Marcellus & Utica Shale Story Links: Tue, Jan 28, 2014

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

New York

Public Accountability or Fractivist Fraud?
Natural Gas Now
Groups claiming to be non-partisan are often among the funders and enablers of very partisan fractivist campaigns under the cloak of public accountability. Last week I wrote about the Fracking Lobby Lie and this prompted a reader to ask about Soros connections to fractivist campaigns. This is a subject we’ve covered some (see here and here) but not a lot at Natural Gas Now because too many people have stretched too far to connect Soros to all sorts of nefarious enterprises. Nonetheless, as the old saying goes, ”You’re only paranoid when you’re wrong” and there are a few things we do know about Soros that are undeniably true. Those few things illustrate just how much of a fraud most fractivist campaigns really are.


Marathon subsidiary to bring 150 jobs, $15 million payroll to Findlay
Toledo Blade
Marathon Petroleum Corp’s new distribution subsidiary MPLX is expected to keep its operations in Findlay, creating an estimated 150 jobs worth $15 million in new payroll, after Ohio apparently won the expansion project over what was characterized as “fierce” competition from other states. The Ohio Tax Credit Authority today voted to extend Marathon’s Petroluem’s existing 60 percent, 10-year job creation tax credit, originally approved in 2011, to 14 years. The new jobs are expected to pay an average of $48 an hour. The package was negotiated by the private non-profit economic development corporation, JobsOhio, and then placed in the hands of the state panel for final approval. Marathon is expected to expand its corporate headquarters campus in Findlay to accommodate MPLX’s headquarters and, in the process, recommit to maintaining the 1,650 jobs it promised when it was itself a beneficiary of a tax-credit package itself in 2011.

Why Hess Corp Investors Should Be Pleased With This Number
The Motley Fool
Hess Corp is a company in transition. While shedding assets and slashing 15% from its 2014 capital budget, the company is also focused on fueling future growth from shale. But how is Hess doing this when it’s adding a mere 5% to develop its shale resources? The key is shale well costs are falling so rapidly that Hess really doesn’t have to increase its shale-development budget by that much to really move the needle. Hess is spending a total of $2.85 billion to develop its shale positions in the Bakken Shale and Utica Shale. That’s just $150 million more than it spent last year on shale development. That might not seem like much of a boost for a company that is focusing its efforts on low-risk, high-growth shale development. But while the dollars aren’t going up by much, the number of wells the company plans to drill will see a big boost. In the Bakken, Hess plans to drill about 225 new wells this year. That’s up from the 168 it drilled just last year. That’s a third more wells without much of an increase in costs. It’s the same story in the Utica Shale where the company plans to drill 21% more wells in 2014. So, for just 5% more money the company is drilling a whole lot more wells.


Pro- and anti-drilling factions state views
Wilkes-Barre Times Leader
Proposed rules for oil and natural gas producers are either too stringent or not enough. Those on either side of the Marcellus Shale drilling argument quizzed the state Department of Environmental Protection on Monday night at an Environmental Quality Board (EQB) hearing for a set of regulations the department proposes to enforce on drillers operating in Pennsylvania. Anti-drilling interests made a strong show in the Tunkhannock Area High School auditorium, in which about 75 people gathered to give and hear testimony. Gas drilling advocates pointed out the economic prosperity brought by natural-gas production and reminded the EQB panel that stiffer regulations could be a disincentive for production companies. “Our overarching message is straightforward,” said John Augustine, community outreach manager for the Marcellus Shale Coalition. “Instead of undermining our strong, consistent and predictable regulatory framework, we should work cooperatively to revise these proposals, to maintain a balance between strong environmental protections and competitve economic climate.”

Shale lease debate begins in Murrysville
Pittsburgh Tribune Review
Drilling in a community park could rake in millions of dollars for the Murrysville, but residents need to the risk versus the reward, officials said. On Wednesday, municipal officials confirmed that Monroeville-based drilling company Huntley & Huntley has offered $2,250 per acre for the right to drill under 260 acres of Murrysville Community Park in addition to 12.5 percent of the royalties earned from selling whatever gas is extracted. By mid-April, officials will review an ordinance that would allow the municipality to seek bids for the gas rights. However, officials said that they hope residents petition for a referendum on the November ballot to allow residents their say. “The citizens are the best ones to make the decision,” Councilman Dave Perry said. “Is it worth doing?”

Winter of our content: Natural gas drilling warms consumers’ wallets
Pittsburgh Post-Gazette
Baby, it’s cold outside. But inside most people are fortunate enough to be toasty warm — and those who heat their houses with natural gas also have the luxury of knowing that their utility bills will not rise like heat up a chimney. It wasn’t always so. As recently as 10 years ago, cold weather would put a chill in family budgets. What has changed can be summed up in two words, encouraging or controversial, depending on who says them: Marcellus Shale. As the Post-Gazette’s Michael Sanserino reported Sunday quoting industry sources, Pittsburgh a decade ago was one of a series of delivery points as gas moved from the Gulf Coast to the Northeast. Now it sits atop one of the great natural gas fields of the world, so the supply is ample, delivery isn’t a problem and savings result because the gas doesn’t have to be transported long distances. That means consumers don’t take a cold shower when temperatures fall.

Enterprise Products Partners: 2 Projects That Will Generate Long-Term Value
Seeking Alpha
Production of natural gas liquids, or NGL, in Marcellus shale and Utica shale areas is booming, and the producers are struggling with transportation problems because of lack of infrastructure. To address this concern, Enterprise Products Partners has undertaken a pipeline project called the Appalachia-to-Texas pipeline, or ATEX, Express. The ATEX Express is a 1,230-mile pipeline, which originates in Washington County, Pennsylvania, and ends at the company’s Mont Belvieu complex in Texas. Ethane, which is a valuable feedstock to petrochemical plants, will be delivered by the ATEX Express. The ATEX Express has connections with four fractionators in the Marcellus/Utica shale. The pipeline will have an initial capacity of 125,000 barrels per day, or bpd, which is expandable to 265,000 bpd. This project is also supported by 15-year term contracts for transportation agreements. Initially, 65,000 bpd of these contracted volumes is expected to be transported. This can be ramped up to 130,000 bpd by 2018.

E&Ps And Natural Gas Shale – 4 Different Plays
Seeking Alpha
Chesapeake Energy and Cabot Oil & Gas are two exploration and production (E&P) stocks that are interesting plays off of rising production from shale projects in the U.S and recent increases in the price of natural gas. However, these two stories are very different. Cabot is a top-tier operator largely driven by its assets in the Marcellus shale. Chesapeake Energy on the other hand has operating metrics that rank it at the bottom of the shale E&Ps and it has diverse shale exposure. Earlier this week, on January 21st, the shares of Chesapeake were upgraded by SunTrust Robinson while Cabot Oil & Gas had Brean Capital trim estimates on Jan. 22nd. Chesapeake Energy is the second largest natural gas E&P in the US and the eleventh largest liquids E&P. All of its assets are onshore within the continental United States. It has assets in the Marcellus shale, Utica, Eagle Ford among other regions. Cabot Oil & Gas is the company that Chesapeake is trying to become, at least from an operational and financial perspective. It has higher quality assets mostly located in Marcellus share and some exposure to Eagle Ford. Cabot also has industry leading operating metrics and balance sheet…


U.S. Refiners Bet on Export Quotas
The Motley Fool
Phillips 66 and Marathon Petroleum say they want the U.S. to lift its ban on crude oil exports. Valero and PBF Energy feel the exact opposite. Why the differing opinions? Well, Phillips 66 says lifting the ban will help everyone with free trade at both ends of the crack spread. Valero counters by saying consumers will get hurt at the pump and lose jobs. Today, the U.S. can export crude oil only to Canada. Other shipments by pipeline and train end up in Cushing, Houston, New Jersey, and Los Angeles, among other destinations. World-priced Brent trades around $108 per barrel while contracts settled at Cushing, OK, trade around $96 per barrel. Refiners ship cheaper West Texas Intermediate, or WTI, oil to Gulf Coast refineries to reap large margins. During the past three years, the largest U.S. export has been refined products. Domestic demand for refined products continues to weaken with increases in fuel efficiency, mandated standards, and renewables in the energy portfolio.

Frozen Northeast Getting Gouged by Natural Gas Prices
Bloomberg Businessweek
As temperatures plunge anew into single digits across much of the U.S. Northeast, natural gas prices have been going in the opposite direction. On Jan. 22, thermostats in New York City bottomed out at 7 degrees, a day after the price to deliver natural gas into the city spiked to a record $120 per million British Thermal Units in the spot market on the outskirts of town. That’s about 30 times more expensive than what the equivalent amount of gas cost a hundred miles away in Pennsylvania’s Marcellus Shale, the biggest natural gas field in the U.S. and home to some of the lowest gas prices in the world. And you thought this was the age of cheap energy. Most of the natural gas that gets used in the U.S. is contracted on a long-term basis and bought with futures and forward contracts, meaning that many consumers in the Northeast won’t feel the full brunt of that price spike. They’re not entirely insulated though. The spot market is there for a reason. Essentially, it’s a refuge for the desperate and unprepared—for those who need to buy or sell immediately. And when a natural gas-fired power plant or a big utility finds itself short, having underestimated the amount of demand it has to fill, its traders and schedulers have to jump into the spot market and pay whatever the going price is. For those buying in parts of the Northeast, it’s been reaching new highs.

Free America’s Energy Future: Drop Washington’s Counterproductive Oil And Natural Gas Export Ban
For years people have been told to expect a dismal energy future. But because of rapid free market innovation, Americans now can look forward to a future of energy abundance. The U.S. could even become a leading exporter—if Washington gets out of the way. Successive presidents and Congresses imposed controls, approved subsidies, created bureaucracies, and issued proclamations. The most common commitment was to achieve “energy independence.” But President Ronald Reagan set the stage for today’s energy advances by unilaterally eliminating oil price controls and pushing Congress to drop natural gas price and use restrictions. His successors, however, have regressed back to expensive social engineering. George W. Bush declared war on the common light bulb. Barack Obama poured billions into the coffers of well-connected alternative energy firms, several of which, such as Solyndra, have gone bankrupt. And everyone continued to support the authoritarian Gulf kleptocracies, led by Saudi Arabia, to ensure access to imported oil.


Thousands shiver in Manitoba as pipeline blast cuts gas supply
Thousands of Manitoba residents were without natural gas to heat their homes and businesses for a third frigid day on Monday, following a weekend explosion along a TransCanada Corp pipeline in the Western Canadian province. The temperature on Monday morning in southern Manitoba hovered around -29 Celsius (-20 Fahrenheit). The electricity grid continues to operate. The explosion and fire happened early Saturday near Otterburne, Manitoba, about 50 km (31 miles) south of the provincial capital, Winnipeg. No one was hurt in the blast, which a witness said shot flames up to 300 meters into the sky. The incident interrupted the supply of natural gas to 4,000 residents and other customers, although TransCanada arranged for tanker trucks to deliver compressed natural gas to a hospital and nursing homes. TransCanada Corp’s mainline pipeline system supplies natural gas from Western Canada to markets in Manitoba, Ontario, Quebec and the U.S. northern tier states. However shipments on the system, which uses a number of separate lines, have waned as shale gas from fields such as the Marcellus in the Eastern United States supplant more distant supplies.