Marcellus Oilfield Services Cos Being Forced to Discount

Make Him an Offer He Can't RefuseMDN editor Jim Willis attended the Platts Global Energy Outlook Forum yesterday in New York City. (New York at Christmas time is truly a sight to behold.) One of the more interesting things Jim learned was from a purely off-the-cuff remark made by John Hill, vice chairman and managing director of First Reserve, one of the world’s largest energy-focused private equity and infrastructure investment firms. John was talking about the downward pressure energy companies are making on oilfield services companies–like Schulmberger and Halliburton and Baker Hughes–forcing them to discount their prices. In the case of Halliburton, which is buying Baker Hughes (see Shotgun Wedding: Halliburton Forces Baker Hughes to Sell), Hill said energy companies are telling Halliburton they WILL lower their prices (by 20%) or else. Or else the energy companies will squawk to regulators in Washington that the proposed buyout is creating an unfair monopoly. The energy companies kind of have Halliburton over the proverbial barrel…
Continue reading

PwC Report: “Shale Effect” has Major Effect on U.S. Manufacturing

A new report released yesterday by PwC (PricewaterhouseCoopers) says not only is the “shale effect” changing the energy picture globally, it’s also boosting U.S. manufacturing by saving money boatloads of money and creating tons of new jobs. The new report titled, “Shale Gas: Still a boon to US manufacturing?” (full copy of the 12-page report below) estimates that the continued shale effect on U.S. manufacturing could bring an annual cost savings of $22.3 billion by 2030, assuming a high natural gas recovery and low price scenario. In terms of job creation, PwC estimates that continued shale gas activity will create 930,000 shale gas driven manufacturing jobs by 2030 and 1.41 million by 2040. Talk about a boom! (Meanwhile, the anti-drilling nuts in NY are bleating about banning fracking with their Not One Well campaign–go figure.) According to PwC’s managing partner in the Pittsburgh office…
Continue reading

Anti-Drilling Investor Groups Issue 2nd Fracking Scorecard

Last year a group of four smug, self-righteous investor groups–As You Sow, Boston Common Asset Management, Green Century Capital Management, and the Investor Environmental Health Network (IEHN)–released their first so-called “scorecard” on energy companies that use hydraulic fracturing (see Eco-Nut Investor Groups Trot Out Faux Report on Fracking “Risks”). Their claim is that they want to force energy companies to be more forthcoming about the risks (to investors’ money) about fracking. You have to take them seriously because they represent people with billions of dollars to invest. The foursome is back with an update and a new scorecard, and once again a number of Marcellus and Utica drillers are on the list. In fact, a majority of the 30 companies listed have operations in either the Marcellus, the Utica, or both…
Continue reading

Ohio River Valley Anti-Drilling Groups Meet in WV to Plot Strategy

Extremist so-called environmental groups can’t get much traction on their own, so increasingly national groups–like the odious Food & Water Watch and infamous Sierra Clubbers–form alliances and umbrella groups. It makes it look like that there are millions and millions who oppose shale drilling (when such is not the case). What works for the big guys ought to work for the little guys too, right? The trend we see is for small fringe groups to also throw in their lot together (strength in numbers). A group of tiny fringe enviro groups in the Ohio River Valley (WV and OH) recently got together in Huntington, WV to swap lies and collude on their next attack strategies…
Continue reading

The 2 Types of Opponents to a NY Compressor Plant

In June 2014 Dominion filed an application with the Federal Energy Regulatory Commission (FERC) to, among other things, build two new compressor stations in upstate New York: one in Chemung County, the other in Madison County–both along an existing pipeline. It’s part of Dominion’s New Market project (see Dominion’s NY Compressor Plants to Move More Marcellus Gas). Some residents in Madison County are opposed to the new 10,880 horsepower compressor that would be built near some homes. More than 150 residents spoke out against it at hearings held by FERC this year (public comments closed on Dec. 5). What struck us, in a recent story about opposition to the plant, is the dichotomy that exists among those who oppose it…
Continue reading

Who’s Building Natgas-Fired Electric Plants in the Marcellus?

You might think the companies most bullish on using Marcellus Shale gas to generate electricity would be utility companies–what is called, in the business, an LDC or local distribution company. LDCs love low-cost Marcellus gas to redistribute to their customers and are doing so. Case in point: UGI Central Penn now sources 80% of the natural gas it delivers to customers in northeast and central Pennsylvania from the Marcellus Shale on its doorstep (see UGI Central Penn Natgas Rates Go Down Thanks to the Marcellus). However, it’s not utilities, local–like UGI–or national–like NRG–that are building new electric generating plants that use natural gas. It is, instead, private equity firms–investors–like Panda Power Funds, building two new plants in NEPA (see Plugging in to Panda Power’s Electric Generation Supply Chain). Why is it that private equity funds are building these plants–not only in the Marcellus but also in other regions–and not utility companies? Bloomberg explains…
Continue reading

More Marcellus Gas Going to Cheniere LNG Export Facility in TX?

Earlier this week Kinder Morgan signed a new 15-year agreement with Cheniere to supply Cheniere’s Sabin Pass LNG export facility near Corpus Christi, Texas. One of the pipelines that will deliver the gas is Kinder’s Tennesses Gas Pipeline. Although the press release doesn’t say so, we believe at least some of the gas that Kinder will provide to Cheniere via the TGP will be Marcellus Shale gas…
Continue reading

PA Accountants Love Marcellus Severance Tax (and Smoking Pot)

Two accountants walk into a bar….Wait! No. That’s a story for another blog site. Reboot: The Pennsylvania Institute of Certified Public Accountants (PICPA) has just released a poll of their members. One of the questions asked: How should PA close the state budget gap? The top three choices from the bean counters: (1) privatize liquor stores (69%); (2) implement a severance tax on shale drilling (67%); and (3) legalize pot smoking (27%). There are 22,000 members of PICPA, so if 22% of them (almost 5,000) want to light up a joint, it looks like more than a few in PA believe like John Hanger, Gov.-elect Wolf’s new Secretary of Planning and Policy. Before Hanger dropped out of the governor’s race, he famously endorsed legalizing pot smoking. Maybe PA will become the new Colorado–full of stoners? But we digress. Does anyone else find it suspicious that the people who would have to file reams of tax forms on a severance tax (generating lots of billable hours) are in favor of such a tax? Can anyone say, conflict of interest?…
Continue reading

The Connection Between Natgas Development & the Price of Oil

Another story about the relationship between the price of oil and it’s impact on natural gas development–this time a story about the Marcellus. We noticed a brief mention in an article published on The Street (Jimmy Crammers website) that provides an important piece of the puzzle for us–and we thought you would be interested too. The article says the price of LNG (liquefied natural gas) is pegged to the price of oil. Low oil prices, low LNG prices, and that may affect drillers in the Marcellus and elsewhere. Except, according to the article, even though the price of oil is in a free fall, production and drilling of natural gas in shale areas like the Marcellus have not been affected…
Continue reading