MDN Short Vacation for 2 Days – Off Tuesday & Wednesday

gone fishingMarcellus Drilling News doesn’t take a lot of vacation, but we try to take at least a few days in the summer and near the Christmas holiday. MDN will be off for the next two days–Tuesday and Wednesday. We’ll return on Thursday with all the Marcellus/Utica news that’s fit to print!

Corporate Raiders Try to Incite Shareholder Revolt at Williams

Mini-MeOn Friday MDN reported that Enterprise Products Partners, a huge midstream company, wants to buy Williams (see Here We Go Again: Enterprise Products Wants to Buy Williams). Yes, we’ve seen this movie before. Last year Energy Transfer Equity’s CEO Kelcy Warren tried the same thing–which ended in disaster earlier this year (see Dead as a Doornail: ETE Terminates Merger with Williams). History is repeating itself. The same agitators–corporate raiders–are once again pressuring Williams to accept the Enterprise offer as they tried to get Williams to accept ETE’s earlier offer. Keith “Mini Me” Meister, a protege of Carl Icahn, is one of the corporate raiders pressuring Williams. Why? So Mini-Me can flip his large amount of Williams stock at a considerable profit (screwing employees of Williams in the process). Once again, here’s why corporate raiders, like Keith Meister, are disgusting low-lifes in our book…
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Ashtabula, OH GTL Plant on Hold “Indefinitely”

VelocysLast month MDN brought you the news that UK-based Velocys, a company that builds gas-to-liquids (GTL) plants has, for now, put a previously planned GTL plant project in Ashtabula, OH on hold (see Velocys Puts Ashtabula, OH Gas-to-Liquids Plant Put on Hold). As a quick reminder, GTL plants convert natural gas, a hydrocarbon, into other hydrocarbons, like diesel fuel, gasoline, solvents and (for Ashtabula) waxes. An abundance of cheap natural gas in the Marcellus/Utica is one of the prime motivators for establishing a GTL plant in eastern Ohio. Buried in a press release in early July, Velocys said it had put the Ashtabula project “on hold” because they can’t get investors to pony up money for the project. Later in July the company issued a newsletter in which the reason for the delay seems to have changed. They now say the wax market in North America is not economical–at least right now. The local newspaper in Ashtabula picked up on that statement and is saying the Ashtabula project is on hold “indefinitely”…
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TransCanada Pipe Drops Price 42% to Compete with Marcellus/Utica

TransCanadaHow low can you go, and still make money? That’s the question TransCanada is testing in a bid to compete with cheap Marcellus/Utica natural gas that is heading to Canada via new pipelines, including Energy Transfer’s Rover and Spectra Energy’s NEXUS pipelines. Last month MDN reported that TransCanada has a plan to use existing pipelines from Western Canada to Eastern Canada–from Alberta to Toronto–to ship more natural gas from west to east (see TransCanada’s Plan to Undercut/Displace Gas from the Marcellus). The aim is to make it less expensive to get gas from Western Canada, some 2,400 miles away, than from the Marcellus, just 400 miles away. As an interesting aside, even though TransCanada wants to compete with gas coming from the Marcellus/Utica, they recently bought a big piece of Marcellus/Utica infrastructure by buying Columbia Pipeline (see TransCanada and Columbia Pipeline Tie the Knot Today). If you can’t beat ’em, buy ’em. Here’s the latest on TransCanada’s low low low pipeline rates (42% less) to ship gas from Western Canada…
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Iroquois Gas Pipeline Offers to Cut Rates for Customers

Iroquois Gas
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This past January the Federal Energy Regulatory Commission (FERC) launched five investigations into four pipelines, three of which operate in the northeast, to determine whether or not those pipelines have been “substantially” overcharging their customers with the excuse of “we have to recover our costs” (see FERC Investigates 3 Northeast Pipelines for Overcharging). Although you might think the free market would govern what pipelines charge, pipelines, like other utilities, don’t operate in a totally free market. You can’t just up and leave one pipeline and take your gas to another. The government grants permission to operate, and the government keeps an eye on the rates charged–just like they do with your local gas and electric company. One of the pipelines under investigation is the Iroquois Gas Transmission pipeline, which runs mostly through New York State. Iroquois has just filed an offer to lower rates for its shippers, to make the FERC investigation go away…
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Some Marcellus/Utica Drillers Make Money Selling Gas at $0!

revelationThe ace reporters and analysts at Natural Gas Intelligence (NGI) recently came through yet another quarterly earnings season with their sanity mostly intact. 😉 MDN editor Jim Willis works with NGI expert analyst Patrick Rau on occasion. Pat is a terrific guy and one of the sharpest energy analysts Jim has had the pleasure of meeting. Pat sat through dozens of quarterly earnings calls for drillers, oilfield services companies and more over the past month or so. What did Pat learn from all those calls? Are there trends emerging? That was the upshot of an article written by NGI reporter Leticia Gonzales last week. It’s a must-read article (see The Worst May Be Over, But NatGas Recovery Will Be Slow, Sometimes Painful). Letty not only interviewed Pat, but other analysts from other sources as well, including RBN Energy, Genscape and Wood Mackenzie. Among the eye-popping news coming from this wide-ranging article is this: Marcellus drillers can make money even at super low prices for natural gas–typically around $2-2.50 per thousand cubic feet (Mcf). In some cases, because drillers extract NGLs (natural gas liquids) along with dry gas (methane), and they can GIVE AWAY the methane for NOTHING and STILL make money! Here’s a short excerpt that was, for us, a revelation…
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Antis Ask NY Senators to Beseech Lord Obama to Stop AIM Pipeline

AlgonquinPipeline_0
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The irrational demands of radicals in New York State are getting out of hand. In March New York’s spineless Gov. Andrew Cuomo asked the Federal Energy Regulatory Commission (FERC) to stop work on the Algonquin Incremental Marketing (AIM) pipeline project because it comes close to an existing nuclear power plant (see Gov. Cuomo Asks FERC to Halt Algonquin Pipeline Near Nuke Plant). A few days later the Federal Energy Regulatory Commission (FERC) told Gov. Andy to stuff it (see FERC Denies NY Request to Stop Work on Pipeline Near Nuke Plant). Following FERC’s denial, some of the worst of the worst Big Green groups, including Riverkeeper Inc., Sierra Club and Food & Water Watch sued to stop it (see Radical Enviro Groups File Appeal to Stop AIM Pipeline in NY/CT). Apparently that effort is either taking too long, or the radicals believe it’s not going to work, because they are now calling it “an emergency” and demanding New York’s far-left U.S. Senators, Chuck “the schmuck” Schumer and Kirsten “nobody ever heard of her” Gillibrand “carry the message” to the White House to stop the AIM project. That is, they want High Lord Obama to issue another one of his illegal Executive Orders or lean on FERC to stop the AIM project…
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Fitch Ratings: American Energy-Marcellus May Default on Loan

Fitch RatingsRatings agency giant Fitch Ratings maintains and periodically issues a “Loans of Concern” list. It is a list of companies Fitch considers to have “material, near-term default risks.” That is, the companies will likely default on repaying loans, which may lead to nastier things, like a bankruptcy. As of last week when Fitch issued the list, there were 53 companies on it. Of those 53 companies, some 49% of them (26 in all) are energy companies. You must be a Fitch subscriber in order to see the full report/list of companies. Alas, we are not. However, Argus got a look and lists a few of the names in the list. One of those names stood out for us: American Energy-Marcellus, which is one of the American Energy subsidiary companies founded by former Chesapeake Energy CEO Aubrey McClendon. American Energy’s Marcellus/Utica division later changed its name to Ascent Resources in June 2015 (see Big McClendon News: Sells 35K Utica Acres, Creates New Company). In August 2015 Moody’s, another ratings agency, downgraded Ascent’s credit profile (see Moody’s Downgrades Ascent Resources Credit Profile to Basement). Ascent has been working hard to stay afloat (see Ascent Resources Offers to Trade IOUs Due 2021 with IOUs Due 2021 and Ascent Resources Sells More of Company to Pay Down Debt). We are assuming Fitch’s name use of American Energy-Marcellus is the same company as Ascent Resources–but we don’t know for sure…
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Update on Antero’s $275M Wastewater Facility in WV

antero resourcesIn August 2015, MDN told you that one of the biggest drillers in the Marcellus/Utica, Antero Resources, floated the idea of building a $275 million state-of-the-art frack wastewater treatment plant in Doddridge County, WV (see Antero Building New 60K Bbl Wastewater Recycling Facility in WV). The new plant, which will process 60,000 barrels of wastewater per day, will save Antero $150,000 per well in completion costs once it’s up and running. In February 2016, Antero filed for a permit to build a landfill next to the wastewater plant (see Antero Plans Salt Landfill Next to Proposed Wastewater Recycling Plant). The wastewater plant will separate water, salt and radioactive particles. The salt can be sold to municipalities for use as road salt–but frankly there’s not enough of a market to sell it all. And not all of it will be of sufficient quality to be sold that way. So Antero needs a place to dispose of it, hence the $20 million landfill proposal. Predictably, there has been some resistance to the new facility and landfill. The good news is that the facility is on track for a 2017 opening. Below is an update on the wastewater facility and the salt landfill next to it…
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Combating Fairy Tales: PA DEP Releases Climate Action Plan Update

Grimm's Fairy TalesPennsylvania, like all states, is on a mission to combat the fairy tale of man-made global warming by reducing carbon dioxide (CO2) emissions (the stuff you exhale with every breath), and by reducing methane (i.e. natural gas) that escapes into the atmosphere. Global warmists have talked themselves into the belief that a little methane leaking here and there is worse than a supernova. Whatever. The Dept. of Environmental Protection (DEP) in PA is tasked with developing a plan to reduce CO2 and methane emissions in the Keystone State. They’ve just released a final version of their 2015 Climate Change Action Plan Update (full copy below). Among the suggestions from the brainiacs at the DEP is dressing up trucks in skirts (don’t ask)…
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Are We Building Too Many NatGas-Fired Electric Plants in M-U?

too much of a good thingA quick tutorial on the U.S. electric grid system. At a very basic level, the electric grid in our country is made up of RTOs (regional transmission organizations) and ISOs (independent system operators). Each RTO or ISO covers a single state (ISO) or multiple states (RTO). Electric generation is shifted around to meet demands in each region, overseen by whichever regional authority is in charge. For much of the Marcellus/Utica region, the electric organization in charge is the RTO called PJM (lots of acronyms!) PJM Interconnection covers all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and the District of Columbia. There has been a flurry of new natgas-fired electric plants announced over the past six months or so. The question being asked by industry analysts and bankers (who back such projects) is this: Are we building too many new electric plants, particularly in the Marcellus/Utica?…
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