Rice Energy Offers Bankrupt ANR $200M for Marcellus/Utica Assets

Rice EnergyIn March MDN told you that Alpha Natural Resources (ANR), primarily a coal company with 27,400 acres of Marcellus/Utica Shale leases, was throwing in the towel and calling it quits (see Alpha Natural Resources Selling Marcellus/Rice Energy Stake). In March ANR received what it called a “stalking horse bid” for the Marcellus acreage. It will come as no surprise that the bidder, as we learned yesterday, is none other than Rice Energy. Rice and ANR previously worked together on a joint venture. Yesterday Rice confirmed it has entered into a purchase agreement “to acquire Marcellus and Utica assets in central Greene County, Pennsylvania for $200 million in cash, subject to purchase price adjustments.” Rice also announced they will float a new round of stock in order to finance the $200 million purchase (see today’s companion story). Here’s the details on the Rice offer to buy ANR’s Marcellus/Utica assets…
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Rice Energy Floats New Round of Stock, Hopes to Raise $488M

Rice EnergyMDN’s lead story today is that Rice Energy has made a $200 million offer to buy the Marcellus/Utica assets from now bankrupt coal company Alpha Natural Resources (ANR). As you know, drillers like Rice (and every other driller on the planet) are currently in a cash crunch. Rice doesn’t have an extra $200M laying around ready to use for such a purchase. So in addition to the ANR deal announced yesterday, Rice also announced they will float another 29 million shares of common stock hoping to raise an additional $488 million, part of which will go for the ANR acreage purchase. What happens if Rice doesn’t consummate the ANR acreage deal? They’ll use the money raised from this new stock offering “for general corporate purposes”…
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New Company Announces Open Season for NGL Storage in Ohio Utica

Mountaineer NGL StorageNGLs, or natural gas liquids, are the “other” hydrocarbons that come out of the ground along with methane, or natural gas. The most common NGLs that come out of Marcellus and Utica boreholes in southwestern PA, eastern OH and northern WV are ethane, propane and butane. Ever so gradually new markets are opening up to sell NGLs. Right now for many drillers in the region ethane, the most common NGL, actually costs drillers to dispose of. It is an expense. But ethane could be used to feed cracker plants and so much more! Pipelines are beginning to cart NGLs to other regions like Canada, the Gulf Coast and (now) to the Philadelphia area where the NGLs can either be used in petrochemical plants or exported to be used in petchem plants overseas. But what if drillers had a way of storing NGLs until they could get access to pipelines or rail or new petchem plants to use it? That’s the premise behind a brand new startup called Mountaineer NGL Storage. Started by a group of industry veterans and backed with big money from Goldman Sachs, Mountaineer NGL Storage is developing a new underground storage facility in Monroe County, Ohio, near Clarington, along the Ohio River. Yesterday the company announced a non-binding open season for drillers who want to reserve storage capacity in the new facility when it goes live sometime in 2018…
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Statoil Accident Gift that Keeps Giving, $100K for OH Firefighters

StatoilPlease bow your head in a moment of silence for the 70,000 fallen. Who? More like what. In June 2014 crews were working to frack a Utica Shale well at a Statoil drill pad in Monroe County, OH when hydraulic tubing (not to be confused with fracking) from some of the equipment caught fire. The fire quickly spread to 20 trucks lined up at the pad, burning the trucks (some of them exploding) and creating thick, black smoke that billowed for hours (see Statoil Frack Trucks Catch Fire in Monroe County, OH). Unfortunately fluids from the well pad escaped containment and made their way to a local creek and killed some fish, crayfish, frogs and other aquatic critters. Hence the moment of silence for the fallen. Statoil paid for the accident, to the tune of $223,000 (see Statoil Fined $223K for 2014 Monroe County, OH Well Pad Fire). The Ohio EPA fined Statoil $41,000 for the roughly 70,000 fish and other critters that died after chemicals ran off the well pad and into a nearby creek, and about $132,000 for contaminating the water. Except that wasn’t the end. Now comes word that Statoil has agreed to give Monroe County Firefighters Association $100,000 to compensate emergency responders for their work during the event. This is the accident that just keeps on giving–giving Statoil’s money to other people…
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PA House and Senate Panels Vote to Reject DEP’s New Drilling Regs

PA DEPYesterday the Pennsylvania State House and Senate energy committees voted to disapprove the state Dept. of Environmental Protection’s proposed new Article 78 and 78a drilling rules. In February when the Pennsylvania Environmental Quality Board (EQB) approved the new regulations after those regs were vigorously opposed by conventional drillers in the state, the Pennsylvania Independent Oil & Gas Association (PIOGA) blasted the decision calling the DEP “deceptive” (see PA Board Adopts New Drilling Regs, PIOGA Blasts DEP “Deceptive”). The Pennsylvania Independent Petroleum Producers Association (PIPP) filed a lawsuit on March 24, 2016, in the Commonwealth court of Pennsylvania challenging the legality of controversial new regulations (see PA Conventional Drillers File Lawsuit to Stop New DEP Regulations). The fight has now gone to the legislature, which has some, but not ultimate, authority to derail the new regulations. Yesterday the legislature used that authority when the energy committees for both houses voted to not approve the new regs. What happens next? The state’s the Independent Regulatory Review Commission (IRRC) will review the new regs on April 21 and make a decision about whether to approve them or not…
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Cabot Talks About Appeal Request re Tragic Dimock Verdict

cabot-logo-siteLast week MDN brought you news that mainstream media has all but ignored, in hopes of burying it: Cabot Oil & Gas has filed a legal motion to appeal the OJ jury decision to award two landowner families in Dimock, PA $4.24 million (see Cabot Files Appeal in Dimock Case – Alleges Judicial Misconduct). The jury made the award even though there was hard evidence that Cabot did not cause methane migration into the landowners’ water wells. Which is why we call them the equivalent of the OJ jury. Total disregard for evidence and decide “with your heart” instead. “That evil big oil & gas company has boatloads of money. Look at those little kids on the stand. Let’s just give them some money, even if the evidence says otherwise.” That must have been the thinking. At any rate, on Sunday Cabot, who has until now been silent about the appeal, issued the following statement. They’re either asking for (a) the court to overturn the verdict, or (b) order a new trial because of judicial misconduct on the part of the landowners’ attorney…
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Study: $546 Billion Needed in Gas/Oil/NGL Infrastructure by 2035!

INGAAForget about drilling, infrastructure is where it’s at baby! That’s our words summarizing a new study just released by the Interstate Natural Gas Association of America (INGAA). The new study, titled “North American Midstream Infrastructure Through 2035: Leaning into the Headwinds” (full copy below) says the U.S. and Canada need to invest $546 billion (real 2015$) total over the 21-year period from 2015 to 2035–or $26 billion per year–in natural gas, crude oil and natural gas liquids infrastructure. Natural gas infrastructure includes “gathering and transmission pipelines, compressors, laterals, gas-lease equipment, processing, gas storage and liquefied natural gas export facilities” (NGI). Our tongue-in-cheek opening statement isn’t completely true. You need drilling or sooner or later you have no gas to flow through the infrastructure. However, for the time being, investors (and engineers and construction firms, etc.) need to pay attention to infrastructure buildout…
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Everything You Wanted to Know About LNG – in One Report

IGUThe International Gas Union (IGU) released their “2016 World LNG Report” at the LNG18 conference yesterday taking place in Perth, Australia. The report (we have a full copy below) shows global LNG, or liquefied natural gas, is set to grow. It will play an increasingly important role in the world’s energy mix. In addition to giving a great overview of the worldwide LNG industry, the report contains some really cool appendices, including a list of active liquefaction (i.e. export) plants, a list of export plants under construction, a list of receiving terminals (and terminals under construction), and a list of LNG ships that cart it from point A to point B. LNG, as we’ve said a number of times, will be an important market for Marcellus/Utica drillers. We look at this report like “everything you wanted to know about LNG”…
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Marcellus & Utica Shale Story Links: Wed, Apr 13, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Ohio has 1,721 drilled Utica wells; southern Utica sees more permit activity; big o&g law firm Reed Smith in merger talks; PA Senate panel votes to kill Wolf’s Clean Power Plan plans; new FL natgas-powered electric plant goes live; Chesapeake bets the farm; how fracking reduces greenhouse gases; and more!
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