Cabot/Williams to NY: You Lied Re Constitution Pipe, We’re Suing

liar.jpgThe partners in the Constitution Pipeline, including Williams and Cabot Oil & Gas, have come roaring back against Gov. Cuomo and his pusillanimous Dept. of Environmental Conservation (DEC) after the DEC lied last Friday in announcing they would not grant stream crossing permits for the pipeline project. Yesterday Cabot, along with Williams, issued a STRONGLY worded rebuttal that says, in part that the DEC’s “stated rationale for the denial includes flagrant misstatements and inaccurate allegations, and appears to be driven more by New York State politics than by environmental science.” Flagrant misstatements is another way of saying the DEC lied, which is exactly what we said yesterday (see NY Gov. Cuomo Refuses to Grant Permits for Constitution Pipeline). The new statement also says the Constitution worked closely with the DEC for three years and bent over backwards, forwards and in every other possible direction to meet the DEC’s requests and requirements. The statement says “The project sponsors will pursue all available options to challenge the legality and appropriateness of New York’s decision.” In other words, we’re suing to force this project through. Good! About time!! Here’s the full statement (take time to read it)…
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Constitution Pipe Denial May Destroy 2K Existing Upstate NY Jobs

Raymond forkliftNew York Gov. Andrew Cuomo’s action to stop progress on the Constitution Pipeline has very real, tangible negative effects on jobs in Upstate New York. This is the true story of two large regional employers in New York’s Southern Tier that would benefit from cheap, abundant, and clean-burning Marcellus Shale gas from northeastern Pennsylvania. Wait. You believed the anti’s lie that all of the gas traveling through the Constitution would be transported to other areas, with much of it exported, and would not in any way benefit local residents? Yeah, that’s a lie. Another 100% lie pedaled by irrational fossil fuel haters. As the Constitution crosses places like Broome, Chenango and Delaware counties in the Southern Tier of New York State (i.e. “Upstate”), the pipeline will be tapped in several locations by Leatherstocking Gas Co.–a small but important local utility company. Leatherstocking will then provide gas to area communities and to two large businesses. One of those businesses is the Amphenol Aerospace plant in Sidney, NY. Amphenol is the largest employer in Delaware County with some 1,100 employees. Amphenol needs cheap Marcellus Shale gas from the Constitution to stay competitive and to keep the plant open. The second business is located in the small Chenango County village of Greene–Raymond Corporation. You know those bright red-colored forklifts you see in warehouses and factories? They’re all built at Raymond, which ships them worldwide. The facility is now owned by Toyota. Raymond also needs natural gas from the Constitution Pipeline. With over 800 1,600 employees at Raymond, it is the third largest employer in Chenango County. Does Gov. Cuomo really want to play Russian roulette with nearly 2,000 upstate jobs? Here’s the sad story of a corrupt governor bowing to political pressure and screwing his own constituents in Upstate…
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DRBC’s Lawless Action to Review PennEast Pipeline Apart from FERC

drbc_logo_thumb.gifThe Delaware River Basin Commission (DRBC), charged with overseeing potential impacts on the Delaware River and the various tributaries that feed it, has once again stepped outside of its legal bounds. The PennEast Pipeline is a $1 billion, 118-mile pipeline from Luzerne County, PA to Mercer County, NJ–part of it through the Delaware River Basin area. In 2014 the DRBC tried to tell PennEast and its sponsors that the pipeline will need their approval before it can be built (see DRBC Tells PennEast They Need DRBC (Not Just FERC) Approval). There’s just one teeny tiny problem with that–called the U.S. Constitution. The pipeline is permitted solely by the Federal Energy Regulatory Commission (FERC)–not any other agency, including the quasi-governmental DRBC. PennEast told them as much (see PennEast Tells DRBC Not So Fast, FERC has Final Say on Pipeline). But silly little things like laws don’t stop power-mad liberals like those at the DRBC. Last summer FERC, in a bid to be gracious to the libs at DRBC, agreed to hold one joint hearing on the PennEast with the DRBC (see Anti Drillers Demand DRBC Hold 7 Meetings on PennEast Pipeline). The DRBC has decided it will take its marbles and go home. Yesterday the DRBC informed FERC, by letter, that they will no longer participate in the joint hearing with FERC and will, instead, hold their own hearings (plural) on the PennEast. The DRBC is clearly operating outside of its charter. The DRBC news got THE Delaware Riverkeeper titillated…
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Rex Energy Converts IOUs into Common Stock, Avoids Bankruptcy?

Rex EnergyIn what appears to be an ongoing strategy/trend among exploration and production companies (i.e. drillers), Rex Energy is the latest driller to convert outstanding debt in the form of notes (IOUs) into equity, or stock ownership. Earlier this year Rex, a small Marcellus/Utica driller headquartered in State College, PA, offered to refinance its IOUs so the notes expire later, meaning Rex wouldn’t have to cough up cash sooner to pay off the debt (see Rex Energy Offers to Refinance Outstanding IOUs). With few takers for a second lien, Rex then offered to sweeten the deal (see Rex Energy Extends & Sweetens Offer to Refi Outstanding IOUs). Rex finally closed out the offer at the end of March (see Sigh of Relief for Rex Energy: Noteholders Agree to 2nd Lien Deal). But what’s this? Rex announced yesterday they have exchanged a bunch of the notes, along with some preferred stock and second liens, for common stock. We’ve seen this before with companies either heading for or in bankruptcy–they exchange debt for equity. The strategy turns outstanding debt into ownership in the company, which tends to devalue the stock held by existing investors. Here’s the Rex announcement…
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List of 7 Announced NatGas-Fired Electric Plants Planned in Ohio

Ohio-counties-map_thumb.gifThere have been a flurry of announcements over the past year or two for natural gas-fired electric power generation plants across the Marcellus/Utica region. One of the most active areas seems to be Ohio, where there have been seven such projects (and counting!). Our friends at Energy in Depth have put together an excellent post (below) with the complete list of seven natgas/electric projects. As they point out in the post, once all of these projects are up and running, if you add together all of the electrical output, these seven new projects will produce enough electricity to power every single household in Ohio, plus some. Wow! That’s the power of cheap, clean-burning Utica (and Marcellus) Shale gas in the Buckeye State…
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NED Not Dead? Kinder Morgan Files for 30 Day Stay, Antis Fret

Kinder MorganLast week midstream giant Kinder Morgan announced they didn’t have enough demand lined up for their proposed $3.3 billion Northeast Energy Direct (NED) pipeline and so they will suspend any more work on the project (see NED is Dead – Kinder Morgan Suspends $3.3B New England Pipeline). But is it truly dead? After the announcement Kinder Morgan asked both the Federal Energy Regulatory Commission (FERC) and the Massachusetts Dept. of Public Utilities (DPU) for a temporary stay on the project. The stay allows Kinder to formally brief the utility companies that did sign up about their decision. Lack of this pipeline puts some of those companies in a tight spot. The stay also allows relieves Kinder from filing certain responses required by certain deadlines in May. FERC has not yet responded to the stay request, but the DPU has–the DPU granted the stay. All of which kind of rattles the antis. They’re suspicious that Kinder may pull a fast one and revive the project if they let down their guard…
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SSE 1Q16: Revenue Down 64%, Lost $59M, Quick Bankruptcy Coming

77 energyLast week Seventy Seven Energy (SSE)–the old Chesapeake Oilfield Operating unit that was spun into its own company a few years ago–announced it would soon declare bankruptcy (see Seventy Seven Energy Filing for Bankruptcy, Converting Debt into Stock). The message was “Don’t worry, this will be a quick and relatively painless bankruptcy.” Painless for everyone except existing common stockholders who will see the value of their stock plummet. But we digress. We can see why they announced the bankruptcy last week because yesterday SSE released their first quarter 2016 financial and operating results. Revenue plummeted by 64% in 1Q16 over 1Q15 (and down 19% from 4Q15). The company lost $59.5 million in 1Q16. CEO Jerry Winchester said (our words) given that all the wheels have come off the drilling cart, SSE’s 1Q16 performance wasn’t all that bad. Here’s the announcement (take some Alka Seltzer before reading it if you’re an investor in SSE)…
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DOE Rejects Sierra Club’s Request to Re-Hear Cove Point Decision

DOERadical environmentalists from groups like the Sierra Club, Chesapeake Climate Action Network and Earthjustice continue a full court press to try and stop Dominion’s Cove Point LNG (liquefied natural gas) export facility, currently under construction (more than a quarter done) along the coast of Maryland. These groups coordinate and collude to try and deny a single, legitimate business–Dominion–the right to conduct business. Sounds like something out of Stalin’s Russia or Hitler’s Germany–but no. It’s right here in the US of A. Here’s the radical’s strategy in a nutshell–throw as much feces against the wall as you can, and hope that some of it sticks. One pile of feces they’ve thrown is to file multiple lawsuits, in various courts (see Green Groups Ask DC Judge to Stop Construction at Cove Point LNG). Another pile of feces thrown is against the government agencies involved–the Federal Energy Regulatory Commission (FERC) and the Dept. of Energy (DOE). The strategy used by antis against the agencies is to beg and plead for “re-hearings” of decisions already made by the agencies. Last year FERC told the nutters to blow off (see FERC Says “No” to Anti’s Request for Cove Point LNG Re-hearing). The Sierra Club then went after the DOE–to ask them to reconsider their approval to sell Cove Point LNG to non-Free Trade Agreement countries–specifically India and Japan. Last week the DOE also told the Sierra Club to blow off…
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Southwestern Energy Names Cathy Kehr as New Chairman of the Board

Kehr
Cathy Kehr

We sometimes hear, usually from industry critics, that there’s not enough women in oil and gas jobs. That women have a hard time breaking through “the glass ceiling.” That o&g is “a man’s world.” Don’t tell that to Cathy Kehr. Cathy was just named the new Chairman (or Chairwoman) of the Board at one of the biggest drillers in the Marcellus/Utica–Southwestern Energy. The current Chairman, Steve Mueller, is retiring in May. Mueller was previously not only Chairman, but also CEO. Mueller announced in January he was leaving his post as CEO at that point, and subsequently retiring from the board in May (see Southwestern Energy Gets New CEO – What’s Ahead for 2016?). Bill Way, who was just President, is now President & CEO. Bill runs the company. Bill’s boss will be Cathy. She comes from the Wall Street/money side of the isle–previously a portfolio manager for one of the world’s largest investment management, The Capital Group. Three cheers for Cathy!…
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Prices for LNG Heading to Japan Drop 42.5% Year Over Year for May

LNG tankerHow low can world LNG prices go? One of the potentially important markets for U.S. LNG is Japan. Historically when drillers would get $3-$4 per thousand cubic feet (Mcf) here at home, they could easily get $8 or more per Mcf in Japan–if they could just get the gas loaded onto ships and get it there. Hence facilities being built like Dominion’s Cove Point, Maryland, which export gas to Japan (and India). But something happened on the way to the LNG party. Last December Platts reported LNG deliveries to Japan and Korea were fetching $7.40/Mcf (see Platts Says LNG Heading to Japan & Korea Fetching $7.40/Mcf). By February, that number had tumbled to $5.34/Mcf (see LNG Exports to the Rescue in Northeast? Not So Fast). That number has fallen even more. Today LNG going to northeast Asia is only fetching $4.24/Mcf–the lowest in seven years. Ouch. Why are the prices tanking in Japan and Korea?…
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Marcellus & Utica Shale Story Links: Tue, Apr 26, 2016

best of the restThe “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: What happens to Cabot O&G without Constitution Pipeline?; we must defeat enviro tyrants who would rule us; EPA wants closer look at ET Rover; gas rig count falls to new all-time low; PA energy law firm calls off merger talks; WV downgraded by S&P; delay in Atlantic Coast Pipeline; Cheniere gets more storage; biz groups criticize flaring rule; Halliburton/BH deal dead?; and more!
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