Marcellus & Utica Shale Story Links: Mon, Feb 17, 2014

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

New York

FERC staff finds little wrong with Constitution, Iroquois pipeline projects
SNL Financial
An environmental review by FERC staff allowed two connected natural gas transportation projects proposed by Constitution Pipeline Co. LLC and Iroquois Gas Transmission System LP keep rolling through the FERC permitting process. The projects together represent investments of almost $760 million. “We conclude that the approval of the projects would have some adverse environmental impacts, but these impacts would be reduced to less-than-significant levels,” environmental staff with the FERC Office of Energy Projects wrote in a Feb. 12 draft environmental impact statement. FERC staff said its determination was based on the fact that Constitution and Iroquois would minimize impacts on natural and cultural resources during construction and operation of their projects using their plans and required mitigation measures. The projects would also be put together under the oversight and with the recommendations of FERC and other agencies.


2 Natural Gas Liquids Drillers to Watch This Year
The Motley Fool
Ohio’s Utica shale — an emerging oil and gas play — recently reached an important milestone. According to the latest update from the Ohio Department of Natural Resources, the Utica now has 300 producing oil and gas wells. This year, drilling activity in the Utica is expected to accelerate further as upcoming improvements in gas processing and pipeline infrastructure entice companies to boost production. While Chesapeake Energy, the play’s largest leasehold owner and most active driller, is still top dog in the Utica, two other companies are also seeing tremendous success in the play. Let’s take a closer look. Antero Resources, a Denver-based oil and natural gas exploration and production company with primary assets located in Pennsylvania’s Marcellus shale and the Utica, is one of them. The company boasts 105,000 net acres in the Utica, and has consistently posted some of the best drilling results in the play. In its recently released fourth-quarter operating update, Antero reported exceptional results from its five most recently drilled wells in the Utica’s super-rich window in Noble County. The wells posted an average 24-hour peak processed rate of 32.2 MMcfe/d, compared to 27.5 MMcfe/d for its previously drilled five wells in the area. Crucially, the new wells yielded 65% liquids, producing an average of 1,897 barrels per day of natural gas liquids, and 11.2 MMcf/d of dry natural gas. This is encouraging because the company earns significantly higher rates of return from drilling in the liquids-rich portions of the play.

Ohio governor extends propane shipment order
AP/Youngstown WFMJ-TV
Ohio Gov. John Kasich has extended the state’s energy emergency declaration by two weeks to allow continued speedy shipments of propane gas to ease a cold-weather shortage. The order extends until March 1 Kasich’s original declaration of Jan. 18 allowing propane shippers to temporarily drive more hours and consecutive days than usual. Propane availability is more limited and prices are higher this year for several reasons including stretches of extreme cold that drained an already depleted supply. The federal government has issued a similar declaration to speed up interstate shipments. About 6 percent of Ohio households are heated primarily using propane, most of them rural homes.


In This Corner: Why Infrastructure Needs to Lead First
Scranton Times-Tribune
In terms of “resources,” I’m talking about the pockets of natural gas in our country, and specifically, the Marcellus Shale deposit, which is one of the largest in the world, not just the country. The missing piece is the fueling stations or “infrastructure,” which are plagued by first cost barriers and a lack of demand. The commonwealth of Pennsylvania has invested significant amounts of money in nearly every other form of alternative energy (wind, solar, geothermal, biofuels). Most were poor investments. None of these sources of energy can hold a candle, or in this case light bulb, to natural gas. A glaring example of careless spending by a government, albeit with “good intention,” was the conversion of buses in San Francisco Metropolitan Transit Agency to bio-diesel-hybrid fuels. “Biofuels” are made from corn, which is made by water, seed and fertilizer (all of which require money and energy to pump, transport and create). This is just the “corn” part. Take that corn, add even more energy, and you have just the “biofuel” part of that hybrid.

Marcellus Matters educates citizens about science
State College Centre Daily Times
As natural gas development stretched across Pennsylvania, a group of Penn State researchers began looking for ways to educate the public not just on drilling in the Marcellus Shale, but on the science behind it. From that came Marcellus Matters: Engaging Adults in Science and Energy, a project started in 2012 with a $1.9 million grant from the National Science Foundation. “We thought Marcellus was a great vehicle to do STEM (science, technology, engineering and mathematics) education, only we call it STEAM (‘A’ for arts) because of the addition of theater to the mix of programs,” said Mike Arthur, geosciences professor, co-director of the Marcellus Center for Outreach and Research at Penn State, and project principal investigator. One part of that, the Marcellus Community Science Volunteer Program, brought together residents of rural communities with Penn State scientists from fields including the geosciences, landscape architecture, education and sociology. After a pilot program in Clearfield County, there were four sessions in different counties, each lasting eight to 10 weeks, with participants meeting once a week.

Train carrying Canadian oil derails, leaks in Pennsylvania
A 120-car Norfolk Southern Corp train carrying heavy Canadian crude oil derailed and spilled in western Pennsylvania on Thursday, adding to a string of recent accidents that have prompted calls for stronger safety standards. There were no reports of injury or fire after 21 tank cars came off the track and crashed into a nearby industrial building at a bend by the Kiskiminetas River in the town of Vandergrift. Nineteen of the derailed cars were carrying oil, four of which spilled between 3,000 and 4,000 gallons of oil, Norfolk Southern said. The leaks have since been plugged. The two other derailed tank cars held liquefied petroleum gas. The train, which originated in Chicago, was destined for an asphalt plant in Paulsboro, New Jersey, owned by NuStar, a NuStar spokeswoman said.


Gas market modeling expert: US ‘on the cusp’ of major demand growth
SNL Financial
The combination of multiple factors, including coal-to-gas switching and LNG exports, will help increase the market for natural gas in the United States and Canada by as much as 20 Bcf/d over the next decade, ICF International’s vice president of fuel markets analysis said Feb. 13. In its new outlook on oil and gas production through 2035, ICF said it expects U.S. and Canadian gas production to grow by approximately 1.8% per year to 121 Bcf/d by 2035. The majority of that, the firm said, will come from the U.S., which will contribute 36 Bcf/d of the 40 Bcf/d increase. In a conversation with SNL Energy, ICF’s Kevin Petak said gas production will likely spike in the next 10 years as demand rises. “We project the market grows over the next 10 years by 20 Bcf/d,” he said. “A lot of the growth comes from increased gas-fired power generation, but the bigger part of growth for natural gas markets is what I would call the oil-gas arbitrage opportunities.” One of the primary arbitrage opportunities, Petak explained, would come in the area of LNG exports. With LNG shipments to Asia indexed to oil, American exports tied to Henry Hub prices would look far more attractive. “When oil is at $100 per barrel, which is between $16/MMBtu and $17/MMBtu equivalent, seeing $5/MMBtu gas and taking advantage of the price differential makes economic sense,” he said.

Keith Johnson: Eager to export gas
Pittsburgh Post-Gazette
The Energy Department on Tuesday approved construction of a multibillion-dollar terminal in Louisiana for exporting U.S. natural gas, only the sixth green light the Obama administration has given during 18 months of bitter political jousting over how to best take advantage of the United States’ sudden energy abundance. Proponents of greater energy exports in Congress, as well as the growing number of countries that want to buy U.S. natural gas, are pushing the White House to sign off on projects more quickly. The Obama administration is still mulling whether to clear construction of another 25 export facilities, including one proposed at a site in Maryland that already is connected by pipeline to Marcellus Shale fields. If approved, the new facilities could have the capacity to liquefy and export nearly 35 billion cubic feet a day of natural gas. There’s a catch, though. U.S. law makes it extremely difficult for American companies to export natural gas to countries that don’t have free trade agreements with Washington. Companies that want to sell to those countries need to persuade the Energy Department that the deals would be in the national interest, a criteria without a formal definition. That makes the approval process a lengthy and byzantine one that is deeply frustrating for would-be purchasers of U.S. gas. At the same time, big gas producers such as Qatar and Australia are ramping up their own gas-export capabilities, threatening to close the window of opportunity for U.S. exporters.

3 Big Reasons You Should Love Fracking
The Motley Fool
Natural gas was one of the big winners in President Obama’s recent State of the Union address. The president noted that “America is closer to energy independence than we’ve been in decades.” He went on to say that “one of the reasons why is natural gas – if extracted safely, it’s the bridge fuel that can power our economy with less of the carbon pollution that causes climate change.” That said, without fracking the natural gas that is changing our nation for the good would still be stuck in rocks a mile or more below the surface. As the president said, when done safely, natural gas extraction is unleashing a powerful force for positive change on our economy. Seen in that light, here are three big reasons Americans should learn to love and not loathe fracking. #1: Plunging carbon footprint. U.S. carbon dioxide emissions from energy consumption are at the lowest level since 1994. Overall, carbon emissions from energy have fallen for five straight years. Natural gas, as the president pointed out, is having a direct impact as natural gas power generation is replacing dirtier coal power on a near 1-to-1 ratio.

Could Natural Gas Prices Catch Fire?
The Motley Fool
It’s supposed to be the transition fuel of the 21st century. It’s the fuel source that ExxonMobil bet $41 billion on when it acquired XTO Energy in 2009. And it’s also the commodity that is up 40% in the last four months. Natural gas prices have been on fire, with Henry Hub futures contracts recently trading around $5/MMbtu. Can the commodity keep rising with the trend? Lower supply and unseasonably cold weather Natural gas prices have come a long way from 2012, when they were trading around $2/MMbtu. Since that time, in order to reduce supply, many natural gas producers, such as Chesapeake Energy and Range Resources, have cut back on natural gas production and focused more on producing higher-margin liquids. The total U.S. natural gas rig count has fallen steeply as well. According to Baker Hughes, the U.S. natural gas rig count was only 351 on February 7, versus 600 in 2012 and over 1,600 in 2008.