There was an explosion and fire at a Chevron Marcellus shale well in Greene County, PA early yesterday morning. The explosion happened about 6:45 am at Chevron’s Lanco 7H well pad, in a remote area northwest of Bobtown. One person was treated for “minor injuries” and released. However, the sad news is another person is missing. Since the fire is still burning and hot, no one can get close enough to search for the missing worker, so we sadly assume the worst. Our prayers and thoughts go to the families involved.
Chevron has flown in a disaster team from Wild Well Control (Houston, TX) to get the fire extinguished, but it will take at least “several days” before the fire is out. Below we have the information we’re able to find concerning the explosion and fire–why it happened–along with some perspective on the level of danger workers face working in the shale drilling industry, plus we make some connections and provide background you won’t find anywhere else but here, on MDN…
Boardwalk Pipeline Partners, a Houston-based midstream company, suffered a massive stock drop on Monday (down over 40% in one day) after announcing a big drop in revenue and earnings and lowering cash distribution some 81%. Boardwalk’s stock recovered slightly yesterday–something traders refer to pejoratively as a “dead cat bounce”–meaning when something drops so far from such a height, when it hits bottom it’s likely to bounce at least a little. Ouch. To date, Boardwalk has no presence with its pipelines and other operations in the northeastern Marcellus/Utica region–so why is it news here?
Number one, much of the reason for Boardwalk’s woes is precisely because they don’t have infrastructure in the northeast, an area white hot with activity. Number two, because Boardwalk, partnering with Williams, is trying to establish a presence in the northeast by building the Bluegrass mixed NGL pipeline from the Marcellus/Utica to the Gulf Coast. And Boardwalk/Williams is in a horse race with Kinder Morgan/MarkWest to see who builds their pipeline first (see “Midstream Knife Fight” – Who Will Have 1st Operational NGL Pipeline to Gulf?). Will Boardwalk’s stock drop affect Bluegrass plans? And, as one analyst asks, will Boardwalk’s stock drop bleed over and affect similar midstream companies?…
MDN has long chronicled the struggle for Inergy (now a part of Crestwood Midstream) to turn a depleted salt cavern along Seneca Lake, NY into a critically important underground propane storage facility–the only such new facility planned for the northeast. We’ve also told you about nutty protesters, like so-called “distinguished scholar in residence” at Ithaca College, Sandra Steingraber, who was arrested for blocking the entrance to the facility last year (see NY Protesters Arrested for Blocking NatGas Storage Facility). We even told you which businesses you should consider boycotting for their agitation against the facility (see Inergy: Boycott NY Businesses that Support ‘Gas Free Seneca’). One of the businesses in the list stands out: Pompous Ass Winery, run by…well, you can imagine.
As MDN noted not long ago, the delay in allowing Inergy/Crestwood to begin using the facility to store propane is partially to blame for why northeasterners are now paying propane rates out the nose (see Northeast Propane Shortage – Andrew Cuomo Partially to Blame). Enough dithering by Can’t-Make-a-Decision Cuomo. NY State Senate Energy Committee Chairman George Maziarz, R-Lockport, has introduced a bill that requires the recalcitrant state Dept. of Environmental Conservation to get off the pot and permit the facility…
Seems to us, from an informal survey around town, that most residents of Marietta, OH are in favor of the city leasing 35 acres of municipal property to Protege Energy for the offered $4,750 per acre signing bonus and 17.5% royalty on any gas produced.
A sampling of reaction “around town”…
Forced pooling, or as it’s called in Ohio, “unitization”–it’s something we understand, but we don’t like it. Chesapeake Energy and Atlas Noble have filed petitions seeking forced pooling for property owned by a number of landowners in Columbiana County, OH. Some of those petitions have been approved by the Ohio Dept. of Natural Resources (ODNR). Some are still pending.
The industry and landowners who have leased will argue it’s not fair that one or two hold-outs who won’t lease can scuttle a deal to drill and therefore should be forced to lease if they can’t come to reasonable terms. Landowners who don’t want to lease say it’s their land and drillers can figure out how to drill around them–I don’t say you can’t drill, and you don’t say I have to drill under my land. We favor the later position, to the consternation of our friends in the shale drilling industry. We say, make it worth their while–give them an offer they can’t refuse. Here’s some of the details on the forced pooling being sought by Chessy and Atlas in eastern OH:
Last week Chesapeake Energy, a big driller in the Marcellus and the biggest driller in the Utica Shale, released their 2014 Outlook (see Chesapeake: My Rig’s Better than Your Rig, Cuts Capex Another 20%). They tried to spin spending 20% less on drilling as a good thing for the company–enforcing fiscal responsibility. But it means they’ll be drilling 20% less–cold, hard fact. We learned from the release of their 2014 outlook that Chesapeake will cut the number of drilling rigs in the Utica Shale from the typical 17 they operated in 2013 down to 7-9 rigs, making the Mark Twain-like claim that 7-9 of their rigs are like 20 of someone else’s rigs. Whatever.
Chesapeake’s still new CEO Doug “the ax” Lawler was on an earnings call last week with his lieutenants (we’re sure boss man and corporate raider Carl Icahn was listening in too). Doug hasn’t met a Chessy employee he wouldn’t be willing to fire. But we digress. Woven throughout the call was references to the Marcellus and Utica and the important role they will play in the company in 2014 and beyond. Lawler’s comment on the Utica Shale is that it’s “a huge liquid lever for us.” Below is a transcript of last week’s call…
What’s the long-term prognosis for the commodity price of natural gas? Depends on who you ask–but overall, “the market” seems to be saying even amidst one of the coldest winters on record in decades, the longer term trend will be low to moderate prices for methane/natural gas. Industry publication Oil and Gas Investments Bulletin issued one of their analysis stories on the press release wire (a clever marketing move that we appreciate). The story delves into the issue of gas prices and its relationship to Canadian exports/imports. One of the major components of the story (full copy below) is an analysis by investment firm Raymond James.
Guess which shale play Raymond James spends a good deal of time examining? The Marcellus, of course–which is why we found this particular story about gas prices intriguing. Another reason the story is intriguing is because it reveals that Canada, which has long been the #1 source of natural gas imported into the U.S., has seen their gas flows into the U.S. drop by 50% in the past six years. And now, Marcellus gas is starting to flow the direction, into Canada…