Range Resources 2Q17 – Hints at Selling NE PA Marcellus

Range Resources, the very first driller to sink a Marcellus (back in 2004), released its second quarter 2017 results and held a conference call yesterday to discuss it. Range had a great 2Q17, with record production of close to 2 billion cubic feet per day (up 37% from 2Q16). Range’s Marcellus/Utica gas production was up 9% year over year. Range continues to drill impressive wells. One pad with seven wells drilled in the wet gas Marcellus area saw initial production (IP) rates averaging 29.1 million cubic feet equivalent per day (MMcfe/d), while a set of four wells on another pad in the Marcellus dry gas area say IP rates of 30.0 MMcfe/d. By the end of 2017, Range plans to have drilled and turned in line (TIL) 113 new wells in the Marcellus/Utica, and 56 new wells in the Louisiana Haynesville Shale. Yes, Range continues to ramp up its Haynesville program after buying Memorial Resource for $3.3 billion last year, spending money in Louisiana rather in Pennsylvania–which is a warning to the severance taxers in PA that companies can and will leave the state. On yesterday’s conference call Range CEO Jeff Ventura was asked a question about his views on Marcellus/Utica companies merging, like EQT/Rice. He responded: “If you think about it at a very high level, fewer companies I think in the Basin drilling is probably a positive thing. It’s probably a more pace development, a more prudent and more rational development. So I think that’s a good thing for the macro.” Range CFO Roger Manny hinted that Range may be looking to unload their considerable acreage position in northeastern PA when he responded this way to a question about more asset sales: “So we still have assets in the Mid-Continent that would be deemed non-core. One can make the case that the stuff we have in Northeast Pennsylvania, although it’s high quality, is away from that core blocky stacked pay position we have in the Southwest. So there’s other assets we have that we could sell.” Sounds like Range intends to concentrate on SWPA and LA moving forward…
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Dominion: Cove Point LNG 95% Complete, Online in 4Q17

Dominion Energy released its second quarter 2017 update and held a conference call yesterday to discuss those results. Dominion is a huge producer and transporter of energy with its fingers in a lot pies. Dominion produces 26,200 megawatts of electricity, owns 15,000 miles of natural gas transmission, gathering and storage pipelines, and owns 6,600 miles of electric transmission lines. Dominion operates one of the nation’s largest natural gas storage systems with 1 trillion cubic feet of storage capacity. They also are a local utility company, serving more than 6 million customers. Yeah, big company, big deal. However, our interest in Dominion is fairly narrow: They are building an LNG (liquefied natural gas) export facility along the shoreline of Maryland. The Cove Point LNG facility will export 1.8 billion cubic feet per day (Bcf/d) of Marcellus/Utica Shale gas–to India and Japan. On yesterday’s call, Dominion CEO Tom Farrell said Cove Point is “95% done” and “remains on-time and on-budget” to begin operations by the end of this year. That’s great news! The other thing we closely watch with Dominion is the $5 billion, 594-mile Atlantic Coast Pipeline (ACP)–a natural gas pipeline that will stretch from West Virginia through Virginia and into North Carolina. With respect to ACP, Farrell said they’ve already purchased 84% of the materials needed for the project and that it remains “on-track to start construction later this year.” Farrell said the pipeline should be done in the “second half of 2019.” More good news! Here’s the latest from energy giant Dominion Energy…
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Shell Conducts 4th Meet-n-Greet with Residents Near Cracker Site

Shell officials held the fourth (so far) public meeting in Beaver, PA to talk with local residents about the mammoth, $6 billion ethane cracker plant the company is building in their midst. For the most part, the event was uneventful. More than 150 people came out to hear what the petrochemical giant had to say. A table at the event held polyethylene pellets–the stuff that will be manufactured by the plant. Also on the table were a variety of products made from those pellets, including bottles, food packaging and more. One local resident opposed to the plant told a reporter she had to restrain her potty mouth because Shell officials would not answer her questions from the floor–in front of the crowd. Shell (and others in the o&g industry) have wised up. They post representatives at tables who are happy to answer private questions privately, but they don’t throw open the floor to antis who want to bleat and blat in front of an audience. We think it’s a wise precaution. The woman could get her questions answered, and express her unhappiness–but she wanted to do it in front of a crowd and in front of cameras and microphones. No thanks. Organize your own meeting if you want to do that…
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Judge Hears Arguments For/Against Broome Virtual Pipe, Delay Stays

Yesterday both sides were in court in Broome County, NY to put forward their best arguments for why a natural gas transfer station (i.e. virtual pipeline) project in the Town of Fenton, near Binghamton, should (or should not) get built. We’ve covered this story from the beginning–because we like virtual pipelines which get natural gas to customers who aren’t blessed to live near a pipeline, and because we live about 10 miles from the proposed site. NG Advantage wants to build a virtual pipeline operation in a suburb of Binghamton. The location NG picked, after considering up to six other locations in the region, was selected because of it’s proximity to major highways, proximity to the Millennium Pipeline, and availability of high-power electric lines. A virtual pipeline is nothing more than a compressor plant (series of compressor plants) that grabs gas from a pipeline, in this case the Millennium, and compresses it and loads it onto special tractor trailers that then deliver the gas to industrial customers like manufacturing plants, hospitals, and even small regional gas distribution systems servicing residential homes. The location NG selected, in the Town of Fenton (within spitting distance of residential communities Hillcrest and Port Dickinson) was approved by the Town of Fenton after a detailed review. The area NG selected is zoned industrial and is, in fact, a former dump site. However, residents from nearby neighborhoods in Hillcrest and Port Dick were not aware of the project (so they claim) and when construction began to clear the dump site, and residents learned what was going to be built at the site, some of them demanded court action to oppose it. Two court cases have been filed and a local judge has temporarily stopped construction at the site. Yesterday that judge heard arguments for and against. NG Advantage CEO Rico Biasetti was encouraged by the judges questions…
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Shell Needs 450 Welders to Work on Ethane Cracker Plant

Good news if you’re a welder, or interested in a welding career, and you live in southwestern Pennsylvania. Shell needs you. Shell is in the process of building a massive, $6 billion ethane cracker plant in Beaver County, PA (northwest of Pittsburgh). Cracker plants have lots of pipes that need to be welded as the plant goes up. While these jobs are not long-term, as in “the rest of you career,” they’re long enough, likely lasting several years. Steamfitters Local 449 is right now recruiting new apprentices, offering a free 17-week apprentice training program. Local 449 is holding an open house this Saturday…
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It’s Time to Keep Track of Mexico’s NatGas Market – Here’s How

For some time now, MDN has had its eye on Mexico. No, not for a vacation (although that would be sweet), but because of the natural gas market, which is undergoing a dramatic change. Mexico passed landmark energy sector structural reform in 2013 and 2014, freeing up Mexico’s oil and gas markets from strict government control. The reforms abolished the state monopolies administered by state-owned companies Pemex and the Federal Electricity Commission with the aim of creating competitive markets in the oil and gas industry AND in the power industry. Why? To attract private investment with the ultimate aim of dramatically improving Mexico’s energy markets. While renewable energy grabbed much of the attention in mainstream media, the core of the energy reform effort lies in the expansion of Mexico’s natural gas market. Not only is power generation heavily focused on increasing capacity through gas-fired combined cycle power plants, but also consumption by industrial users is expected to rise at a steady pace in the coming decades. Mexico is going through a rapid expansion of its natural gas pipeline infrastructure–with a number of projects either under construction or planned. This expansion has opened numerous opportunities for the private sector, with more on the way. So how does Mexico affect the Marcellus/Utica? (1) Some of our gas may end up flowing across the border–eventually. Maybe not today or tomorrow, but there are pipeline projects that already are, or soon will, carry our gas to the Gulf Coast. From there, it’s a short trip over the border. Mexico may become an important future market for our gas. (2) Even if our gas never flows across the border, gas from Texas, Louisiana and Oklahoma will. As that gas goes south, it doesn’t go north to compete with Marcellus/Utica gas and opens up more markets for our gas in the Midwest and South. (3) As more American gas flows south–from whichever source–prices at the Henry Hub (and everywhere else, including the Marcellus/Utica) will go higher. It’s simple economics: less supply, same demand, equal higher prices. Mexico’s natgas market bears watching, and watching closely. How can you keep track of it? The same way we do. NGI (Natural Gas Intelligence) recently introduced a news service that tracks what’s happening in the Mexico natgas market–and for the next few months you can get it for FREE…
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OH Court Rules on ‘Paying Quantities’ Affecting Lease Termination

A recent ruling from Ohio’s Seventh District Court of Appeals has the potential to affect conventional and unconventional (shale) leases. As with most legal rulings, this one is a bit complex. We’ll do our best to summarize. In Ohio, most oil and gas leases have both a primary term and a secondary term. The primary term is that period of time a driller has to locate and drill for oil or gas–typically five years. The secondary term is that period of time (which can last for decades) under which oil and gas is produced from the well. In most lease contracts, as long as the well is producing in “paying quantities” the lease remains in effect. But when the well does not produce in paying quantities, the lease is terminated and the landowner can seek a new lease. Of course, the definition of “paying quantities” is key. In a previous case, the Ohio Supreme Court defined paying quantities. However, the recent Seventh District Court case, Paulus v. Beck Energy Corp., added to, or should we say “refined” the definition provided by the Supreme Court by providing guidance on what items may be considered when determining paying quantities and lack of production in Ohio…
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Anti-Pipe Objections Aired in Wrong Forum in Morgan County, WV

As MDN has previously reported, Mountaineer XPress Pipeline includes 165 miles of new pipeline with approximately 2.7 billion cubic feet (Bcf) per day of transportation capacity from existing and future points of receipt along or near the Columbia pipeline system–most of it located in West Virginia (see Details on Columbia Pipeline Mountaineer XPress Pipeline Project). Just last month the Federal Energy Regulatory Commission (FERC) gave Moutaineer XPress and its companion project, Gulf XPress, a favorable final environmental impact statement (see FERC Issues Favorable Final EIS for Mountaineer/Gulf XPress Pipes). The only thing left now is for FERC to issue a certificate for construction to begin–which won’t happen until Sen. Chuck Schumer and obstructionist Democrats allow a Senate vote on new commissioners, to restore a voting quorum at FERC. Don’t hold your breath. At any rate, a few local residents in Morgan County, WV appeared before the Morgan County Commission last night to complain about the project. The residents were there at the prompting of several Big Green groups, who organized the effort. Problem is, Morgan County can’t do a thing about the pipeline project. It was the wrong forum to complain in, but that didn’t stop them…
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Nova Scotia’s Bear Head LNG Sees Surge of Interest

For the past few years, MDN has tracked the progress of an LNG export plant planned for the eastern shore of Nova Scotia, the Bear Head LNG project (see our Bear Head LNG stories here). Of all the Canadian LNG export projects, Bear Head seems to have the most momentum. The project has received most of the necessary permits it needs to proceed. In fact, an official from the project says it is “shovel-ready” and can begin at any time. However, they aren’t ready to begin quite yet. The reason we track the project is because the most probable source of natural gas to feed the plant would come from the Marcellus Shale via the Maritimes & Northeast pipeline, converted to be bidirectional (see FERC Approves Atlantic Bridge Project for New England/Canada). However, the recent uptick in interest in Bear Head is not coming from the Marcellus, but because another LNG project on Canada’s West Coast was canceled last week. That has gas producers in Western Canada expressing interesting in piping their gas cross-country to the Bear Head project…
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Marcellus & Utica Shale Story Links: Thu, Aug 3, 2017

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: NY politicians don’t let facts on fracking stand in way of ignorance; rig count rises in OH Utica; class-action lawsuit against Range Resources over wages; Atlantic Coast Pipeline debated at WV DEP hearing; WV Northern Panhandle needs more roads for natgas growth; Weymouth, Mass. compressor station badly needed; Pioneer gets more gas than expected from Permian; scientists use big data in hunt for oil/gas; Japan’s LNG imports expected to drop in 2 years; and more!
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