits necessary federal and state permits to begin construction of a facility to liquefy natural gas for export. Michael D. “Mike” Frederick, who previously was director-LNG Operations at Cove Point, is returning to the Calvert County facility as vice president-LNG Operations. Robert B. “Bob” McKinley, vice president-Generation Construction for Dominion Generation, is becoming vice president-Cove Point Construction. “Mike and Bob are leading a team that is in place to add export capability to our terminal safely and with a commitment to excellence,” said Thomas F. Farrell II, chairman, president and chief executive officer. “They have started working with the community and communicating with their neighbors on the $3.8 billion project, which will boost the Southern Maryland economy and result in $40 million in additional annual tax revenue for Calvert County. Dominion’s investment will ensure a vibrant quality of life for many, many years.”

New York

Andrew Cuomo’s fracking ‘cone’ job
New York Post
Blocking traffic on toll-plaza lanes of the George Washington Bridge for four days under cover of a bogus traffic study turned out to be a very bad idea. So why is it acceptable to block drilling across an entire state for three years under cover of a series of supposed studies? The “traffic study” was actually about a political agenda of retribution — engaged in, if not by New Jersey Gov. Chris Christie, then by aides who at the least thought they were serving their boss’s interests. It all fell apart when subpoenaed e-mails removed all doubt that the traffic study was a sham and the payback the reality. Meanwhile, here in New York, we have the the long-delayed issuance of a purported scientific study on the safety of hydraulic fracturing in the Marcellus shale, which geologically underpins much of Upstate.

Foundation asks New York court to invalidate fracking bans
Akron Beacon Journal
The Washington Legal Foundation (WLF) today asked the New York Court of Appeals to overturn a decision that threatens to allow N.Y. municipalities to ban oil and gas exploration locally, even though the state legislature has expressly preempted all oil and gas regulation. In a brief filed in Norse Energy Corp., USA v. Town of Dryden, WLF argued that under New York’s Oil, Gas and Solution Mining Law (“OGSML”) the New York Legislature reserved to itself exclusive jurisdiction to regulate the oil and gas industry. As a result, the OGSML expressly preempts all local zoning ordinances that seek to ban oil and gas exploration within town limits. WLF also argued that the OGSML impliedly preempts all such ordinances because the two laws irreconcilably conflict.

Hydrofracking Foes Vow To Dog Gov. Cuomo At Manhattan Re-Election Campaign Stop
New York Daily News
When Gov. Cuomo shows up at the Harvard Club for a re-election campaign “conversation” Thursday, he’ll be greeted not only by high-powered financiers, but a flock of fracking protesters.


Ohio has approved 1,042 Utica permits with 679 wells drilled
Akron Beacon Journal
The Ohio Department of Natural Resources has approved 1,042 Utica shale permits, as of Jan. 11. That total includes 679 wells that6 have been drilled and 270 that are in production. A total of 44 rigs are working in Ohio. One new permit was approved last week: in Washington County.

District enters agreement for community school
East Liverpool Review
The Southern Local Board of Education moved forward with plans to establish and operate a gas- and oil-oriented community school by approving a preliminary agreement with Jefferson County Educational Service Center (ESC). Southern Local Superintendent John Wilson laid out his vision for the proposed community for the public at Monday’s Board of Education meeting. He said the school will be geared toward preparing students for careers in the gas and oil industry, but will also offer a traditional curriculum as per state requirements. The school will be open enrollment for students grades 9-12, and most of their studies will be through online modules, said Wilson. He noted teachers will also be onsite at the community school to provide guided instruction in conjunction with the student’s online learning. Wilson emphasized that plans for the school are still in the early phases, and the charter for the school is not yet complete.

Drilling at Lake Raises Concerns
The Intelligencer/Wheeling News-Register
Having maintained a cottage at Piedmont Lake since 1968, Ted and Swanhild Voneida fear allowing Utica Shale natural gas drilling on nearly 6,600 acres of lake property will jeopardize the area’s future as a recreation destination. “I am deeply concerned about the health effects of oil and gas drilling,” Ted Voneida said during a Wednesday meeting with representatives from the Muskingum Watershed Conservancy District regarding plans to lease the Piedmont property for drilling. “If you do this, you will violate your own charter.” Along with Piedmont, the district manages several large eastern Ohio lakes, including Tappan Lake, Clendening Lake and Seneca Lake.

Critics find shale gas plan too lax
Toledo Blade
An industry-backed proposal to raise the tax on shale oil and natural gas drilling in Ohio while providing for other industry tax breaks could actually drain resources from the state, critics argued Wednesday. Expected new revenue from the higher tax is uncertain, particularly since it would be partially offset by other breaks, raising doubt enough would be available to cover the costs of regulating the burgeoning industry and capping abandoned wells. “This is a costly bill for the state,” said Wendy Patton, senior project director for the left-leaning Policy Matters Ohio. “That’s one reason the severance tax rates need to be higher than the 1 percent of House Bill 375. … We’ve got a subsidy for the oil and gas industry that’s really quite large.” She dismissed suggestions from the industry that drillers would be less likely to take risks in Ohio if the state raises the severance tax beyond what is proposed in its bill.


The latest chances for Shell’s groundbreaking ethane cracker in Appalachia
Platts The Barrel
Shell Chemicals for nearly two years has said its final decision to construct a $4 billion ethane cracker near Pittsburgh wouldn’t come quickly. Too much due diligence to perform, too much feedstock ethane to lock up in contracts, too many customers to sign for the ethylene the cracker produced. And now, perhaps too much competition to make the region’s largest construction project in decades viable. All the ethane production from the Appalachian Basin could be swallowed easily by the seven pipelines either operating, soon-to-flow or in various development/construction phases, consultants and analysts have said.

Range’s Challenge to Township’s Ordinance Postponed While Parties Wait for More on Act 13
NGI’s Shale Daily
The zoning board of South Fayette, PA, has agreed with Range Resources Corp. to indefinitely postpone a hearing for the company’s challenge to a 2010 ordinance that essentially restricts drilling in the small township. According to news reports, the board voted unanimously to postpone arguments scheduled for this week after lawyers for both parties agreed no final decision could be made on the issue in the wake of the Pennsylvania Supreme Court’s recent decision to strike down key parts of the state’s oil and gas law known as Act 13.


Chasing the Dream of Half-Price Gasoline from Natural Gas
MIT Technology Review
At a pilot plant in Menlo Park, California, a technician pours white pellets into a steel tube and then taps it with a wrench to make sure they settle together. He closes the tube, and oxygen and methane—the main ingredient of natural gas—flow in. Seconds later, water and ethylene, the world’s largest commodity chemical, flow out. Another simple step converts the ethylene into gasoline. The white pellets are a catalyst developed by the Silicon Valley startup Siluria, which has raised $63.5 million in venture capital. If the catalysts work as well in a large, commercial scale plant as they do in tests, Siluria says, the company could produce gasoline from natural gas at about half the cost of making it from crude oil—at least at today’s cheap natural-gas prices. If Siluria really can make cheap gasoline from natural gas it will have achieved something that has eluded the world’s top chemists and oil and gas companies for decades. Indeed, finding an inexpensive and direct way to upgrade natural gas into more valuable and useful chemicals and fuels could finally mean a cheap replacement for petroleum.

The Natural Gas Supply Glut Is Over
Seeking Alpha
Last week the Energy Information Administration (“EIA”) released its weekly natural gas storage report. In my opinion the report established what spot prices have been telling us: the natural gas supply glut is over. While this is bullish and certainly a welcome development for Exxon Mobil (XOM), the #1 producer of natural gas in the US, smaller companies like Cabot Oil & Gas (COG), Chesapeake Energy (CHK) and ConocoPhillips (COP) derive a much larger percentage of revenues from domestic natural gas and will therefore see a larger impact on profits.

2013 Was a Terrible Year for Energy Mergers
The Motley Fool
Last year had all of the markings of a boom year for energy mergers and acquisitions. Consulting firm Ernst & Young noted early in the year that stable oil prices and a recovering banking sector were key signals that suggested 2013 had the potential to produce a record number of energy M&A deals. Instead, 2013 was the worst year for energy M&A since 2008, with activity down by 49% from 2012. There were a few reasons why deal volumes were down last year. First, many producers had been using asset sales to fund drilling programs. However, in 2013 many of these companies started to scale back on drilling because the prices assets were fetching on the market didn’t justify a sale. Natural gas prices were a prime example of this as fewer companies were willing to unload natural gas assets for a pittance in order to drill elsewhere. This is one reason we saw active sellers like Chesapeake Energy Corporation unload just $3.6 billion worth of assets in 2013, which is down substantially from the more than $10 billion sold in 2012. One reason for this is that Chesapeake Energy really doesn’t have much left to sell. That’s in addition to its company’s new management team, which is joining a growing trend within the industry to slash capital spending to align with cash flow.

Study: Natural Gas Use Slashes Air Emissions
A new report by researchers at the National Oceanic and Atmospheric Administration (NOAA) finds that, thanks to the increased use of natural gas over the last decade, there have been “significant reductions in the emissions of CO2, NOx and SO2.” [NOx = nitrogen oxides; SO2 = sulfur dioxide] Just how much of a difference has natural gas made? According to the report: “As a result of the increased use of natural gas, Co2 emissions from U.S. fossil-fuel power plants were 23% lower in 2012 than they would have been” without that increase in natural gas use. The increased use of natural gas has…led to emissions reductions of NOx (40%) and SO2 (44%). Further reductions in these emissions can follow by converting a larger fraction of U.S. electric power production to natural gas, and by ensuring that all natural gas power plants are equipped with the latest combined cycle technology.”


Unforeseen U.S. Oil Boom Upends Markets as Drilling Spreads
The U.S. oil boom has put European refineries out of business and undercut West African crude suppliers. Now domestic drillers threaten to roil Asian markets and challenge producers in the Middle East and South America. Fifteen European refineries have closed in the past five years, with a 16th due to shut this year, the International Energy Agency said, as the U.S. went from depending on fuel from Europe to being a major exporter to the region. Nigeria, which used to send the equivalent of a dozen supertankers of crude a month to the U.S., now ships fewer than three, according to the U.S. Energy Information Administration. And cheap oil from the Rocky Mountains, where output has grown 31 percent since 2011, will soon allow West Coast companies to cut back on imports of pricier grades from Saudi Arabia and Venezuela that they process for customers in Asia, the world’s fastest-growing market.