PA Board Adopts New Drilling Regs, PIOGA Blasts DEP “Deceptive”

PA DEPYesterday the Pennsylvania Environmental Quality Board (EQB) approved “sweeping” new changes to the regulations governing oil and gas drilling in the state (for a copy of what was passed, see PA DEP Issues “Final” New Drilling Regulations; Industry Pushback). In the end the vote came down 15-4 to pass the onerous new regulations which, according to the Marcellus Shale Coalition, will cost the industry $2 billion per year without any corresponding safety improvements for the general public. The interesting thing is that two advisory boards appointed by Gov. Wolf and Dept. of Environmental Protection PennFuture Secretary John Quigley–the Conventional Oil and Gas Advisory Committee and the Technical Advisory Board (for unconventional)–came out against the new regulations. What does that tell you? A previous version of the new regs was ready to go at the end of 2014 and then Gov. Wolf won election, installed a radical environmentalist to run the DEP (Quigley) and promptly changed the rules to damage to the drilling industry–both conventional and unconventional. These new regs are the result. The Pennsylvania Independent Oil & Gas Association (PIOGA) minces no words by saying, “The four-year process of developing these regulations has been an exercise in deception, misinformation and disregard of the law by the Department of Environmental Protection that escalated under Gov. Wolf.” Below is a look at the sausage making behind the new rules, and industry’s response…
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Is Crestwood Exploring Sale of Marcellus Assets to Antero?

The following is highly speculative and the equivalent of rumor, but sometimes it’s fun to engage in a bit of rumor-mongering. We spotted a post on the investor website Seeking Alpha that posits the following theory: Crestwood Equity Partners (i.e. Crestwood Midstream), owner of major pipelines and other facilities in the northeast and in other locales, “may” be looking to sell their Marcellus operations to Antero Resources and their Bakken Shale operations to Tesoro Logistic Partners. It must be said up front the person authoring the article owns units (i.e. shares) of Crestwood (CEQP) and is in no way objective. Articles on Seeking Alpha attempt to persuade investors to buy or sell securities. However, the rationale laid out in the article intrigues us and we think it’s worth pondering whether or not Crestwood is about to shed large parts of the company, and what that might mean for our region…
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Patterson-UTI Average Rig Count Falls to 78 in January

As we do every month, MDN tracks how many rigs oilfield services company Patterson-UTI Energy reports operating–as a proxy for when/if the drop in rig counts for the Marcellus/Utica will turn around. Patterson operates a number of rigs in the northeast, as well as other areas of the continental United States (and Canada). Previously Patterson’s December rig count number went down by 10% from November–from 91 in November to 82 in December. The count has dropped again for January–down to 78 active rigs for the month. For many months Patterson’s Canadian rig count has stood at four. Below is the announcement for January’s numbers, along with a chart we’ve created showing Patterson’s average monthly rig count number from March 2015 through January 2016…
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Big Green Groups Funding Fayette County, WV Ban Lawsuit

The people behind Big Green groups are nasty people. They are, according to one source we have communicated with, “terrorizing” legitimate oil and gas businesses in Fayette County, WV. We’ve highlighted the ongoing story of three liberal Democrat county commissioners who decided to ban not only injection wells, but over 500 conventional oil and gas wells currently operating in Fayette County, WV (see Anti Admits Fayette County, WV Ban Aims to Shut Down All O&G Wells). The ban was intentionally written so broadly (by Big Green groups assisting the county) it not only bans injection wells, like those operated by Danny Web Construction and EQT, but it will also ban currently operational oil and gas wells. It is an outrageous offense and “taking” of private property, violating the Fifth Amendment of the Constitution. EQT and Danny Web have sued the county and a federal judge slapped an injunction on the county’s ban (see Judge Stops WV County from Enforcing Injection Well Ban, For Now). You can add another outrage to the situation. The county will be represented in the lawsuit against them by several Big Green groups, groups with deep pockets and armies of lawyers, for FREE. It is a clear conflict of interest and should not be allowed. Members of these groups are responsible for falsely calling in claims of spills that never happened, making false claims alleging toxins in streams that don’t exist, etc. These groups have perpetuated smear campaigns against legitimate o&g businesses–ruining reputations. And now they will be allowed to use their enormous financial resources to defend the county in this lawsuit? Sick…
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Ceramic Beads Used to Drill CONSOL’s Monster PA Utica Well

On Monday MDN told you about CONSOL Energy’s newest Utica Shale well, a gusher with initial production of an eye-popping 61.9 million cubic feet per day per day (see CONSOL 4Q15: All About that Utica, ‘Bout that Utica, No Marcellus). The well, the GH 9, was drilled not in Ohio, but in Greene County, PA. Drillers always wonder what techniques and technologies were used in drilling such a well. How long are the laterals? What kind of choke is used? How much sand per foot? Etc. We have one bit of detail to share. Apparently CONSOL is cool with CARBO Ceramics telling the world that the GH 9 used CARBO ceramic beads in place of sand as the proppant. Here’s the details from CARBO for exactly what was used as the proppant in the GH 9…
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New Midwest Pipeline to Tap REX’s Marcellus/Utica Gas

An exciting new market for Marcellus and Utica Shale gas may open up in the next 2-3 years in the Midwest. On a quarterly analyst conference call yesterday, Laclede Group (St. Louis-based natural gas utility) said they plan to build a 60-mile pipeline from St. Louis through southwest Illinois and connect to the Rockies Express (REX) and Panhandle Eastern Pipeline (see the map below). That will bring low-cost Marcellus and Utica Shale gas to the utility, not only for resale to gas customers, but also potentially for new natgas-powered electric plants planned to replace retiring coal-fired plants. The project will cost $170-$200 million and take 2-3 years to complete, according to Laclede CEO Suzanne Sitherwood…
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MarkWest Completed 3 Processing Plants in ’15, 5 More Coming in ’16

MarkWest Energy, now a subsidiary of Marathon Petroleum, reported its fourth quarter and full year 2015 results yesterday. Net income–revenue less expenses–was down for MarkWest in 2015, but at least the company is still in the black. MarkWest had $178 million in net income for 2014, and $157 million for 2015. Not too shabby considering the disastrous results many other companies have had. Net income for 4Q15 for MarkWest was a paltry $18 million, vs. $37 million in 4Q14. Among the operational highlights for MarkWest for 2015: The company commenced operation of one processing plant and two fractionation facilities in the Marcellus shale, increasing their total processing capacity by 200 million cubic feet per day and fractionation capacity by 73,000 barrels per day. Looking ahead to 2016, MarkWest says they have 10 major processing and fractionation projects currently under construction on a just-in-time basis, with five of the 10 expected to be completed in 2016. They expect to spend $1-$1.5 billion on capital expenditures in 2016. Here’s the update…
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2 Pipe Companies with Offices in Marcellus/Utica Merging

Two oil country tubular goods (OCTG) companies, both with operations in the Marcellus/Utica, have announced they will merge. Bourland and Leverich Supply and Pipeco Services will merge to become B&L Pipeco Services. Both companies are subsidiaries of the Japan-based Sumitomo Corporation–one of the world’s largest general trading companies, owning some 800 companies with 70,000 people working for them. What the heck are oil country tubular goods (OCTG)? Pipe and tube products used in drilling–including drill pipe, pipe casings and oil/gas pipes. It certainly makes sense for two different companies in the same business with the same parent to combine…
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Cornell University Rejects Fossil Fuel Divestment Scam

Cornell University is home to some real loons–like Tony Ingraffea and Robert Howarth, who try to claim using natural gas is worse for the environment than burning coal (see New Cornell University Study Says Shale Gas Extraction Worse for Global Warming Than Coal). Their research has been debunked numerous times (see Howarth, Ingraffea Shale Gas Study on Global Warming Discredited by U.S. Department of Energy). But then there are some real scientists and professors at Cornell, like Lawrence M. Cathles, Larry Brown, and Andrew Hunter (see New Cornell Study Says Coal is Not Cleaner than Natural Gas). Over the years we’ve despaired that Cornell would ever pull its collective head out of its…asphalt. But then none other than the Cornell Board of Trustees does us proud. There has been a great deal of pressure from spoiled, rich, white kids to force the universities they attend to divest from fossil fuels. This is true for Cornell as well. The Cornell Board of Trustees has just voted NOT to divest their considerable endowment funds from companies that produce fossil fuels. Kudos to Cornell!…
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Spectra Energy Provides Update on 3 NE Pipeline Projects

Midstream giant Spectra Energy released their fourth quarter and full year 2015 update yesterday. It was a mixed bag. Overall Spectra showed strong performance for the year, but their natural gas liquids business combined with a weak Canadian dollar worked to drag down the company’s financials. Of primary interest for us is a section in the report updating us on several important pipeline projects for the Marcellus/Utica: NEXUS, AIM and Access Northeast…
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ND vs PA – How Adults Behave When Faced with Budget Crisis

We’d like to draw a contrast between the way the Republican governor of North Dakota is handling a budget shortfall, and the way the Democrat governor of Pennsylvania is doing so. ND is, in many ways, like PA. It saw a huge ramp-up in economic activity with shale drilling in the Bakken Shale over the past 10 years. In ND the drilling is for oil–in PA it’s largely for natural gas. Both states were favorable to the shale drilling industry during its formative years. Both states had Republican governors (ND still does), until the idiots voters in PA voted Tom Corbett out and the in-over-his-head-and-stubborn-as-a-mule Tom Wolf in. Wolf thinks he’s the candy man, promising to steal money from the drilling industry and redistribute it to teachers unions. With commodity prices for oil and gas approaching 30-year lows, both states are in trouble with their budgets. In ND, Gov. Jack Dalrymple has ordered across the board cuts–forcing the state to live within its means. In PA, Tom Wolf has ordered…tax increases. Wolf and the Democrats NEVER cut anything. They NEVER live within their means. They have a voracious appetite for other people’s money so they can redistribute it in a scheme to hold on to political power. We thought you might like to see how adults, like those in ND, behave when faced with a budget crisis…
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Marcellus & Utica Shale Story Links: Thu, Feb 4, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Green groups sue crude-by-rail operator in NY; New England power generators need more long-term gas contracts; 2 southeast pipelines get FERC approval; oil cos. cutting jobs right and left; why cheap oil could be bad for global economy; Russia’s dalliance with OPEC; and more!
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