Marcellus & Utica Shale Story Links: Thu, Feb 20, 2014

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

New York

State energy plan calls for reduced greenhouse gas, more natural gas use
Albany Times Union
The state’s vision for its energy future drew praise Tuesday for its goals of reducing climate-changing greenhouse gases emissions by midcentury and expanding green energy. But it also was criticized for the sparse details on how exactly that will get done. And those who praised greenhouse gas targets also questioned how the state could possibly succeed if it were to move ahead with hydraulic fracturing of natural gas, a controversial drilling technique that is strangely absent from the 210-page draft plan released last month, even though the plan calls for increased use of natural gas. The plan reaffirms the state’s goal of cutting greenhouse gas emissions by 80 percent of 1990 levels by 2050 through increased use of natural gas, clean alternatives such as wind, solar and biomass, and increased efficiency. That goal was listed in 2009 by Gov. David Paterson.

Can You Ban Fracking? [Video]
Binghamton WICZ Fox 40
Does a community have the legal right to ban fracking? It’s a question being hotly debated and litigated in our area, and on Tuesday in Binghamton some legal experts weighed in. The League of [Liberal Democrat] Woman Voters of Broome and Tioga Counties hosted an informational program inviting in Attorneys Deborah Goldberg and Joe Heath. Heath is part of the legal team defending Binghamton’s moratorium on fracking. Goldberg is the attorney defending the Town of Dryden’s ban on fracking which has been taken up by the Court of Appeals with a decision expected to come this summer. Since 2011 more than 100 towns in New York have passed anti fracking measures. So can you ban fracking? “So far, every single court that has considered this issue has said yes. So the way that it’s been working here in New York is through zoning amendments and land use law and we are fairly onfident that you can ban fracking in New York if you use your land use law correctly. She says bottom line, for a local law to survive a challenge, it must be carefully drafted, well supported and properly adopted.


Fracking views
Marietta Times
Marietta City Council members heard from folks on both sides of the oil and gas horizontal hydraulic fracturing (fracking) debate during a special public meeting of council’s lands, buildings and parks committee at Washington State College Tuesday night. At issue is an offer from a broker for Tulsa, Okla.-based Protege Energy III to lease up to 95 acres of city property that would be included among 6,100 surrounding acres for a drilling operation that would be located on property near the city. About 40 people attended the session. “We’re here to learn your opinions about the city’s potential lease of this property,” said Councilman Harley Noland, D-at large, who chairs the lands, buildings and parks committee. He explained that in January James Vuksic, CEO of MNW Energy LLC in Marietta told the committee that 35 acres of city property could be included with a block of surrounding lands for lease to Protege. Vuksic said at the time that MNW is working with about 200 area landowners to put together a 6,000- to 7,000-acre block of properties in Washington County where Protege could set up horizontal drilling operations to extract natural gas from nearly a mile below the earth’s surface. The original 35 acres included parcels of city-owned land located behind the Walmart complex and along Goose Run Road in Marietta Township.

Communication called key to promoting drilling
Warren Tribune Chronicle
Education was the theme of the afternoon as Walter “Buzz” Pishkur, former president of Aqua Ohio and Regional Chamber board member, served as the keynote speaker at the chamber’s Youngstown Ohio Utica Natural Gas Series luncheon in Youngstown. Pishkur, now the director of water utilities for the city of Arlington, Texas, was joined by Jim Parajon, Arlington’s director of community development and planning, as well as Washington County, Pa., Chamber of Commerce President Jeff Kotula to comprise a panel that stressed the importance of educating the public on misinformation surrounding the shale drilling industry. Pishkur has held his position in Arlington for about a year and described himself as neither a supporter nor an opponent of the industry. There are 56 well sites within the 99 square miles of Arlington, and the natural gas drilling there began in the early 2000s, Parajon said. The key is transparency when dealing with the public, he said. “One of the things we learned over the last 10 years is that the more transparent you are, the less assumptions people make about what goes on within their neighborhood,” Parajon said.

County hears details on proposed pipeline project
Chillicothe Gazette
An underground natural gas liquids pipeline is expected to run through a small portion of Ross County as part of a 1,100-mile project involving four other states to connect to an existing line that runs to the Gulf Coast. Wendell Hunt, local outreach business partner with the Williams Co., met with the Ross County commissioners Tuesday afternoon to discuss the proposed Bluegrass Pipeline project that would involve constructing pipelines in Pennsylvania, West Virginia, Ohio, Kentucky and Louisiana. The Tulsa, Okla.-based Williams Co. is partnering with Boardwalk Pipeline Partners, based in Houston and Owensboro, Ky., on the development that Hunt said is necessary because of a need for natural gas liquids to get out of the Marcellus and Utica shale regions that exist. The current proposed route for the pipeline would run through less than a mile of Ross County and would be situated on the northern border of Ross and Pickaway counties. Hunt said the route was determined to minimize the effects on people in the area, adding that the company has land agents working directly with property owners by “negotiating with them in good faith to determine what’s mutually beneficial for a pipeline route.”

Frackfree Gathers Enough Signatures for 3rd Vote
Youngstown Business Journal
The Youngstown Community Bill of Rights Committee reports its members have surpassed their goal of collecting enough signatures on petitions to add a charter amendment to the May municipal ballot. The signatures will now go through the required legal processes to certify a ballot question, said committee spokeswoman Susie Beiersdorfer. If certified, it would be the third time the group has placed up for vote a charter amendment that would ban hydraulic fracturing in the city of Youngstown. “With our strong showing at the polls last time and our powerful base of almost 5,000 Youngstown voters who voted ‘yes’ for the Community Bill of Rights Charter Amendment in November 2013, we fully expect to win this time,” said Susie Beiersdorfer, Frackfree Mahoning Valley and Community Bill of Rights Committee member.


Bradford County farmer gets gas royalty checks for $1.10 and 10 cents (PA) Patriot News
A Bradford County farmer says he recently got a $1.10 royalty check from Chesapeake Energy for the natural gas taken from two well pads on his farm in the Sayre area. That is not what Glenn Aikens said he was promised when he signed a lease to allow drilling on his farm. He claims he was promised the royalty would never drop below 12.5 percent of the sales price of the gas produced. That is the guaranteed minimum in the Oil and Gas Lease Act the Legislature passed in 1979 to protect owners from unfair or deceptive leases. Today, Aikens says he is averaging less than 1.5 percent and that is not enough to pay the taxes. His assessment was increased on one parcel when it was removed from the Clean and Green program. Besides the recently received $1.10 royalty check, he said he got one for 10 cents last June. As a member of the Bradford County Planning Commission for more than 30 years, Aikens said he fully understands what the Marcellus Shale natural gas development has meant to the county.

Pa. Marcellus Shale production increases
AP/Marietta (OH) Times
State regulators report that Marcellus Shale natural gas production in Pennsylvania topped three trillion cubic feet in 2013. That’s more than double the previous year’s production, and the energy equivalent of over 500 million barrels of oil. The Department of Environmental Protection reported the production figures. The data is submitted by energy companies and sometimes contains errors, but the report of 3.1 trillion feet for total 2013 production is very close to independent estimates. The Marcellus Shale is a gas-rich formation deep underground that extends across several states, but most of the current production is in Pennsylvania. The U.S. Department of Energy estimates that the Marcellus Shale now provides about 18 percent of the nation’s natural gas, but that figure includes some West Virginia production.

New drilling study needed, [Democrat] Yudichak says
Scranton Times-Tribune
A new environmental impact study is needed before any more gas drilling takes place on state parks and forests, a Luzerne County senator said Wednesday. The drilling proposal in Gov. Tom Corbett’s 2014-15 state budget represents a major shift in state environmental policy because it would bring deep Marcellus Shale drilling to state parks for the first time, said Sen. John Yudichak, D-14, Nanticoke, ranking Democrat on the Senate Environmental Resources and Energy Committee. “I think a study should be done,” he said. Mr. Yudichak’s comments followed an exchange with Department of Conservation and Natural Resources Secretary Ellen Ferretti of Dallas during a budget hearing.

West Virginia

Superload Ready For First Leg of Journey
The Intelligencer/Wheeling News-Register
Corky Demarco said moving huge loads such as the 41-yard long Williams Energy de-ethanizer is an “unfortunately disruptive” part of the Marcellus and Utica shale natural gas industry’s ongoing expansion. The 510,000-pound machine is scheduled to begin its four-day journey aboard its modular platform trailer known as a Goldhofer from the Benwood CSX rail yard to Williams’ Oak Grove facility along Fork Ridge Road at 8 a.m. today. “It is just part of our industry,” Demarco, executive director of the West Virginia Oil and Natural Gas Association, said regarding the superload. “How else are you going to do it? They can’t drop it in by helicopter.”


Turns out the Loup Power District’s excess sand is perfect for fracking – and worth millions
Omaha (NE) World-Herald
Few people would have guessed over the years that the massive expanse of sand surrounding Loup Power District’s canal near here would one day be worth untold millions of dollars, or that it would eventually be responsible for up to 150 jobs. The source of the sand, the Loup River, presents James Reeg a never-ending challenge. As dredge foreman for the public power district, Reeg is charged with removing anywhere from 1 million to 2 million tons of sand and sediment from the utility’s settlement basin every year. It’s a task that takes about three months in the spring and about three months in the fall to keep water flowing to the district’s two hydroelectric power plants at Monroe and Columbus. And every year since 1937, that sand was pumped to either side of a two-mile-long canal, requiring the district to purchase additional land for storage. As it turns out, the sand covering thousands of acres of land just west of Genoa happens to match the type of sand used to extract oil and gas in a process known as hydraulic fracturing, or fracking. Advances in the controversial technique helped create a domestic oil and gas boom. And that’s been a boon for this little town of about 1,000 people west of Columbus.

Natural Gas Is America’s Real Green Energy
The Motley Fool
Renewables may be hot, but natural gas is becoming the biggest provider of America’s electricity generation needs. The U.S. Energy Information Agency (EIA) expects that from 2012 to 2040 natural gas will grow from 30% to 35% of total U.S. generation. In the same time frame renewables are only expected to grow to 16% of total U.S. electricity generation. If we really want to dethrone coal and make America greener, natural gas is a very effective tool. What about solar? Electricity demand peaks from noon to 7 PM. Peak demand happens when the sun is shining, helping companies like First Solar (NASDAQ: FSLR ) compete with expensive natural gas peakers. Its strong utility sales give the company a healthy profit margin of 12.2%. First Solar’s expanding sales operations and proven experience have helped it drum up a good sized 7.7 GW DC project pipeline, but the majority of the pipeline is still early stage. First Solar’s biggest challenge will come once North American utilities have already replaced the majority of their natural gas peakers with solar. Non-peaker natural gas plants have levelized costs of energy (LCOE) as low as $67.1 per MWh, far below solar’s LCOE.

Dicker and Link: Natural Gas Trades Over $6 [Video]
The Street
Eek! Natural gas now costs $6 per thousand cubic feet, a price not seen since briefly in 2010. Meanwhile, crude oil is trading well above $100 a barrel. There are going to be some unhappy consumers when they open their fuel bills this month. Even more disheartening, I believe the relatively high price of both natural gas and crude oil are here to stay for 2014. In natural gas, a steadily difficult winter has continued to drop stockpiles well below the five-year average. We are currently sitting at less than 1.5 trillion cubic feet in storage. With another cold snap of any kind before the spring, or even with an early onset of hot weather in May, we could see lifetime-low stockpiles of close to 1 trillion cubic feet. Furthermore, American exploration and production companies have worked hard in the past two years to shut down production of dry gas assets, preferring to concentrate on shale oil and NGL production. It will be difficult to ramp up production for gas anytime soon. Finally, there’s nothing like the trader shark tank of natural gas once it gets running. I remember often from my on-the-floor days seeing natural gas rocket upwards with very little catalyst except the “hot trade” idea of the week. It is a classic counter-intuitive move to see natural gas trade today above $6/mcf precisely on the day that snow is rapidly melting here in the northeast and temps are expected to be in the 50s for the upcoming weekend.

3 Reasons to Be Bullish on This Battered MLP
The Motley Fool
Investors aren’t very happy with Boardwalk Pipeline Partners. The natural gas pipeline master limited partnership (MLP) cut its quarterly distribution sharply, which triggered a common unit, or MLP share counterpart, price collapse of over 40%. But Boardwalk’s plunge may have been overdone. The partnership might be as compelling an investment as better performing peers like El Paso Pipeline Partners or Spectra Energy Partners. Here are three reasons why it might be time to get bullish on Boardwalk Pipeline Partners. Unfavorable natural gas pricing appears a major reason for Boardwalk Pipeline’s recent disappointing 2014 outlook. A glut in natural gas inventories has hurt pipeline and storage providers. As supply levels climbed, prices fell and producers’ desire to deliver, store, and transport increased volumes waned, reducing demand for the midstream transportation services that MLPs like Boardwalk provide. Better natural gas pricing appears likely, however. Recent frigid winter weather has increased natural gas demand and drawn down inventories. The U.S. Energy Information Administration recently reported that gas stocks at the end of March, when the heating season draws to a close, are expected to fall to the lowest level since 2008. While these supplies will likely be restored eventually, higher natural gas prices should be supported in the meantime.

Asian Tigers Stalk U.S. Gas as Louisiana Shale Profits Taper
DeSoto Parish, Louisiana, has a problem. The solution may lie 10,000 miles away in Jakarta. A rustic stretch of bayous and timberland, DeSoto and other communities in the Haynesville shale formation have become victims of the energy industry’s success in extracting natural gas from deeply buried rock. Even as U.S. gas production surges to a record, outpacing domestic demand, Haynesville output has slumped 40 percent since 2011 amid falling prices as companies shift rigs to reservoirs richer in lucrative oil and gas liquids. Tax revenue has tumbled by the same percentage over the past two years from a record $50 million in the parish, home to Civil War battlefields and Billy B’s Cajun Grill. In Jakarta, a city of 10 million, high-rise buildings crowd the skyline and auto-rickshaws, motorcycles and taxis vie for space on gridlocked roads. Indonesia’s energy use may more than double from 2010 through 2035, according to the Asian Development Bank. As early as next year, cargoes of liquefied natural gas shipped from Gulf Coast terminals to fast-growing Asian countries will propel the region into the ranks of global gas exporters such as Qatar and Australia for the first time.

More for Less: The Turnaround Story Unfolds
The Motley Fool
Spending less but producing more: Is it possible? Chesapeake Energy is going to spend 20% less on capex yet will still grow output by 8% to 10% this year, after adjusting for asset sales. In order to compensate for low natural gas prices (which have risen substantially recently), Chesapeake Energy has been focusing all of its cash on liquids-rich plays. This is clearly seen in Chesapeake’s update and guidance for 2014. After adjusting for asset sales, there will be around 8%-12% oil production growth, 4%-6% dry gas output growth, and a whopping 44%-49% growth in NGL production this year. Overall, Chesapeake is guiding for 1%-5% oil, 40%-45% NGL, and -2%-zero dry gas output growth. Total liquids production would be up around 14%-18%, while dry gas production would remain relatively flat. A major plus for Chesapeake Energy has been the abnormally cold winter all across America, which has pushed natural gas prices up to $5 mmBtu due to sharp increases in demand. While Chesapeake is moving away from dry gas plays, it’s production mix is still ~70% weighted toward dry gas.This doesn’t mean that Chesapeake Energy should stop its major push into liquids production, but it will help Chesapeake generate more cash flow.

Developers of Natural-Gas Plant Agree to Emissions Limits to Comply with Mass. Climate Mandates
ecoRI News
The Conservation Law Foundation (CLF) has reached a groundbreaking settlement ensuring that for the first time a proposed natural gas-fired power plant must comply with conditions aimed at reducing greenhouse gas emissions and over-reliance on fossil fuels. The agreement also includes enforceable annually declining emissions limits and a date certain for future plant retirement. The agreement between CLF and the developers of the natural gas-fired Footprint Power Plant proposed at the site of a retiring coal-fired plant in Salem has been filed for final review and approval with Massachusetts authorities. “At a time when many across the nation and the world see unrestricted growth of natural gas as a climate solution, this is the first settlement providing a pathway for new natural gas infrastructure to help enable rather than undermine a clean energy future,” CLF president John Kassel said. “By recognizing the need to limit greenhouse gas emissions from natural gas-fired plants, this agreement reaffirms that natural gas and other fossil-fuel projects must comply with state climate mandates, and has important implications for similar projects in the region and nationally.”

Gas-to-liquids plants face challenges in the U.S. market
EIA Today in Energy
Gas-to-liquids (GTL) is a process that converts natural gas to liquid fuels such as gasoline, jet fuel, and diesel. GTL can also make waxes. The most common technique used at GTL facilities is Fischer-Tropsch (F-T) synthesis. Although F-T synthesis has been around for nearly a century, it has gained recent interest because of the growing spread between the value of petroleum products and the cost of natural gas. The first step in the F-T GTL process is converting the natural gas, which is mostly methane, to a mixture of hydrogen, carbon dioxide, and carbon monoxide. This mixture is called syngas. The syngas is cleaned to remove sulfur, water, and carbon dioxide, in order to prevent catalyst contamination. The F-T reaction combines hydrogen with carbon monoxide to form different liquid hydrocarbons. These liquid products are then further processed using different refining technologies into liquid fuels.


Scotland’s Wood Group lauds U.S. shale
Wood Group of Scotland singled out the U.S. shale energy sector as among the energy company’s strengths, crediting it with 30 percent of its recent revenue. The company, which has headquarters in Aberdeen, Scotland, acquired Wyoming-based services company Elkhorn, which operated in the Niobrara, Permian, Marcellus and Utica shale basins in the United States. for $215 million in November. Wood Group said it has about 4,500 people employed in its various activities “across the most significant U.S. shale plays.” “We are predominantly an upstream oil and gas services business and our intention is to broaden and deepen the services we can offer in this sector,” Wood Group Chief Executive Officer Bob Keiller said Tuesday. New technologies used for drilling into shale formations have released oil and gas reserves previously out of reach for energy companies.