Marcellus & Utica Shale Story Links: Wed, Jan 8, 2014

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


Ohio EPA director Scott Nally resigns abruptly, cryptically
Columbus Dispatch
Ohio Environmental Protection Agency Director Scott Nally frequently told his staff, “If it’s 80 on 1, and I’m the one, bet on me.” All bets were off yesterday, however, as Nally abruptly resigned after three years on the job. The only reason cited for his sudden departure was that he is pursuing “other opportunities.” Nally, 49, a feisty native New Yorker and former wrestler, was replaced on an interim basis by Craig Butler, Gov. John Kasich’s senior director of energy and environmental policy. Nally was picked by Kasich in late 2010 specifically to reconcile the EPA with business interests, a task he took seriously and did well, the governor said in a statement. Nally was paid $134,000 annually.

Gulfport Hits Low End of 2013 Guidance, Expects Better Things in 2014
NGI’s Shale Daily
Despite a tremendous gain in its annual production last year, Gulfport Energy Corp. said it came in at the low end of its guidance when the company announced its 2013 exit rate on Monday. The company has a swath of land under lease in southeast Ohio that is widely believed to be among some of the best acreage of any operator in the Utica Shale play. But Gulfport, like others, continues to struggle with well completions, infrastructure buildout, weather and operational delays in the still-emerging play. But Monday’s update was enough to keep financial analysts, and Gulfport itself, optimistic about the potential of the Oklahoma City-based company’s acreage and strategy in the play.

David Hill Named Regional Director for Ohio
Ohio Gas & Oil
David R. Hill of David R. Hill Inc. is the new IPAA regional director for Ohio, replacing Jerry James of Artex Oil Company. Hill is one of 33 directors elected from each of the U.S. regions. He was elected Nov. 7 at the IPAA Annual Meeting in San Antonio, TX. Hill will serve as an Ohio’s Regional Director for 2013-15. Regional Directors are limited to four consecutive two-year terms. Hill’s role as regional director is to work with both IPAA and the Ohio Oil and Gas Association (OOGA) on outreach, education and legislative efforts on behalf of the oil and gas industry in Ohio. He also currently serves as Vice President of OOGA. He is a longtime oil and gas producer whose company is based in Byesville, Ohio. “Today the oil and gas industry is ever changing and growing due in large part to shale development here in Ohio and across our county and the world. Such activity requires day in and day out efforts to reach out to communities all across Ohio to answer questions about the industry and talk about the positive impacts of exploration and production. I am delighted and honored to serve both the industry and Ohio in my role at OOGA and my new position at IPAA”. – David Hill

Youngstown area gets 4,000 jobs, $5 billion in investments from shale
Akron Beacon Journal
Since 2010, the Mahoning Valley and adjacent areas have seen at least 4,000 direct and indirect jobs created from shale development and an investment of more than $5 billion, according to information compiled by the Regional Chamber. “The people of the Valley have embraced the oil and gas industry because they have seen a significant turnaround in our economy – much of it from shale development and the growth of its supply chain,” said Tom Humphries, President & CEO of the Regional Chamber. The Chamber has counted 25 job creation and investment projects related to the oil and gas industry since 2010, when Vallourec Star first announced they would build a new stainless steel pipe mill in the Youngstown-Girard area that would serve the growing Marcellus and Utica shale development. Vallourec ultimately spent more than $1 billion on the new advanced manufacturing facility that provides 350 direct jobs and about 1,800 indirect jobs.


IMG Midstream plans small plants to generate electricity from gas
Pittsburgh Post-Gazette
Technically, the Marcellus Shale wasn’t the motivation behind IMG Midstream’s plan to build natural gas power plants in Pennsylvania. The startup, based in Yardley, Bucks County, came up with the idea of building the plants after talking to small, shallow gas producers who were having trouble getting their gas to buyers, edged out of interstate pipelines by Marcellus production. Don Clayton, a managing director with IMG, said he heard the concerns from a number of natural gas drillers in West Virginia. So, he thought, why not create a market for them? The company wants to use local gas to make electricity that would be sold to the grid and fed back to local utilities. In planning the projects, IMG found that the same constraints that stifle conventional gas producers’ getting their product to market also apply to Marcellus companies. So, now, the company plans to source from both conventional and shale producers.

Chapter 78: A guide to the proposed oil and gas regulations
StateImpact Pennsylvania
State environmental regulators are gathering public comment on a proposed overhaul of Pennsylvania’s oil and gas regulations that will change the way the industry operates above ground. The wide-ranging revision will update Chapter 78 of the Pennsylvania Code, the section of the state’s rulebook that guides the construction and operation of oil and gas wells. The proposals focus on surface activities on and off well sites: waste handling, spill prevention, pipelines, pits and the protection of public resources. Some of the revisions were required by the passage of Act 13 in 2012, the state’s updated oil and gas law that also initiated the impact fee and spurred a legal fight over municipal rights to set limits on drilling. Other revisions reflect the Department of Environmental Protection’s effort to adapt its rules to the modern practices of a quickly evolving industry. Still others give legal strength to policies that are already in place by elevating them to the status of a regulation. What Would the Proposal Change?…


ANALYSIS-Arctic chill exposes weakness of U.S. natural gas system
Thomson Reuters Foundation
Brutally cold weather this week laid bare critical weaknesses in the Northeastern U.S. natural gas system, leaving some states paying vast sums for supplies as arctic weather enveloped the region. Despite its location alongside the biggest natural gas deposit in the country, the northeast region saw record price spikes on Monday as an unprecedented surge in demand from power plants and homeowners overwhelmed pipelines. The rise in prices forced spot-market buyers in New York and New England to pay up to 20 times more for their gas than amply supplied hubs in Texas and Louisiana. The volatility shows that nearly a decade into a drilling boom that has flooded much of the country with gas, a lack of pipelines has left some areas vulnerable to shortages this year and potentially for years to come. It is a weak spot in what has been a huge resurgence in U.S. natural gas production over the past 10 years, and exposes how in some areas pipelines have failed to keep up with the new supplies that have come out of the ground.

MarkWest Energy Partners: A Growth Focused MLP With A 5.10% Yield
Seeking Alpha
MarkWest Energy Partners’ assets can be found throughout the US, with a focus on natural gas midstream related services such as gathering, processing, storage, and marketing. Areas of growth for the company include the Marcellus and Utica. MarkWest Energy Partners is currently the largest processor and fractionator in the Marcellus shale, with over 2.2 BCF/D of processing capacity and 136,000 BBL/D of fractionation capacity. This is slated to increase to over 3.7 BCF/D and 232,000 BBL/D, respectively. The company also has a large presence in the Utica, with more than 1 BCF/D of processing capacity currently being built. MarkWest Energy Partners’ legacy assets are mostly found in the Texas/Oklahoma area. This corresponds to some of the older shale plays such as the Granite Wash, Barnett, Permian, and Haynesville.

Producers Could Return to Gulf Coast Basins for Better Natural Gas Price, Says EIA
NGI’s Shale Daily
The Northeast may not be as compelling for natural gas producers looking to get the best price for their product, and some may consider moving toward the Gulf Coast basins once again, according to the U.S Energy Information Administration (EIA). In its January Short-Term Energy Outlook (STEO) on Tuesday, the first to include forecasts for 2015, EIA said domestic gas output in 2014 will continue to rise, led by “rapid” Marcellus Shale production. Output for the year is forecast to increase on average about 2.1% from 2013. In 2015, gas output also would rise, albeit more slowly, at a rate of about 1.3%.