Highlights from 2016 Shale Insight, Day One

Shale InsightDay One of Shale Insight is now in the books. MDN editor Jim Willis is attending, with a booth, and had a chance to shake hands with many subscribers. A hearty and heart-felt “thank you” for the kind words to subscribers and long-time industry friends who stopped by. There is no way to sugarcoat the fact that the exhibit space (number of exhibitors) is much smaller this year than in past years. However, you just can’t replace getting face-to-face with customers and (hopefully) future customers. Although the event may be smaller in numbers, that’s not a reflection of the conference program. This year’s program is filled with terrific speakers. Jim had a chance to listen to the speakers during the main sessions in the morning and at lunch. They were some of the best he has heard in attending Shale Insight over the past five years–and that’s no exaggeration. Without a doubt the speaker from Day One grabbing the most headlines was Harold Hamm, CEO of Continental Resources and one of the drillers who figured out how to frac (with no “k”, we’ll explain below). Below are highlights only–pickings from the things Jim heard on Day One. We hope, at some point, to bring you the PowerPoint presentations and perhaps even videos for some of the talks–we’re working on it. In the meantime, here are brief highlights, things that caught our fancy, from the first day…
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PA Gov Wolf Said He May Ask NY Gov Cuomo to OK Constitution Pipe

manoamanoOne of the interesting tidbits to come out of yesterday’s first day of the Shale Insight conference in Pittsburgh was an off-the-cuff remark from Pennsylvania Gov. Tom Wolf’s special assistant for infrastructure, Yesenia Bane, who said that Gov. Wolf is “willing to talk” with New York Gov. Andrew Cuomo to ask him to approve the Williams Constitution Pipeline project in the Empire State. Bane said Wolf has met with Williams and other stakeholders in the Constitution project, and apparently Wolf was impressed enough that he’s willing to add his own voice to those calling for an approval of the Constitution. Democrat on Democrat. Mano a mano. Should be interesting, if Wolf ever gets up the nerve to do it…
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Gov. Wolf Nominates Pat McDonnell to Head PA DEP, Finally

Patrick McDonnell Acting Secretary, DEP
Patrick McDonnell Acting Secretary, DEP

In May 2016, Pennsylvania Dept. of Environmental Protection (DEP) Secretary John Quigley was fired for using a PRIVATE email account to collude with his Big Green friends to try and bully PA’s legislators into supporting his onerous proposed regulations (see Smoking Gun: Copy of the Email that Got John Quigley Fired). Richly deserved. The man who took his place as Acting Secretary is Patrick McDonnell, a 19-year veteran of the DEP. Although Pat made it clear he’d like to move from “acting” to full Secretary, as of a few weeks ago Wolf still hadn’t put forth McDonnell–nor anyone else’s–name for the permanent position (see PA Gov Wolf Searching for New DEP Sec 3 Mo After Firing Quigley). As we stated at the time, McDonnell, while not without his faults (he believes in man-made global warming flummery, but so do a lot of otherwise rational adults), he seems to be a “get it done without generating controversy” kind of guy and not nearly as extreme as Quigley was. Radical environmental groups didn’t seem overly thrilled with McDonnell as Secretary (see PA’s New Acting Sec DEP: What Do We Know? Will He Be Permanent?). However, the radicals are moderating their words, because yesterday Wolf went ahead nominated Pat for the position…
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Dominion Signs Contract with Builder for Atlantic Coast Pipeline

atlantic-coast-pipeline-july-2016
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In August MDN reported that Dominion’s $5 billion, 594-mile Atlantic Coast Pipeline–a natural gas pipeline that will stretch from West Virginia through Virginia and into North Carolina–had received the very good news that the Federal Energy Regulatory Commission (FERC) finally released timing for when they will approve the project (see Atlantic Coast Pipeline Makes Progress, FERC Timing Announced). FERC set June 30, 2017 as the date by which the agency will issue their final environmental impact statement for the project. Yesterday Dominion announced another major milestone for the project–the naming of Spring Ridge Constructors as the entity that will actually build the pipeline. Spring Ridge is a consortium of five major natural gas pipeline companies…
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Epsilon Deal to Buy More Marcellus Acreage from JV Partner Dies

Epsilon EnergyCanadian driller and midstream company Epsilon Energy had a shareholder rebellion in 2013 and threw out the sitting board of directors (see Shareholder Rebellion at Epsilon Energy – New Board as of Today). Epsilon CEO Michael Raleigh announced at the time that the company had embarked on a turnaround strategy of focusing on the Marcellus Shale–less than a year after saying they would scale back in the Marcellus (see Epsilon Energy Makes “About-Face” on Marcellus Drilling). Epsilon was and remains a very small player in the Marcellus–but the Marcellus is the company’s entire focus. The company released its second quarter 2016 update in July (see Epsilon Energy: Still No Marcellus Drilling, Focused on NEPA Pipe). From what we could tell, the company has not drilled, and doesn’t plan to drill, a single Marcellus well since 2014. However, they do own a 35% interest in the Auburn Gas Gathering system in the northeast PA Marcellus (Williams is majority owner with 44%). Epsilon’s capital expenditures for 2Q16 were a grand total of $100,000, all of it spent on the Auburn system. Epsilon released an announcement yesterday that, unbeknownst to us, they had signed an agreement with one of their joint venture drilling partners back in February to pick up an additional 4% interest in the jv acreage. But, according to yesterday’s announcement, the PSA (production sharing agreement) to pick up the extra 4% has expired and the deal is, for now, dead…
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TransCanada’s Plan to Lowball Marcellus/Utica Gas Delayed

delayedYou may recall that TransCanada, one of Canada’s leading midstream/pipeline companies, cooked up a deal to pipe natural gas from Canada’s West Coast to the East Coast in order to fend off cheap supplies of Marcellus/Utica gas that will flow into Canada when/if the NEXUS and Rover pipelines get built (see TransCanada Pipe Drops Price 42% to Compete with Marcellus/Utica). TransCanada dropped their pipeline price by 42% to lure drillers by (theoretically) making it less expensive to get gas from Western Canada, some 2,400 miles away, than from the Marcellus, just 400 miles away. But all is not butterflies and unicorns with the TransCanada plan. Drillers are balking at having to sign a 10-year agreement in order to get the favorable pricing. Their reticence is leading to a delay in TransCanada’s master plan to conquer the Mighty Marcellus…
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Dispelling the Notion that PennEast Pipe Gas Will Get Exported

penneastFor the gazillionth time, PennEast Pipeline is addressing the lie spread by opponents that “most a that thar gas will get exported overseas.” Virulent anti-drillers try to whip up opposition to the pipeline any way they can, including spreading the lie that PennEast gas will not stay local and benefit local residents. The single counter-argument that utterly destroys that lie is this: In order to export gas, PennEast would first have to apply for and receive permission from the U.S. Dept. of Energy. Guess what? PennEast has not (nor is going to) apply to the DOE for export permission, as they indicate in the following Letter to the Editor…
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Saudi War on American Frackers Led to More Productive U.S. Wells

harder_better_faster_stronger1The Saudis sure didn’t see this one coming. Back in 2014 Saudi Arabia and their toadies in OPEC declared open war on the American shale industry. The aim was to bankrupt our shale drillers by pumping so much oil for so cheap, that our small potatoes drillers would go out of business. The thinking was that the Kingdom could outlast our private companies–for years if necessary. And sure enough, some of our o&g companies have gone bankrupt–nearly 100 of them since 2015. But here’s what happened along the way–the unintended consequence. Good old American ingenuity kicked in and our companies innovated–figured out how to drill for less money and get even more oil (and gas) out of the ground while doing it. That is, the Saudis’ action in trying to bury us was to make us better and stronger. One of the major ways we became better and stronger was through the lowly grain of silicon–as in sand. Can anyone say, “mega-frack”?…
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