Rex Energy Update – Brings 10 New Wells Online in Butler Co. PA

Rex Energy, a driller focused mainly on the Marcellus/Utica (headquartered in State College, PA), is a plucky company. Although it has faced its share of financial challenges, it continues to drill in the Marcellus/Utica–bringing new wells online. Rex released an announcement yesterday to tout two new wells pads with a cumulative 10 new wells between them that the company has now brought online into production. Rex always refers to their drilling program in three areas: “Bulter Legacy” and “Moraine East” are drilled on Rex’s leases in Butler County, PA; “Warrior North” refers to Rex’s drilling program on land in Carroll County, OH. The latest two pads were both drilled in Rex’s Moraine East area of Butler County. One of the pads, the “Shields” pad with six wells, produced an initial cumulative rate of 9.2 million cubic feet equivalent per day (MMcfe/d), dropping to 7.9 MMcfe/d after 30 days. The “Mackrell” pad with four wells produced an initial cumulative rate of 8.4 MMcfe/d. No 30-day rate (yet) for the Mackrell pad. Here’s the particulars of our “little driller that could”…
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Williams Breaks Ground on Atlantic Sunrise Pipe, Ahead of Schedule

Earth moving has begun for a compressor station in Columbia County. (Williams Partners)

Well that didn’t take long! Yesterday MDN brought you the fantastic news that the Federal Energy Regulatory Commission (FERC) had granted Williams a certificate/go-ahead to begin construction on Atlantic Sunrise, a $3 billion, 198-mile natural gas pipeline project running through 10 Pennsylvania counties to connect Marcellus Shale natural gas from northeastern PA with the Williams’ Transco pipeline in southern Lancaster County (see FERC Greenlights Construction of Atlantic Sunrise Pipeline). FERC issued their permission to begin construction last Friday. Based on a previous Williams statement, we expected construction to begin tomorrow, on Sept. 20th. However, as soon as Williams had the certificate in their hands, they began construction–LAST FRIDAY. Where? Williams fired up bulldozers at two locations–one in Wyoming County, the other in Columbia County (both in northeast PA), to clear land for two new compressor stations they will build as part of the project. Yesterday both Williams AND Cabot Oil & Gas issued the same press release to announce construction has begun. Interesting that Cabot issued the release too, showing just how important this project is to Cabot’s future (and to their stock price)…
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FERC Lifts Rover Horizontal Drilling Ban, Pipeline Work Resumes

Rover Pipeline–$3.7 billion, 711-mile natural gas pipeline that (will eventually) run from PA, WV and eastern OH through OH into Michigan and on to Canada–began flowing natural gas through a large portion of the pipeline on Sept. 1st (see Big Portion of Rover Pipeline Now Up & Running – Thru Most of Ohio). In the past three weeks, Phase 1A of the pipeline has steadily increased its throughput and now flows over 700 million cubic feet per day (MMcf/d) of yummy Utica/Marcellus Shale gas to Defiance, OH. However, it could flow more, if the Federal Energy Regulatory Commission (FERC) would lift its considerable boot off Rover’s neck and let them finish Phase 1B pipeline work in eastern Ohio to feed more gas to the main part of the pipeline. The problem is that Rover had early missteps, the most serious of which spilled 2 million gallons of non-toxic drilling mud in a swamp near the Tuscarawas River back in April (see Rover Pipeline Accident Spills ~2M Gal. Drilling Mud in OH Swamp). An investigation by the Ohio Environmental Protection Agency (OEPA) found the presence of diesel fuel in the drilling mud, which means the mud wasn’t so non-toxic after all (see OH EPA Says Diesel Fuel Found in Rover 2M Gal Drilling Mud Spill). Rover believes sabotage may have been the cause. Since April, FERC has blocked all new underground HDD work for the Rover project. Rover has asked (begged, pleaded) FERC, several times, for permission to restart the HDD work–at least in a few select locations. In August, FERC issued eight conditions before they would agree to lifting the HDD ban (see FERC Issues Rover 8 Commandments to Restart Horizontal Drilling). Rover says they have met all of those conditions. However, the OEPA says they have not. Last week OEPA asked FERC to continue blocking HDD activity until they (OEPA) are satisfied (see Rover Pipeline Still Battling Ohio EPA, Asks FERC to Lift HDD Ban). Rover fired off a letter to FERC that says OEPA’s public statements are opposite of their private statements with Rover. In other words, OEPA is lying. Who will FERC listen to? Now we know. They’re listening to Rover. Yesterday FERC lifted the ban on HDD for nine key locations–NOT including the Tuscarawas River site. FERC says they are still investigating that spill. FERC said, in lifting the HDD ban, that “Rover has demonstrated sufficient progress on the required rehabilitation and restoration of the areas affected by the inadvertent release and drilling mud contamination” and that the company is following FERC’s 8 Commandments. We’re pretty sure yesterday’s FERC decision won’t make the OEPA happy…
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PA House Getting Ready to Cave on Severance Tax? Say it Ain’t So!

It’s funny how mainstream media–and liberal Democrats–can turn on a dime. It was just a few days ago we read an AP story endlessly regurgitated across PA about how the PA budget fight had turned “ugly” and “personal” (see Pennsylvania’s ugly budget fight gets personal and regional). The story began this way: “The feel-good bipartisan spirit that Democratic Gov. Tom Wolf tried to instill last year in Pennsylvania’s Capitol is gone, stomped to bits in an increasingly ugly budget stalemate. Now, the Capitol seems gripped by a feud that is perhaps less partisan than it is regional and personal.” And now, a few days later, everyone is all-of-a-sudden happy and feeling better. It’s all bipartisan butterflies and unicorns popping up in Harrisburg. Why the change? Because now there are whispers that House Republicans may cave on adopting a Marcellus-killing severance tax. That has the antis, and the Dems (often one and the same) all giddy and feelin’ good. Is there any truth to the rumors?…
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EIA Sept Drilling Report: Marcellus/Utica Production Hits New High

MDN’s favorite government agency, the U.S. Energy Information Administration (EIA), issued our favorite monthly report, the Drilling Productivity Report (DPR), yesterday. The DPR is the EIA’s best guess, based on expert data crunchers, as to how much each of the U.S.’s seven major shale plays will produce for both oil and natural gas in the coming month. Last month EIA combined the Marcellus and Utica plays into a category they call Appalachia–a big change in the report (see EIA Makes Big Changes to Monthly Drilling Report, Combines M-U). What does the latest report forecast for the coming month? EIA says that natural gas production across all seven major shale regions will jump another 788 million cubic feet per day (MMcf/d) to a record high of 59.7 billion cubic feet per day (Bcf/d), with nearly half of the increase next month coming from one region–Appalachia. Here’s the latest edition of our favorite monthly report, with some analysis…
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Constitution, NFG Pipes to Seek FERC Relief from NY DEC Tyranny

Yesterday we told that you history has been made–the Federal Energy Regulatory Commission (FERC) has broken the back of the New York Dept. of Environmental Conservation (DEC) by overturning the DEC’s decision to block a short pipeline Millennium wants to build to a power plant in Orange County (see History Made! FERC Overrules NY DEC on Millennium Pipe Permit). The DEC has also blocked federally-approved pipeline projects in two other cases–the Constitution Pipeline, a $683 million, 124-mile pipeline from Susquehanna County, PA to Schoharie County, NY carrying Marcellus gas (a Williams project), and the Northern Access Pipeline, a $455 million project includes building 97 miles of new pipeline along a power line corridor from northwestern Pennsylvania up to Erie County, NY, to carry Marcellus gas northward (a National Fuel Gas Company project). Given Millennium’s success in having FERC overrule NY DEC, one would think these other two projects would also file requests with FERC for the same thing. According to Reuters, NFG already has filed such a request, and Williams is about to…
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Sierra Club Radicals Use FL Court Case to Challenge 2 M-U Pipelines

In August, the D.C. Court of Appeals ruled in a case that may have long-term, very negative consequences for the oil and gas industry related to pipeline development (see DC Court of Appeals Legislates New Law re FERC & Global Warming). The profoundly litigious, anti-fossil fuel radicals of the Sierra Club previously filed a lawsuit against the Federal Energy Regulatory Commission (FERC) blaming FERC for not considering mythical man-made global warming as it conducted a review of three pipelines in the southeast. The Sierra Club is known for filing frivolous lawsuit after frivolous lawsuit. This is just one in a long line. The Southeast Market Pipelines Project is an umbrella project for three natural gas pipelines in Alabama, Georgia, and Florida. The linchpin of the project is the Sabal Trail pipeline, which travels from Tallapoosa County in eastern Alabama, across southwestern Georgia, and down to Osceola County, Florida, just south of Orlando (nearly 500 miles), feeding gas-fired power plants in the region. The Sierra Club antis said the three projects together didn’t take into consideration an increase in carbon and methane that would result from the three projects getting approved, and that said carbon and methane will contribute to man-made global warming. The D.C. Court of Appeals agreed and instructed FERC to reconsider its environmental assessment of the three projects–vacating an approval of the main part of the project, the Sabal Trail pipeline. Just one teeny tiny problem (for the antis): all three pipelines–Sabal Trail, Hillabee Expansion and Florida Southeast Connection–are up and running. This decision likely will not shut them down. But the decision does have a big impact on projects not yet built. Drunk on their earlier success, yesterday the Sierra Club filed two requests (demands?) with FERC requesting the agency redo their already-done environmental impact statements for Dominion’s $5 billion Atlantic Coast Pipeline from WV through VA and into NC, and for EQT’s $3.5 billion Mountain Valley Pipeline, from WV into VA. The Sierra Club says the Sabal Trail decision is all they need to force FERC into redoing the EIS’–to force FERC to consider mythical man-made global warming…
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Ultra Petroleum Not Out of Woods Yet, Corp Raider Fir Tree Attacks

Ultra Petroleum, based in Houston, TX, is an independent exploration and production (E&P) company mainly focused on drilling in the Green River Basin of Wyoming. Ultra also drills for oil in the Uinta Basin/Three Rivers area in Utah. In addition, Ultra maintains a “non-operated” (someone else does the drilling) position in the Pennsylvania Marcellus shale with leases on 72,000 net acres–no small amount. One year ago, in April 2016, Ultra filed for Chapter 11 bankruptcy (see Ultra Petroleum (with 184K Marcellus Acres) Files for Bankruptcy). A year later, Ultra announced it has emerged from bankruptcy, raising nearly $3 billion to pay back creditors and floating 195 million shares of new stock (see Ultra Petroleum Does Bankruptcy Right, Exits with Higher Value). We thought Ultra was out of the woods, now on a strong footing. But perhaps not. Yesterday a loathsome corporate raider, Fir Tree Partners, announced it’s intention to “immediately engage with Company management to pursue value-maximizing strategic alternatives for UPL.” UPL is Ultra’s stock ticker acronym. Unfortunately for Ultra, Fir Tree is their largest stockholder. As a quick reminder for those new to MDN, corporate raiders (these days renamed to “activist investors”) take a major position in a company so they can pressure the company into firing hundreds (or thousands), and selling off assets, in order to make the company look better on paper. Once the company looks better, the share price goes up and the raider sells its stock in the target company, taking a big profit and moving on to the next target. It’s disgusting. And now it’s happening to Ultra…
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EIA: Gas & Oil Will Dominate Energy Mix for Next 20+ Years

Last week our favorite government agency, the U.S. Energy Information Administration (EIA), released its annual “International Energy Outlook 2017” (full copy below). What does the report show? EIA predicts energy consumption is set to increase 28% from 2015 levels by 2040–in a little over the next 20 years. To meet this huge uptick in energy, EIA predicts fossil fuel use–led by natural gas and oil–will continue to account for about 77% of energy consumption through 2040. So much for the renewable nirvana future we’re always just a year or two away from (according to Al Gore). Fossil fuels will remain the #1 fuel of choice by the world for the next generation, and almost certainly the generation after that, and the one after that. Do you now see why drilling for oil and gas in shale is so vital to the future of not only our country, but the world? According to EIA, most of the growth in energy consumption (and fossil fuels) will come from China and India. Here’s the lowdown on what’s just around the corner…
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Marcellus & Utica Shale Story Links: Tue, Sep 19, 2017

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: The best opportunity to keep WV’s bright young people in the state is O&G; North Dakota sets record natgas output in July; wastewater pipelines see big growth in Texas; BH rig count drops by 8 to 936; coal faces a gassy death in US; the new rock star of oil & gas is digitalization; potential scenarios for 2017-18 natgas market withdrawals; and more!
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