Chesapeake Energy 1Q16: Loves Marcellus, Loves Utica More

Chesapeake EnergyChesapeake Energy released its first quarter 2016 update yesterday. From the update we learn that the company lost $964 million in 1Q16–but most of it was a paper loss, their assets being written down in value given the low price of oil and gas. Chessy spent $365 million in 1Q16 vs. $1.5 billion in 1Q15. Perhaps most telling is that the company operated just 8 drilling rigs during 1Q16 vs. operating 54 during 1Q15. What about the Utica and Marcellus? During the earnings teleconference call, Chesapeake’s Executive Vice President for Exploration, Frank Patterson, and CEO Doug “the ax” Lawler had high praise for the Marcellus. Both calling it “a core asset” and “an incredibly powerful asset.” Currently the Marcellus produces about 1.8 billion cubic feet per day for Chesapeake. They are curtailing about 350 million cubic feet per day of Marcellus production. However, Chessy loves the Utica more–at least right now. While there are no plans to restart drilling in the Marcellus this year (as it stands right now), there are plans to drill more wells in the Utica. Why? Because the Utica has pipelines that can cart production to the Gulf Coast, via Spectra Energy’s OPEN (Ohio Pipeline Energy Network) pipeline. The Marcellus is currently pipeline challenged, which makes the recent announcements about both Kinder Morgan’s NED project and Williams’ Constitution Pipeline project all the more tragic. Chessy loves the Marcellus–but they’re waiting and watching until more pipeline capacity comes online. Here’s what was said vis-a-vis the Marcellus and Utica on yesterday’s analyst call…
Continue reading

ETE CEO Kelsey Warren Says Williams Merger “Can’t Close”

indecent proposalLast year midstream giant Energy Transfer Equity and its CEO Kelsy Warren pursued Williams, for months, and finally got Williams to agree to a deal to sell itself to Warren for $38 billion (see Williams Accepts ETE’s “Indecent Proposal” – Price Went Down $10B). Over the following months, the gas market tanked price-wise, and Warren got cold feet (see ETE Wants Out of Williams Merger/Takeover, Offering $2B Breakup Fee). Then he wanted to change the deal, making it an all stock-swap deal instead of having to pony up billions in cash–because of tax implications. Along the way Warren got his board to issue a sweetheart stock deal to himself and other top managers/investors as a hedge against the deal, which enraged Williams (see Merger Turns Sour: Williams Sues ETE/CEO Kelcy Warren). On a quarterly earnings call yesterday, ETE’s top brass addressed the Williams merger controversy. CEO Kelsy Warren said point blank: “I’d like to be really direct about this. We can’t close. We don’t have a transaction that can close. So I want to be very clear: We can’t close this transaction … So, absent a substantial restructuring of this transaction — which Energy Transfer has … been very willing and … actually desiring to do — absent that, we don’t have a deal.” Apparently the deal as proposed by Warren, with a cash component, will be taxable in ways he didn’t plan–so he either wants Williams to accept a stock swap, or bail from the deal. Here’s what was said on yesterday’s phone conference…
Continue reading

Williams’ Atlantic Sunrise Pipeline Gets Positive EIS from FERC

Atlantic Sunrise Pipeline map
Atlantic Sunrise Pipeline map – click for larger version

The sun continues to rise on on Williams’ Transco Atlantic Sunrise pipeline project. It seems like we’ve covered the story of Atlantic Sunrise forever–a $2.1 billion project consisting of compression and looping of the Transco Leidy Line in Pennsylvania along with a greenfield (brand new) pipeline segment of 178 miles, called the Central Penn Line, connecting the northeastern Marcellus producing region to the Transco mainline near Station 195 in southeastern Pennsylvania (see Atlantic Sunrise Will Pump $1.6B into Economy, Create 8K Jobs). There’s been some opposition from wackos and nutjobs–but for all their bluster, they are relatively few in number. In April 2015 Williams filed an official application with the Federal Energy Regulatory Commission (see It’s Official: Williams Files with FERC for Atlantic Sunrise Pipeline). A major step in the approval process is to receive a favorable environmental impact statement (EIS) from FERC. That happened yesterday. FERC says that although there are “some impacts on the environment,” those impacts “would be reduced to less-than-significant levels” with proposed mitigation by Williams. This is really terrific news–an indication that FERC will grant final approval later this year or early next year…
Continue reading

Analyst Says Check Your History, Constitution Pipe Won’t Get Built

Constitution Pipeline map
Constitution Pipeline map – click for larger version

An analyst with a Washington, D.C. policy and research firm believes that Gov. Andrew Cuomo’s recent action in denying Williams stream crossing permits for the Constitution Pipeline means that project is dead. He cites another pipeline project from a decade ago–the Islander East project–that faced a similar situation. In the end, Islander East didn’t get built. He believes the same fate is in store for the Constitution. We sincerely hope he’s wrong and that FERC (Federal Energy Regulatory Commission) will “grow a pair” and not let Gov. Cuomo bully them. At its heart this is a battle over the trampling of federal authority. We find it curious that Obama and his sycophants throughout the government are hellbent on expanding federal authority over every aspect of our lives–from health care, to what we eat, to what forms of power we can use. And yet these same people stand by and are silent when a federal agency like FERC is emasculated by a state like NY. Of course it should be the opposite. This is one time when the federal government Constitutionally has the authority to act, and that authority has been illegally co-opted by a state. FERC needs to force the issue in court to overrule NY’s abuse of power. The analyst, however, doesn’t see it that way…
Continue reading

Cabot O&G and Susquehanna County, PA – Match Made in Heaven

Cabot Oil & Gas Regional HQ in Dimock PA
Cabot Oil & Gas Regional HQ in Dimock PA

When Cabot Oil & Gas leased acreage in the Pennsylvania Marcellus some 7-8 years ago, they decided to concentrate their focus on a single county–Susquehanna County (about 15 miles from where MDN is written). Cabot guessed right. As we have written about over the years, Cabot has become a low-cost producer and pumps out an enormous amount of gas from that single county. In February Cabot produced an average of 1.9 billion cubic feet from its wells in Susquehanna County. Astonishing! In the third part of a 3-part series running on the SNL Financial website, the author takes a close look at a match made in heaven–Cabot & Susquehanna County–with some interesting details on Cabot’s program in NEPA…
Continue reading

EIA: Miracle of Fracking Now Produces 2/3rds of U.S. Natural Gas

EIAAccording to new numbers just released by our favorite government agency, the U.S. Energy Information Administration (EIA), fracked wells (most of them shale wells) now produce two-thirds of the natural gas produced in the United States. And the U.S. produces the most natural gas of any country on Mom Earth. Even so, Crazy Bernie and Hillary have both pledged to shut it all down (yes, we believe them, they would do it). Here’s the EIA’s story of how the miracle of hydraulic fracturing has taken over in the U.S.–a miracle we can continue if we don’t elect radicals to high office…
Continue reading

2 Natgas-Fired Electric Power Plants Coming to Cambria County, PA

Cambria County PA
Cambria County, PA

KeyTex Energy, based in Greensburg (Westmoreland County), PA, wants to build a Marcellus gas-fired electric power plant in Cambria County at a former prison site. Regional power grid operator, PJM Interconnection, will need to weigh in on the project and determine whether or not electrical substation upgrades are needed. A second natgas-fired electric plant, planned by Competitive Power Ventures, is already much further along the curve with another planned power plant. The $900 million CPV plant will be located off Route 271 near Vinco in Cambria County. CPV is now putting out bids for the electricity it will produce, and getting ready to begin construction. If both of these projects get built in Cambria (a good chance they both will), they will use cheap, abundant and clean-burning natural gas from the Marcellus and Utica Shale. Electric generating plants are an important new market to sop up some of the overcapacity we have in the Marcellus/Utica. Here’s the low down on these two natgas electric plants being planned…
Continue reading

New Bill Trims PA Gov’s Control over Environmental Quality Board

PA State Rep Cris Dush
PA State Rep Cris Dush

Republican members of the Pennsylvania legislature are tired of radical leftists like PA Gov. Tom Wolf and his Secretary of the Dept. of Environmental Protection (DEP) John Quigley running environmental policies in the state like dictators. So they’re attempting to remove some of the power they have by changing the Environmental Quality Board (EQB). The EQB is part of the DEP. Its role is to adopt new regulations proffered by the DEP. Essentially it’s a watchdog to ensure new regulations don’t become too onerous. But the EQB has been co-opted by Quigley and Wolf–witness the recent EQB vote to adopt onerous new regulations by Quigley & co. known as Chapter 78 and 78a of PA’s oil and gas law (see PA Board Adopts New Drilling Regs, PIOGA Blasts DEP “Deceptive”). So PA State Rep. Chris Dush is about to float a new bill and is looking for co-sponsors of the bill, a bill that will remove the DEP Sec. as the Chairman of the Board for the EQB. It also expands membership of the board to 23 members (up from 20) and doubles the number of members appointed by the House and Senate from four to eight. In other words, it’s time to reshuffle the EQB deck and give the executive branch less of say on the board…
Continue reading

Enviro Nazis File Lawsuit to “Force” EPA to End Injection Wells

lawsuitA group of radical/leftist environmental groups have just launched their latest “sue and settle” case against the federal Environmental Protection Agency (EPA). For a description of the despicable practice of sue and settle, where our own government colludes with these groups in a faux lawsuit which “forces” an agency to do what it wanted to do but couldn’t otherwise under existing laws, see this MDN story: Environmentalists & Government Collude in “Sue and Settle” Cases. The National Resources Defense Council (NRDC), one of the worst of the worst, is working with Environmental Integrity Project, Earthworks, Responsible Drilling Alliance, San Juan Citizens Alliance, West Virginia Surface Owners’ Rights Organization, and the Center for Health, Environment and Justice in filing a lawsuit against the EPA to “force” the EPA to stop the practice of disposing of frack wastewater via injection wells. If you can’t get rid of the wastewater, you can’t drill–which is the purpose of this latest assault on freedom and free enterprise in the U.S. These commie dirtbag pinkos (yes, we’ll tell you what we REALLY think!) are working WITH the EPA to grant the EPA sweeping new powers, via judicial decree, to shut down the oil and gas industry. This must stop…
Continue reading

Looking for an O&G Job? Check Out This Resource

oilandgaspeopleHey, it’s tough out there in the oil and gas patch. Something like 200,000+ workers in the industry have been laid off in the past year and a half. Now, somebody wants to do something about it. Oilandgaspeople.com, an online job site for the oil and gas industry, recently announced they are making their service 100% free for recruiters. Now companies with jobs in the industry can advertise those jobs, for free, on website that gets an astounding 1 million+ visitors a month. Let’s help the industry out! Post your jobs and get them filled with a qualified candidate…
Continue reading

Marcellus & Utica Shale Story Links: Fri, May 6, 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: PA energy advisor moves from gov to PUC; PA lawmakers attempt to stop new o&g drilling regs; energy infrastructure in New England badly needs an update; new underground storage rules coming from the feds; is fracking as dirty as coal?; what the failed Halliburton/BH deal means for the oil service industry; skeptics mock White House “support” for natgas; and more!
Continue reading