PA 2Q NatGas Production Report – Another New Record

It continues to be another banner year for natural gas production in Pennsylvania, going by the latest quarterly production report. Yesterday, the PA Independent Fiscal Office (IFO) released their latest quarterly Natural Gas Production Report for May-Jun 2017 (full copy below). It shows natgas production rose 3.8% compared to the same period last year. It also shows the number of producing wells is up 7.5% from last year. Total natural gas production volume was 1,315.7 billion cubic feet (Bcf) and the number of producing wells in 2Q17 was 7,853. Perhaps the biggest news is that 2Q17 saw the highest quarterly production–ever. Another interesting fact from the latest report: Four counties (Susquehanna, Washington, Bradford and Greene) comprised two thirds (68%) of statewide production. All counties except Greene and Lycoming registered production gains. The #1 county for natgas production in 2Q17? Susquehanna County. The #1 driller in that county? Cabot. You might say, with some justification, that the success of Cabot’s drilling program in Susquehanna County has translated into success for all of Pennsylvania…
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Midstreamer E2 Energy Gets Major Investment from Tailwater Capital

E2 Energy Services, which operates numerous natural gas processing facilities in the Marcellus/Utica, has just recapitalized “through an equity commitment from Tailwater Capital.” MDN first heard of E2 back in October 2014 when EnLink Midstream transferred ownership (“dropped down”) its investment in E2 Appalachian Compression, LLC and E2 Energy Services, LLC from one EnLink corporate entity to another (see EnLink Midstream’s Primary Focus in the Marcellus/Utica is…). EnLink, at least in 2014, owned a majority interest in E2–so we consider E2 a subsidiary of EnLink. Now comes word that a private equity investment company, Tailwater Capital, has committed a big slug of money, although we are not given the amount. When a company like E2 “recapitalizes” that typically means the company is swapping debt (bonds and notes) for equity (stocks). The announcement from E2 does not share the exact nature of the recapitalization. Below is the announcement, along with a list of E2’s assets and operations in the Marcellus/Utica region…
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Potter County, PA Could Support 3K+ Shale Wells, Theoretically

When it comes to shale drilling in the northern-tier of Pennsylvania, counties like Susquehanna (#1 producing county in the state), Bradford (#3 producing county) and event Tioga (#7 producing county) may come to mind. But what about the county west of Tioga–Potter County? Potter isn’t even in the top 10 producing counties in the state. But that doesn’t mean there’s not shale drilling activity. In July MDN reported that JKLM Energy (owned by Buffalo Bills owner Terry Pegula) is in the process of drilling a dozen Utica wells in Potter this year (see JKLM Drilling 12 Utica Wells in Potter County, PA This Year). The residents in the county are being proactive about promoting shale drilling in Potter. They’ve formed the Potter County Natural Gas Resource Center Steering Committee, complete with its own website. At a recent meeting of the Steering Committee, Penn State’s Jim Ladlee told attendees that Potter County could, theoretically, support 3,000+ shale wells. That certainly doesn’t mean it will ever see that many, but what it does indicate is that there is potential in Potter County far beyond the dozen or so shale wells currently planned. Here’s a report from the meeting…
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South Jersey Resources to Manage NatGas Supply for W PA Elec Plant

South Jersey Resources Group has cut a five-year deal to provide natural gas for the Hickory Run Energy Station in Lawrence County, PA. Just two weeks ago MDN told you that the Hickory Run Energy Marcellus gas-fired electric plant planned for Lawrence County appears to be active and moving forward once again (see Signs of Life in Lawrence County, PA NatGas-Fired Electric Plant). Tyr Energy, a subsidiary of ITOCHU Corporation, purchased the Hickory Run Energy project in 2016 from LS Power Development. South Korea’s KB Asset Management announced they are investing $150 million in the project, which we said is “a sure sign that the pieces are now coming together for construction to begin.” Little did we know how prophetic those words were. Two days later, another report in the Korean Investors publication reported that French banking giant BNP Paribas has originated $460 million worth of loans for the project–of which the KB Asset Management investment is part (see Ground Broken for Lawrence County, PA NatGas-Fired Electric Plant?). The article also reported, “Ground has been broken for the plant.” Cool. Now another piece of this fast-moving puzzle falls into place. South Jersey Resources will contract for and supply natural gas to the plant, when it fires up…
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Central PA Counties form Co-op to Expand NatGas Service Locally

Juniata County just became the fifth central Pennsylvania county to join the SEDA-COG Natural Gas Cooperative. SEDA-COG stands for Susquehanna Economic Development Association – Council of Governments. Collectively, SEDA-COG is a group of 11 central PA counties. The other four counties that belong to the Natural Gas Cooperative include Clinton, Centre, Mifflin, and Perry. So what’s the big deal about this group? In 2013 MDN reported that SEDA-COG was working on an initiative to bring natural gas to more residents and businesses in their collective 11-county region (see Central PA Counties Cooperate on Infrastructure for More Gas Use). That cooperative effort eventually, in early 2016, gave birth to the SEDA-COG Natural Gas Cooperative group. Between 2014-2016 SEDA-COG conducted two studies to identify key targeted investment areas for establishment or expansion of natural gas service in its 11 member counties. Earlier this year, they issued a final report (full copy below). The report outlines ways in which the counties can cooperate to bring new gas infrastructure (distribution pipelines) to the region–delivering gas to homes and businesses. It is local government at its best, putting their heads together to benefit the entire region. The great news is that these central PA counties either have local shale wells, or are situated close to abundant shale production in nearby counties. Now it’s just a matter of getting folks hooked up to the gas…
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Range & PA DEP Settle re Alleged Methane Leak at Lycoming Well

Range Resources and the Pennsylvania Dept. of Environmental Protection (DEP) have officially “settled” something we thought was already settled–alleged methane migration from a well Range drilled in 2011. In June 2015, then-Secretary of the DEP, John Quigley, slapped Range with an $8.9 million fine–the largest such fine ever levied by the DEP (see PA DEP Slaps Range with Record $8.9M Fine for Methane Migration). Range’s enviro crime? Methane migration from a well in Lycoming County, PA. The DEP says the Range well, drilled in 2011, leaked methane since at least 2013 via an improperly cemented well casing, and the methane “contaminated the groundwater-fed wells of private water supplies, and a nearby stream.” Range and the landowner where the well is drilled say methane was in groundwater supplies long before Range drilled the well. Range fought the action tooth and nail, appealing the determination and fine to the PA Environmental Hearing Board (see PA DEP’s $8.9M Methane Migration Fine Appealed by Range Resources). In May 2016, the DEP quietly dropped the fine and the case against Range (see PA DEP Drops $8.9M Fine Against Range Res. re Methane Migration). We assumed that was the end of the matter. But alas, no. We now, finally, have an end. Both Range and the DEP filed paperwork with the Environmental Hearing Board (a special court set up to hear appeals of DEP decisions) requesting the matter now officially be closed and “settled.” The paperwork (copy below) does not say what the terms of the settlement are. Both Range and the DEP are being mum about the terms…
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EIA: Gas Processors Key to Rapid Growth in Marcellus/Utica

Ever hear the old proverb: “Success has many fathers, but failure is an orphan.” There are many reasons, many “fathers” for why the Marcellus/Utica region has become the highest producing natural gas region in the U.S. We have great shale rock. We have a lot of shale rock. We’re located close to major markets. We have a large and ready workforce. Increasingly, we have pipeline infrastructure to move the gas to new markets. All of those things contribute to the success of our region. But there’s one element that is critical, but often overlooked–gas processing and fractionation. Gas processing cleans up the hydrocarbons coming out of the ground–removing water and impurities, and separating methane (i.e. natural gas) from natural gas liquids (NGLs). Fractionation further separates NGLs into their components–ethane, propane, butane, pentane, etc. The U.S. Energy Information Administration (our favorite government agency) published an article yesterday looking at they critical role played by processing and fractionation in the Marcellus/Utica. They point out that when the shale revolution really began to take off in our area, circa 2010, we had roughly 1.1 billion cubic feet per day (Bcf/d) of gas processing capacity. In 2016, that number had zoomed up by a factor of nearly 10, to 10 Bcf/d of gas processing capacity. Without the ability the process the gas, it can’t be sold. One of the main “fathers” of success in the Marcellus/Utica, is processing…
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Antis Continue to Fight Inevitable NEXUS Pipe, Change Strategies

Anti fossil fuelers committed to stopping (NOT rerouting) the newly approved NEXUS Pipeline in Ohio continue to pin their hopes on a meritless lawsuit against the Federal Energy Regulatory Commission (see CORNballs Strike Again, File Lawsuit to Stop NEXUS Pipeline). However, just in case that doesn’t work (which of course it won’t), members of the Coalition to Reroute NEXUS (or CORN, folks we call CORNballs), have two more strategies up their sleeve which they hope will work. The first is to convince the Ohio EPA to deny a federal stream crossing permit for the project. That tactic worked in Communist New York State, so they hope maybe it will work in Ohio. Second, if all else fails, a couple of CORN members are running for the local town board in the districts where they live (in Media County). No doubt they plan to make mischief at the town board level, perhaps by introducing/passing illegal zoning ordinances to try and slow down or stop NEXUS…
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3rd University of Cincinnati Finds No Problems with Utica Fracking

The University of Cincinnati (UC) has now used $470,000 of taxpayer money for three research studies (over the past four years) to study the health effects of Utica Shale fracking. One of the studies dealing with ambient air pollution (published in March 2015) had such major errors the authors retracted it in June 2016 (see Ohio Air “Study” Near Frack Sites Retracted for Basic Math Error). Kind of embarrassing. Another study was completed 18 months ago, looking at potential issues of fracking on nearby water wells in Ohio. That study was funded, in part, by anti organizations who didn’t like the findings–that there IS NO negative impact of fracking on groundwater. So they’ve hushed it up and have refused to allow it’s publication (see Chorus Grows Louder for U of Cinci to Release Fracking Study). Now come leaks that a third research project has been completed at UC, once again looking at air samples near fracking sites–this time looking for elevated levels of volatile organic compounds (VOCs) and formaldehyde. The findings are that, “none of the air sample averages exceeded EPA levels of health concern.” Looks like yet another UC study that will get buried and never see the light of day…
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Marcellus & Utica Shale Story Links: Wed, Aug 30, 2017

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Columbiana County, OH to get jobs, tax boost from NEXUS Pipeline; energy groups fight back against radical efforts to shut down Dakota Access Pipeline; Harvey’s widespread destruction tests US shale; O&G companies respond to Harvey crisis with millions in donations; the next tech wave in drilling; trimming produced water costs; electric vehicles a boon for gas-fired plants; Russian Gazprom profit plunges 80% in Q2; Nigeria supplies stranded industries with LNG tanker trucks; and more!
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