Baker Hughes Rig Counts Continued to Rocket Higher in December

The Baker Hughes rig count continued to rocket skyward in December–on all levels. The international rig count (worldwide) was 929, up 4 from the 925 counted in November. However, in the U.S., the December rig count was 634, up a whopping 54 rigs from the 580 counted in November. And the Marcellus/Utica had equally good news. The combined rig counts for PA-OH-WV was 58, up by 5 rigs from November’s 53. Cool! The biggest gainer was PA, with a count of 31 (up 4 from 27 in November). OH gained 2 and now stands at 18 active rigs. WV, on the other hand, lost a single rig and the count stood at an average of 9 rigs. Something else to note, December’s M-U rig count of 58 is the highest average monthly rig count in 2016. On the chart below you will see we hit our low point in June/July when the count was 36. Since that time we have gained rigs every single month…
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Bill Aims to Fix PA DEP Conflict of Interest re Penalty Revenue

PA Sen. Scott Hutchinson

Pennsylvania State Senator Scott Hutchinson says the PA Dept. of Environmental Protection (DEP) has a built-in conflict of interest. The DEP has broad powers of investigating and assessing fines and penalties on the oil and gas industry for violations of the rules the DEP itself makes. The icing on the cake is that the DEP gets to keep the money it levies in fines and penalties. Hmmm. You make up the rules, you get to aggressively enforce the rules, and then you get to keep the money that results. What’s wrong with this picture? Hutchinson says if you put someone else (the PA legislature, in this case) in charge of the money raised from the fines and penalties, that makes the situation a little more fair and balanced. We couldn’t agree more…
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Williams Letter to FERC: Please Hurry Up Atlantic Sunrise Cert

As MDN reported last week, on the last business day of 2016, the Federal Energy Regulatory Commission (FERC) issued a favorable final environmental impact statement (EIS) for one of the major pipeline projects in the Marcellus/Utica: the $3 billion Williams Atlantic Sunrise Pipeline project (see FERC Approves Atlantic Sunrise Pipeline! Cabot Grabs More Capacity). What’s left to do now? FERC must issue the final certificate that allows the company to start the backhoes and begin construction. Williams (under the subsidiary name of the Transco pipeline), sent a letter to FERC on Jan. 5 requesting FERC to issue that certificate no later than Feb. 16. Why? To “begin preparations to finalize federal and state permits as well as plan for construction to comply with restrictive environmental windows, specifically tree clearing within key habitat areas and installation through certain water bodies.” Williams/Transco has a lot to do in a short period of time if they are to keep this project on track for a mid-2018 launch. If they get the final certificate by mid-February they can clear trees by the end of the month and get ready for initial construction this summer. Williams plans to have at least some of the pipeline project up and running by the end of this year! And the rest by summer of 2018. So the letter (full copy below) is a “pretty please, would you hurry it up” request…
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Eastern Shore Files with FERC to Expand Delmarva Pipeline

In July 2016 MDN told you about a smallish, but important pipeline project in the Delmarva Peninsula area, which includes most of Delaware and portions of Maryland and Virginia. Eastern Shore Natural Gas’ 2017 System Expansion project will bring new sources of natgas from an interconnection Eastern Shore has with the mighty TETCo (Texas Eastern Company) pipeline near Philadelphia (see PA/MD/DE Pipeline Project Heats Up with Open House Mtgs This Week). Although Eastern Shore, a subsidiary of Chesapeake Utilities Corporation, ran a non-binding open season in 2015, and although they pre-filed for the expansion project in May 2016, they have only just filed a full, official application with the Federal Energy Regulatory Commission (FERC). Originally the project was slated to run ~33 miles of pipeline looping in PA, MD and DE. That number seems to have gone down, to 23 miles. Compressor upgrades and other pipeline will also be added. Chesapeake Utilities, the parent company, calls the project the single largest such expansion in Eastern Shore’s history, a project that will bump up gas delivery volumes by 25%…
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2 Failing Big Green Groups in PA Quasi-Merge, PennFuture & CVPA

Two radical Pennsylvania-based “environmental” groups are not exactly merging–but almost. One group is the radical PennFuture, which gave rise to such luminaries as John Quigley (fired as Sec. of the PA Dept. of Environmental Protection), John Hanger (left the state, former DEP Secretary, ran for governor last time, lost, supports legalizing pot), and Cindy Dunn (currently Secretary of Dept. of Conservation and Natural Resources). PennFuture is tax exempt, yet it routinely engages in political activity in violation of its IRS 501(c)(3) status. The other group is Conservation Voters of PA, a 501(c)(4) advocacy organization affiliated with a political action committee (PAC). The two groups are combining certain portions of their operations–“policy, advocacy, and legal resources”–in an attempt to “hold legislators accountable, mobilize voters, and shine a spotlight on candidates’ records on clean air, water and energy issues.” Our view is that their organizations’ membership and donations are dwindling and this is two failing organizations clinging to each other so they don’t slip beneath the waves into oblivion…
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Make Marcellus Drilling Better – by Using a Math Formula?!

Can you actually use a mathematical formula to figure out better ways to plan how to drill shale gas wells? It turns out the answer to that question is a resounding, “Yes!” A chemical engineering professor at Carnegie Mellon University, along with several Ph.D. students have, working with EQT, pioneered research that figured out how to turn 14,000 water truck trips to a well site into 1,400 trips–an “order of magnitude” difference. That is a big deal in the drilling industry. Using mathematical formulas–something called “mixed-integer optimization”–Professor Ignacio Grossmann and the other researchers tackled how to make processes in the shale gas industry more efficient. They published a paper in the AIChE Journal in 2016 titled, “Strategic Planning, Design and Development of the Shale Gas Supply Chain Network” (full copy below). The paper “presents a mixed-integer nonlinear programming (MINLP) model to optimally determine the number of wells to drill at every location, the size of gas processing plants, the section and length of pipelines for gathering raw gas and delivering processed gas and by-products, the power of gas compressors, and the amount of freshwater required from reservoirs for drilling and hydraulic fracturing so as to maximize the economics of the project.” Er, right. As you can tell, it’s complex. But it’s also very interesting and relevant for drillers and others in the industry, which is why we bring it to you. Below is a quick summary/overview of the paper, a video of Prof. Grossmann describing the research, and a copy of the paper itself…
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EXCO’s Day of Reckoning with Bankers: Feb 1

EXCO Resources was once a sizable player in the Marcellus. They still have 145,000 net acres in the Marcellus, with 124 horizontal Marcellus wells drilled and in production. However, EXCO, as we pointed out last March, has pretty much abandoned the Marcellus at this point (see EXCO: No Marcellus Drilling in 2015/2016, NYSE Threatens Delisting). The company has flirted with bankruptcy for some time. They were able to slow the bleeding in 2Q16 (see EXCO Still Hammering Midstreamers re Contracts, Bleeding Slowed). In 3Q16 EXCO finally turned a profit, going from losing $355 million in 3Q15 to making $51 million in 3Q16 (see EXCO 3Q16: Turns a Profit! Marcellus Production Continues to Fall). That is an astonishing turnaround for a company razor close to bankruptcy. However, they aren’t out of the woods yet. Last fall EXCO was due to have borrowing base redetermination. A company’s borrowing base is the value of its assets–in this case the value of the leases and oil/gas wells EXCO owns. Those assets are used as collateral to back up loans and IOUs. If the bankers extending credit determine a company’s assets are no longer sufficient to cover their loans, the bankers may force that company into bankruptcy as a way to protect the bank’s investment. EXCO pushed off the asset checkup to November. Then in December, the company got a reprieve, pushing the overdue checkup from Nov. 1, 2016 to Feb. 1, 2017. It now appears time is up and the redetermination will happen on Feb. 1. What will the banks find?…
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Climate Radicals Protest in Philly Against Trump’s Cabinet Picks

Some 200 leftist/radical bought-and-paid-for “protesters” (paid by Big Green groups) “rallied” in downtown Philadelphia yesterday in front of both of PA’s U.S. Senate office (Bob Casey, total jerk and Democrat hack, and Pat Toomey, marginal Republican). They were protesting President-elect Trump’s picks to run the EPA, Dept. of Energy and Dept. of Interior–calling them “climate deniers.” This is part of a national campaign paid for by radical environmental groups, like 350.org and the Sierra Club, groups totally invested in the theory that mankind is causing the earth to catastrophically heat up–even though the temperature record doesn’t back up the theory. Holding silly banners like “NO CLIMATE DENIAL CABINET” they paraded around, collected their paychecks, bought a few dime bags of weed while they were in the ‘hood and generally had a good time. What’s really offensive is that these same idiots demanded that Republicans rubber stamp Obama’s radical cabinet when he assumed office–which stupid Republicans did. These same “protesters” now demand the victor (yes, Trump won) cave to their childish demands. Fortunately Trump is a different kind of Republican and doesn’t back down from a fight…
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Indeck Gets Michigan Approval for $1B Gas-Powered Electric Plant

Indeck Niles Power Plant – artist’s rendering (click for larger version)

Indeck Energy announced in October a plan to build a $1 billion electric generating plant (powered by natural gas) in Niles, Michigan, not far from Chicago (see $1B Electric Plant Planned Near Chicago, M-U Connection?). There has been no mention of Marcellus/Utica gas feeding the plant (so far), but our own speculation is that with the reversal of the Rockies Express (REX) pipeline which now flows gas from the Marcellus/Utica west to Illinois, we suspect our gas will be used to power the plant. Good news: the State of Michigan has given its blessing and approval for the project and Indeck plans to begin construction on the 1000-megawatt plant this year…
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Cove Point LNG Now 78% Complete, On Track to Open This Year

In October 2014 Dominion announced they had officially broken ground on the Cove Point LNG export plant, a project that will inject between $3.4 and $3.8 billion in Calvert County, Maryland and pump upward of 1.8 billion cubic feet per day of cheap, abundant Marcellus and Utica Shale gas (see Dominion Breaks Ground on Cove Point, MD LNG Export Facility). Anti-drilling zealots have been desperate to stop the facility in a vain attempt to stop “fracked gas.” The Sierra Club, among others, has repeatedly launched frivolous lawsuits. They’ve all failed. Dominion released a video update (below) that shows the facility is now 78% complete and “on track for an in-service date in late 2017.” There are currently 1,800 construction workers on site. All of the concrete has been poured, the sound wall is finished, and more than 50% of the steel has been installed for this project. Some 31 of the 34 barge loads have been received and 68 of the 77 heavy haul deliveries have been transported. It is all systems “go” for this project…
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Journal ‘Science’ Pimps Itself to the Democrat Party with Op-Ed

Science, as in the storied journal, is supposed to be about, well, science. Instead, they’ve opened up their pages to politics. Not that Science hasn’t long been bastardized by and riddled with politics. But just like mainstream media was unmasked during this last election as being TOTALLY biased and willing to “shade” the truth (i.e. lie), Science is now unmasked. Barack Hussein Obama submitted an article to the journal about global warming, as an exercise in mass propaganda, to try and create the meme that he actually achieved great things related to energy while in office–i.e., his “legacy.” The opposite is true. In the Science article (below) Obama alludes to the rise of fracking as lowering carbon emissions, but he can’t even bring himself to actually refer to fracking or hydraulic fracturing in the article itself. That would tick off his radical base. The entire article is about global warming and how mankind is causing it–pure rubbish and non-science. But there you go. Our point is that it is now only too obvious that Science is to the scientific world what the National Enquirer is to the “news” world…
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Marcellus & Utica Shale Story Links: Tue, Jan 10, 2017

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Citizens Financial a gem in the heart of the Marcellus; Energy Services of America, firesale prices; NY closing nuke plant, will burn more oil instead; why hasn’t natgas shopping caught on in PA; will U.S. shale soon get a $50B infusion; EPA asks employees if they are gay, straight, or “other”; and more!
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