Midstream Nightmare Comes True: Judge Lets Driller Cancel Contracts

court-gavel.jpgTwo weeks ago MDN warned you of a court case that has the potential to upend the midstream (pipelines & processing plants) market–here in the Marcellus/Utica and across the country (see Shock: Judge May Allow Drillers to Cancel Gathering Pipeline Deals). That potential has now been realized. Judge Shelley Chapman, in a case in U.S. Bankruptcy Court for the Southern District of New York, has ruled that Sabine Oil & Gas may cancel a pipeline gathering contract with Cheniere’s Nordheim Eagle Ford Gathering in Texas. Nordheim spent $84 million building a pipeline system to Sabine’s wells. In return for laying out that kind of money, Sabine, as is always the case, signed a multi-year contract with Nordheim (10 years in this case), ensuring Nordheim would make make a profit on its up-front investment. The judge is allowing Sabine to cancel the deal several years into the contract. If a driller signs a contract and that signature is no longer any good, will anyone build pipeline systems anymore?…
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Alpha Natural Resources Selling Marcellus/Rice Energy Stake

As we told you a month ago, Alpha Natural Resources, Inc., one of the largest metallurgical coal producers in the world, has been offered $500 million for the company’s major assets–its crown jewels (see Bankrupt Alpha Natural Resources Offered $500M for Assets). Among those assets is 25,000 acres of Marcellus gas leases in Greene County, PA and a stake in Rice Energy. We now have more details. Yesterday Alpha filed a proposed Chapter 11 bankruptcy plan that lays out selling the company’s best assets, keeping a few assets so it can cover the cost of reclaiming certain coal mining operations. In essence the company is throwing in the towel and calling it quits…
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Chevron Cuts 2017/2018 Budget by 34%; Scaling Back in Marcellus

Chevron is cutting its budget for 2017 and 2018. Chevron maintains an active drilling program in the Marcellus Shale–but it has been selling bits and pieces of its Marcellus assets (see Chevron Lists Another 6,630 Marcellus Acres for Sale in Central PA). Previously the company committed to a capital budget of $26.6 billion for 2016–down 24% from 2015. They’ve just announced preliminary estimates for spending in 2017 and 2018–a plan to spend $17-$18 billion in each of those years. Chevron says it will continue to cut spending in order to “preserve cash” in the low price environment. What about their Marcellus/Utica program? They plan to take a “measured pace”…
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Dimock Trial Update: Judge Says Plaintiffs Didn’t Suffer Damage

The judge in the famous Dimock water contamination case has ruled that the plaintiffs have not proven any kind of damages, so he tossed out the negligence claim against Cabot Oil & Gas. That is, he just tossed out most of the remaining case! The only claim left now for the jury to decide, beginning today, is whether or not Cabot created a “nuisance” with their drilling activities. Translation: Cabot Oil & Gas did not, in any way, contaminate water wells in Dimock with their drilling activities. That is now proven in a court of law. Once again MDN friend Tom Shepstone, who has done a superb job of covering the trial, files this report about the judge tossing the last major charge against Cabot, and about more expert testimony that demolishes the plantiffs’ so-called expert witness Tony Ingraffea…
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CONSOL Uses Magnum Dissolvable Frac Plugs in Utica Shale

We’re always intrigued by the technology being used by Marcellus and Utica drillers. Some of the best innovations in the shale patch have come in the northeast. So when we spotted a story (press release) about a company hooking up with CONSOL Energy to provide high tech fracking solutions, our eyes and ears perked up. Magnum Oil Tools says they have provided CONSOL with 20 Magnum Vanishing Plugs (frac plugs) for use in the Utica Shale. What the heck is a frac plug?…
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Mountain Valley Pipeline Wins Right to Survey in VA w/o Permission

Mountain Valley Pipeline is a $3.5 billion, 301-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA. The project, which filed an official application with the Federal Energy Regulatory Commission last October, is being built by EQT, NextEra Energy and several other partners (see Mountain Valley Pipeline Files FERC Appl, Now Just Matter of Time). The project has faced stiff opposition from landowners in West Virginia (see Mountain Valley Pipeline Sues 103 WV Landowners for Survey Access). The project has also faced opposition from landowners in Virginia. However, things just got a lot easier for Mountain Valley when it comes to surveying a potential route through the Old Dominion state. The Virginia Supreme Court on Monday decided NOT to hear an appeal of a lower court ruling that allows pipeline surveyors to access a property WITHOUT the landowner’s permission. That decision means the lower court ruling, which allows surveyors unpermissioned access, to stand…
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WV “Help Out Antero” Bill (re Nuisance Lawsuits) is Dead for 2016

We’ve told you about a bill winding its way through the legislative process in West Virginia that would stop a rash of so-called nuisance lawsuits–primarily against Antero Resources (see WV Senate Bill Stops Frivolous Nuisance Lawsuits Against Drillers). Hundreds of nuisance lawsuits (“they’re too loud, “they leave the lights on too late,” “I don’t like the truck traffic”) have been filed against Antero and other drillers. The lawsuits against Antero have been combined into a class action lawsuit (see More People Pile on Antero, Seek to Join Mass “Nuisance” Lawsuit). It’s a back door way to bring down a company–like a pack of hyenas attacking a giraffe. If the pack is big enough, it can kill its prey. Senate Bill (SB) 508 was meant to stop this insanity, and as of a few weeks ago it was advancing (see 2 Bills Favorable to Drillers Advance in WV Senate – SB 508 & 565). But that was then, this is now. SB 508 is now pretty much dead. A House committee is holding it up and the bill won’t make it to the floor for a vote before the end of WV’s brief 60-day legislative session…
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Rice U Study: NatGas Used in Power Generation Lowers Global Warming

We thought maybe the International Journal of Global Warming was a comic book, er, a, “graphic novel” as they’re called these days. But no! It’s a real, literal academic journal, published to amuse those who believe in unicorns and other fairy tales. But let’s not depart from the subject at hand. A new study just published says using natural gas to power electric generating plants is a good thing for global warming (pay attention Tony Ingraffea and Robert Howarth). Researchers from Duke University say using natgas leads to less global warming, not more–as long as that old villain fugitive methane doesn’t escape into the atmosphere when drillers extract natgas from the ground. What about using natgas to power trains, plains and automobiles? Nah, not so much of a benefit for Mom Earth, according to the authors…
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Garrett County, Maryland Commissioners Commit Fracking Suicide

As we told you on Monday, Garrett County, MD commissioners were contemplating committing fracking suicide by banning fracking in 41,000 acres around a lake in the county (see Maryland Continues to Shoot Itself in the Head re Shale Drilling). Even though the state hasn’t even allowed fracking yet, and even though Garrett is part of the one and a half counties with frackable shale gas under it. We’re sad to report the commissioners went ahead and pulled the trigger…
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Marcellus & Utica Shale Story Links: Wed, Mar 9, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: EIA misses Marcellus production forecast bigtime; OH has 1,240 drilled wells; OH injection well volume up 9.5%; fracking is key to expanding manufacturing in PA; CONSOL Energy no longer in the S&P 500 Index; light at the end of the natgas price tunnel?; natgas prices grind toward the abyss; what will it take for natgas prices to recover?; the impact of 2016 presidential race on energy policy; and more!
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